Conserving Energy and Preventing Global Warming

TCFD Information Disclosure

The THK Group has identified climate change as a material issue (significant challenge), and as of February 2023, it has become a supporter of the TCFD (Task Force on Climate-Related Financial Disclosures) recommendations. The TCFD recommendations are structured around the four core elements of governance, strategy, risk management, and metrics and targets. In accordance with the TCFD recommendations, THK has analyzed the impact of climate change on its business.

Governance

THK has established a Sustainability Committee, headed by the CEO, that investigates and discusses risks, opportunities, and responses related to climate change and acts as an advisor to the Board of Directors.
As an organization beneath the Sustainability Committee, the Sustainability Promotion Subcommittee is made up of representatives of each business division, and they analyze scenarios related to climate change risks and opportunities in accordance with the TCFD recommendations.
The Sustainability Committee confers on the results of the analysis performed by the Sustainability Promotion Subcommittee, determines measures to respond to climate change, and monitors the progress.
Based on the items discussed and resolutions determined by the Sustainability Committee, the Board of Directors receives and discusses reports and proposals as appropriate and provides general supervision for the climate change efforts of each division.

Strategy

Based on 1.5°C and 4°C climate change scenarios proposed by the IEA (International Energy Agency) and IPCC (International Panel on Climate Change), the THK Group has been analyzing scenarios primarily with regard to its Japanese industrial machinery business and automotive and transportation business in consideration of their long-term impact up to 2050 in order to investigate strategies and the resilience of those strategies with reference to climate change risks and opportunities.

• * 1.5°C scenario: Scenario in which regulations for minimizing global warming are strengthened and market changes are enacted (IEA NZE, IPCC AR6 (Sixth Assessment Report) SSP1-1.9, etc.)
• * 4°C scenario: Scenario in which physical impacts such as extreme weather events result from global warming (IPCC AR5 (Fifth Assessment Report) RCP8.5, etc.)

Primary Climate Change Risks/Opportunities and Responses

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Scenario	Cause	Change	Risk/Opportunity	Level	Impact on THK	THK’s Response
1.5°C	Introduction of carbon taxes	Increased procurement costs	Risk	Major	The introduction of carbon taxes will cause raw material price increases to be passed on to THK, and procurement costs will rise.	▶Reduce raw material input ▶Switch to raw materials with low carbon taxes
		Increased operating costs	Risk	Major	The introduction of carbon taxes will cause carbon tax payments to increase based on Japanese Scope 1 and Scope 2 emissions.	▶Develop energy-saving production technology ▶Transition to low-carbon, non-fossil fuel energy
	Change to renewable energy	Increased energy procurement costs	Risk	Major	The change to renewable energy will increase energy procurement costs.	▶Procure renewable energy internally by installing solar power generation systems
	Increased need for energy savings	Increased demand for environmentally friendly technology solutions	Opportunity	Major	There will be more equipment designs, fabrications, modifications, and product demand for automation and efficiency improvements for the purpose of boosting energy efficiency.	▶Strengthen provision of THK products that contribute to energy savings (LM Guide, electric actuators, unit products, etc.)
		Increased business opportunities in semiconductors	Opportunity	Major	Business opportunities will increase for the manufacture of semiconductor manufacturing equipment components, particularly involving power semiconductors, which form the core of energy savings.	▶Establish a development, production, and sales structure that can respond promptly and flexibly
		Increased demand for failure diagnosis/predictive failure detection service	Opportunity	Minor	Demand will increase for a failure diagnosis/predictive failure detection service that utilizes the IoT and helps boost productivity and reduces energy loss.	▶Expand IoT services that boost productivity and strengthen sales activities and solutions that utilize such services
	Advancement of electric vehicles	Increased demand for electric vehicle components	Opportunity	Major	As more vehicles become electric, new types of products become required, and demand for THK products will increase.	▶Establish a development, production, and sales structure that can respond promptly and flexibly ▶Plan new business
	Expansion of environmental business	Increased ESG investment	Opportunity	Minor	Expanding THK’s business in environmental fields will capture the attention of investors and make them evaluate THK more favorably, and ESG investment will increase.	▶Establish a development, production, and sales structure that can respond promptly and flexibly ▶Actively disclose information and strengthen communication with stakeholders
4°C	Serious damage from weather-related disasters	Supply chain interruptions	Risk	Minor	Supply of raw materials will be interrupted if the supplier suffers a disaster.	▶Decentralize raw material suppliers ▶Secure alternative suppliers
		Increased costs from global warming	Risk	Minor	Rising temperatures will cause air conditioning costs to increase for factories, distribution centers, and offices.	▶Improve heat insulation performance of buildings

