Sustainability Report 2018 NEC Sustainability Report 2018 Table of Contents 73 Supply Chain Management 80 Ensuring Quality and Safety 2 Message from the President Social 84 Respecting Human Rights Sustainable Management 91 Personal Information Protection and Privacy 99 Diversity and Inclusion 3 Sustainable Management 107 Creating a Diverse Work Style Environment 7 Priority Management Themes 114 Human Resources Development and Training from an ESG Perspective – Materiality 120 Health and Safety 14 Dialogue Sessions on Materiality with Experts 20 Dialogue and Co-creation with Our Stakeholders 21 Dialogue with Our Diverse Stakeholders Environment – Case Examples 26 CS (Customer Satisfaction) Initiative 126 Environmental Management Initiatives 30 Cooperation with the Local Communities 35 Innovation Management 45 External Ratings and Evaluation Reference Information 133 GRI (Global Reporting Initiative) Index 144 Global Compact 145 ISO26000 Governance 147 Third-party Assurance 148 Information Disclosure Policy 48 Corporate Governance 150 Data Collection 50 Risk Management 50 Compliance and Risk Management 55 Basic Approach on Tax Matters 56 Promoting Fair Commercial Transactions 60 Business Continuity 67 Information Security and Cyber Security NEC is a signatory to the United Nations Global Compact. 1 NEC Sustainability Report 2018 Message from the President Becoming a company that is embraced by and essential to society Since its founding in 1899, NEC has been providing products and services that are centered on IT and networks under the motto of “Better Products, Better Services” as the company contributes to customers and society. In 2014, we created the Brand Statement “Orchestrating a brighter world” and have been promoting business that originates from efforts to address important social issues. In fiscal 2018, under the Mid-term Management Plan 2020, we identified nine themes that represent “Materiality” – Priority Management Themes from an environmental, social and governance (ESG) perspective. This demonstrates to stakeholders, inside and outside the company, NEC’s 119 years of efforts to provide value to society and clearly presents NEC’s resolve to work together to further promote growth initiatives. NEC became a signatory to the United Nations Global Compact in 2005, which was founded on the basic principles of human rights, labor, environment and anti-corruption. NEC continues to strive to minimize any burdens that business activities may have on society, and when we identify a materiality, we emphasize that themes must be able to contribute to value creation for society. Moreover, the name of each materiality reflects the aspirations and resolve that NEC is seeking to promote. For example, the theme of “Security to maximize ICT possibilities” expresses NEC’s desire not only to minimize the impact of risk but also to contribute to the creation of a safe and secure society where everyone has the opportunity to lead positive and abundant lives. This can be accomplished through the provision of our information security and cyber security solutions. NEC is a member of the Sumitomo Group, whose business philosophy encourages individuals to “place prime importance on integrity and sound management,” a belief passed down from some 350 years ago. The principle of placing prime importance on integrity and avoiding pursuit of immediate benefit can be defined as the heart and essence of sustainable management. This philosophy is also in alignment with the principle of SDGs. The significance of NEC’s existence can be measured by its continued provision of value to society through its business activities. The NEC Group is determined to serve as a company that is embraced by and essential to society. By each employee listening to the opinions of customers and the voices of society, the company can strengthen its ability to create value while working towards the solution of social issues. July 2018 Takashi Niino President and CEO 2 NEC Governance Social Environment Sustainability Report 2018 03-06 Sustainable Management 07-13 Priority Management Themes from an ESG Perspective – Materiality 14-19 Dialogue Sessions on Materiality with Experts 20 Dialogue and Co-creation with Our Stakeholders 21-25 Dialogue with Our Diverse Stakeholders – Case Examples 26-29 CS (Customer Satisfaction) Initiative 30-34 Cooperation with the Local Communities 35-44 Innovation Management 45-47 External Ratings and Evaluation Sustainable Management NEC’s Sustainable Management NEC has defined the brand statement “Orchestrating a brighter world” and provides solutions to worldwide social issues for the realization of a global society where everyone has the opportunity to lead positive and abundant lives. In 2014, we announced this brand statement