Empowering Society with Innovation • Contents • Page Title Applicable GRI Guidelines

NEC Annual CSR Report 2006 Year ended March 31, 2006

Empowering Society With Innovation • Contents • Page Title Applicable GRI guidelines

Contents, Editing Policy 2.10, 2.11, 2.13, 2.17, 2.22, 4.1 01 NEC at a Glance 2.1, 2.2, 2.3, 2.6, 2.8, EC1, EC2, LA1 02 Contributing to Society Through Innovation 1.2 04 Highlights NEC’s Contribution to Solving Social Issues 1.1, 3.7, SO1 10 Platform for CSR-driven Management and CSR Vision 1.1, 2.9, 3.4, 3.6, 3.7, 3.13, 3.17, 3.19, HR1-4, HR6-7, SO1-3, SO7, PR1-3 12 CSR Promotion Activities: Performance and Objectives 1.1, 3.7, 3.13, 3.14, 3.16, 3.17, 3.19, SO1 14 Communication With Stakeholders 3.10, 3.11, 3.12, 3.16, SO1, PR8 16 Strengthening Corporate Governance 3.1, 3.2, 3.4, 3.7, 3.13 17 Protecting Personal Information and Upgrading Information Security 3.13, 3.20, PR3 18 Promotion of Corporate Ethics and Compliance 3.7, 3.10, 3.12, 3.13, HR9-10, SO1-3, SO7, PR1-2, PR9 20 For stakeholders in our markets 20 For Customers 3.10, 3.12, 3.13, SO4, PR1-2, PR8 24 Communication With Shareholders and Other Investors 3.10, 3.12 25 Collaboration With Business Partners 3.10., 3.13, 3.15, 3.16, EN33, HR2-3, SO7 26 For communities 26 Helping Local Communities Around the World –NEC Makes a Difference 2005– 3.10, 3.12, SO1 28 For employees 28 Building Quality Workplaces 3.13, LA10-12, HR1, HR4, HR8, SO4 30 Training and Career Development LA16-17 31 Occupational Health and Safety (OH&S) 3.13, LA5, LA12 32 For the environment 32 Birth of an Eco-friendly Mobile Handset 1.1, 3.12, 3.16, EN19, SO1 34 Extension of the Eco Symbol to IT Solutions 3.16, EN8, EN17, EN19, SO1, PR2, PR6 35 Environmental Impact Reduction 3.16, EN8, EN19, EN30, EN33, EN34 Using RFID-based Supply Chain Reforms 36 Making Maximum Ecological Use of Solar and Wind Power EN2, EN3, EN8, EN15 37 Rice Paddy Restoration Project 3.10, 3.12, SO1 –The Benefits of Communication With Nature– 38 Environmental Management at NEC 3.4, 3.6, 3.7, 3.10, 3.13, 3.16, 3.17, 3.19, EN8, EN17, SO1, PR6 39 Mid-term Environmental Plan –NEC Eco Action Plan 2006 (Results of Fiscal 3.7, 3.10, 3.13, 3.16, 3.17, 3.19, 3.20, EN3, EN4, EN8, EN14-15, EN17, EN19, EN30, EN33, EN34, SO1, PR2 2006 Activities and Fiscal 2007 Mid-term Targets)– 41 Mass Balance of Business Operations EN1-5, EN8, EN10-12, EN22 42 Environmental Accounting 2.18, 3.17, EC13, EN35 42 Environmental Audits and Risk Management 2.20, 3.13, 3.16, EN13, EN16 43 Environmental Communications 2.22, 3.7, 3.10, 3.12, 3.13, 3.16, PR2 44 Ratings and Awards From External Organizations SO4 45 Independent Review of NEC Annual CSR Report 2006 2.20, 2.21, 3.12

Editing Policy

NEC views this report as an important communication tool essential to earn- ing the trust of all stakeholders. We have worked to make the layout of this CSR Promotion and Planning Office report as easy to understand as possible. The report provides references to CSR Promotion Unit various websites, indicated by aURL mark, as necessary, where more NEC Corporation details or relevant information are available. 7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan [Reference Guidelines] Telephone: +81-3-3798-9837 GRI’s (Global Reporting Initiative) Sustainability Reporting Guidelines 2002: Facsimile: +81-3-3798-6030 Applicable GRI guidelines provided in the above table of contents. Ministry E-mail: csr@csr.jp.nec.com CSR home page: http://www.nec.co.jp/csr/en of Environment’s Environmental Reporting Guidelines 2003 [Scope of Report] Statements in this report other than historical or current facts are • Period covered by report: fiscal 2006 (the fiscal year from April 1, 2005 to forward-looking statements based on NEC’s assumptions and beliefs in March 31, 2006), including activities before and after fiscal 2006. light of information currently available to it. Accordingly, we caution you • Organizations covered by report: The content solely relates to NEC that these forward-looking statements are subject to changes in business Corporation in certain sections but also includes group companies in other conditions and other factors. sections. For information covering a specific set of NEC and group companies, the scope of such information has been explicitly defined in each rel- This report may also be viewed online at the following URL: evant section. Unless noted otherwise, NEC refers to NEC Corporation and URL http://www.nec.co.jp/csr/en/ its group companies in this report. For further details on environmental activities, please view NEC’s Please feel free to send us inquiries about this report, or your opinions or Annual Environmental Report 2006 at the following URL: questions regarding NEC’s CSR activities. URL http://www.nec.co.jp/eco/en/annual2006 ■ ■ NEC ataGlance Businesses Facts Corporate * Includinginter-segment sales(FY2006) Composition ofSalesbyBusiness IT SolutionsBusiness e ae Non-consolidated¥2,370.7billion(YearendedMarch31,2006) 356(AsofMarch31,2006) ¥337.8billion(AsofMarch31,2006) Non-consolidated23,528(AsofMarch31,2006) Consolidated subsidiaries Number ofemployees July17,1899 7-1,Shiba5-chome, Minato-ku,Tokyo,Japan Net sales HajimeSasaki Capital NECCorporation President Kaoru Chairman oftheBoard Established Address Company name Yano tronic manufacturers. color LCDs,electroniccomponents,etc.,mainlytoelec- The ElectronDevicesbusinessprovidessemiconductors, Electron DevicesBusiness services providers. cations field,mainlytoenterprisesandcommunications gration relatingtothebroadbandandmobilecommuni- The NetworkSolutionsbusinessprovidesnetworkinte- Network SolutionsBusiness ers, mainlytogovernmentagenciesandenterprises. that includessoftwareandhardware,suchascomput- The ITSolutionsbusinessprovidessystemsintegration (¥ billion) 1,000 1,500 2,000 2,500 500 0 Electron Devicesbusiness Network Solutionsbusiness IT Solutionsbusiness Overseas: 214 Japan: 142 Consolidated 154,180(AsofMarch31,2006) Consolidated ¥4,824.9billion(YearendedMarch31,2006) (FY2006) Composition ofSalesbyRegion 28% Overseas Japan 72% 01 NEC Annual CSR Report 2006 Contributing to Society Through Innovation

The NEC slogan “Empowered by Innovation” reflects our philosophy that our entire business is aimed at empowering customers with innovation and contributing to a more dynamic society. It is in NEC’s corporate DNA to use the power of innovation to solve issues faced by customers and help our customers achieve their goals and realize their dreams. We build on this by joining with customers to play a part in invigorating society through innovation. This sums up what corporate social responsibility (CSR) at NEC is all about. For NEC, CSR is about building good relationships with customers and various other stakeholders and, at the same time, helping to solve issues that affect society using innovation generated through our business activities. I firmly believe that the NEC group will continue to grow as we work to contribute to the sustainable growth of society.

Recently, concerns have also been rising over problems such as crime, terrorism, disease, natural disasters, IT system security, privacy, and food safety. NEC is one of only a handful of companies worldwide that can claim global leadership in fields spanning both IT and network technologies. Our aim is to leverage our expertise to contribute to resolving social issues by taking full advantage of the innovation that defines NEC. Our efforts will play an active role in developing solutions

02 to global environmental problems and in realizing a secure, reliable ubiquitous networking society. This report introduces specific examples: ePassport Systems, which improve security at immigration controls; Submarine Cable Seismic and Tsunami Sensing Systems that form the basis of long-term research in Japan on earthquake pre- diction and disaster countermeasures; and eco-friendly NEC Annual CSR Report 2006 bio-plastics made from recyclable plant fiber, which we are now using in our mobile phone products. In addition to our regular business activities, we also are actively engaged in CSR-driven activities as a responsible corporate citizen. For example, since 1999, the NEC Realizing a Secure, Reliable Ubiquitous Networking Kids Internet Safety Program has been teaching children Society Through Innovation all across Japan how to enjoy using the Internet safely Advances in IT and network technology have significantly without falling prey to online crime. This report intro- transformed lifestyles over the past decade. Today, we are duces this program and other CSR-driven activities. seeing the emergence of a “ubiquitous networking society”—one in which people can communicate with each Strengthening NEC Group Corporate Governance and other and have access to information and a wide range Compliance Systems of services anytime, anywhere, using various communica- CSR has always been an essential aspect of manage- tions devices. There are increasing efforts to build reliable, ment at NEC. During fiscal 2005, we strengthened our secure, and user-friendly, high-speed Next Generation corporate systems to promote CSR activities in three Networks (NGN) for the purpose of supplying the IT and ways: first, strengthen CSR-related risk management; network infrastructure essential to the ubiquitous net- second, promote activities aimed at creating value for working society. society; and, third, promote better communication with Yet even as modern society becomes more conve- stakeholders. nient, we still face many serious challenges, such as Recognizing that one of the most important priorities poverty and environmental issues around the globe. for NEC is to avoid having a detrimental impact on society Dialogue with employees (April 2006)

and the global environment, we identified six priority can help to create a better tomorrow. I believe that this risks (quality and safety, the environment, information pursuit requires new collaborative and dynamic combi- security, fair trade, occupational health and safety, and nations of people and organizations. Promoting greater human rights) in the area of CSR-related risk manage- workplace diversity and improved teamwork are key ment. We also have increased our efforts to promote aspects of creating a more collaborative and innovative compliance across the NEC group. However, we deeply NEC culture. Having lived and worked in the United regret that improprieties involving the leakage of cus- States on three separate occasions, I know how a diverse tomer and personal information, as well as false transac- working environment can strengthen and stimulate an tions, occurred in the past fiscal year at certain NEC organization. To use the power of innovation to expand group companies. our global business, we will stress the importance of 03 We are responding to these incidents by redoubling teamwork and try to cultivate a diverse workforce consist- efforts to strengthen corporate governance across the ing of talented people with a global outlook and a highly entire NEC group, including the thorough implementa- tuned sense of business ethics. tion of internal controls, and to institute effective compli- Since my appointment as president of NEC in April ance risk management systems throughout NEC and our 2006, I have visited many sites and have tried to discuss supply chain. In addition to improving our legal and reg- these issues with as many employees as possible. Based NEC Annual CSR Report 2006 ulatory compliance framework, we are focusing on the on the catchphrase “We Can Change,” I believe that the thorough implementation of awareness programs to employees of the NEC group will unite as a team to help ensure that each and every officer and employee within create a better NEC. In doing so, we will also create value the NEC group understand the social responsibilities for society as a whole through innovation. inherent in working for our organization. Our aim is to In addition to communicating our CSR-related activi- build awareness so that employees incorporate a compli- ties, this report represents a collective commitment on ance-oriented mindset into daily business activities. In the part of the 150,000 people that make up the NEC addition to compliance issues, these programs stress the group to fulfill our social responsibilities. In closing, I importance of acting ethically and in harmony with soci- invite all stakeholders to give us the benefit of their feed- ety at all times. back and opinion. I am personally taking the initiative to ensure that we forge a highly transparent and open organization with a June 2006 matching corporate culture. This CSR-oriented approach stresses the importance of communication and deepen- ing mutual understanding to help us explain our actions both internally and externally in easily understandable terms. Kaoru Yano President, NEC Corporation Creating a Better Tomorrow Using innovation to solve social issues means that we must further pursue innovation across NEC so that we 04 NEC Annual CSR Report 2006 H Reliable UbiquitousNetworkingSociety Realizing aSecure, explained beginningonpage32. Furthermore, NEC’s environmentalactivitiesare methods forenjoyingsafeInternetusage. contribution activitytoteachchildrenrulesand the NECKidsInternetSafetyProgram,isasocial society saferandmoresecure.Thethirdexample, and Tsunami SensingSystems)involvemaking ePassport SystemandSubmarineCableSeismic networking society.Two oftheexamples(the the aimofrealizingasecure,reliableubiquitous helps tosolvesocialissuesinvariousfieldswith commercial andotherwise,throughwhichNEC This sectionintroducesthreespecificactivities, ighlights cations areavailable irrespectiveoftimeorlocation. phones sothatinformation,services andcommuni- ment totheInternetinadditioncomputers andmobile focus onconnectinghomeappliances andotherequip- Current effortstorealizeaubiquitous networkingsociety calls thisenvironmentaubiquitous networkingsociety. access informationnetworksanytime, anywhere—and where. NECenvisionsanenvironmentwhereanyonecan “ubiquitous” referstosomethingthatcanbefoundevery-

Derived fromtheLatinword * Ubiquitousnetworkingsociety: with theskillsandenthusiasmofNECemployees. communities thatmakeuseoftheadvancedinformationandcommunicationtechnologiescompanyhasdeveloped,together citizen, NECisinvolvedinanumberofactivitiescollaborationwithNPOs(nonprofitorganizations),governmentagenciesan issues inareasincludinginformationsecurity, disasterpreventionandenvironmentalpreservation.Moreover, asagoodcorpora reliable ubiquitousnetworkingsocietythroughinnovation.IntegratingITandtechnologies,NECaimstosolvevariou fields ofIT, communicationsandsemiconductors,NEC’s toppriorityfromtheviewpointofsocialresponsibilityistorealizea support suchavision,wemustalsoleavebehindsoundglobalenvironmentforfuturegenerations.Withbusinessesspanningth We mustsolvevarioussocialissuesifwearetorealizeaprosperoussocietywhereallcanlivewithsecurityandconvenience.

NEC KidsInternetSafetyProgram Submarine CableSeismicandTsunami SensingSystems ePassport System ◆

NEC’s ContributiontoSolvingSocialIssues ubique

(“everywhere”), Business activities Secure, reliableubiquitousnetworkingsociety Make societymore livable forseniors and thedisabled NEC’s ContributiontoSolvingSocialIssues Improve use information prevention of medical Disaster services security Ensure

Creation ofsocialvalue Social issuesrequiringsolutions Be partofthesolution Crime prevention product safety workplaces food safety NEC Ensure Ensure quality Build

Social contributionactivities Environmental transportation Safe, efficient preservation

information

Safeguard personal Others

secure, d local

To To te e s companies towin thecontract.Trialoperation ofthesystem world-leading passportbookand personalizationtechnologies incorporating biometricdata.NECSAP formedaconsortiumwith of Singapore,thiscontractisforthe turnkeydeliveryofePassports ePassport projectcurrentlybeing promotedbythegovernment Checkpoints AuthorityandMinistry ofHomeAffairs.Partthe project (BioPassProject)contractbySingapore’sImmigration& In March2005,NECSAPwasawardedthebiometricpassport Deploying theePassportSysteminSoutheastAsia other importantdatabasessuchasthepolicecriminalwatchlist. contributes tosafe,worry-freelivesforthepublicbylinking port forgeryandimprovessecurityatimmigrationcontrol,italso on theICchip.Whilethistechnologyobviouslypreventspass- the individual’sfingerprintandfacetomatchdatarecorded machine thatsimultaneouslytakesnewbiometricreadingsof ded inthepassport.Thepassportisinsertedintoaspecial such asfingerprintsandfacialfeatures,onanICchipembed- owner ofapassportusingpreregisteredbiometricinformation, in SoutheastAsia,thesystemverifiesthatanindividualis ments inthesystemsintegrationfield.Currentlybeingrolledout Pte. Ltd.(NECSAP),acompanythatboastsmanynotableachieve- the technologyofSingapore-basedNECSolutionsAsiaPacific cation andfacialrecognitiontechnologyofNEC,combinedwith identity ofanindividualwith96.5%accuracy. tion orexpression,forexample,andisthusabletoverifythe technology isnotsignificantlyaffectedbychangingfacialposi- is lessthan1in10million.Moreover,ourfacialrecognition decades anditsaccuracyissuchthatthefalseacceptancerate cation systemhasbeenunderdevelopmentformorethan3 achieved world-classlevelsofaccuracy.Ourfingerprintidentifi- fication systemandfacialrecognitiontechnologyhaveboth a matterofconcernformanysocieties.NEC’sfingerprintidenti- technology, aimingtocontributetheimprovementofsecurity, NEC haslongbeeninvolvedinthedevelopmentofbiometric What IstheePassportSystem? on thelatestIT. to ensurereliableimmigrationcontrolthatNEChasstartedofferePassport,asystembased monitoring themovementsofpeopleacrossbordersisimportanttomaintainpublicsafety.It control counter.Thelongqueueatimmigrationisoftenveryirritating,butthejobofcarefully national borders.Whetheronbusinessorholiday,thetravelermustalwayspassimmigration As globalizationhasprogressedinrecentyears,therebeenmoremovementofpeopleacross Secure, ReliableImmigrationControl BecomesaReality The ePassportSystemisbasedonthefingerprintidentifi- 1. ePassport System it isactivelyrollingoutthetechnologytootherAsiancountries. into operationinAugust2005.With win thecontractforThaiePassportProject,whichcame began attheendofApril2006. of peoplearoundtheworldastheygoabouttheirdailylives. our systeminordertocontributethesafetyandpeaceofmind understanding ofdemandandfurtherimprovetheaccuracy countries ofEurope.AtNEC,weintendtoobtainaprecise Thailand, whereithasalreadybeenintroduced,andinthe technology inotherAsiancountriesoutsideSingaporeand ePassport SystembasedonNEC’sstate-of-the-artbiometric adopt electronicpassports.Thereisgreatinterestinthe U.S. inSeptember2001,therehasbeenagrowingtrendto be prevented.Followingthesimultaneousterroristattacksin due torelianceonafacialphotographalone,andforgerycannot Conventional paperpassportscancauseauthenticationerrors and PeaceofMind Promoting WorldwideDeploymenttoFurtherExtendSafety safety andsecurityofpeopleintheirhome countries. enjoy theirtripsinsafety,whilewealso contributetoensuringthe projects acrossthewholeofAsiasothat peopletravelingoverseascan recognition. Fromnowon,wehopeto participateinnewePassport proof thatouradvancedtechnological capabilitieshavereceived Singapore andThaiePassportProjectcontractswereawardedtousis raises efficiencywithitsfastturnaroundtime.Thefactthatboththe NECSAP alsoformedaconsortiumwithlocalcompaniesto The automaticgateforePassportuse accuracy rate.Atthesametime,it NEC SolutionsAsiaPacificPte.Ltd. Senior VicePresident Tan BoonChin extremely reliableandboastsahigh nology enhancessecurity,asitis NEC’s fingerprintidentificationtech- this andothe r achievements 05 NEC Annual CSR Report 2006 Submarine Cable Seismic and 2. Tsunami Sensing Systems Embracing the Challenge of Providing Early Seismic Warnings Many regions have still not recovered from the tsunami that devastated the Indian Ocean periphery following an earthquake off the coast of Sumatra, Indonesia, in December 2004. Such natural disasters will always threaten human civilization, no matter how advanced our technology. In Japan, one of the world’s most earthquake-prone countries, seven undersea sensing systems are in place to detect tremors with precision and to provide early seismic and tsunami warnings for disaster prevention purposes. NEC has earned recognition for its extensive experience in the manufacture of devices used in submarine communications cables and in laying such cables. This recognition has made NEC Japan’s only comprehensive supplier in this specialized field. A cable-laying vessel feeds a seismometer toward the seabed

