Nippon Yusen Kabushiki Kaisha NYK Report 2020 Financial, Social and Environmental Performance Prologue Focusing on the Next Generation Brand New Vision We are looking ahead to the next stage of our integrated logistics business strategy centered on maritime shipping. Surveying the NYK Group reveals a multitude of insight, know-how, technological expertise, and comprehensive global networks developed through operations. Can we harness these elements to create completely new value? Can we realize the kind of value that is needed in the coming era? Inspired by these questions, we have created new goals and approaches for achieving them. NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 1 Our Goal To play an essential role in society and industry as a Sustainable Solution Provider In supporting society and industry for 135 years, we have done much more than simply “transport” cargo. We have played an essential role in society because we have boldly taken on new challenges that no-one else has and achieved results. Today, we are witnessing the dramatic dawning of a new era. We believe that environmental, social, and governance (ESG) issues constitute the key theme for value creation going forward. Taking a completely new approach, we will continue to play an essential role in the world as a corporate group, winning the favor of society in the new era. 2 NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 3 Our Approach We will make an amazing transformation through a concerted groupwide effort. NYK Total Innovation Issues emerge when we take an ESG-centric management perspective. Solving issues requires more than technological development. Doing so also requires a full commitment to an amazing transformation through a powerful, far-reaching, concerted groupwide effort. Moving on from the past and changing our organization, human resources, approaches, and behavioral patterns—this is how we will become a Sustainable Solution Provider that plays an essential role in society. This is the NYK Group’s Total Innovation Strategy. 4 NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 5 Contents 8 Message from the President Editorial Policy for NYK Report 16 NYK Group ESG Story The NYK Report 2020 is the eighth iteration of the NYK Group’s integrated report, which first launched in 2013. Targeting a wide range of the NYK Group’s stakeholders, 18 Our Approach the report is designed to present the Company’s various initiatives to solve environ- mental, social, and governance (ESG) issues, as well as its management strategies, 18 ESG Management at the NYK Group which are strongly oriented toward contributing to the sustainable growth of society 20 The NYK Group’s Innovation for Solving Issues in and industry as well as of the NYK Group. In the NYK Report 2020, we highlight once Maritime Shipping again the Group’s raison d’être while telling our growth story with a focus on the next 22 Innovation Roadmap generation, asking ourselves what value we can provide through our businesses to the societies and industries of the future. 24 Next Innovation for Zero 26 A Group of Technical Experts for Creating New Value Website 28 Taking On the Challenge of Maritime Autonomous Ships through Open Collaboration General business activities https://www.nyk.com/english/ 30 NYK × Green Financial information Nonfinancial information 32 NYK × Digital Website section: Investor Relations Website section: CSR https://www.nyk.com/english/ir/ https://www.nyk.com/english/csr/ 34 Feature: Roundtable Discussion Considering New Possibilities and Innovation That Contribute to NYK Report (Booklet, PDF (full version), and Financial Results), etc. Solving Social Issues through Business Fiscal Statements Corporate Governance Fact Book I, II Code related documents 38 Our Value Business report 38 The NYK Group Continues to Grow While Supporting the Overcoming of Challenges in Society and Industry Based on Its Basic Philosophy of “Bringing value to life.” Cautionary Statement with Regard to Forward-Looking Statements 40 Ultra-Long Perspective on History of Enhancing Corporate Value Some statements made in this report are forward-looking statements that are based on information currently available and involve certain risks and uncertainties that 42 Data on the NYK Group’s Sustainability could cause actual results to differ materially from those projected. Please be 44 Supporting the Challenges of Society and Industry with a Solid Track advised against undue reliance on such forward-looking statements. NYK under- Record and Technology takes no obligation to publish revised forward-looking statements to reflect events, circumstances, or unanticipated events after the present juncture. 46 Our Business Foundation Supporting the Challenges of Society and Industry Scope of Report 48 Our Progress • Reporting period: Fiscal 2019 (April 2019 to March 2020) In some cases, information from April 2020 and beyond 48 Message from the CFO is included. 