Notice Regarding Issuance of Green Bonds

NGK INSULATORS, LTD. is set to issue its inaugural green bonds (unsecured straight bonds) in December 2021 as the finances for the achievement of “NGK Group Vision: Road to 2050” and “NGK Group Environmental Vision for 2050” formulated in April 2021.

1. Objectives and Backgrounds

Since the company’s foundation in 1919, the NGK Group has provided society with new values centered around ceramics, while possessing an SDGs-like concepts. Still valuing this philosophy, we formulated a mid- to long-term vision “NGK Group Vision: Road to 2050” in April 2021 in order to continue contributing to the resolution of social issues in an era of extreme change.

Envisioning the future society of 2050, we will seize the enormous trends of rapid advancement toward the realization of carbon neutrality and a digital society as an opportunity for new development and work on promoting Five Transformations: (1) Promotion of ESG management, (2) Profitability improvement, (3) Focus on R&D, (4) Focus on commercialization, and (5) DX (digital transformation). With “Surprising Ceramics.” as the slogan for our unique ceramic technology, we intend to convert our business structure in anticipation of the “Third Foundation.”

We will position fields related to “carbon neutrality,” in which people coexist with the natural environment, and “digital society,” in which they can live securely, conveniently, comfortably, and in good health, as the focus fields and will develop business so that products related to these fields make up 80% of the company’s sales in 2050. We plan to allocate a total of 300 billion yen in R&D expenses over the next 10 years and distribute 80% of that amount to both fields. We have established a goal of “New Value 1000” to achieve net sales of 100 billion yen from new businesses in 2030, which will be a checkpoint in the plan. We will invest management resources with a focus on promising development topics for creating new products and businesses.

The “NGK Group Environmental Vision for 2050,” meanwhile, is in place to meet social needs through business activities — i.e., “carbon neutrality,” “a recycling-oriented society,” and “harmony with nature.” Specifically, the NGK Group aims at zero CO₂emissions for FY2050, with FY2025 and 2030 targets set at 550,000 tons (reduce by 25% from FY2013) and 370,000 tons (reduce by 50% from FY2013), respectively.

The proceeds of the green bonds will be used to finance carbon-neutral R&D and the group’s decarbonization projects, all designed to put the vision into practice.

2. Overview of the green bonds

*1 Structuring agent is a party which helps issuance of green bonds through providing advice on developing a green bond framework and acquisition of external third-party assessments.

3. Projects eligible for the green bonds’ financing

We have set projects for development and distribution of products and services contributing to realizing “carbon neutrality,” “a recycling-oriented society,” and “harmony with nature,” and for investment in development of the manufacturing processes of such products, as eligible projects for green bond financing.

A. Distribution of environmentally friendly products and services

B. The NGK Group’s business and manufacturing activities for carbon neutral initiatives

*2 GBP：Green Bond Principles

The green bond framework is aligned with the ICMA Green Bond Principles 2021 and the Green Bond Guidelines 2020 by the Ministry of the Environment and has obtained “Green 1(F),” the highest rating, provided by a third party (Japan Credit Rating Agency, Ltd.).