What are Submarine Cable Seismic and Tsunami transmission technology, introduced with the third system for Sensing Systems? the Ito area, has helped to improve the quality of data substan- Current theory states that large earthquakes are caused by slip- tially. Besides seismometers and tsunami detectors, the exteri- page along the junctions between the tectonic plates that cover ors of some of the cable systems also contain other equipment the Earth. The Pacific Ocean seabed to the east of the main to monitor various parameters of the ocean environment in real Japanese archipelago contains numerous plate junctions whose time. NEC is currently making five ocean bottom seismometers relative movements create frequent earthquakes. Placing seismic and three tsunami pressure gauges for a new cable system in detectors directly on the ocean floor enables scientists to monitor the offshore Omaezaki region ordered by JMA, due for comple- even the slightest movement, providing precise and potentially tion in 2008. NEC also seeks to take this system to overseas 06 life-saving data on the nature of these earthquakes. The sensing markets in the hope that one day they will be in use all around system consists of undersea sensing equipment such as ocean the world. bottom seismometers and tsunami detectors installed at observa- Locations of NEC Submarine Cable Seismic tion points inside submarine cables that are laid at depths of and Tsunami Sensing Systems thousands of meters. Digital data from these detectors are trans- mitted in real time around the clock via optical fibers also con- Optical Coaxial tained in the cables, which stretch for 100–200 km from the #7: Kushiro NEC Annual CSR Report 2006 JMA: Japan Meteorological Agency (JAMSTEC, 1999) Japanese coast. The undersea sensing equipment and related ERI: Earthquake Research Institute, University of Tokyo NIED: National Research Institute for Earth Science systems must be carefully designed to work with perfect reliability and Disaster Prevention #5: Sanriku (ERI, 1996) under deep-ocean conditions of hundreds of atmospheres of JAMSTEC: Japan Agency for Marine-Earth Science and Technology pressure. #2: Katsuura (JMA, 1986) History of Submarine Cable Seismic and Tsunami #4: Hiratsuka (NIED, 1996) Sensing Systems #1: Omaezaki #6: Muroto (JMA, 1979) #3: Ito NEC installed the first such system for the Japan Meteorological (JAMSTEC, 1997) (ERI, 1993) #8: Omaezaki Agency (JMA) in 1979 in the offshore region near Omaezaki. NEC (JMA, 2008) has been responsible for all aspects of the design, construction [planned] *Years of completion shown and installation of the Submarine Cable Seismic and Tsunami Sensing Systems now in place in seven offshore areas of Japan. Over the past 25 years, these systems have sent valuable real- System Construction Based on Detailed Marine Survey time data without a single failure. The use of fiber-optic digital The first step is a highly detailed marine survey. NEC then designs the system, basing the cable structure, route and installation on the survey results. Based on this design, NEC manufactures the undersea equipment, cables and related land-based facilities. After carefully conducting environmental and system tests and other trials to confirm functional viability, the equipment is installed inside the cables on the ground, and a specialized ship is then chartered to lay the cable along the planned route. This step Photo provided by JAMSTEC demands advanced technology and vast experience: the precision of operationssincethefirstOmaezaki Projectinstallation. the world.Wehavenothadasingle unitfailurein25-plusyears devices installedinsubmarinecommunications cablesaround must havefail-safereliability.Wenowover3,000relay operations whereweareresponsibleforvitalinfrastructurethat testing andevaluationtechniques,developedincommunications a majorfactorisourproductiontechnologies,includingequipment that’s whywebeganinstallingseismometersontheoceanfloor. provide earlywarningofamajorearthquakeinthisregion.And seabed todetecttremorsinoceantrenchesanattempt experts inseismologybelievedthatweneededtomonitorthe major earthquakesarebelievedtooccurevery80–90years,many earthquake intheTokairegionforaboutacentury.Sincethese taken toensurethatsysteminstallationdoesnotadversely from thetopofahighmountain.Naturally,lotcareisalso observation pointisliketryingtohitacarwithstonethrown required topositiontheunderseaequipmentatdesignated System ConstructionBasedonDetailedMarineSurvey aiesre ytmdsg al-aigi ca Operationaltesting Cable-layinginocean Systemdesign Marine survey in theconstructionofsubmarinecommunicationscables, In additiontosystemsintegrationcapabilitiesdeveloped back in1979.Backthen,therehadnotbeenamajor The JMAcommissionedustobuildthefirstsystem these systems? What factorssupportthehighreliabilityof anywhere. Whyweretheyinstalled? There arenoothersystemslikethese NEC Telenetworx,Ltd. Mobile &OverseasNetworkSystemsDivision Department Manager,OceanEngineering Noriyuki Fujiwara,Ph.D. Equipment procurement and manufacture 24 months(average) System assembly peak seasonforcommerciallong-linetunafishing. cooperation withlocalfishingindustryassociationsduringthe case oftheMurotoProject,installationrequiredahighlevel affect thelocalfishingindustry,scenery,orecosystem.In strong interest in in strong interest to thework Tsunami ciate thedirectbenefitofSubmarine CableSeismicand many otherareasofITandcommunications, itishardtoappre- when Itriedtoexplainithimduring elementaryschool.Unlike gives meinspiration.Mysonfoundithardtounderstandmywork ronment thatissaidtobemoremysteriousthanouterspace. in deep-seaobservationnetworks,helpingustoexploreanenvi- land-based installations.Thiswouldalsoleadtomarkedprogress vation equipmentprovidingadensityofinformationsimilartothe a daywhenwehaveLAN-connectednetworkofdeep-seaobser- designed tosavelives.Inaddition,Ithinkwecanalsoenvision now shiftedawayfromresearchtowardearly-warningsystems measures suchasevacuations.Ibelievethattheemphasishas time astheyoccur,thereal-timedatafeedcouldaidinresponse and testing profile tsunami detectors. well astheaccountmanagerforoceanbottomseismometersand th Submarine CableSeismicSensingSystemprojects.Heiscurrently geological monitoring.HehasbeeninvolvedineveryoneofNEC’s development ofsubmarinecablesystemsforcommunicationsand Since joiningNEC,Dr.Fujiwarahasbeeninvolvedinthedesignand detect tremorsclosetotheepicenteratvirtuallysame If wecaninstallmoreobservationpointssothat ted toimprovingthesafetyandsecurityofoursociety Working withcustomerswhoarepassionatelycommit- Sensing Systemsinourlives.Ithink whatattractsme e deputyprojectmanagerfortheongoingOmaezakiProjectas that Idoisitssocialsignificance—and perhapsmy involvement inthisbusiness? What isyourfeelingaftermanyyearsof and TsunamiSensingSystemsevolving? How doyouseeSubmarineCableSeismic the world’soceans aswell. 07 NEC Annual CSR Report 2006 08 NEC Annual CSR Report 2006 NEC inavoluntary capacity,buttheexperience ofstandingup use oftheIT-relatedknowledgethat Ihaveacquiredinmyjobat inside andoutsideofNEC.Not only hasitbeengoodtomake opening upthroughmeetingthe children andotherpeople,both wanted tobeateacher.SoIdecided toregisterasavolunteer. Internet SafetyProgramimmediatelyattractedmebecauseIhad tunity toteachelementaryschoolchildrenthroughtheNECKids Kids InternetSafetyProgramtoteachchildrenhowenjoyusingthesafely. websites detrimentaltochildrenandinformationthatcouldleadvarioustypesofcrimescontinueproliferate.NECsponso The Internetisrapidlybecominganindispensablepartofourlives,bothasasourceinformationandmeanscommunication T eaching ChildrenProperInternetUse ■ into problemsontheInternet.”AsofMarch2006,program properly;” “It’sarelieftoknowthatIcangetgoodadviceifrun such as:“I’mgladthatnowIunderstandhowtousetheInternet The lessonshavebeenwellreceivedbychildren,withcomments and convenientaspectsaswellcautionarypoints. e-mail, bulletinboardsandchatrooms,discussingenjoyable children hands-onexperience,thelessonscovertopicssuchas are NECgroupemployees,andtheJapanGuardianAngels.Giving all belongtotheNECCyberstars,avolunteerclubwhosemembers Guardian Angelstoprovidetheseclassessince1999.Teachers of safeInternetusage.NEChaspartneredwiththeNPOJapan helps childrenofelementaryschoolagetolearnrulesandmethods The NECKidsInternetSafetyProgramisahands-onclassthat Since Ibeganthisvolunteerwork, Ihaveenjoyedmyworld Program HistoryandDevelopment 3. for theNECCyberstarsinwinterof2002.Theoppor- I sawanoticeurgingNECgroupemployeestosignup a teacherintheprogram? What madeyouvolunteertobecome NEC KidsInternetSafetyProgram NEC Telenetworx,Ltd. Secure NetworkServiceDivision Network OperationServicesDepartment Assistant Manager, Kumi Mizukami them navigatethewebsafelyandenjoyably. hopes toopenuptheworldJapanesechildrenbyhelping to useinformationorcommunicatewithunlimitedpotential.NEC The Internetsurmountsbarriersofdistanceortimetoenableus to covermobilephoneuse,targetingchildrenofmiddleschoolage. of 6,958children.TheprogramwasalsoextendedinApril2005 covered atotalof143classesin47schools,withattendance face-to-face conversation. Ithinkthatcommunication withother tools. SoIalsowantthekidsto understandtheimportanceof easy touse,theInternetisstilljust oneofmanycommunication communicate withpeopleface to face.Whileconvenientand class Itrytoremindthepupilsthat itisalsogoodsometimesto useful inbuildingthecommunicationskillsthatIneedatwork. in frontofpeopleandteachingthemhasalsobeenextremely profile bulletin board. counselor toadvisechildrenonInternet-relatedproblemsthrougha classes atprovincialelementaryschools.Shealsovolunteersas a 2002. Shedevotestimeafterworkonweekdaysandholidaystoteach Ms. MizukamiregisteredtojointheNECCyberstarsinwinterof the Internetenjoyablyandsafely, butattheendof The aimoftheclassesistoteachchildrenhowuse communicate tochildren? What istheonethingthatyoumostwantto class atanelementaryschool NEC KidsInternetSafetyProgram rs theNEC . However, to in helpingchildrentoenjoyusingtheInternetsafely. avoiding itsperils.Ibelievetheprogramisplayingapositiverole aware ofthedarkersideInternetandlearnsafeways ing. dedicated tosuchthingsaspornography,suicideorbombmak- made iteasytoseekoutdangerintheformofadult-onlysites the importanceofbeingconsideratetoothers. bother tocallormeetpeople.Iwanthelpchildrenappreciate human beingssuffersifpeoplesimplyusee-mailanddonot on mehowtheseclassesdependateameffort. culties involvedincommunication,theexperiencealsoimpressed the class.Besidesgivingmeabetterunderstandingofdiffi- We foundsomeonewhocouldsignforusandIwasabletofinish

teach asnormal,butthensuddenlythechildburstoutcrying. The NECKidsInternetSafetyProgramaimstomakechildren i In oneclassthatItaughttherewasachildwithhear- the factofmatteristhatitswidespreadadoptionhas Most childrenonlyassociatetheInternetwithfun,but ng disability.Ididnotrealizethisatfirstandproceeded our IT-drivensociety? classes hastaughtyouaboutthedangersof What doyoufeelthatteachingthese moments? Have therebeenanyparticularlymemorable participants areeasyto understand. The illustratedbookletsdistributedtoclass at ajuniorhighschool Class onInternetsafetyusingmobilephones children toenjoyusingtheInternetmoresafely. classes arrangedforparentssincethiswouldprobablyhelpthe puter skillsoftheparentstocatchup.SoIwouldalsolikesee extremely fastlearners,thereisanincreasingneedforthecom- the programtocovervariousothertopics.Also,askidsare safety programonanongoingbasis. most ofourorganizationalstrengthstoimprovetheInternet networks andsoftware,Ibelievethatwecanbothmakethe partnership withNEC,whichpossessesalotofexpertisein zation, involvetryingtopreventstreetcrime.Throughthis ities ofJapanGuardianAngels,whichisanon-profitorgani- and etiquettewillalsobeusefulindailylife.Mostoftheactiv- hope thatthelessonschildrenlearnaboutonlineethics lies inthefactthatitisliterally“child’splay.”Asateacher,I into thehandsofadultswhopreyonthemonline:danger the classeshasmademerealizethatkids’innocenceplays Angel inonlinecrimepreventionactivitiesJapan.Teaching For thepastsixyears,IhavebeeninvolvedasaCyberGuardian aid inschools. for parents,itisbeingusedasateaching to explainingsuchissues.Includingpages guide foritssimple,child-orientedapproach Parents andchildrenalikehavepraised the use informationandavoidonlinedanger. others whileprovidinglessonsonhowto dren tobeconfidentandconsiderate Preparing themforaubiquitousnetworkingsociety,itencourageschil- about onlinesafetyandsecurityusingasimplethree-stepmethod. This guidepreparedbyNECforguardians URL URL A SafeandSecureInternetforAllofUstoEnjoy and bulletinboards.Inthefuture,Iwouldliketoexpand At themoment,classonlycoverse-mail,chatrooms http://www.guardianangels.or.jp/eng/ http://www.nec.co.jp/literacy/kids/ (Japaneseonly) develop inthefuture? How wouldyouliketoseetheprogram Japan GuardianAngels(NPO) Jin Kimura is designedto educate children 09 NEC Annual CSR Report 2006 10 NEC Annual CSR Report 2006 * C&Cstandsforcomputersandcommunications. implement theminthecourseofdailybusinessactivities. every officerandemployeetounderstandthesepolicies management atNECisforallorganizationalunitsandeach NEC GroupCodeofConduct.OnekeythemeforCSR-driven Philosophy, theNECGroupCharterofCorporateBehaviorand The CSRpromotionplatformatNECcomprisesitsCorporate Platform forPromotingCSR-drivenManagement ples forconductingbusinessactivitiesasamemberofsociety. its responsibilitiesasagoodcorporatecitizeniskeyelementofenhancingvalue. investors, businesspartners,thecommunityatlargeandemployees.NECbelievesthatearningtrustofsuchstakeholdersby The NECgroup’sbusinessactivitiesarebasedonrelationshipswithmanystakeholders,includingcustomers,shareholdersandot Platform forCSR-drivenManagementandCSRVision Preserving theGlobalEnvironment Disclosing Information Conducting FairCorporateActivities Developing NewTechnologies Attaining CustomerSatisfaction The CorporatePhilosophysetsforthfundamentalprinci- and contributestobuildingasustainablesociety. The NECGroupreducestheimpactonglobal environment while enhancingthetransparencyofitscorporate activities. information inatimely,clear,andappropriatemanner The NECGroupdeliversaccurateandsufficientcorporate political bodiesareofanormalandpropernature. relationships anddealingswithgovernmentagencies competition betweencorporationsandensuresthatits The NECGrouppromotesfair,transparent,andfree the futureprosperityofsociety. break groundinnewareasofbusinessthatwillcontributeto The NECGroupstrivestodevelopcreativetechnologiesand and servicesbypayingcarefulattentiontosafety. developing andofferingbeneficialreliableproducts The NECGroupearnscustomersatisfactionandconfidenceby the trustofcustomers,shareholders,investors,suppliers,communityatlarge,itsemployees,andallotherstakeholders. and regulations,butalsobyfulfillingitssocialresponsibilitiesasagoodcorporatecitizen.Atthesametime,Groupmu benefit society.Tothisend,theGroupisawareofneedtoenhanceitscorporatevaluenotonlybyobservingallrelevant The NECGroupworkstoimproveprofitabilitythroughsoundbusinessactivitiesandachievedynamicdevelopmentsoas advance societiesworldwidetowarddeepened mutual understandingandthefulfillment NEC strivesthrough“C&C”*tohelp Corporate Philosophy of humanpotential. (Formulated in1990) NEC GroupCharterofCorporateBehavior to remainafirmworthyofthetrustallstakeholders. of CorporateBehaviorandNECGroupCodeConductinorder strictly observestheCorporatePhilosophy,NECGroupCharter porate ethics. activities, mainlyfromtheperspectivesofcomplianceandcor- and everyofficeremployeeinthecourseofdailybusiness Conduct (seep.18),specifiesthebehaviorexpectedofeach fulfilling NEC’ssocialresponsibilities.TheNECGroupCodeof required ofmemberstheNECgroupfromperspective of tenprinciplesthatprovideaguidetothecorporateactivities NEC tocontributethedevelopmentofasustainablesociety. order toreturnbenefitssociety.Ultimately,thiswillenable raise profitabilitywhilepromotingdynamicdevelopmentin Corporate Philosophythroughsoundbusinessactivitiesthat The objectiveofNEC’sbusinessactivitiesistorealizetheNEC Daily effortsarebeingmadetoensurethattheNECgroup The NECGroupCharterofCorporateBehavioriscomposed Protecting IntellectualPropertyandPersonal Information Valuing Employees Protecting HumanRights Conducting ThoughtfulCorporateCitizenshipActivities Maintaining GoodRelationswiththeCommunity and personalinformationproperlymanages them. The NECGrouprecognizesthevalueofintellectual property can fullydemonstratetheirabilitiesandcarryoutjobswithenthusiasm. and createsworkenvironmentswhereallitsemployees The NECGrouprespectseachemployee’sindividuality child orforcedlabor. activities, neveracceptinganydiscriminatorypracticesor The NECGrouprespectshumanrightsinallitscorporate activities ofsocialbenefitasagoodcorporatecitizen. society andactivelyengagesinphilanthropyother The NECGroupfullyrecognizesthatitisakeymemberof that contributestocommunitydevelopment. regions andcountriesmanagesitsactivitiesinaway The NECGrouprespectsthecustomsandculturesofall (Formulated April2004) st win laws

fulfilling her holders Promote activedisclosureanddialoguewithvariousstake- (3) DeepenCSR-relatedcommunication Incorporate CSRelementsintobusinessactivities (2) Promoteactivitiesaimedatcreatingvalueforsociety * areas* Secure competitiveadvantagebyminimizingriskinsixpriority (1) StrengthenCSR-relatedriskmanagement Policies: NEC hasformulatedthefollowingthreeBasicCSRPromotion Three BasicCSRPromotionPolicies are tofulfillcompliance-relatedresponsibilitiesbyensuring this inschematicform. Charter ofCorporateBehavior.Thediagrambelowillustrates NEC’s thinkingonCSRisencapsulatedintheNECGroup CSR Vision Promotion Council •Environmental Management Meeting •CS andQualityPromotion •Information SecurityPromotion Meeting human rights Quality/safety, theenvironment,informationsecurity,fairtrade,OH&S,

NEC Corporation,CorporateStaff Base line In essence,thefundamentaltenetsofmanagementatNEC brand value Enhancing corporate *1. Occupationalhealth&safety*2.Customersatisfaction Improving profitabilityandreturningbenefitstosociety Compliance responsibilities Economic responsibilities Observance ofcorporateethics CSR OrganizationalStructure(FromFiscal2007) Human rights,OH&S* quality, informationsecurity, social issuesthrough: Sustainable DevelopmentofSocietyandNEC Community activities Business activities Legal compliance environment, etc. NEC Group Contributing to solving Supply ChainManagement(BusinessPartners) NEC GroupCompanies(AffiliatedCompanies) CSR Promoters(CorporateEthicsDivisionConcurrentAssignmentStaff) NEC GroupCharterofCorporateBehavior NEC Corporation,BusinessUnits 1 CSR PromotionCommittee , CS* BU StrategyCommittee 2 , President Protecting corporate (risk management) brand value Building trustthrough communication CSR/Ethics PromotionStaffSteeringCommittee CSR PromotionUnit •Human RightsAwareness Committee •Site-based OH&Scommittees Committee •Security Technology CenterSteering Related committees CSR Promoters Shareholders/investors CSR Promoters Global environment Business partners