in order to confirm our vision to achieve “Social Value Creation.” This statement is rooted in the NEC group corporate philosophy which was established in 1990, “NEC strives through C&C* to help advance societies worldwide toward a deepened mutual understanding and the fulfilment of human potential.” * C&C: the integration of computers and communications For us at NEC, sustainable management means that every one of us, executives and employees, will seek to operationalize the brand statement and the corporate philosophy through our business activities while listening to the voices of society through dialogue with our stakeholders. Our activities, which include both non-profit social contributions and our core business, will contribute to the creation of social value, impacting society and the environment positively from Environment, Social and Governance (ESG) perspectives. We don’t only focus on fulfilling our compliance responsibility, typified by legal compliance and corporate ethics. We also focus on mitigating corporate risks that may adversely affect society or the environment. At NEC, we are pushing forward the above initiatives in line with the “NEC Way,” statements setting out the guiding principles for human resource development and for the mind set which applies to each individual employee. Furthermore, in 2005 NEC signed the United Nations Global Compact, which calls for corporate activities that adhere to 10 principles in the four areas of “Human rights,” “Labor,” “Environment” and “Anti-corruption,” and we periodically undertake self-evaluations of the activities that we are carrying out based on the principles. In these ways, we are driving forward corporate activities which center on contributing to the Sustainable Development Goals (SDGs) adopted by the United Nations (UN) in 2015. NEC Way 3 NEC Governance Social Environment Sustainability Report 2018 03-06 Sustainable Management 07-13 Priority Management Themes from an ESG Perspective – Materiality 14-19 Dialogue Sessions on Materiality with Experts 20 Dialogue and Co-creation with Our Stakeholders 21-25 Dialogue with Our Diverse Stakeholders – Case Examples 26-29 CS (Customer Satisfaction) Initiative 30-34 Cooperation with the Local Communities 35-44 Innovation Management 45-47 External Ratings and Evaluation Basic Approaches and Process for Redefining “materiality,” the Priority Management Themes from an ESG Perspective Since its founding, NEC has been working to drive (2) Contribute to solving social issues through our Tentatively define materiality and carry out forward initiatives relating to Environmental, Social and business activities dialogues with experts Governance (ESG) issues, with the aim of realizing NEC maximizes both economic value and social value NEC created a list of social issues which were considered sustainable development for both society and NEC Group through our business activities. itself. In 2007, we defined the CSR initiatives, and in potential contenders for being set as priority themes, by 2014 we announced our brand statement “Orchestrating (3) Promote communication with stakeholders referring to global guidelines such as the GRI Standard, ISO26000 etc. and the SDGs while taking NEC’s business a brighter world” specifying our direction as a company NEC identifies the fundamental issues of customers and which aims to take up the revolution of Social Value characteristics into account. We then undertook a society and the values they seek by engaging in questionnaire survey of our employees which asked what Creation, and have been making progress with carrying communication and dialogue with a wide range of out business activities which originate from social issues. priority they would place upon each social issue and state stakeholders. NEC discloses the corporate initiatives the extent to which they believed NEC’s initiatives would On the other hand, there is now a trend of using non- taken to solve those issues, the results of these impact society in the mid- to long-term, and, conversely, financial information to evaluate corporate activities. initiatives, and new challenges in Sustainability reports the extent to which these areas would be impacted by (CSR reports) and other publications. Furthermore, by society. Accordingly, in our Mid-term Management Plan 2020, continuously implementing improvement measures NEC has identified “materiality” as new priority through PDCA cycles that take into account the feedback In addition, we then drew up a materiality matrix which management themes from an ESG perspective in the from society, NEC will continue to build relationships of centered on the impact that NEC will have on society and light of the needs of society including the SDGs, in order trust with our stakeholders