50 Efforts to Mitigate Climate Change • Coverage: The activities of NYK and its consolidated group companies 52 Medium-Term Management Plan Progress in Japan and overseas are included. The scope of coverage is indicated when there are differ- 56 Business Overview ences in the major companies involved in specific business 56 Global Logistics operations. 58 Bulk Shipping: Car Transportation Division • Date of issue: October 2020 (previous: August 2019; next: August 2021) 60 Bulk Shipping: Dry Bulk Division Target Reader 62 Bulk Shipping: Energy Division This report has been prepared for all parties who have an interest in the activities of 64 Corporate Governance the NYK Group, including customers, shareholders, investors, business partners, employees, local communities, NPOs/NGOs, students, certification bodies, research- 64 Directors, Audit and Supervisory Board Members, ers, and those responsible for CSR/ESG at other companies. and Executive Officers 66 NYK Group Management System Guidelines for Disclosure about the Environment, Social, and 68 Independent Outside Directors’ Messages Governance factors 70 Message from Chief Compliance Officer • International Integrated Reporting Framework Version 1.0 by the International 73 Corporate Governance Integrated Reporting Council (IIRC) • GRI Standards, global standards for sustainability reporting produced by the Global 76 10-year Summary Reporting Initiative (GRI) 80 Environmental Data • ISO 26000 82 Environmental Accounting, NYK Green Bonds • Environmental Reporting Guidelines 2018, by the Ministry of the Environment, Japan • Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Ship name: Selene Leader 83 Human Resources Data Collaborative Value Creation by the Ministry of Economy, Trade and Industry Type: Pure car and truck carrier 86 Corporate Data • Japan Business Federation Gross tonnage: 59,499 tons 87 External Evaluations Society 5.0 —Co-creating the Future Length overall: 199.99 meters CSR > NYK Report > GRI STANDARDS / ISO26000 INDEX Total loading car capacity: 6,400 units 6 NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 NIPPON YUSEN KABUSHIKI KAISHA NYK REPORT 2020 7 Message from the President Adoption of Environmental, Social, and Governance (ESG) Initiatives as the NYK Group’s Next Growth Strategy While Moving to a New Stage through Total Innovation Keep the Logistics Lifeline Open There is no doubt that many people take the maritime shipping and been assigned, and we transport freight to its destinations, despite logistics industries for granted in much the same way as water and the risk of infection. I am sure you will have seen many news reports air. However, as infections by COVID-19 spread rapidly throughout of shortages of masks and medical supplies, mainly in Japan. the world, some regions are struggling with ongoing increases in Without the efforts of NCA, Japan may well be in an even worse cases even now. This situation has brought home to many the great situation. The same goes for container ships that transport living social responsibility borne by the maritime shipping and logistics essentials, dry bulkers that convey foods such as soy and wheat, industries, which usually operate unnoticed, expressed by the NYK and tankers that deliver energy resources. The NYK Group operates Group’s mission statement, “Bringing value to life.” Take air cargo over 750 vessels worldwide, staffed by nearly 20,000 crew members, services for example. With passenger services reduced or sus- which continue to carry the cargoes essential for society. It is our pended, the transport of medical supplies, such as pharmaceuticals, duty to keep the logistics lifelines open, upon which society depends, masks, and surgical gowns, has now fallen to Group company while making people’s daily lives safer and more secure. In light of Nippon Cargo Airlines Co., Ltd. (NCA). As cities go into lockdown one this, I would like to once again encourage all employees of the NYK after another around the world, human movement has been severely Group to take pride in their work and carry out this great mission and restricted. Personnel needed to operate transportation services have responsibility faithfully. Hitoshi Nagasawa President, Representative Director, President and Chief Executive Officer Career at NYK After joining the Company in 1980, Hitoshi Hikawa Maru Evoking a Sense of a “Safety-” and “Innovation-Oriented” History Nagasawa became the general manager of LNG Group in 2004, a corporate officer in In writing this president’s message, I visited Hikawa Maru, which is compartments that could be sealed with waterproof sliding doors in 2007, and a managing corporate officer in 2009. He has been in charge of the Energy moored at Yamashita Park in Yokohama. I have made the trip many the event of inundation. The vessel was state of the art, brimming Division since becoming a director in 2011 times before. Built in 1930, Hikawa Maru was operated as a passen- with technologies that were considered innovative at the time. The and has chaired a committee overseeing the ger ship on NYK’s Seattle service, carrying not only cargoes but also extremely high level of safety is evident even to observers today.