Stakeholders Communities

Customers Employees … … • CSR PromotionUnit:Thisunitoverseesandcoordinates pro- • work forpromotingCSR-drivenmanagement. The diagramshowstheorganizationalstructureofNEC’sframe- Framework forPromotingCSR-drivenManagement activities (whichareundertakenasagoodcorporatecitizen). through businessoperationsaswellcommunitysupport engaged inthesolutionofvariousissuesfacedbysociety ness activities.ItisalsocrucialthatNECremainactively responsibilities byenhancingprofitabilitythroughsoundbusi- observance oflawsandcorporateethics,tofulfilleconomic relevant corporatestaffdivisions,BUsandaffiliates,theCSR motion ofCSR-relatedactivitiesgroup-wide.Incooperationwith the chairmanshipofpresident. the BUStrategyCommittee,whichmeetseverymonthunder important CSR-relatedoperationalmattersarediscussedin promotion policies,criticalissuesandrelatedmeasures.Any CSR every quarter,itisaforumfordiscussionsonimportant CSR promotionmanagersofeveryBusinessUnit(BU).Meeting leads theCSRPromotionUnit,thiscommitteeincludes CSR PromotionCommittee:Chairedbytheexecutivethat • • CSR/Ethics PromotionStaffSteeringCommittee: The March 2006:135). and mechanisms(numberofCSR Promotersasof role indevelopingandmanaging CSR-relatedsystems organization, CSRpromotionmanagers playacentral motion areinplaceatallBUsand NECaffiliates.Ateach promotion activitiesacrossNEC. sions onimprovementstothemanagementofCSR Staff). Thecommitteeprovidesaforumfordiscus- division (CorporateEthicsConcurrentAssignment ethical andcomplianceissuesineachcorporatestaff the CorporateEthicsDivision,areresponsibleforCSR, members ofthiscommittee,chairedbythehead CSR Promoters:Managersresponsible forCSRpro- by NEC’sBasicCSRPromotionPolicies. Promotion Unitisworkingonthethreethemesaddressed well astheNECgroup. tributes tothesustainabledevelopmentofsocietyas and therebyraisecorporatevalue.Overall,thiscon- contribute totechnologyandbusinessinnovation their trust.Moreover,NEC’saimisthatsuchprocesses views ofstakeholdersinbusinessprocessestoearn open dialogue,itisimportantthatNECreflectthe such actionstothem.Atthesametime,throughan ments tostakeholdersfulfillitsobligationexplain mation onCSRactivitiesandrelatedaccomplish- Furthermore, NECproactivelydisclosesinfor- 11 NEC Annual CSR Report 2006 12 NEC Annual CSR Report 2006 1. Deepenandexpand Medium-term Issues

to supplychain) systems andextend management (establish CSR management CSR risk * Quality/safety,theenvironment,informationsecurity,fairtrade,OH&S,humanrights promote furtherdisclosureofCSR-relatedinformationattheNECgrouplevel. communicate toemployeestherelationshipbetweencorebusinessesandCSR; risk management;surveyCSR-relatedactivitiesinNEC’ssupplychain;clarifyand businesses. Thefourmajorobjectivesforfiscal2007aretoclarifyandexpandthescopeof reliable ubiquitousnetworkingsociety”asamajorthemeforpursuingCSRthroughcore activities tothesupplychain;anddefining“contributingrealizationofasecure, awareness ofCSR-relatedissuesamongCSRPromotersatgroupcompaniesinJapanandoverseas;extending checklists andclarifyingissuesinBUsNECgroupcompaniesJapanoverseas;holdingeducationalCSRworkshopstorai checklists insixpriorityareas*.Infiscal2006,NECmadefurtherprogressonseveralthemes,including:continuingtheuseo three basicCSRPromotionPoliciesandestablishingsystems,promotingCSR-relatedriskmanagementbasedonself- In fiscal2005,NECundertookanumberofmeasurestosolidifythebasicsCSR-drivenmanagement.Theseincludedclarifyingt CSR PromotionActivities:PerformanceandObjectives

developments Supply chain-related promotion education/awareness Employee areas focused onsixpriority Risk management security Information Key Points ･･･････････

Held web-based training programs for all NEC Corporation Held web-basedtrainingprogramsforallNECCorporation Held grouptrainingcoursesforsalespeopleinAfrica Initiated compliance-relatede-learningcoursesfor Distributed bookletscontaining100NECGroupCode Revised NEC Group Procurement Policy and published Revised NECGroupProcurementPolicyand published Obtained PrivacyMarkforentireNECCorporationfrom Implemented CSRself-checklistsacrossBUsandgroup Unified monthlyreportingimplemented(ledbyNEC Participated inJapanElectronicsandInformation Held CSRworkshopsforPromotersatgroup Information SecurityManagementSystems(ISMS) security security assuch corporate ethics, the employees inJapan,coveringCSR-relatedtopics companies inJapanandoverseas region regions NEC groupcompaniesinNorthAmericaandChina group on promoting supply chain-oriented CSR activities group onpromotingsupply chain-orientedCSRactivities T of ConductcasestudiestoallNECCorporationemployees activities cooperation ofleadingsuppliersinCSR promotion CSR-related guidelinesforNECsupplychain; sought built/operational/evaluated toISMSstandards Japan InformationProcessingDevelopmentCorporation employee educationandawarenessbuilding companies inJapanandoverseas;thekeyissuewas Corporation) ･･ echnology IndustriesAssociation(JEITA) working Overseas: regional workshops held in North America, Overseas: regionalworkshopsheldinNorthAmerica, Japan: five workshops held (approx. 50 participants Japan: fiveworkshopsheld(approx.50participants (approx. (approx. Europe (twice),S.E.Asia,ChinaandOceania in total) and privacy 120 participantsintotal) icl20 civmnsPg e.Fiscal2007Objectives Pageref. Fiscal 2006Achievements environment, information

P25 P14 P19 P18 P43 P19 P17 P17 ー･････････ Conduct moreworkshopsforCSRPromotersatNEC Promote sharingofrisk-relatedinformationandboost Reinforce informationsecuritymanagement(expand Continue educationalmeasures,includingtraining Improve CSRself-checklistsusedbyBUsandNEC Extend unifiedmonthlyreportingtoNECgroupcompanies Expand education(e-learning,grouptraining,etc.) Expand web-basedtrainingprogramsonCSR-related Phase insurveysofstatusCSRactivitiessuppliers group companies web communications,etc.) awareness (siteroadshows,tier-specific training, to preventleaks,etc.) ISMS standards,installspecialdata-entryterminals Help Line on corporateethicsandraisingawarenessoftheNEC and relatedprocesses) group companiesinJapanandoverseas(content throughout Japan for employeesofoverseasgroupcompanies companies inJapan topics foremployeesofNECCorporationandgroup ･･ CSR workshopheldatNECAustralia(March2006) Overseas: holdworkshopsinsixregions(Latin Japan: holdworkshopsonmanagementsystems, Oceania) America, Europe,China,NorthS.E.Asia, site communication f self- he se 3. Promote 2. IncorporateCSR Medium-term Issues stakeholders with various communication businesses) through core pursuing CSR competitiveness by (Increase business activities elements into business activities reflect indaily of stakeholdersand Rapidly obtainviews CSR Report disclosure using Promote information Others value to createsocial business activities CSR-driven core For theenvironment For employees For communities and investors For shareholders For customers e onsFsa 06Aheeet aerf Fiscal2007Objectives Page ref. Fiscal2006Achievements Key Points ･･････････････････････ Implemented communication activities mainly targeting Implemented communicationactivitiesmainlytargeting Produced and distributed CSR leaflets (introducing CSR Produced anddistributedCSRleaflets(introducing Published Annual CSR Report 2005 (including an independent Published AnnualCSRReport2005(includinganindependent CO Achieved greenprocurementrateof100% Extended EcoSymbolproductsystemtoITsolutions Implemented physicalandmentalhealthmaintenance The numberofcertifiedcareerprofessionalsintheNEC Held “Life Design” seminars and offered re-hiring support Held “LifeDesign”seminarsandofferedre-hiringsupport Increased ratioofemployeeswithdisabilitiesatNEC Held digitalinclusionprogramsincludingNECITTraining Participation insocialcontributionactivitiesaspartof Developed mobilephoneversionofNECKidsInternet Mailed post-interimresultdividendnoticesoneweek Moved shareholdermeetingtolargervenuecapableof Introduced customerfeedbackforms.EnhancedNEC Implemented SI-CSRinitiativestopreventsystemfailures Reinforced compliancesystemsforelectricalsafetylaws Set theme for CSR-driven core business activities at NEC: Set themeforCSR-drivencorebusinessactivitiesatNEC: Established SecurityTechnology Center(STC);400 partners, localcommunities,NPOsandemployees customers, shareholdersandotherinvestors,business business partnersandemployees activities) tocustomers,shareholdersandotherinvestors, opinion andactivityreviewbyanNPO) fiscal 2005) measures, andrelatedmanagerialtraining within Japanexceeded10,000. Certified Professional(NCP)systemattheNECgroup system in conjunctionwithupgradedextendedemployment services (includingopportunitiesoutsidetheNECGroup) Corporation to1.9%(Japanesestatutoryminimum:1.8%) Supporter Training Workshops for MothersRaisingSmallChildrenandNECSeniorIT employees worldwide NEC MakesaDifference2005by135,000officersand Internet use Safety Programformiddleschoolchildrentoteachsafe earlier attended accommodating allparticipants;about900shareholders group companiesinJapan Security PromotersappointedatNECCorporationand awareness awards systemtoboostcustomersatisfaction(CS) gr ubiquitous networkingsociety”(linkedtomedium-term “Contributing totherealizationofasecure,reliable Participated via Nippon Keidanren in Japanese industry’s Participated viaNipponKeidanreninJapanese industry’s Jo standard onsocialresponsibility contribution toadoptionoftheISO26000 guidance Network owt ined UnitedNationsGlobalCompactand itsJapan 2

emissions reducedby30,000tons(down2%from h strategy) P31 P24 P15 P14 P43 P32 P25 P20 P28 P17 P27 P26

P24 24

ーー

P9 P8 〜〜〜

･･････････････････････ Reduce energy-derivedCO Promote useofbio-plasticsinNECproducts Create atleastonefront-runningeco-conscious Strengthen systemstopromoteindustrialinsurance, Upgrade physicalandmentalhealthmaintenance Hold web-basedtrainingforallmanagersonhuman Promote hiringofpeoplewithdisabilities(raise Expand NECKidsInternetSafetyProgramtotarget Revise andupdateIRwebsitecontenttofacilitate Improve shareholdermeetingsbyintroducingamore Improve securityofsystemsforcustomers,ledby Promote overallconceptofSI-CSRactivities Upgrade interdivisionalconnectionsduringsystem Promote employeeawarenessofthetheme“con- Continue programsshownontheleft Institute meetingsforemployeestoprovide Annual Reinforce systemsforgatheringexternalshareholder Formulate conceptandplanningforAnnualCSR Compile NECguidelinesondisclosureofCSR-related Promote socialcontributionactivitieslinkedto Promote ahealthywork-lifebalance(upgrade Promote “JoyofWork” small-groupactivities product center facilities including provincialsiteswithnoNEChealthcare measures rights awareness employee ratioto2.0%byfiscal2009) for allmanagers) childcare supportsystem;awareness-raisingprograms businesses seniors use byindividualinvestors open format STC throughout NECgroup failure response communication withemployees) and awareness-raisingprograms,aswell ubiquitous networkingsociety”(throughtraining tributing totherealizationofasecure,reliable CSR Reportfeedback views andinternalfeedback Report 2007jointlywithNPOs information 2 emissions 13 NEC Annual CSR Report 2006 Communication With Stakeholders

A core policy of CSR-driven management at NEC is to promote communication with stakeholders and to incorporate feedback into continuous improvements in operating activities. This section introduces a few examples of stakeholder communication initiatives from fiscal 2006.

Customers

Customer suggestions lead to various improvements in our products and services. In fiscal 2006, customers noted that for PC models that allow users to watch television on the PC display, it took some time for the picture to appear after switching on the power button. The new models feature an “instant TV viewing” function that reduces the waiting time to just a few seconds. Responding to other customer feedback that e-mail was difficult to read due to small lettering, NEC equipped the N506iSII mobile handset with six different point sizes for e-mail fonts, a function that has been extremely well received by customers.

14 NEC also welcomes and responds to CSR-related feedback from corporate clients. In 2004, NEC received CSR-related supply chain management guidelines as part of the Global Citizenship Principles formulated by Dell Computer of the U.S., a customer for NEC’s DVD and floppy disk drives. NEC’s commitment to these guidelines earned the company the accolade of Global Citizenship Supplier of the Year 2005 from Dell. The award was presented on March 7, 2005. NEC Annual CSR Report 2006

Business Partners

NEC believes that listening sincerely to suppliers is a key part of promoting transparent, fair and competitive procurement practices. In fiscal 2006, the NEC Help Line, a reporting system for business partners to make complaints or to consult on business issues, was extended to include overseas suppliers as well as companies in Japan. The prior survey of suppliers suggested that NEC provide more information on its business activities to suppliers. In fiscal 2006, NEC welcomed around 600 materials suppliers to the annual supplier meeting and distributed CSR leaflets to the 990 attendees to promote better CSR-related communication. The president of NEC also gave a presentation on NEC’s CSR activities at the meeting, requesting the cooperation of suppliers in various joint initiatives. Through ongoing feedback and evaluation, NEC aims to continue building stronger relationships with suppliers based on mutual trust. Employees

The president, other officers and senior managers frequently post messages on NEC’s intranet, and every employee may reply with their views or requests, enabling two-way communication on a daily basis. Similarly, the intranet allows individual employees to express opinions and communicate ideas for change. NEC also uses this medium to conduct, analyze and publicize the results of an annual opinion survey targeting all employees. Analysis of the results of the fiscal 2006 survey led to the adoption of measures to invigorate NEC Corporation’s entire organization, including the promotion of exchanges between divisional heads and younger employees and greater staff participation in special strategy meetings.

NPOs and NGOs

Since 2002, in partnership with Japanese NPO Entrepreneurial Training for Innovative 15 Communities (ETIC.), NEC has supported projects to promote social ventures and foster entrepreneurial talent by teaching students how to start and manage business-oriented NPOs in a special educational program for social entrepreneurs. Aiming to boost further the social significance and effectiveness of this program, in the second half of fiscal 2006, NEC organized three stakeholder meetings involving program mentors, NEC volunteers, entrepreneurs, NPO representatives as well as current and former participants. The events underscored the need to make the NEC Annual CSR Report 2006 program more beneficial to society and help participating NPOs build up capacity. Follow-up and support activities are ongoing.

Local Communities (Environmental Communication)

On March 10, 2006, NEC Personal Products, Ltd. held its first environmental stakeholder meeting at the Yonezawa Plant, which is the main company site for PC development and production. Twelve representatives of local government bodies, educational institutions, NPOs and corporations attended the event. To promote exchanges of opinions, activities included presentations of NEC Personal Products’ Annual Environmental Report, a site tour showcasing production reforms and a workshop. Many opinions and requests on environmental reporting and the ecological aspects of PCs were received. Among other topics, these opinions and requests addressed various aspects of products already on the market, such as efforts to reduce the weight of computers and extend the operating time of laptops. NEC plans to continue improving the ecological performance of PCs while seeking the cooperation of customers in energy conservation through increased awareness of this issue.

* Please refer to P24 for information on shareholder and investor communication. 16 NEC Annual CSR Report 2006 consisting offivemembers,includingtwooutside NEC CorporationhasestablishedtheCompensationCommittee, Compensation Committee Ensuring TransparencyandSoundnessThroughthe their responsibilityformanagementeachfiscalyear. the termsofdirectorsweresetatoneyearinordertoclarify side directors(asofthesamedate).EffectivefromJune2004, bers includingfouroutsidemembers,threeofwhomwereout- June 22,2006,theBoardofDirectorsconsisted15mem- bership. Followingtheadditionofoneoutsidedirectoras outside memberstoaroundone-thirdoftheBoard’stotalmem- Board ofDirectors,NEC’spolicyistoincreasethenumber Aiming tofurtherreinforcethesupervisoryfunctionsof Directors Reinforced SupervisoryFunctionsoftheBoard Auditors andindependentauditors. corporate internalauditdivision,theBoardofCorporate Committee, andengenderingclosercooperationamongNEC’s number ofoutsidedirectors,establishingtheCompensation management transparencyandsoundnessbyincreasingthe and businessexecution.NEChasalsobeenworkingtoimprove ment responsibilitiesandfacilitatingpromptdecision-making tative directorstocorporateofficers,therebyclarifyingmanage- substantial authorityforbusinessexecutionfromtherepresen- Officer systemreducedthenumberofdirectorsandtransferred governance responsibilities.TheintroductionofaCorporate auditors. NECbelievesthisstructureisbestsuitedtofulfillingits structure iscenteredontheBoardofDirectorsandcorporate corporate governance,wherebythegovernance NEC Corporationhasadoptedthecorporateauditormodelof URL Independent Auditors appropriate andfairdisclosure. and soundmanagement;(2)expeditedecision-makingbusinessexecution;(3)clarifyaccountability;(4)offertimely, ted tostrengtheningitscorporategovernancepracticesthroughthefollowingfourfundamentalpolicies:(1)ensuretransparent In recognitionofthefactthatreliablecorporategovernanceisessentialtomaximizationvalue,NECcommi Strengthening CorporateGovernance Cooperate http://www.nec.co.jp/profile/en/governance.html lc n ims lc n ims Electanddismiss Electanddismiss Elect anddismiss Cooperate Audit Cooperate (Board ofCorporate Corporate Auditors Corporate Auditing Bureau Auditors) Corporate GovernanceStructure Internal audits General MeetingofShareholders Audit Committee Executive Business Units,Groupcompanies Board ofDirectors (Directors) (Corporate Officers) Business Progress Supervise Committee Deliberate /report Management/Supervision Compensation Business execution approaches tointernalauditswiththeindependentauditors. rate auditors.Thebureaualsoperiodicallydiscusses and otherresponsibledirectorsofficers,butalsotocorpo- the resultsofinternalauditsregularlynotonlytopresident porate auditorsandindependentauditors,thebureaureports divisions asrequired.Inordertopromotecooperationwithcor- activities andproposeimprovements,asnecessary,torelevant to ensurelegal,appropriate,andeffectiveexecutionofbusiness Auditing Bureauasaninternalauditdivisiontoperformsaudits as required.NECCorporationhasestablishedtheCorporate tors andreceivedreportsonauditsfromindependentauditors outside corporateauditors,auditedtheactionsofNEC’sdirec- As ofJune22,2006,fivecorporateauditors,includingthree Corporate AuditingBureauandIndependentAuditors Cooperation AmongtheBoardofCorporateAuditors, to theBoardofDirectors. Compensation Committeereportstheresultsofitsdeliberations tors andcorporateofficersfromanobjectiveperspective.The the remunerationsystemandlevelofcompensationfordirec- one ofwhomisthechairperson.Thecommitteedeliberateson disclosed onNEC’swebsite. policy onestablishinginternalcontrolsystems.Thisis Japan inMay2006,theBoardofDirectorsdeterminedabasic Act. FollowingtheimplementationofCompanyLaw related tofinancialreportingbasedontheU.S.Sarbanes-Oxley ment systems,aswellimproveinternalcontrolsystems wide compliance,informationmanagementandriskmanage- NEC isworkingconstantlytoupgradeandstrengthengroup- Systems Establishment andMaintenanceofInternalControl Committee sure incooperationwithrelevant divisions. work toensureproperinformation disclo- management, NEChasestablished aframe- president andothermembersofsenior investor relations(IR)activitiesledbythe In additiontoeffortsstrengthenglobal Disclosure Promoting Timely,AppropriateandFair URL http://www.nec.co.jp/profile/en/internalcontrol.html t- related issuesare heldthroughoutNEC.Allemployees have (4) Education divisions andtypesofpersonalinformation. has alsoinstitutedoperationalregulations forspecificbusiness documented andinforceacross NEC.Wherenecessary,NEC Clear policiesforthemanagement ofpersonalinformationare (3) Formulationandimplementationofmanagementrules information. of individualswhohaveprovidedthecompanywithpersonal operates asystemforregisteringandkeepingtrackoftheprofiles (2) Identifyingpersonalinformation privacy basedonthismanagementsystem. privacy-related issues.Everyeffortisbeingmadetoprotect also hasitsownPrivacyPromoterchargedwithoverseeing each typeofpersonalinformation.EachNECbusinessdivision has appointedmanagersandsupervisorsinchargeofhandling handling ofmanyandvariedtypespersonalinformation.NEC ous businessdivisions,whichhaveanintimateknowledgeofthe constructed appropriateprivacymanagementsystemsforvari- customers, includingcorporationsandorganizations.NEChas handling andmanagementofpersonalinformationprovidedby nance ofinformationsystems,thecompanyisinvolvedin ness operationsincludetheconstruction,operationandmainte- ( enforced throughoutNEC. Japan’s PersonalInformationProtectionLaw.Theserulesare programs fortheprotectionofpersonalinformation,andwith Industrial Standardstipulatingrequirementsforcompliance systems thatarefullycompliantwithJISQ15001,aJapan In October2005,NECcompletedtheconstructionofmanagement been strengtheningmeasurestoprotectpersonalinformation. Since formulatingtheNECPrivacyPolicyinJuly2000,has Privacy ProtectionMeasures mation andtomanagerelatedissuesprofessionally. employees toensurethesafetyofpersonalandcorporateinfor- ments. Wewillbringtogetherthecollectiveeffortsofall to raiseemployeeawarenessandmakevarioustechnicalimprove- these incidents,NEChasfocusedontakingconcretemeasures resulting inproblemsforcertainNECcustomers.Inthewakeof In fiscal2005,someNECproductswerealsoaffected,regrettably alerted Japanesesocietytotheproblemofinformationsecurity. leaks, someinvolvinghighlysensitiveinformation.Theseincidents Winny file-sharingsoftwarehasledtoanumberofonlinedata In Japan,propagationoftheAntinnyvirusovernetworksthrough 1) Constructionofprivacysystem URL of asecure,reliableubiquitousnetworkingsociety. personal dataprotection.NECistakingstepstoreinforceprivacyandinformationsecuritywiththeaimofcontributing As anenterprisesupplyingIT/network-relatedproductsandservices,NECrecognizestheimportanceofinformationsecurity Security Protecting PersonalInformationandUpgrading http://www.nec.co.jp/site/en/privacy.html NEC PrivacyPolicy : Programstoeducateallemployees aboutprivacy- : BecauseNEC’smajorbusi- : NEChasestablishedand URL http://www.nec.co.jp/csr/en/management/security.html NEC InformationSecurity Statement : internal auditstoimproveprivacymanagementfunctions. division. NECiscontinuallyworkingtoupgradethequalityof regular auditsbytheCorporateAuditingBureau,aspecialist (5) Internalaudits tractors toprovidestaffwithsimilartraining. received trainingontheseissues.NECalsoencouragesitscon- even iflostorstolen. nals, whichhavenomemoryfunction, willpreventdataleakage customer serviceandprovider operations.Thesetermi- install data-entryterminalsforsenior managersandpersonnelin information. Inaddition,bytheend offiscal2008,NECplansto computers usedinternallytoprevent unauthorizeddisclosureof has introducedasystemofsoftwareencryptiononalllaptop around 10,000projects. system capableofverifyingthesecuritymanagementstatus and NECgroupcompaniesinJapan,hasalsoinvesteda NEC hasappointed400SecurityPromotersatCorporation security ofsystemsandservicesforthebenefitcustomers. October 2005aspartofeffortstostrengthentheinformation companies inJapanreceivedtrainingoninformationsecurity. affiliate inChina(May2006) Information securitymeetingatNEC Information SecurityManagementSystem(ISMS)standards.During based onsecuritymanagementsystemsthatconformtovarious undertakes effectivesecuritymeasuresagainstvariousthreats assets entrustedtoitbycustomersandbusinesspartners.NEC April 2004,NECworkstoensuretheprotectionofallinformation In linewiththeNECInformationSecurityStatementinstitutedin Information SecurityMeasures As partofmeasurestostoptheleakagepersonaldata,NEC NEC establishedtheSecurityTechnologyCenter(STC)in : AllNECbusinessdivisionsaresubjectto Privacy MarkvalidationasofMay2006. A totalof26groupaffiliateshadalsoreceived Processing DevelopmentCorporation(JIPDEC). sector firmsoperatedbytheJapanInformation Privacy Markvalidationschemeforprivate- certification ofprivacyproceduresunderthe In October2005,NECCorporationreceived Corporation and73NECgroup ees andsecondeesofNEC 12 mately worldwide. Inaddition,approxi- and 124NECgroupcompanies operation atNECCorporation with ISMSstandardswerein fiscal 2006,systemscompliant 0,000 officers,employ-

realization 17 NEC Annual CSR Report 2006 18 NEC Annual CSR Report 2006 • • The CorporateEthicsDivisionfocusesexclusively onenforce- • dards ofbehaviordetailedintheNECGroupCodeConduct: ough, effectiveandefficientenforcementoftheethicalstan- The followingorganizationsworkcloselytogethertoensurethor- Ethical ComplianceStructure their day-to-dayactivities. rules forallofficersandemployeesintheNECgrouptofollow perspective, theNECGroupCodeofConductsetsforthspecific To earnthetrustofallstakeholdersfrombothalegalandethical All OfficersandEmployees NEC GroupCodeofConduct:AReliableGuidetoBehaviorfor Corporate Ethics Promoters collectivelyformanetwork through- porate planning. to exchangeopinionsandreflect ethics-relatedissuesincor- Division andtheseconcurrentassignment staffprovideaforum Conduct. Monthlymeetingsbetween theCorporateEthics awareness ofandcompliancewith theNECGroupCodeof Ethics Divisiontoimplementvariousmeasurespromote current assignmentstaffinconjunctionwiththeCorporate specifically assignedatotalof18employeestoserveascon- ment ofbusinessethicsthroughouttheNECgroup.has legal compliance. behavior, basedonestablishedbusinessethicsandaspiritof tant policiesrelatedtotheenforcementofpropercorporate The CSRPromotionCommitteedeliberatesanddecidesimpor- 7. PoliciesonPublicityandAdvertising 6. 5. PoliciesonEntertainmentandGifts 4. 3. 2. 1. ProductandServiceSafety III. 4. Prohibitions onInvolvementinAnti- 3. PoliticalFunds 2. Contributions 1. PreservationoftheEnvironment II. RelationswithSociety II. I. standards ofbehaviorbyindividualsasthebasisCSRfulfillment.Tothisend,NECundertakesavarietymeasures. shareholders andotherinvestors,businesspartners,thecommunityatlargeemployees.NECviewsstrictadherencetoet NEC viewsthefulfillmentofitsresponsibilitiesasacorporatecitizenkeytoearningtrustallstakeholders,inclu Promotion ofCorporateEthicsandCompliance Policies onImport-ExportTransactions Policies onTransactionswithDistributors Materials andServices Policies onTransactionswithSuppliersof Transactions Free CompetitionandFairCommercial Social Activities GeneralProvisions Partners, andCompetitors Relations withCustomers,Business NEC GroupCodeofConduct 2. Inquiries 1. ImplementationSystem VI. ImplementationSystem 3. The ProtectionandUtilizationof 2. HandlingofConfidentialInformation 1. Management andProperUseof 2. ProhibitionofInsiderTrading 1. DisclosureofCorporateInformation IV. Relations withShareholders and V. Intellectual PropertyRights Company’s Assets

and Information Management ofCompany’sAssets Investors (Formulated April2004) • The CorporateAuditingBureauisaninternalauditingdivision increased gradually,reaching43 infiscal2006. number ofcasesreportedtothe HelpLineeveryyearhas of reportingorconsultingoncompliance-related issues.The suppliers. Individualsfacenonegative consequencesasaresult available toemployeesofNEC group affiliatesandmaterials Besides NECCorporationofficersandemployees,theserviceis to respondatanearlierstageawiderrangeofcompliancerisks. independent third-partyorganizationtoboostconvenienceand November 2003,theservicehasbeenoperatedjointlywithan or suspectedviolationsoftheNECGroupCodeConduct.Since easy foremployeestoreportorseekadviceincasesofknown NEC HelpLinein1999toprovideasystemthatwouldmakeit the sametime,CorporateAuditingBureauestablished with superiors,colleaguesorpeoplefromrelateddivisions.At discuss anycompliance-relatedworkissues,howeverminor, environment forall.Individualemployeesareencouragedto NEC believesintheimportanceofcreatingapositiveworking Parties toReportorConsultonComplianceIssues NEC HelpLineforEmployees,BusinessPartnersandOther regulations. ness operationsareincompliancewithapplicablelawsand that performsinternalauditstochecktheexecutionofbusi- and complianceissues. Ethics Divisiontoraiseinternalawarenessofcorporateethics companies to businessdivisions(406individuals*)andaffiliated dards ofbusinessethics.CorporateEthicsPromotersassigned throughout theNECgroupactsincompliancewithstan- out thecompanytoensurethateachandeveryemployee Corporate Auditing Bureau Audit Report Audit (140 individuals*)workcloselywiththeCorporate Business Unit T Corporate Staff NEC Corporation op Management Assignment Concurrent Staff Promotion ofEthics Important Policies (*As ofMarch31,2006) Corporate Ethics Promoters Corporate Ethics CSR Promotion Division Committee Promotion of Ethics ding customers, NEC Group Companies NEC Group Affiliated Promoters Corporate Ethics hical containing 100of thesecasestudiesthathasbeen distributed studies hadrisento128bythe end ofMarch2005.Abooklet that couldariseineverydaywork. Thenumberofsuchcase ical andlegalissuesrelatedtothe NECGroupCodeofConduct Involved?” (inJapaneseonly),to familiarizeemployeeswitheth- of possibleincidentsentitled“What WouldYouDoIfWere awareness ofethics,NECbegancompilingrealisticcasestudies information onrelatedtopics.InMay2001,tofostergreater An e-mailnewsletterdistributedtwiceamonthprovidesthelatest section oftheNECintranetisdedicatedtobusinessethicsissues. outside Japan. 2005. Planscallforholdingsimilarprogramsinotherregions of ConductwasconductedatNECaffiliatesinChinaDecember seas (seep.12).AneducationalprogramontheNECGroupCode shops oncorporateethicsand importance ofethicstoemployees.NECalsoconductsCSRwork- opportunity forthepresidentofNECCorporationtostress (December 21,2005) NEC CSRBusinessEthicsForum2005 behavioral code. ment tiersemphasizetheimportanceofcomplyingwiththis ties fornewgraduaterecruitsandprogramsspecifictomanage- also usetheprogram.Moreover,educationalandtrainingactivi- (99.2%) completedthetraining.NECgroupcompaniesinJapan all officersandemployees.Infiscal2006,nearlyemployees been conductedontheNECGroupCodeofConduct,targeting Since fiscal2005,annualweb-basedtrainingprogramshave Educational andAwareness-raisingPrograms procedures withoutallowingthemattertobecomeneglected. also needstoleadtheimprovementofexistingsystemsand propriate behaviorisrecognizedassuchimmediately.Recognition awareness amongallofficersandemployeessothatanyinap- business ethicsatNEC.Inpractice,thismeansfosteringasharp “Awareness” and“InformationSharing”arethekeywordsof and “InformationSharing” Corporate EthicsandComplianceBasedon“Awareness” NEC isalsostrivingtoimproveinternalcommunications.A The annualNECCSRBusinessEthicsForumprovidesan compliance-related issues over- ments inethicalawareness. detail todevisemeasuresaimedatsecuringfurtherimprove- NEC planstoanalyzetheresultsofthislatestsurveyingreater respondents didnotperceiveanystancebyNEConsuchissues. past fiveyears.However,thesurveyalsorevealedthat12.9%of ethical issuesinbusinesshasimprovedsignificantlyduringthe The resultsofthefiscal2006surveyindicatedthatawareness Annual SurveysonMeasurestoPromoteBusinessEthics Corporate ethicsintranetsite“NECEthicsPark” in JapaneseandEnglish. releases onbusinessethicstooverseasoperationseverymonth based trainingcourses.Inaddition,NECdistributestopical to allNECofficersandemployeesisusedasanadjunctweb- 1% What doyouthinkofNEC’s currentstanceonbusiness ethics? operations) “Business Ethics”(foroverseas 13% (March 2000) 50% survey First Other ecieasrn omtet Noperceivedstance Perceive astrongcommitment

36% No reply 2.2% Booklet of100casestudies 12.9% case study NEC GroupCodeofConduct (May 2005) survey Sixth 84.9% 19 NEC Annual CSR Report 2006 20 NEC Annual CSR Report 2006 approximately 1,200people. actively workingtoimproveCSandqualitycurrentlycomprises affiliates. TheentirenetworkofpeopleintheNECgroupworldwide NEC extendedtheQualityPromotersystemtoinclude39overseas central roleinactivelypromotingimprovementactivities.In2005, Promoters areassignedtoeachbusinessdivisionandplaya wide promotionactivitiesaimtoraisebothCSandquality.Quality is vitaltoensuringhighlevelsofcustomersatisfaction.Group- NEC believesthatimprovingthequalityofproductsandservices • CSandQualityPromotionFramework safety issuessothatcustomerscanuseNECproductswithcompleteconfidence. with theaimofsupplyingproductsandservicesthatexceedexpectations.Systemsareinplacetoidentifyanyqualitydefects Service” wasthefirstNECcorporateslogan,emphasizingneedforallemployeestolistento,thinkabout,andactoncusto NEC hasputCustomerSatisfaction(CS)attheheartofitscorporatecultureeversinceestablishmentin1899.“BetterProd For Customers improvements. QualityPromotionManagersalsotakepartinthe CS assigned toeachbusinessunit(BU)studyandimplement Group-wide CSandQualityImprovementCycle Group-wide CSandQualityPromotionActivities holders andother investors,businesspartners,and localcommunities. activities, weaimtomeettheexpectations ofvariousstakeholders,includingcustomers,share- strengthening cooperationwithin andoutsideNECwhileworkingasonetoconductbusiness activities. Lookingahead,wehope tocontinuethesekindsofcustomer-centricactivities.By customer satisfaction,aswehelp themtoachievetheirgoals.Thisthinkingguidesourdaily We thinkagreatdealabouthoweach andeveryoneofuscanbetterservecustomersincrease Our GreatestRewardIstoBeThankedbyCustomers issues measures toaddress decide improvement Set policiesandgoals; Furthermore, QualityPromotionManagershavebeen Make improvementsandreflectcustomerviewsrequestsinproductsservices BUs Divisions activities issues; promoteimprovement group-wide CSandquality Identify andrespondto Customers CSR PromotionCommittee CS andQualityPromotion Quality PromotionManagers CSR Promotion All employees Committee Meeting Quality Promoters NEC products and services

• • Assess improvements System confirmation CS surveys Customer views and requests make NECaleaderinCS. frontline, inrepeatedgroup-wideimprovementcyclesthataimto involves theentiregroup,fromseniormanagementto also meetstodeliberateimportantmatters.Theframework implementation attheBUlevel.TheCSRPromotionCommittee quality issuesandtodeterminegroup-widepromotionactivitiesfor and QualityPromotionCommitteetodiscusscross-functional aim ofimproving the quality in theseareasandonsupportactivitiessuchasaudits,withthe quality issues.Effortsfocusonsettingclearcompliancestandards safety activitiesineachbusinesstopreventtherecurrenceof enforced. undergone amajorreviewsinceOctober2000andisthoroughly top priority.Thequalityandsafetyriskmanagementsystemhas NEC hasalwaysviewedqualityandsafetyriskmanagementasa • QualityandSafetyRiskManagement Global AssignmentofQualityPromoters NEC hasappointedmanagersresponsibleforqualityand and safetyofprouctsservices. NEC Corporation Customer Satisfaction&QualityPromotionDivision General Manager Izumi Kimura Repeat improvement Quality Promoters cycles mer feedback ucts, Better and related with compliancestandardsforvariouslawsandregulations. and regulatorymonitoring.Thesesystemsareestablishedinline areas suchassurveys,awareness-building,employeeeducation oversee effortstoreinforcecompliance-relatedsystems,covering and TelecommunicationsBusinessLaw).Thesemanagersalso Japan’s ElectricalApplianceandMaterialSafetyLaw,RadioLaw and regulationsgoverningproductqualitysafety(suchas menting strictinternalstandardsrelatedtoalltechnicallaws given toindividualNECemployees bycustomers. President’s CSAward,whichispresented inrecognitionofpraise leadership andcreativity.Another NECinternalawardisthe results fromCSandqualitypromotion activitiesbydisplaying which isawardedtoQualityPromoterswhogenerateoutstanding customer satisfaction. activities aspartofmeasurestounderpinoveralleffortsgenerate recognizing excellenceingroup-wideCSandqualitypromotion NEC hasrevisedandupgradeditsinternalawardsystemsfor • Award SystemstoRecognizeOutstanding

Quality andSafetyRiskManagementSystem

Improvements Raising EmployeeAwareness ofCS management

Management Compliance managersareresponsibleforsettingandimple- One exampleistheExcellentQualityPromoter(EQP)Award, Detect risks senior to Report in advance CSR Promotion Committee improvements Quality andProduct Recommend Risk Management Safety Audits Emergency Reports Corporate ethicsandlegalcompliance Operating Divisions Safety Management Core Regulations for Qualityand Customer Interfaces Information System Quality activities Business Standards forResolvingCritical Preventive measures Product QualityIssues critical qualityissues Extraction of Emergency Action Notification of critical issues quality Regulators Customers Meeting Media Crisis response Corporate Staff Immediate corrective actions Operating Divisions for stakeholdersinourmarkets NEC Corporation Kansai Government&CommunitySystemsSales Division Assistant Manager Hiroomi Wada “security” and“trust.” to improvetheseservicesbasedonourwatchwordsof do intheeventoflightning.Weplantocontinueworking sures, methodsofpreventingvirusattacks,andwhatto instance, weinformedcustomersaboutsecuritymea- on servicesemphasizingpreventivesafetymeasures.For nical staffandtheirexpertise, continued upgradingthequalityofresponseourtech- by NikkeiPCmagazinein2004and2005.In2005,we 1st placeinoverallcustomersupportrankingspublished handles PC-relatedinquiriesfromcustomers.Wewere I managethe121(one-two-one)ContactCenter,which EQP AwardRecipient(April–September2005) foundation forlastingrelationships. up toyouanddealwithsquarely.Thisservesasthe to clients.Withasincereattitude,customerswillopen IT. Ibelieveitisimportanttobesincerewhenresponding Japanese governmenttorecognizeprogressonadopting the customertoreceiveamonthlyawardgivenby significant reductionsinoperatingcosts.Italsohelped backbone operationsystemtoanopenrealized Our effortstomoveonecustomerfromaproprietary (April–September 2005) President’s CSAwardRecipient with themainfocusbeing NEC PersonalProducts,Ltd. Customer ServicesDivision Group Manager Kazuaki Tajima 21 NEC Annual CSR Report 2006 22 NEC Annual CSR Report 2006 services. These resultsarereflectedinactionstoimproveproductsand and determinetherelateddegreeofcustomersatisfaction. precisely howcustomersevaluateNECproductsandservices requests. NECregularlyconductsitsownsurveystofindout with gainingfeedbackfromcustomersontheiropinionsand Creating productsthatprovidecustomersatisfactionbegins • CustomerSatisfactionSurveysConductedbyNEC * satisfaction. while unitingtheorganizationbehindeffortstoraisecustomer to gainafullerunderstandingofthecustomer’sperspective concept ofthe“JoyWork.”SuchprogramshelpNECemployees importance ofboostingworkplaceincentivesbasedaroundthe the CSSmall-groupActivityProgram*,whichemphasizes vation ofemployeesindailybusinessactivities.Oneexampleis In addition,NECundertakesvariousinitiativestoraisethemoti- • MeasurestoBoostEmployeeMotivation were moresatisfied thaninfiscal2005withthe speedand and safe.”However,althoughthe surveyshowedthatclients ing thevalueprovidedtocustomers byNECwas“trustworthy companies. Themostfrequentresponse fromthissurveyregard- services. Thefiscal2006survey targetedapproximately1,600 sales, systemsengineering(SE), products,andmaintenance and public-sectororganizationsseekingcustomerevaluationsof each yearsurveysitsclientbaseof1,500–2,000companies any seriouscomplianceviolationsorotherproblems. goal istoboostCSbyeliminatingcarelesserrorsaswellpreventing enlivening dailyworkplaceactivitiesfromthefrontline.Theoverall generate enthusiasmandtoimproveemployeesatisfaction(ES)by These initiativesaredevisedandimplementedbysmallteamsto Major CSandQualityPromotionActivities One exampleistheIT/NetworkSolutionsbusiness,which Small-group activities high customerratings. given toCSandrelatedactivitiesremainsakeyfactorinattaining surveys in2004and2005.NECbelievesthatthehighpriority users ratedNECoverallasthetopPCsupplierinanumberof tion surveystargetingindividualproductuserseachyear.Japanese in amannerthatsatisfiescustomers. between divisions,withtheaimofrespondingtosystemfailures functional activities.NECplanstofocusonbuildingstrongerlinks working toreinforcecooperationamongdivisionsthroughcross- this wasstillseenasanissue.Toresolveproblem,NECis appropriateness ofresponsebyNECincasessystemfailure, staff divisions.In addition,NECmakesuseofopportunities to the combinedexpertiseofsales, SE,productandcorporate customers abouttheirneedsand proposesolutionsthatreflect request ofcustomers,NECcreated moreopportunitiestoask and exchangeviewswithcustomers. Forexample,atthe customer feedbackformstofacilitate bettercommunication has beeninstalled.Infiscal2006,NECintroducedasystemof between engineersandcustomersonceaninformationsystem There aretypicallyfewopportunitiesfordirectcommunication • IntroducedCustomerFeedbackForms Customer SatisfactionSurveySystem

The PCbusinessalsoconductsseveralcustomersatisfac- Improvements incorporated into products and services and products into incorporated Improvements Expectations ■ ■ Direct feedback confirmation Gain objective measures Implement Customers Satisfied • NECperformanceassessments • Competitorbenchmarking • Payattentiontocustomerviews • Systemimprovements • Processimprovements NEC productsandservices Dissatisfied satisfaction survey Customer for stakeholders in our markets

discuss customers’ medium- and long-term expectations, which • Reducing Quality and Safety Risks provides useful information to guide project decisions. Aiming to reassure customers and to gain trust, NEC is undertaking SI-CSR activities that focus on system failure prevention by • NEC Customer Contact Center designing and implementing measures to lessen the individual This center listens to the “customers’ voice” on behalf of the foreseeable risks linked to systems operation. In fiscal 2006, NEC entire group. It receives telephone calls, email, and letters, etc., briefed nearly 6,000 frontline systems engineers on the signifi- not only from Japan, but also from various countries around the cance, nature and planned effects of these activities to increase world. It responds to requests, comments, and complaints about awareness of the associated operational risks with major social our products, services, and NEC itself. The center is a vital con- implications and related countermeasures. Future plans call for duit linking customers to each business unit. the extension of the SI-CSR program to the entire NEC group. The center’s response to customers can have a significant influence on the image of NEC and helps to improve our CS. The External Evaluations contact center for each product receives feedback based on customer information, which enables us to enhance the quality NEC has received high marks in external surveys as a result of 23 of our products and services. its broad-based activities focusing on CS and quality improvements, such as those described above. NEC was the top-ranked For further details, please visit: supplier in the areas of system planning and construction as well as maintenance and support in the 2005 Japan Solution Provider URL http://www.nec.com/cgi-bin/contact/select_qc.cgi Satisfaction Survey by J.D. Power Asia Pacific, Inc., an international consumer research organization based in Japan. Furthermore,

In fiscal 2006, NEC began publishing a monthly customer in fiscal 2006, NEC ranked 1st place for the second consecutive NEC Annual CSR Report 2006 feedback report targeting all employees as part of efforts to year in the Fiscal 2005 PC Manufacturer Support Ranking spon- raise CS awareness across the NEC group. sored by Nikkei PC magazine.

NEC Chairman Awarded the Deming Prize for Individuals

Hajime Sasaki, Chairman of the Board of NEC, was awarded the Deming Prize for Individuals in October 2005. He was the second NEC leader to be honored with this distinction, the first being the late Dr. Koji Kobayashi, a former Chairman Emeritus. The award was in recognition of his outstanding contribution both to industry (for example, as a representative of the quality control symposia organizing committee at the Union of Japanese Scientists and Engineers) and to NEC. Working tirelessly to promote the use of customer value-creating TQM (Total Quality Management) as the standard within NEC, he was also a pioneer within the Company for advocating the importance and effectiveness of TQM in quality control processes. Not only was he responsible for developing TQM systems and raising awareness in NEC Corporation and within the NEC group, he was also instrumental in helping firms such as NEC Kansai, Ltd. and NEC IC Microcomputer Systems, Ltd. win the Deming Application Prize as well (the latter being the first company from the Japanese software industry to win this award). 24 NEC Annual CSR Report 2006 • For investors,NECprovidesaforumfortopmanagementto • NEC regardstheAnnualGeneralMeetingofShareholdersas 1. Strengthened communicationwithshareholdersandother views inmanagement. shareholders andotherinvestors,withtheaimofreflectingtheir NEC tookstepsinfiscal2006toimprovecommunicationwith value. ment throughtimely,appropriateandfairdisclosure,NECaimstodeepentheinvestmentcommunity’sunderstandingofitscorpor Shareholders andotherinvestorsconstituteoneofNEC’smostimportantstakeholdergroups.Byraisingthetransparencymana Communication WithShareholdersandOtherInvestors top managementandreflectedinmanagement. views ofinvestorsobtainedthroughthisforumaresharedby ness strategiesheldbythePresident.Thequestionsand issues withinvestorsthroughregularpresentationsonbusi- explain theirapproachtomanagementdirectlyanddiscuss participated inthemeetingheldJune2005. to enablemoreshareholdersattend.Many Since 2005,NEChasconvenedthismeetinginalargervenue an importantforumforcommunicationwithshareholders. investors • What doesNECthinkabout theintroductionoftakeover • • There areconcernsinJapanoverthehollowingoutof • Digital terrestrialbroadcastingwillsoonbelaunchedin • • • summarized below: shareholders andotherinvestorsatthemeetingare Some ofthequestionsandcommentsreceivedfrom Fiscal 2006Activities defenses? including itssubsidiaries? What isNEC’sapproachtogroup-widemanagement, of reinforcingproductionprocesses? industry. HowisNECrespondingtothisissueinterms ments inthissectorandplansforthefuture? regions throughoutJapan.WhatareNEC’sachieve- mobile handsetandsemiconductorbusinesses Improving operatingresultsintheunderperforming which Ifeeloffersexcellentgrowthopportunities. develop thestrategicIT/NetworkSolutionsbusiness, I wanttoexpressmysupportforNEC’sefforts nesses? How willNECleverageitsstrengthstodevelopbusi- • Notices informingshareholdersofinterimdividendpayments 4. Enhancedservicestoshareholders • • Published onceayear,theNECAnnualReportprovidesread- 3. IRpublications • For thesixthyearrunning,NECwasselectedasoneof255 • Information aboutNEC,suchasnewsreleasesandearnings • The contentoftheIRwebsitewasupgradedtoprovidemore 2. ImprovementstoNECwebsite URL were mailedoneweekearlierthaninpreviousyears. opments. together witharticlesontrendsandthelatesttechnicaldevel- shareholders thatprovidesreviewsofbusinessperformance “NEC TODAY”(inJapaneseonly)isapublicationsentto such asR&Dactivitiesandintellectualproperty. formance andstrategy,aswellreviewsofotherkeyareas ers inJapanandoverseaswithinformationonbusinessper- Investor RelationsCo.,Ltd. Japanese firmswithoutstandingIRwebsitesbyDaiwa ence. part ofeffortstofacilitateimproveddisclosureawideraudi- holders couldmoreeasilyobtainthisinformation.Thiswas investor informationwithlargevolumesoftrafficsothatshare- presentations, wasmadeavailableonwebsitesspecializingin business strategy. fundamental informationaboutNEC,includingareassuchas http://www.nec.co.jp/ir/en/index.html Annual Report2006 ge- ate for stakeholders in our markets

Collaboration With Business Partners

Materials and services supplied by business partners are critical to many of the products and services the NEC group provides to customers. NEC seeks to make procurement activities sincere and fair, based on the NEC Group Procurement Policy. NEC believes it is essential to deepen collaboration with business partners in its supply chain to facilitate joint promotion of CSR-driven activities.

Revision of NEC Group Procurement Policy containing chemicals to ensure full compliance with the EU RoHS directive that came into force in July 2006. NEC revised the NEC Group Procurement Policy (see URL In addition, with the aim of taking green procurement below) in October 2005 as part of moves to strengthen internal activities to the next level, from fiscal 2007, NEC plans to apply CSR-driven purchasing controls and extend this approach to the green certification program to purchasing items other than business partners. The revised policy supplements the basic product-related materials. rationale with a clear statement of NEC’s stance on procurement and CSR-driven activities conducted jointly with business Strengthening Collaboration With Business Partners partners. The policy provides the basis for internal rules govern- ing all purchasing processes. All NEC purchasing staff receive In parallel with the material surveys targeting business partners regular training to raise awareness of compliance, ethics and (see p. 14), since fiscal 2005, NEC has also conducted aware- related issues. ness surveys among staff in materials operations as a means of

URL http://www.nec.co.jp/purchase/nec_p1e.html promoting internal problem identification, revitalization and employee education. After the fiscal 2005 survey highlighted

the need for close communication between different material 25 Publication of Supply-chain CSR Guidelines purchasing operations, NEC instituted cross-divisional workshops to improve the situation in fiscal 2006. A follow-up survey NEC began extending CSR initiatives to its supply chain in in March 2006 confirmed that internal communications on this December 2005. In purchasing, this involved the formulation of front had improved. Going forward, NEC plans further staff the Supply-chain CSR Guidelines for NEC business partners, development measures to support advanced global operations covering a comprehensive range of issues such as quality and in this area. Efforts continue to develop a vital working environ- safety, the environment, information security, fair trade, occu- ment based on the feedback of both business partners’ and the NEC Annual CSR Report 2006 pational health and safety, and human rights. NEC made these staff’s views from regular surveys, both to boost the motivation guidelines public on its website (please refer to the above URL) of staff within NEC materials operations and to improve cooper- and also sent printed copies to approximately 600 suppliers in ation with business partners. the invitation letter to the Annual Suppliers Meeting to initiate joint CSR promotion activities. During fiscal 2007, NEC plans to Collaboration With Other Companies undertake surveys based on these guidelines to evaluate the CSR-related activities of business partners as part of efforts to NEC is participating actively in a 12-member working group at forge deeper long-term relationships based on mutual under- the Japan Electronics and Information Technology Industries standing. Association (JEITA) to formulate and publish a single guide to CSR promotion activities that all companies within the industry could use. The aim of the guidebook is to identify priority CSR- Further Extension of Green Procurement related initiatives within the electronics industry and also to help Since fiscal 1998, NEC has been working to implement the member companies in responding to CSR-related requests from NEC Green Procurement Policy—not only for hardware prod- customers. Through this initiative, NEC aims to secure the ucts, but also for software and services. Based on internal cooperation of other firms in the industry in promoting CSR- Green Procurement Guidelines, NEC has developed a system driven activities that are targeted at the industry’s supply chain. that awards green certifications. In fiscal 2006, apart from some internal-use supplies, the proportion of purchasing by value of product-related materials that met NEC’s green procurement criteria was close to 100%. Going forward, NEC plans to continue monitoring and surveying the status of purchased items, focusing in particular on those 26 NEC Annual CSR Report 2006 mental, educationalorcommunity-basedthemes. organizations. Inlinewiththeslogan“Nature,Education,Community:TheHeartofNEC,”MDDactivitiesoftenrevolvearounden and employeesallovertheworldtospendtimeaddressingcommunity-orientedissuesinpartnershipwithlocalNPOsvoluntee “NEC MakesaDifference(MDD)”beganin1999ascelebrationofNEC’scentenary.TheconceptbehindMDDisforNECgroupoffic – NECMakesaDifference2005 Helping LocalCommunitiesAroundtheWorld NEC TechnologiesHongKongLtd.(ManilaRegionalOffice) Assistant Manager,HR&Administration Monday L.Meneses abled studentsattendinglocalschools. involvement inthecommunitykeepsgrowingasaresult.” also beenveryrewarding.Awarenessofourcompany’s employees andmembersoftheNPOthatwesupportedhas activities. ThepersonalcontactgainedbetweenNEC Staff input,involvementandfeedbackhavesustainedthese grams. Itisessentialtoworkasateamontheseprojects. for ustocontributesocietythroughvariouskindsofpro- “In myopinion,NECMDDprovidesanexcellentopportunity NEC EuropeLtd.(C&CResearchLaboratories) Assistant/Secretary Karin Niemann sidiaries basedinthePhilippineshelppaintandspruceup force thecohesionofNECgrouplocally.” through ourcollectiveefforts.Thisprogramalsohelpedrein- make amoresubstantialcontributiontothecommunity group companiesjoinedforcesin2005,andwewereableto integral partofnationbuilding.Asin2003,severalNEC privileged communitieshopeandcouragetoliveisan gram, employeesrealizethatcommunityservicegivesless nizations wearesupportinginthefield.Throughthispro- sleeves andworkingtogetherwithcolleaguestheorga- blessings –notnecessarilyfinancially,butbyrollingupour “MDD activitiesprovideuswithanopportunitytoshareour September 17,2005:PCworkshopwasheldfordis- November 19,2005:EmployeesoffiveNECsub- 2,000 pupils. a localelementaryschoolwith local communityclean-upprograms. environmental educationclasses,blood-donationdrivesand see thekids’eyessparkle.” employees volunteeringtoteach.Itwasjustwonderful we taughttolocalchildrenaboutmobilephones,with people inadvance.Aneweventfor2005wasaclassthat where peoplewillbehappytoparticipateandbynotifying to gainthecooperationofemployeesbydesigningactivities corporate programsthatcontributetothecommunity.Itry “NEC MDDisgreatbecauseitallowsustotakeparteasilyin NEC Saitama,Ltd. Business Planning Shigenori Sakaki activities. companies intheBeijingareaparticipatetree-planting home theimportanceofplantingmoretrees.” severe sandstormsthatwegethereinBeijingaredriving commitment toCSRandsocialcontributionactivities.The that seniormanagerstakepartunderscoresNEC’sstrong is growingeachyear,whichmakesmeveryhappy.Thefact any employeecanjoinineasily.Thenumberofparticipants “Tree-planting activitiesareaformofsocialcontributionthat NEC (China) Assistant Manager,BusinessDevelopment Zuo Anguo 2005: VariousMDDactivitiesincludedstudenttours, April 2,2005:Some400employeesfrom6NECgroup viron- ers r ducted infourregionsatonce. (photo) September17,2005:Beachclean-upactivitiescon- their personalgrowth.” community throughMDDactivities,andthiscontributedto Participants feltthattheyplayedanimportantroleinthe innovative projects,and(3)tolearnfromtheseexperiences. will ofthepeopleinvolved,(2)tobepersistentinsearch programs are(1)tomakethemostoftalentsandgood- ferent events.IthinkthesecretstosuccessofourMDD “During 2005,atotalofover300peopletookpartintendif- NEC (Brasil) Quality Analyst,PlanningOffice Sonia Toriello events topromoteinterculturalunderstanding. clothing, natureconservationactivities(photo)andvarious goal tomakeadifference.” companies cancombinetheireffortstoreachacommon and theirfamilies,communityorganizations,otherlocal company’s volunteereventsisenjoyablebecauseemployees events todoevenmorevolunteerism.Participatinginthe Employees havecommentedthattheyfeelinspiredbythese ports localcommunitiesbycoordinatingvolunteeractivities. “Our employeevolunteersareproudthatthecompanysup- NEC ElectronicsAmerica,Inc. Public RelationsManager,CorporateCommunications Denise Garibaldi URL MDD activitiesincludedcharitydrivesforfoodand http://www.nec.co.jp/community/necmd/e/ donations ofover¥7million. earthquake thatstruckPakistaninOctober2005withtotal employees andlaborunionsinJapanrespondedtothe struck inSeptember2005.NECgroupcompanies, help thevictimsofU.S.HurricaneKatrina,which of ¥30million,alongwithdonationsgoodsandblood,to Japan andtheUnitedStatescollectivelyraisedinexcess NEC groupcompanies,employeesandlaborunionsin activities andthefeedbackfromcoordinators.Meanwhile, execute activities.Thissectiongivesasnapshotofthe people worldwidefor2005)helpedtoplan,organizeand care institutions.Eventcoordinatorsateachsite(183 grams forvictimsofnaturaldisastersandvisitstonursing on Internet/PC/mobilephoneusage,emergencyreliefpro- mental educationseminarstoteachingclassesforchildren sites, rangingfromtree-plantingprogramsandenviron- 1,644 eventsandactivitieswereorganizedacross412 in NECMakesaDifferenceactivities2005.Atotalof A recordtotalof135,000peoplevolunteeredtotakepart Record ofMDDActivities 120,000 150,000 (epe (Hours) (People) 30,000 60,000 90,000 1,000 1,500 2,000 500 0 0 2004 2004 T otal numberofparticipants Participating NECsites for communities 2005 2005 2006 2006 V olunteer hours (Fiscalyear) Programs (Fiscalyear) 100,000 20,000 40,000 60,000 80,000 0 27 NEC Annual CSR Report 2006 Building Quality Workplaces

NEC aims to create a fair, diverse and high-quality working environment that allows all employees to demonstrate their abilities, without facing discrimination by gender, age, nationality, ethnicity, religion, disability, or other parameters.

Promoting a Healthy Work-Life Balance Systems introduced FY Childcare-related Nursing care-related Aiming to create attractive workplaces for employees, especially 1991 Childcare leave system Nursing care leave system women, NEC Corporation has been ahead of its peers in intro- Reduced working hours Reduced working hours for childcare support for nursing care support ducing policies such as childcare leave and reduced working 1993 Medical care leave system hours for employees raising children. Having introduced the 1998 Nursing care coupon system Childcare Support System in fiscal 2006, NEC plans to upgrade 1999 Childcare coupon system such measures in fiscal 2007 to provide additional support for Reduced working hours for childcare support Reduced working hours for extended nursing care support extended employees in retaining a healthy work-life balance. (from 3 years to as long as 2001 (from pre-school (age 3) until entry into elementary school) nursing care is necessary) Telecommuting system Childcare Support System Improvements Family-friendly leave system 2003 Following a recent surge in crime against young children in (revised medical care leave system) Japan, NEC Corporation plans to extend the reduced working · Introduction of Family-Friendly Fund Use of 30-min units for · Use of 30-min units for reduced working hours reduced working hours 28 hours system to cover employees raising children until the end 2005 system system · Reduced working hours extended of the third grade of elementary school. NEC is also extending (to first graders, in special circumstances) the scope of another childcare support program allowing · Childcare Support System · Fee subsidies payable to employees using voluntary telecommuting to parents of third graders while broadening pro- 2006 local childcare support services; mobilization of retired NEC employees for voluntary childcare gram eligibility. programs · Reduced working hours extended (to third graders, in special circumstances) Special Arrangements for Mothers-to-be · Telecommuting system for childcare support

NEC Annual CSR Report 2006 NEC Corporation plans to expand the system of annual paid upgraded 2007 (coverage extended from children up to the first grade to leave to grant additional paid holiday to female employees who those up to the third grade) · Family-friendly leave extended to women with are either experiencing morning sickness or undergoing fertility morning sickness or undergoing fertility treatment · Extended leave for women in fertility treatment treatment. The system will also allow women undergoing long- term fertility treatment to take extended leave.

“Knowledge, technology and expertise are essential for an Awareness Training for Managers enterprise to grow. It is vital that these skills be allowed to Increasing awareness is another important aspect of promoting permeate through an organization. Besides employing the a healthy work-life balance. All NEC Corporation managers took latest education and training techniques tailored to that an online management training course on providing support to firm, this process requires building good relationships workers with child-raising responsibilities in March–April 2006. between bosses and subordinates. Using various types of Going forward, NEC plans to continue developing family-friendly training, our job is to help create a workplace where employment policies that balance work and family requirements. employees regard their work as enjoyable. The Success of Women at NEC At our company, we respect First female president of Japanese NEC group firm the individuality of men and women, and of our younger and NEC actively promotes the advancement of women in the work- older, more experienced employ- place. Fiscal 2006 saw the appointment of a female president ees. We aspire to be a model for at NEC Learning, Ltd., a domestic subsidiary that supplies the rest of the NEC group by Fusako Utsumi managing the firm in a way that human resource development solutions to the NEC group and President external clients. This marked the first appointment of a woman NEC Learning, Ltd. stimulates the enthusiasm of all.” to the position of president within the NEC group in Japan. for employees

NEC Receives Minister’s Award From the Ministry of Health, Seminars, online managerial training courses, poster cam- Labour and Welfare for Employment of People with Disabilities paigns and other measures target the prevention of sexual harassment. In addition to efforts to raise awareness, each NEC NEC is actively engaged in promoting the employment of people business unit also provides a consulting center for equal rights with disabilities. The ratio of employees with disabilities at NEC and other issues. Female managers are available for such con- Corporation has been above the Japanese statutory minimum sultations. every year since fiscal 1997; in fiscal 2006, it exceeded the internal target of 1.9%. NEC Friendly Staff, Ltd., a subsidiary established by NEC in March 2003 that is specially equipped to employ people with mental disabilities, now employs 16 people. In September 2005, NEC’s achievements in the employment of people with disabilities over several years were recognized with a Minister’s Award for Excellent Business Sites from the

Ministry of Health, Labour and Welfare. NEC Corporation aims 29 to further raise the ratio of employees with disabilities to 2.0% by fiscal 2009.

Ratio of Employees With Disabilities NEC Corporation (%) Statutory minimum in Japan 1.95

1.90 NEC Annual CSR Report 2006 1.85 “At NEC, we believe it is important to create quality work- 1.80 places for people with disabilities. For example, for any 1.75 parts of NEC that have employees with hearing disabilities, the Human Resources Development Division provides a 1.70 manual and other forms of support to gain the under- 1.65 standing of bosses and colleagues. In meetings, we share 1.60 information by having it displayed on a nearby PC screen. 1.55 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (Fiscal Lessons on sign language are also provided after work to year) help promote better communication. All domestic NEC group companies are working to ensure that the ratio of employees with disabilities exceeds the statutory figure in Human Rights Awareness Programs Japan.”

The Human Rights Awareness Committee, a company-wide organization, prepares activity plans every year, as part of measures to advance training seminars and raise awareness of human rights. In fiscal 2006, numerous training seminars targeting specific positions and objectives were held; total atten- dance for the NEC group in Japan was 4,770. Furthermore, initiatives to promote greater awareness of human rights issues Holding the award (from left): Setsuro Uetake, Manager, among all employees included more human rights-related fea- Mitsuyo Takeuchi, and Hitoshi Nakane, Manager, Human tures on the NEC intranet and calls for proposals for human Resources Development Division, NEC Corporation rights-related catchphrases. Training and Career Development

NEC aims to create dynamic workplace environments that help people to become more employable. Human resource development focuses on maximizing the potential of each individual. NEC also offers a lifetime career support system (career design support) and training for employees in overseas operations.

Ranks of NEC Certified Professionals Surpass Career Planning Advisory Services 10,000 Mark Eight career planners work inside NEC to provide individual The NEC Certified Professional (NCP) system is an internal employees with career planning advice from a specialist view- framework for creating higher added value for the market and point. As of March 2006, this dedicated team had provided customers alike by nurturing the talents of specialized person- career counseling to a total of approximately 1,500 people. nel in fields ranging from sales, support service and systems engineering to software and hardware development. Cumulative “I’ve been working in this role for three-and-a-half years, and numbers of people holding certified qualifications under the my motto is always to be as cheerful, healthy and enthusiastic NCP system reached 10,864 in fiscal 2006. as possible. I have provided counseling to about 350 employees to date on a wide range of career-related issues, Lifetime Career Design Support from career direction, problems at work and skills development to ques- Responding to new laws in Japan, NEC Corporation has tions about life design and balancing work with home life. I aim to support upgraded systems to offer extended employment for employees Harumi Kaga employees in the hope that they will 30 that want it. A number of career design support measures were Career Advisor lead more enjoyable and fulfilling lives Human Resources Development introduced in fiscal 2006. and careers by encouraging them to Division NEC Corporation “Life design” seminars view themselves more positively.” These seminars target employees aged 55 and over and provide training on planning and managing the rest of life, starting from a financial perspective. Global Executive Development Training Program Rehiring support services

NEC Annual CSR Report 2006 NEC Corporation provides employees nearing retirement the The Global Executive Seminar was held in Tokyo in July 2005, opportunity to seek a new career challenge (rather than an with the principal objectives being to share global business extension of a current contract) outside the NEC group by offer- strategy and to facilitate the growth of leadership in local mar- ing access to rehiring support services through NEC group kets to support increased overseas operational autonomy. Nine companies. This service is one part of the career design sup- senior managers with executive potential from around the world port program, which aims to provide employees with help in participated in the event. The seminar featured a frank discus- lifetime career planning at all stages, from joining the company sion and exchange of views with senior managers and execu- to post-retirement employment. tives based in Japan to share information on best practices and to study business development action plans. Lifetime Career Support

55 years old “The experience was extremely valuable in enabling partici- 45 years old Parcel pants to debate issues with senior managers from NEC 35 years old Parcel Headquarters and other regions. This helped us to better Parcel Career Parcel understand the overall business strategy for the NEC group.

Personal growth “Life design” Career design for seminar employees aged 50 From what the managers were saying, Self-evaluation of this event confirmed for me the impor- Independent career personal marketability development program for employees aged 40 tance of seeking to create business for employees aged 30 EQ self- Second career support system opportunities in local markets rather understanding program than relying heavily on NEC Career guidance for Embrace new career challenges within the NEC Group Headquarters. I will implement the second year employees action plans we created immediately Antonio Moulet Career-related advice for individuals (career counseling) so that our business continues to President and Managing Director develop during fiscal 2007.” NEC Ibérica, S.A.U. Joined NEC 30 years old 40 years old 50 years old 60 years old for employees

Occupational Health and Safety (OH&S)

Based on the fundamental principle that workplace conditions must provide all employees with a safe and healthy working environment, NEC provides various employee preventive health programs. OH&S groups and Health Care Centers at plants at NEC Corporation lead and coordinate these initiatives.

Employee Health Maintenance at the Workplace Mental Health Maintenance Measures

In April 2006, the Japanese law on OH&S was revised with a NEC has put in place a program designed to maintain the view to maintaining and improving the health of workers. NEC mental health of employees, with the primary emphasis being anticipated this development, initiating various measures in line on preventive measures. with the proposed legislation in fiscal 2005. OH&S programs at The Mental Health Support Program, which began in NEC aim to prevent damage to health caused by workplace February 2005, aims to identify signs of mental health issues at stress, and through these programs, NEC emphasizes better an early stage so that measures can be taken to prevent any health in the workplace to maintain the physical and mental problems from persisting or worsening. Briefings, intranet cov- health of individual employees. erage and activities at Health Care Centers are being used to raise employee awareness of the program and the number of Health Maintenance Approach employees seeking help before problems develop is increasing Long work hours, poor communication and interpersonal Workplace stress gradually. relationships, little scope to work independently, etc.

Creating a healthy workplace Since January 2006, modules on the program have also High m ort fro Prevention of physical and been included in training courses for managerial ranks, reflect- pp lth mental health problems due /su ea ing the key role of workplace supervisors in the operation of the 31 nce l h to stress caused by overwork a als e ff uid stria n c ta G u sio pla t s program. d s rk en in fe o m pro w e nd ag Going forward, NEC plans to reinforce measures aimed at a an m Risks associated with managing workplace stress from a preventive viewpoint. cerebrovascular, heart and Individual health other lifestyle diseases Low promotion/maintenance Basic Approach to Preventing Workplace Stress Individual health Low High risks Work-related stress (quality/volume of work; workplace environment) NEC Annual CSR Report 2006 Workplace Strengthen stress management HR divisions

Physical Health Maintenance Measures Industrial Treatment Prevention Physical health management physicians Management of high health Mental health management Nurses risks Stress checks Health checks Industrial Counseling Aging and work-related stress have a complex cause-and-effect psychiatrists Lifestyle advice Mental health education (Nutrition, exercise and rest) Specialist relationship with various lifestyle diseases. NEC aims to provide physicians Counselors employees with multiple risk factors* for cerebrovascular or heart Cerebrovascular disease Depression / depressive state Ischemic heart disease, disease and other conditions with information to help identify Schizophrenia / severe etc. stress reactions, etc. risks and make positive lifestyle changes. NEC also uses super- vised workplace restrictions where necessary to reduce health risks for individuals. In the two years since the above program began in January Construction of NEC Group Health Management System 2004, the number of employees with multiple risk factors has fallen by about 25%. Work management sections and the Increased exchanges of personnel between NEC group compa- Health Care Center have also coordinated with workplace nies in recent years have made the construction of health man- supervisors to observe and follow up on any employees made agement systems that span different firms a more urgent issue. subject to workplace restrictions for health reasons. Programs NEC group companies based at sites in the Tokyo area to prevent and reduce physical health risks remain ongoing. have been investing greater resources in health management

* Employees diagnosed on the basis of health checks and related tests for NEC group employees. Going forward, NEC plans to build on with at least four of six risk factors (obesity, high blood pressure, this progress by constructing a national health management hyperlipidemia, diabetes, smoking and aging) system in Japan for the NEC group, comprising ten regional blocks. The main focus of these moves is to institute health maintenance activities to help prevent workplace stress. 32 NEC Annual CSR Report 2006 *(according toNECresearch) ment. now acceleratingeffortstowardthefull-scaleuseofthisbio-plasticinelectronicequip- plants, comparedwithonly50%inmostbioplasticsusedelectronicequipment.NECis oped foruseinelectronicequipment.Approximately90%ofthisbio-plasticisderivedfrom NEC hascreatedtheworld’sfirst*mobilehandsetusingaplant-derivedbio-plasticdevel- Birth ofanEco-friendlyMobileHandset products andservices. NEC alsocontributestotheeffortsofcustomersandsocietyasawholereduceenvironmentalimpactbysupplyingeco-conscio To protecttheglobalenvironment,NECaimstolowerenvironmentalimpactandrisksassociatedwithitsownbusinessactivi For theEnvironment with gooddesigninthishandset.”TheN701iECOisbasedon rather thannon-renewablefossilfuels. raw materialsusedintheproductarebiodegradableplants methods, whichhelpstopreventglobalwarming.Second,the generates roughly50%lessCO impact intwoways.First,thebio-plasticmanufacturingstage phones. sufficient strengthandheatresistancetobeusedinmobile plant-derived componentof90%,theresultingmaterialhas agent tothematerialusingitsowntechnology.Evenwitha bio-plastic byaddingkenaffiberasaplant-derivedreinforcing strength ofthematerial.NEChasbeenabletodevelopanew als, becauseraisingtheplant-derivedcomponentlowered to containroughly50%byweightofpetroleum-derivedmateri- now mostofthebio-plasticsusedinelectronicequipmenthad a bio-plasticthathasbeenreinforcedusingkenaffiber.”Until approximately 75%ofthesurfaceN701iECOismade Moriyama: “Apartfromthepartaroundscreenandkeys, New MaterialEnablesEco-friendlyMobilePhone Moriyama: “Wealsoworkedtocombineeco-friendliness Eco-friendly mobilephoneshelptoreduceenvironmental 2 emissions thanconventional NEC Corporation Mobile TerminalsDivision Product PlanningDepartment Assistant Manager Yusuke Moriyama expressed interest inpurchasingonebecauseof itsstyle,color The femalereaction tothemodelwasgood;in fact, abouthalf women intheir20sto40swere themaintargetconsumers. tively advanced.Wemadethe prototypepalepinkbecause commercialization stagebecause theprototypehadbeenrela- in JapanonMarch10,2006. mercialization efforts,andtheN701iECOwasofficiallylaunched prototype attheExpopromptedpartnerstospeedupcom- planning toprototypesignificantly.Favorablereactionthe NTT DoCoMoInc.andNEChelpedtoshortenthetimefrom of aneco-friendlymobilephone.Thecollaborationbetween natural-feeling designandbecauseofthenoveltyconcept phone attractedalotofinterestfromvisitors,bothforits opportunity totesttheN900i-basedprototypeinpublic.The with anenvironmentalthemeinMarch2005,providedtheideal began inJuly2004,andtheAichiWorldExpo,whichopened handsets areproducedinJapaneveryyear.Productplanning product couldhaveahugeimpactbecausetensofmillions activities.” Makingthemobilephoneintoaneco-conscious phones couldactuallycontributetoenvironmentalprotection Hirosawa: “Weweretryingtoworkoutawayinwhichmobile Products thataddvalueintheformofeco-friendlyfeatures. a phoneforthefuture.NECisworkingtodevelopmoreEco 2006. Stylish,welldesignedandeco-friendly,theN701iECOis the N701imodel,whichwonaGoodDesignPrizeduringfiscal Collaboration WithNTTDoCoMo Hirosawa: “Therewerevirtually noissuestosolveinthe ties. us for the environment

and eco-conscious advantages. We are also seeing growing Future Development of Eco-friendly Mobile Phones interest in model colors for men and purchases for corporate applications.” Hirosawa: “In our original planning, the problem we had was that the more we tried to imagine an eco-friendly mobile phone, the further it seemed to get away from user convenience. But this model is basically only different in the fact that it is made out of a bio-plastic. The fact that we have gone ahead and mar- keted an eco-friendly handset also makes a big difference, in my opinion. Now that we have taken the first step, I think the important thing for us to do in considering our next step is to avoid any inclination to make the phone less user-friendly. Katsuhiko Hirosawa Manager Making users feel that they have to accept 33 Product Department less just because the phone has environ- NTT DoCoMo, Inc. mental benefits is not where we want to go.” Positive Reaction to Eco-friendly Mobile Phone NEC shares this aim to make eco- friendly mobile phones seem like the The eco-friendly mobile phone was on display at both the NTT most natural thing in the world.

DoCoMo and NEC booths at the Eco Products 2005 exhibition, NEC hopes that these new mobile NEC Annual CSR Report 2006 which was held in December 2005 at the Tokyo Big Sight con- phone handsets will help to con- vention center. There it gained the attention of many visitors. tribute to higher ecological The N701iECO is being displayed alongside the N701i in awareness throughout NTT DoCoMo sales outlets around Japan. Shops report that the society. model has attracted a lot of interest because of its promotion as an eco-friendly phone.

NEC took part in exhibitions in Germany and Taiwan to show- case the environmental benefits of bioplastics overseas. NEC booths drew significant attention from visitors.

On display at the NEC booth (Eco Products The N701i range displayed in NTT DoCoMo 2005: also presented on stage) retail sales outlets

NEC participated in the CeBIT exhibi- The NEC Taiwan Solution Fair 2006 tion (International Trade Fair for was held in Taipei in May 2006. Information and Telecommunications Technology) in Hanover, Germany in March 2006.

URL http://www.nec.co.jp/eco/en/annual2006/02/2-1.html Extension of the Eco Symbol to IT Solutions

During fiscal 2006, NEC began extending the use of the Eco Symbol (an internal eco-label based on voluntarily disclosed standards) from hardware products to IT solutions such as software and services. The

label will be applied to IT solutions that are expected to reduce CO2 emissions by at least 50% when deployed by customers, compared with pre-introduction levels.

Evaluation of Environmental Impact of IT Solutions Suda: “We are now trying to speed up the development of eco- conscious software and services so that we can help our cus- Miyamoto: “We first began doing research on environmental tomers reduce the environmental impact of their operations.” impact evaluations of IT solutions in 2000, based on the idea that we might be able to apply life cycle assessment (LCA) methodology to gauge the overall impact of the positive and negative environmental effects of IT.” The widely held image is Masahiro Suda that greater use of IT increases environmental impact due to Senior Manager Tamachi Environmental Management Center higher energy consumption, but this needs to be offset against Environmental Management Division benefits such as reduced transportation needs and paper usage. NEC Corporation Using the LCA method, it is possible to make a quantitative assessment of the impact of a particular IT solution on CO2 Environmental Impact Evaluation of “Communication Door” emissions by comparing changes in various parameters against

34 pre-introduction levels. These parameters include usage of Ikeda: “Communication Door is a web conferencing solution paper and other items, logistics and storage demand, travel from NEC that allows people in multiple locations around the usage, plus consumption of equipment and network services. world to share voice and image data over the Internet. By elimi- Miyamoto: “Our development program has given us a tool that nating the need for paper or for travel to meetings, our data

calculates these effects in show that this solution reduces CO2 emissions by the equivalent simple overall terms so that we of 89%.” Communication Door was quickly awarded the Eco

can include estimates of CO2 Symbol as a result.

NEC Annual CSR Report 2006 emission reductions in the Ikeda: “We have found that, besides the potential cost sav- sales proposals that we make ings and efficiency gains, customers are also very interested in

to customers.” NEC has com- the solution when we explain to them the reduction in CO2 piled a database of assess- emissions.” Shigeyuki Miyamoto Manager ments already performed for Research Planning Division NEC Corporation over 100 IT solutions.

Akio Ikeda Use of Eco Symbol for NEC Software and Services Manager IT Platform Planning Division Suda: “In fiscal 2005, we began making eco-promotion propos- NEC Corporation als to clients specifically focusing on NEC environmental management and the eco-conscious characteristics of the proposed Communication Door software or solution, such as conservation of energy and Results of Environmental Impact Assessment resources or reduced use of harmful substances. These pro- 100 Travel posals also touted the potential benefits for clients in terms of Paper usage CO 80 2

emissions (%) Network use reduced environmental impact.” From fiscal 2006, the standard Reduction of approx. 89% specified by NEC for any software or service to gain the Eco 60 Equipment use Symbol was that the introduction of the related IT solution must 40 offer a projected reduction in CO2 emissions for the customer of

at least 50% relative to pre-introduction levels, or the equivalent 20 of a reduction of at least 1,500 tons per year. Ten NEC projects were registered with the Eco Symbol in 0 Pre-introduction Post-introduction fiscal 2006 to promote the related environmental benefits.

URL http://www.nec.co.jp/eco/en/annual2006/02/2-2.html for the environment

Environmental Impact Reduction Using RFID-based Supply Chain Reforms

In October 2004, NEC Personal Products, Ltd., which manages NEC’s PC business, became the first PC maker in Japan to introduce a system based on RFID* technology at its Yonezawa plant. By December 2005, the firm had halved production lead times through efficiency gains in materials procurement and other factors as a result of process innovations based on the expanded use of RFID systems. This success has conferred substantial environmental benefits.

*RFID (Radio Frequency Identification): A technology for exchanging information to identify items wirelessly using embedded tags

Supply Chain Reforms at Yonezawa Plant elimination of paper and other benefits generated energy savings, all of which added up to a reduction in CO2 emissions of Morishita: “Supply chain reforms are helping us to boost effi- 36 tons per year.” NEC Personal Products has regarded supply ciency by eliminating various kinds of waste. More efficient chain reforms as a major aspect of efforts to reduce environ- operations consume less energy, resulting in lower CO2 emis- mental impact. Compared with the year in which reforms began sions.” The Yonezawa plant is the main NEC Personal Products (fiscal 2002), annual CO2 emissions across the entire supply site for PC development and production. NEC Personal chain had been reduced by about 5,300 tons by fiscal 2006. Products has set three goals of being the top company in the industry in terms of CS, speed and market share. Supply chain Continuous Supply Chain Improvements reforms, which involve innovations in production as well as the 35 parallel introduction of advanced IT solutions, are regarded as a Morishita: “IT is just a means to an end. To be more effective, I key activity for attaining the No. 1 position in terms of speed. believe that it is important to focus on good process reform. Production innovation needs to start onsite at the front line. In this case, the results have been based on cooperation between our production site and the IT division.” As a tool, RFID cannot generate benefits unless processes are also reformed to take

Terumasa Morishita account of the way RFID tags are used. On the other hand, NEC Annual CSR Report 2006 General Manager SCM Innovation Promotion Division there also remains considerable untapped potential for applying NEC Personal Products, Ltd. RFID technology in other ways to make processes more efficient. Morishita: “We still have a lot of scope to reform our onsite CO2 Emissions Reduced Using RFID by Eliminating the Need for 100,000 Bar Code Readings per Day production processes. We plan to broaden reforms to include suppliers as well as the distribution, sales, and after-sales ser- Prior to the introduction of the RFID system, production instruc- vice functions. I think that we have demonstrated with our activ- tions and related process controls relied on a system of paper ities to date that supply chain reforms can make a substantial and bar codes. This set-up required some 100,000 bar code environmental contribution. We plan to continue focusing on readings each day. attaining our goal of being No. 1 in speed while also pursuing Morishita: “Switching from paper-based production specifi- further reductions in environmental impact. Improvement is a cations to a system based on RFID tags saved having to read never-ending process.” 100,000 bar codes per day, which translated into gains in pro- ductivity and quality control of more than 10%. In addition, the

The old system required reading of bar Placing the RFID card near an antenna codes on printed sheets. automatically displays the specifications.

URL http://www.nec.co.jp/eco/en/annual2006/02/2-3.html Making Maximum Ecological Use of Solar and Wind Power

The plant where NEC AccessTechnica, Ltd. undertakes closed recycling of ADSL modems is eco- logically highly advanced due to the use of solar, wind and other renewable energy sources. The combination of closed recycling and renewable energy usage has helped to lower costs by around 30%. The new facility, the “Eco Park,” generates economic and environmental benefits.

The Chance to Create the Eco Park Eco Park to promote interchange on environmental issues between the company and local residents or officials. Tomita: “Last year, the aging of our facilities prompted us to opt to construct a new plant. Our goal was to build an ‘environmen- Eco Park Outline tal theme park’ based on a highly advanced, sustainable envi- — The Challenge of Sustainable Production Systems — ronmental system that we could show to NEC employees and Theme #1 Small the public, to deepen their understanding of such systems. Using Solar and Wind Power wind farm With this in mind, we named the new facility ‘Eco Park.’” Developing New Energy for Plants Solar power generation The Eco Park aims to run autonomously using sustainable Dual-layer insulation 36 environmental systems. The two main aspects of this concept are the use of solar and wind power and the recycling-oriented

Glass lined with heat-absorbing film Lighting powered Thermal insulation in walls (ALC*) production process. only by renewable High-efficiency reflective halogen lighting energy Theme #2 Resource recycling-based production Pursue 3Rs: Reduce, Re-Use, Recycle Thermal insulation in walls (ALC*) Energy-efficient air conditioning NEC Annual CSR Report 2006 Yukitoshi Tomita Senior Manager Casing Pellet Plastic Environmental Management Center pulverization manufacture fabrication NEC AccessTechnica, Ltd.

Product closed recycling

Twin Themes of Renewable Energy and Resource * ALC: Autoclaved Lightweight Concrete Recycling

The Eco Park seeks to use new forms of energy by incorporating systems to generate solar and wind power as renewable Ongoing Evolution of the Eco Park energy sources. These systems generate enough power to supply the lighting needs of the plant over the entire day. We Tomita: “We do not plan to stop introducing renewable energy.” are also considering using these systems to supply power to the The Eco Park is also a venue for field tests and further research local community in times of emergency, such as in the wake of into the use of such systems. Based on the expertise gained in

an earthquake or other natural disaster. renewable energy, the company aims to cut CO2 emissions to Resource recycling-based production at the Eco Park are 94% of 1990 levels by 2010. Medium- to long-term plans also call exemplified by the closed recycling system for ADSL modems. for investment in new alternative energy systems. On the closed This is a series of linked recycling processes in which modems recycling front, the company aims to raise the proportion of collected from users are disassembled and broken down to materials at the production stage that have been recycled at the yield raw materials. These materials are then re-used in the plant from the current 50% to a recycling rate of 100%. Another manufacture and assembly of new ADSL modems. Hence, objective is to apply the same system to other products. used modems are recycled into new modems using renewable energy. NEC AccessTechnica also organizes guided tours of the

URL http://www.nec.co.jp/eco/en/annual2006/02/2-4.html for the environment

Rice Paddy Restoration Project – The Benefits of Communication With Nature –

Since fiscal 2005, NEC group employees and their families have been working with the NPO Asaza Fund to restore a rice paddy set in a natural ravine. The project is partly a social contribution activity and partly an effort to enhance environmental awareness. After two years of hard work, volunteers have been able to restore the paddy, which had previously been lying fallow, and even make sake from the rice crop. The project has expanded along with the paddy’s size, with a total of 1,000 participants now involved in a variety of activities.

Activities Expanded Further get many people more interested in environmental protection.”

In fiscal 2006, the rice paddy was expanded to double the size and a total of nine major and minor events were held at the site. Each proved highly popular, helping to attract more participants to the project. Cultivation began of several crops, including sweet potatoes, peanuts and soybeans. The soybeans were used to make miso for a local storehouse. Keinosuke Hirose Sake made in fiscal 2006 Yano: “We have planned activities that are safe and fun for Vice President all. Besides making rice, these include making scarecrows and SHIRAGIKU Company (Japanese Sake Brewery) 37 bamboo crafts. Everyone has a meaningful but out-of-the- ordinary experience that they will not forget.” At the rice paddy, where only organic farming For the Next Generation methods are used, the number of dragonflies doubled com- Matsushita: “One parent commented on how she had been pared with the previous year, continually amazed with each visit by how the experience of the

and the local ecosystem is once rice paddy has been helping the children to grow up strong and NEC Annual CSR Report 2006 again promoting the survival of healthy. Having first been afraid to enter the paddy, after sev- a number of endangered animal eral visits and events the same child would be actively planting Tokuya Yano NPO Asaza Fund and plant species. rice and helping younger siblings to find their way safely.” The ravine restoration and farming project is now producing tangi- ble results such as rice, soybeans, sake and miso. The hope is that the project will also produce more intangible rewards Making miso Bamboo crafts by helping the next generation Naoko Matsushita Abiko Environmental Management Center appreciate the importance of Environmental Management Division Increasing the Benefits of Rice Paddies NEC Corporation preserving the environment.

The year also saw an improvement in terms of the grade of the In fiscal 2006, NEC received recognition from external sources, as sake that was made from the harvested rice. Local sake brewer follows: • Joint Prize for Environmental Cooperation at the Fourth Japan SHIRAGIKU Company was one of the businesses that Environmental Management Awards (Mie Prefecture) responded to the call by the Asaza Fund to help in the restora- • Third Partnership Award (NPO Partnership Support Center) tion of the ravine at Kasumigaura. Hirose: “Restoring the area from a fallow site into a productive paddy helps to protect the natural environment that I grew up in. Not only that, but the project also helps to stimulate general interest in sake brewing. I hope that the experience of this restoration project will help to

URL http://www.nec.co.jp/eco/en/annual2006/02/2-5.html 38 NEC Annual CSR Report 2006 which arefollowedrigorouslywithintheNECgroup. describing ourenvironmentalprinciplesandactionplans, Philosophy. WehavealsoestablishedanEnvironmentalCharter NEC GroupCodeofConduct(seepage10)basedonitsCorporate established theNECGroupCharterofCorporateBehaviorand Deeply awareofitscorporatesocialresponsibilities,NEChas This isourvisionforenvironmentalmanagement. more efficiently,andestablishsustainablemanagementpracticesinallbusinessactivities.Itisalsocrucialthatweprovide To makeatrulymeaningfulcontributiontotheenvironment,NECmustfirstreduceenvironmentalrisksandimpact,utilizeresou Environmental ManagementatNEC to playapartinbuildingsustainablesocietybymaximizingthebenefitsofenvironmentalinitiativestakenonboththese and servicesthatlowercustomers’society’soverallenvironmentalimpactpromotetheefficientuseofresources.NECh URL NEC EnvironmentalCharter 7. 6. Maintain andstrengthenanindependentenvironmentalmanagement system, 5. Provide astructuredadministrativeorganizationforenvironmentalmanage- 4. Contribute positivelytosocietythroughanenvironmentalmanagement pro- 3. 2. Encourage thedevelopmentofenvironmentaltechnologyonalllevels:produc- 1. Produce energyandresourcesavingproducts,whilegivingcarefulthoughtto for andpreservationoftheenvironmentisourpriority. so thateachindividualwithinthecompanywillactwiththisinmind.Respect (Preamble) NECwillmakeharmonywiththeenvironmentoneofitsprimarygoals enabling allpeopletopursuetheirfullpotential. tally friendly.Ourvisionisaworldwhereournaturalenvironmentpreserved, nology thatharmonizeswithnatureandthroughproductionisenvironmen- NEC willcontributetoasoundenvironmentandlivablesocietythroughtech- gies andmanagementmethods. announcements onthelatestNECdevelopments inenvironmentaltechnolo- Contribute toenvironmentalprotection,by continuouslymakingpublic pany audits. and implementimprovementmeasuresbased on internalenvironmentalcom- and tobeintheforefrontofenvironmentalmattersatalltimes. ment, withexecutivesinchargeofdifferentareas,todelegateresponsibilities tal consciousnessofallcompanymembers. gram withaglobalperspective,whileeducatingandraisingtheenvironmen- strive tostrengthenandenforceevenstricterNECenvironmentalstandards. Respect andadheretonationalregionalenvironmentalregulations.To the environment. rials, engineeringandrecyclingmethodsthatwillminimizeadverseeffectson tion, sales,distribution,useanddisposalofourproducts.Tointroducemate- environmental safetyissuesindevelopmentandplanning. http://www.nec.co.jp/eco/en/annual2006/03/3-0.html Environmental Principles Action Plans • Enhanceitsownresourceefficiency • Reduceitsownenvironmentalrisks • Reduceitsownenvironmentalimpact management practices Sustainable NEC November 1991 Environmental communications • Software/Services • Products (Solutions) 3) overall netimpactonCO this visionistohelppreventglobalwarmingbyreducingNEC’s ronmental managementconcept.Onespecificgoalstatedin in fiscal2003asalong-termbusinessvisionbasedontheenvi- NEC formulatedEnvironmentalManagementVision2010 2) Promote energy-efficient equipmenttoreduceCO 1) Reduce CO 1) Reduce Specifically, NECwilltakethefollowingthreeactions: – NetImpactonCO NEC EnvironmentalManagementVision2010(Targets) (by customers) products to useofNEC Emissions due activities to production Emissions due CO through theprovisionofITsolutionstoreducecustomers’ Increase theefficiencyofcustomers’businessoperations due totheuseofITequipment. tion. promoting higheroperatingefficiencyandproductioninnova- NEC EnvironmentalManagementVision2010 2 emissions. • Useresourcesmoreefficiently • Reduceenvironmentalimpact Customers andSociety 2 Sustainable society Reductions inCO product energysavingsandITsolutions emissions inproductionandofficeactivitiesby 2 EmissionsReducedtoZero– CO 2 eisosCO emissions 2 emissions tozeroby2010. 2 emissionsofcustomersandsocietythrough Balance 2 reductions 2 emissions

products

fronts. opes rces for the environment

Mid-term Environmental Plan – NEC Eco Action Plan 2006 (Results of Fiscal 2006 Activities and Fiscal 2007 Mid-term Targets) –

NEC has established specific mid-term performance targets based on the NEC Environmental Management Vision 2010. Plan activities and targets are divided into the four areas of products, solutions, plants and offices, and environmental communications. NEC pub- lishes the results of periodic internal evaluations of progress toward achievement of targets in each of these areas. Please visit NEC’s website using the following URLs under the following texts for explanations of terms in the tables.

Product-related items

Mid-term Targets Assess Indicator Item FY2007 Target FY2006 Target FY2006 Result Target Value To Be Achieved (FY) -ment All newly developed products qualifying 100% After 2005 — 100% 100% as environmentally conscious products Make all newly developed products as Eco Symbol Environmentally products 100% 2008 results 95% 85% 78% conscious · Percentage share of Eco Symbol products products (New products developed after FY2006 and beyond) More than one More than Create front-running environmental products proposal in FY2007 — — — — one proposal and beyond 30% Reduction in power consumption of equipment 2008 — — 47% — Prevention of (reference fiscal year: FY2004) 39

global warming Reduce the CO2 emissions of products (performance basis) 50% or more 2011 10% — — — · CO2 emission reduction rate (reference fiscal year: FY2006)

Green procurement rate 100% In 2007 and beyond Maintain 100% 100% 100%

Complete phase-out of substances specified in RoHS Complete Complete Directive (Lead, cadmium, hexavalent chromium, Complete phase-out 2006 — phase-out phase-out mercury) Environmental

RoHS directive compliance rate NEC Annual CSR Report 2006 100% In 2007 and beyond Maintain 100% — 100% — consciousness (reference fiscal year: FY2006) Complete Complete Complete phase-out of lead solder Complete phase-out 2006 — phase-out phase-out Reduction of bromine flame retardants used in equipment casings and frames 90% 2008 85% 100% · Percentage share of equipment casings and frames free 83% of bromine flame retardants Collection of used products 13,500t 2006 — 13,500t 10,260t Usage rate for recycled plastics in equipment casings 55% 2008 — 50% 64% and frames Expanded use of eco-plastics in equipment casings Collecting and and frames 65% 2009 60% — — — recycling · Eco-plastic usage rate resources Promote use of bio-plastics in products More than 10% 2011 — — · Bio-plastic usage rate Applied to more — — 2011 — — · Usage of new high-performance plant-derived materials than 1 model

Promotion of recycling of plastics resources 70% 2008 60% 50% 12% · Material recycling rate

In fiscal 2006, as in the previous year, NEC achieved its target of ensuring that all new products developed meet internal eco-conscious criteria, although the proportion of products granted an Eco Symbol was lower than targeted. In fiscal 2007, NEC plans to further reinforce the application of eco-conscious measures within the various stages and processes of product development. In addition, from fiscal 2007, NEC has set new CO2 emission reduction targets for the usage stage for all new equipment to accelerate progress toward realizing NEC Environmental Management Vision 2010.

URL http://www.nec.co.jp/eco/en/annual2006/03/3-6-02.html Solutions-related Items

Mid-term Targets Assess Indicator Item FY2007 Target FY2006 Target FY2006 Result Target Value To Be Achieved (FY) -ment Average 3 Average 3 Average 2 Average 2.58 Number of eco-promotion proposals 2007~ proposals/person proposals/person proposals/person proposals/person

Software environmental assessment implementation rate 100%2007~ 100% 50% 100% Eco solutions Eco software creation rate 100% 2008~ 80% 50% 59.4%

Eco Symbol creation count in software and services 5 proposals/year2007~ 5 proposals/year 1 proposal/BU 10 proposals by 5 BUs

NEC achieved the targets for all items in fiscal 2006. Rates of achievement relative to target were particularly high in the cases of the number of eco-promotion proposals (129%) and the Eco Symbol creation count in software and services (200%). For fiscal 2007, NEC has raised the target for the average number of eco-promotion proposals per person to 3.0. Efforts also remain ongoing to create software and services with a performance level high enough to merit an Eco Symbol.

URL http://www.nec.co.jp/eco/en/annual2006/03/3-6-03.html

Plants and Offices-related Items

(☆ : Newly added items or modified targets; underlines signify newly added or modified items) (Assessment ○ : Achieved △ : Achieved at a rate of 80% or higher × : Achieved at a rate of under 80% — : Not applicable) 40 Mid-term Targets Assess Indicator Item FY2007 Target FY2006 Target FY2006 Result Target Value To Be Achieved (FY) Reference Fiscal Year -ment

Reductions in energy-derived CO2 emissions per unit of adjusted actual sales -25% 2011 1991 -21% -20% -56% (target set by 4 industry associations)

Prevention of Absolute GHG emissions other than CO2 -10% 2011 1996 — +76% +63% global warming (GWP equivalents)

Absolute distribution-derived CO2 emissions -30% 2011 2001 — -25% -26% NEC Annual CSR Report 2006 Reduction of total absolute emissions below reference- To reference-year 2011 Reference years — — — — year levels for all GHGs level for each GHG Purchased amounts of (legally regulated) chemical -30% 2006 2001 — -30% -14% Effective substances utilization of Reductions in purchased amounts of (legally regulated) -10% 2011 2006 -2% — — — resources chemical substances per unit of adjusted actual sales Reduction in use of substances designated as VOCs -30% 2011 2001 — — — —

Waste emissions (non-commercial and commercial -35% 2006 2001 — -35% -30% wastes) Resource Reductions in waste emissions (non-commercial and recycling -15% 2011 2006 -3% — — — commercial wastes) per unit of adjusted actual sales

Material recycling rate +10% 2006 2001 — +10% +38% Acquisition of ISO 14001 certification All companies Acquire 98% Environmental (applicable to non-ISO-certified subsidiaries in Japan, to acquire — 2007 — certification (123 of 125 management consolidated service/software subsidiaries in Japan, certification by by fiscal 2007 companies) overseas manufacturing subsidiaries) fiscal 2006

Energy-derived CO2 emission levels in fiscal 2006 were 30,000 tons less than in the previous year in absolute terms. NEC also achieved its target for emissions per unit of adjusted actual sales, which is the same target as the unified voluntary target established by the Japanese electronics industry under the auspices of the Nippon Keidanren plan. Due to successful efforts to substitute alternatives,

non-CO2 greenhouse gas (GHG) emissions were 7% less than in the previous year in terms of GWP (Global Warming Potential) equivalents. Reductions in the number of non-scheduled truck shipments and improved load factors for scheduled truck shipments

contributed to an 8% year-on-year reduction in distribution-derived CO2 emissions. Measures to combat global warming will be one of NEC’s main environmental management priorities again in fiscal 2007. Other important ongoing activities target energy savings linked to production reforms and GHG substitution with more eco-friendly alternatives.

URL http://www.nec.co.jp/eco/en/annual2006/03/3-6-04.html for the environment

Environmental Communications Items

(Assessment ○ : Achieved △ : Achieved at a rate of 80% or higher × : Achieved at a rate of under 80% — : Not applicable)

Mid-term Targets Assess Indicator Item FY2007 Target FY2006 Target FY2006 Result Target Value To Be Achieved (FY) -ment Environmental Expansion of Eco-Excellence segment with a high level 60% 2007 60% 50% 44.5% awareness of environmental awareness Environmental Utilization in events During mid-term During mid-term Strategic utilization of “Ecology through IT” 2007~ environmental — — communications and advertisements environmental plan plan

The results of the NEC group environmental awareness survey in Japan showed that the percentage of employees with high awareness (the “Eco-Excellence” segment) had increased from the figure of 42.2% recorded in fiscal 2005, but still fell short of the 50% target. Overall awareness continued to grow, as demonstrated by shrinkage of the environmentally least aware segment. In fiscal 2007, NEC aims to achieve a figure of at least 60% for the Eco-Excellence segment by upgrading efforts to build environmental consciousness among all NEC group employees, both through activities at the group level and programs undertaken at site and divisional levels.

URL http://www.nec.co.jp/eco/en/annual2006/03/3-6-05.html

Mass Balance of Business Operations

NEC clearly understands and discloses the mass balance of its business operations to clarify and quantify the relationship between 41 environmental impact and the company’s direct business operations. These figures aid in the development of measures to reduce environmental impact. In fiscal 2006, NEC achieved reductions in the absolute amounts of many environmental impact items. In fiscal 2006, the NEC group as defined by the scope below, including affiliates added to the group’s scope in fiscal 2004, achieved zero emissions. NEC Annual CSR Report 2006

Mass Balance of Business Operations 1.26 million t CO2 (-2%) 243t 22.9 GWh NOx Electricity (-24%) (-2%) SOx 44t (-17%) 3 Gas 79.68 million m (-3%) 3 Wastewater 12.03 million m NEC (-2%) 37,000kl Fuels (Oil, etc.) BOD 20t (-8%) (Public water area) (-0%) INPUT OUTPUT Non-commercial 8,000t 3 Water 14.0 million m waste (-20%) (-6%) Recycling rate 100% Material recycling rate 74% Chemical substances 49,000t (Regulated by law) (+2%) Thermal recycling rate 26% 44,000t Commercial waste Paper (Paper recycling 2,046t (+7%) rate 95%) (0%) Recycling rate* 99% Reuse rate 4%

Packaging materials 1,800t Landfill volume 440t Material 59% (paper and plastics) (+12%) recycling rate Figures in ( ) represent year-on-year changes. Thermal 37% *Recycling rate of waste disposed of outside NEC group recycling rate

Scope: NEC Corporation (NEC Headquarters, 5 plants, and 2 laboratories), 14 manufacturing subsidiaries, 41 service and software subsidiaries, NEC Electronics and its 6 manufacturing subsidiaries, and 13 independent affiliates.

URL http://www.nec.co.jp/eco/en/annual2006/03/3-9-01.html Environmental Accounting

Environmental accounting acts as a key reference for promoting effective environmental management by quantitatively evaluating the costs and effectiveness of environmental activities in the NEC group. Figures are categorized and aggregated in accordance with the fiscal 2003 Environmental Accounting Guidelines issued by the Ministry of the Environment in Japan.

Environmental Item Environmental Cost Economic Benefit Investment Volume Reduction Benefit (Million Yen) (Million Yen) Major Classification Intermediate Classification Details (Million Yen) Prevention of global warming (prevention of global warming and ozone layer 642 216 219 30,000 tons: CO2 equivalents depletion, and other benefits) (1,000 tons: Chemical substances increased) Effective utilization of resources (reduced usage of chemical substances, paper, 114 tons: Paper 412 12 363 water and packaging materials) 900,000 tons: Water (191 tons: Packaging materials increased) Business area costs Resource recycling activities (appropriate reductions in Resource recycling volume and weight of waste) 26 1,435 343 (1,000 tons: Waste increased) activities Costs of waste disposal (appropriate disposal of waste materials) Pollution prevention, legal compliance, management of 78 tons: NOx; Risk management 1,835 chemical substances 339 2 9 tons: SOx; (3 tons: BOD increased) Subtotal 1,419 3,498 927 —

Design of eco-conscious products, green procurement 329 38 — 31,000 tons: CO2 equivalents Upstream and Collection, recycling and reuse of post-use products — 1,459 26 — downstream costs Subtotal 329 1,497 26 — Personnel costs related to environmental activities; Costs of management maintenance of ISO certification and environmental Management activities — activities audits; human resource development and employee 41 3,337 1 environmental training Research and development (R&D costs for reducing the environmental impact of R&D costs — — — products, manufacturing operations and other corporate activities) 572 42 Costs of social Social activities Environmental improvements, social contribution, 1 208 — — activities disclosure Costs of environmental damage (etc.) — 1 — — Total 1,790 9,113 954 —

Scope of environmental accounting: NEC Corporation (NEC Headquarters, 5 plants, and 2 laboratories); 14 manufacturing subsidiaries; NEC Electronics and its 6 manufacturing subsidiaries; 13 independent affiliates Accounting period: April 2005 to March 2006 (January 2005 to December 2005 for some overseas manufacturing subsidiaries) URL http://www.nec.co.jp/eco/en/annual2006/03/3-10.html NEC Annual CSR Report 2006

Environmental Audits and Risk Management

Environmental Audits Handling of Accidents and Complaints

Environmental audits are conducted annually to review opera- Since fiscal 1999, NEC has voluntarily disclosed the levying of tions from an environmental perspective. In fiscal 2006, envi- any fines or penalties related to environmental matters. No such ronmental audits were carried out at NEC Corporation, 16 fines or penalties were levied in fiscal 2006. There were no manufacturing subsidiaries, 6 subsidiaries of NEC Electronics, accidents during the year that affected areas beyond NEC site and at 14 affiliates. Environmental auditing of software and ser- perimeters, but there were seven accidents that were contained vice subsidiaries in the NEC group commenced during fiscal within site boundaries. NEC initiated clean-up operations imme- 2006. diately after these accidents and devised measures to prevent future occurrences. These measures have been implemented Environmental Risk Management across all sites. Accidents in Fiscal 2006 To prevent the pollution of the atmosphere or water sources as Accidents with no external impact well as any contamination of ground soil, NEC sets stricter inter- Details of accident Actions taken 1. Leakage of chemicals (3 incidents) 1. Renewal schedules reviewed nal emission standards than those stipulated in laws and regu- (to prevent equipment degradation) 2. Leakage of combustible gas (2 incidents) lations. Besides compliance efforts and environmental audits, 2. Operating procedures reviewed 3. Loss of toxic substance (1 incident) 3. Guidance and training given to operators 4. Procedures to prevent leaks/spills reviewed; NEC also takes preventive measures against environmental 4. Minor fuel oil spillage (1 incident) underground pipes moved above ground risks based on various accident scenarios.

URL Environmental audits http://www.nec.co.jp/eco/en/annual2006/03/3-12-01.html URL Environmental risk management http://www.nec.co.jp/eco/en/annual2006/03/3-13-01.html for the environment

Environmental Communications

NEC’s environmental training, awareness, and information-sharing programs aim to raise the environmental awareness of all officers and employees to boost environmental consciousness in daily business activities. NEC discloses results and other details of environmental activities to the public through various media channels, including the press, television, environmental reports and the Internet to enhance NEC brand value from an environmental perspective.

Environmental Training for Employees NEC’s Environmental Website for the Public

NEC Corporation provides all its employees with web-based NEC renewed its environmental website as part of a program to environmental training materials as part of environmental man- make the NEC Annual Environmental agement promotion efforts. Specific content reflecting varying Report fully web-based. The struc- characteristics of operationally based environmental activities ture and format of the site was made was incorporated into the courses for 12 BUs, research labora- consistent with the report, including tories and corporate staff. A total of 99.7% of NEC Corporation additional efforts to make the content employees completed these training courses during August more easily comprehensible while 2005. improving search capabilities. From fiscal 2006, NEC provides more customized content to its group firms to further environmental training efforts and to Numbers of Inquiries promote environmental management at the group level. In fiscal 2006, NEC received 258 environment-related external NEC Group Environmental Management Awareness inquiries. NEC analyzes the type and content of such questions 43 Program periodically in order to update the FAQ section of the website. Number of Inquiries A total of 30,383 NEC group employees in Japan participated in (Number) 387 the annual survey program conducted in November 2005, which 400 was also Environment Month. The high environmental aware- 284 300 ness “Eco-Excellence” segment (individuals whose environ- 245 258 mental knowledge is accompanied by willingness to take action) 200 NEC Annual CSR Report 2006 grew by 2.3 percentage points compared with the previous 100 year, to 44.5%. Furthermore, the “Eco-Players” segment grew 0 by 5 points while the “Eco-Ignorance” segment shrank by the 2003 2004 2005 2006 (Fiscal year) same amount. These results pointed to an overall increase in environmental awareness across the NEC group. Based on this analysis, NEC plans to continue undertaking environmental training and awareness-building activities with the aim of achieving its mid-term environmental target of shifting all NEC Annual Environmental Report/Quarterly employees into the Eco-Excellence segment by 2010. Environmental Activity Reports Full details of NEC’s environmental activities in fiscal 2006 Results of Fiscal 2006 Environmental Management Awareness Survey are published online in the NEC Annual Environmental

(%) Total respondents in fiscal 2006: 30,383 Report 2006. 100 Eco-Ignorance 21.8 16.9 URL http://www.nec.co.jp/eco/en/annual2006 80 3.6 Eco-Intelligence 43.5 5.8 During fiscal 2006, NEC also began issuing an Environmental 49.8 Eco-Players Activity Report on a quarterly basis. 60 30.2 35.0 Eco-Excellence 14.9 40 19.5 17.4 11.0 20 42.2 44.5 19.6 24.2 0 2003 2004 2005 2006 (Fiscal year)

Environmental Activity Report (interim period) Environmental Activity Report (third quarter)

URL http://www.nec.co.jp/eco/en/annual2006/08/8-0.html Ratings and Awards From External Organizations

March 2005 ● Named “Global Citizenship Supplier of the Year 2005” by Dell Inc.

July 2005 ● Ranked No. 1 overall in the support category in Nikkei Personal Computing’s Fiscal 2006 PC Manufacturer Support Ranking (for second consecutive year)

August 2005 ● Selected for inclusion in the Morningstar Socially Responsible Investment Index (MS-SRI, Japan)

September 2005 ● Included in Dow Jones Sustainability World Index and FTSE4Good Global Index Fiscal 2006 Minister’s Award received from the Ministry of Health, Labour and Welfare recognizing NEC’s excellent record in employing people with disabilities Ranked No. 6 overall in the Nikkei Business Daily’s survey of the best Japanese firms from the perspective of workers (ranked No. 1 for proactive HR development stance)

November 2005 ● NEC’s “Refreshed PC” business garners the Chairperson’s Prize in the eco-services category of the 2nd Eco- Products Awards (sponsored by the Eco-Products Awards Promotion Committee)

December 2005 ● Ranked No. 2 overall in the Nikkei Business Daily’s 9th Environmental Management Survey

February 2006 ● Minister’s Award received from the Ministry of Economy, Trade and Industry at the 15th Global Environmental Awards (sponsored by the Fuji Sankei Communications Group)

March 2006 ● Selected for inclusion in FTSE4Good Global Index NEC and NPO Asaza Fund awarded joint prize for environmental cooperation by Mie Prefecture at the 4th Japanese Environmental Management Awards

44 April 2006 ● Selected as a company with an outstanding Internet IR program by Daiwa Investor Relations Co., Ltd. for the sixth consecutive year NEC Annual CSR Report 2006 Inclusion in Socially Responsible Investment (SRI)

Principal Stock Indices · Dow Jones Sustainability World Index (gaining top score in the Computer Hardware & Electronic Office Equipment sector for 2005) · FTSE4Good Global Index · Morningstar Socially Responsible Investment Index

Major SRI Funds in Japan · Asahi Life SRI Social Contribution Fund “Asu no Hane” (Wings of Tomorrow) (as of April 2006) · Mitsubishi UFJ SRI Fund “Family Friendly” (as of March 2006) · Sumitomo SRI Japan Open “Good Company” (as of February 2006) Independent Review of NEC Annual CSR Report 2006

This independent review is based on an examination of NEC’s Annual CSR Report 2006 and Areas Requiring Further Effort interviews with relevant NEC personnel. In our opinion, NEC’s CSR activities are now • NEC needs to encourage group firms in Japan and overseas to take more proactive and beginning to involve the appropriate application of PDCA management cycles across a autonomous action with regard to employee training and awareness-raising for the NEC broad range of items, from measures to reduce the environmental impact of operations Group Code of Conduct and the use of related case studies. to efforts to involve suppliers in activities. • NEC should improve both the scope and content of the questionnaires used to assess management of environmental, safety and human rights issues within its supply chain in order Areas of Excellence to gain a more exhaustive grasp of progress in these areas. NEC also needs to focus on pro- • NEC has clearly identified “medium-term issues” and “key points” as part of its medium- viding support to small suppliers in particular in developing training and management sys- term CSR strategy. In addition to establishing specific targets and associated sets of mea- tems. This reflects a need for NEC to embrace partnerships with suppliers proactively to sures for fiscal 2006, NEC has also set specific objectives for fiscal 2007 based on the focus on implementing activities that will help to solve issues over the medium term. progress that needs to be achieved within each activity. This demonstrates that NEC is • Merely creating systems aimed at promoting a healthier work-life balance is a necessary properly operating PDCA management cycles for CSR-related activities and reporting along but insufficient condition for success in this area: these systems must also be used widely. such lines. Also, NEC needs to focus here on encouraging greater use of the systems and on creating • NEC has expanded the system of Corporate Ethics Promoters to domestic affiliates, and the necessary workplace environment to promote this outcome. their number now exceeds 500. • NEC should proactively upgrade its physical and mental health management systems to • NEC is using the results of regular customer satisfaction surveys to identify issues and to include the employees posted to work in small groups at clients, in areas such as software stimulate cross-functional response measures. NEC has also introduced customer feedback development and systems maintenance. forms to enable follow-up measures for system installations at clients. • NEC needs to put more effort into gaining the understanding and cooperation of users in • NEC has formulated and distributed Supply Chain CSR Guidelines to suppliers in a bid to reducing power consumption during usage and in promoting the collection of post-use encourage business partners to fulfill social responsibilities. NEC has also instituted cross- products (by stressing that users are part of the product lifecycle). divisional meetings to solve identified issues related to communication between different • Besides trying to gain the understanding of employees, local communities, NPOs and other material purchasing operations. stakeholders by improving communication, NEC needs to build trust through joint activities • “NEC Makes a Difference” activities were conducted at NEC group companies. Over in CSR-related areas. CSR is a field that demands continuous creativity. 130,000 people took part in numerous social contribution programs tailored to local community needs. Many NEC personnel from around the world also gave donations to help vic- Chief Executive Officer, International Institute for Human, Organization and the Earth (IIHOE) tims of major natural disasters. • Using measures such as lifestyle improvement guidance and working hour restrictions, NEC has managed to achieve a reduction of 25% in the number of employees identified as having multiple risk factors for cerebrovascular or cardiovascular disease. NEC is also Hideto Kawakita taking active steps to prevent mental health problems with the Mental Health Support Program. This includes managerial training to raise awareness of the program as well as plans to upgrade the health management system of the NEC group in various regions around Japan. • Efforts across the entire NEC group are focusing on reducing consumption of power, gas, 45 other fuels and water, lowering emissions, and promoting recycling. • NEC continues to address the challenge of incorporating environmental initiatives into (Profile of IIHOE) everyday operations. Examples include the use of RFID technology at the Yonezawa plant of The International Institute for Human, Organization and the Earth (IIHOE) is a nonprofit orga- NEC Personal Products and the programs at NEC AccessTechnica to use solar and wind nization (NPO) that has been supporting NPO management and CSR capacity building since power to supply energy for lighting and to recycle resources derived from disassembled 1994. modems. URL http://www.iihoe.com (Japanese only)

Measures Implemented in “Areas Requiring Further Effort” Identified in 2005 NEC Annual CSR Report 2006

• “NEC is recommended to expand CSR activities presently centered on NEC • “With respect to the collection of used products, NEC is recommended to inform Headquarters to include the entire NEC group. As for human rights and safety man- users of how products will be reused or recycled after collection. In this manner, agement in the supply chain, instead of merely excluding problematic business NEC should let users know they are part of the product lifecycle and gain their partners by ending business relationships with them, NEC should proactively cooperation in this respect.” embrace partnerships to resolve issues over the medium term.” We have updated our environmental website to make it easier for people to access We have begun to extend CSR activities not only to the entire NEC group, but also to information about reuse and recycling (in the FAQ section on the front page, we have business partners. Going forward, we plan to build stronger partnerships with suppli- listed “collection and recycling” as a separate topic, with links to information about ers to tackle issues from a long-term perspective while seeking to deepen mutual the 3Rs). Our website for PCs (121ware.com) also introduces product users to collec- understanding. tion and recycling systems. >>> P12, 14, 25 • “With respect to physical and mental health management, NEC is recommended to • “NEC is recommended to request each BU and operating base to implement C&CS proactively take creative steps to reinforce care for individual employees (or small (Customer and Community Satisfaction) activities to reflect the views of local com- groups) seconded to client companies to provide software development, mainte- munity residents, NPOs and NGOs close to NEC operating bases in management. nance or other services.” This would enable the Company to fulfill a broader range of corporate social responsibilities, in addition to enhancing customer satisfaction.” We recognize this as an issue that needs addressing at a future date. The current priority in this area is to reinforce NEC group health management systems in various Our CSR-related activities place a strong emphasis on communication with local regions across Japan. >>> P31 communities and NPOs. This year’s report contains an example of environment- related stakeholder dialogue at the PC manufacturing plant in Yonezawa, Japan. •“Regarding the content of the CSR report, explanations of systems and frameworks, >>> P15 and measures implemented are found throughout the report. However, in addition to this, NEC is encouraged to clearly present accomplishments that highlight improvements from the previous fiscal year, and issues that lie ahead, specifically, actions to be taken in the subsequent fiscal year, in light of these accomplishments.”

We continue to undertake CSR-related activities based on a PDCA management framework. Details can be found in the section of the report entitled “CSR Promotion Activities: Performance and Objectives.” >>> P12, 13 NEC Annual CSR Report 2006 Year ended March 31, 2006 Printed in Japan Issued in July 2006 NEC Corporation 2006 C NEC home page: http://www.nec.com NEC home Telephone: +81-3-3454-1111 Telephone: 7-1, Shiba 5-chome, Minato-ku, Tokyo 108-8001, Japan Tokyo 108-8001, Minato-ku, 5-chome, 7-1, Shiba