Risk Management

In terms of overall risk management, the Risk Management Committee, which serves as an advisor to the Board of Directors, comprehensively and exhaustively identifies and assesses risks in accordance with risk management regulations, evaluates their severity, and determines the priority for addressing them.
For risks related to climate change, the Sustainability Committee and the Sustainability Promotion Subcommittee, which is under the Sustainability Committee, conduct an analysis of scenarios specific to climate change, identifies risks, and evaluates them in order to determine countermeasures.
Based on the risks and measures identified by the Risk Management Committee and the Sustainability Committee, the Board of Directors coordinates the impact of climate change on the business.

Metrics and Targets

In August 2021, the THK Group formulated the following medium-term and long-term targets for reducing greenhouse gas emissions in order to combat global warming.

Medium-Term Target

By 2030, reduce CO2 emissions to 50% of 2018 levels.
Scope: THK Japan and Group companies in Japan
2018 emissions: 106,514 tons
2030 target emissions: 53,257 tons

Long-Term Target

By 2050, achieve net-zero CO2 emissions.*
Scope: Entire THK Group

• * Net-zero CO2 emissions: Achieving a balance between man-made CO2 and greenhouse gas emissions with their removal by carbon sinks such as forests.

Based on these targets, the THK Group will develop products that further contribute to energy and labor savings, continue conducting its business with environmental considerations in mind, and work to achieve a sustainable and affluent society.

THK’s Medium- and Long-Term Targets for Carbon Neutrality

The world is facing risks driven by climate change from global warming, and in response, the THK Group has established medium- and long-term targets for lowering its emissions of greenhouse gases. (These targets were approved by the Board of Directors in August 2021.)
The entire THK Group will continue to work together to promote effective policies aimed at achieving a carbon-neutral society.
As necessary, updates on these efforts will be released in an appropriate manner.

Medium-Term Target

By 2030, reduce CO₂ emissions to 50% of 2018 levels.
Scope: THK Japan and Group companies in Japan
2018 emissions: 106,514 tons
2030 target emissions: 53,257 tons

Long-Term Target

By 2050, achieve net-zero CO₂ emissions.*
Scope: Entire THK Group

• *Net-zero emissions: Achieving a balance between man-made CO₂ and greenhouse gas emissions and their removal by carbon sinks such as forests. (Source: Ministry of the Environment’s website)

Energy Conservation Initiatives

Energy Conservation

As exemplified by sustainability, society and corporations generate common value through corporate activities that minimize the negative impacts and strengthen the positive. With this mindset of working for the benefit of all in addition to our individual interests, THK is promoting various initiatives to achieve the creation of a sustainable society.
The world is facing risks driven by climate change from global warming, and in response, the THK Group has established medium- and long-term targets for lowering its emissions of greenhouse gases. (These targets were approved by the Board of Directors in August 2021.)
To minimize our negative impact, we have established the Carbon Neutrality Promotion Project, which is working to further reduce the CO2 emitted through our business activities. Meanwhile, to strengthen our positive impact, we are expanding our offerings of linear motion and other products and services that contribute to energy conservation. We will accelerate our various initiatives in order to achieve these goals.

Activities and Results

Initiatives for Green Distribution

Policy

1. Propose shipping methods that minimize CO₂ emissions while considering customers’ due dates
2. Consider load efficiency and labor efficiency in logistics
3. Reduce CO₂ emissions year on year and reduce fuel consumption rate by 1% (per ton-kilometer of shipping)

Distribution departments* are constantly considering shipping methods to reduce CO₂ emissions while giving top priority to meeting customer delivery dates. Since June, we have switched some overseas shipping from the conventional air freight to transport by ferry. From the next fiscal year onward, we will actively utilize DX to reduce CO₂ emissions through more efficient shipping, such as by using advance understanding of shipment volumes to determine optimal loading on pallets. In addition, we will use AI to review operations and implement initiatives to save labor.

• * Distribution departments: Two distribution centers (Chubu and Yamaguchi); three factory centers (Yamagata, Kofu, and Mie); and THK NIIGATA

• * Data collection period: January to December
• * Data includes five production facilities in Japan (Yamagata, Kofu, Gifu, Mie, and Yamaguchi); two distribution centers (Chubu and Yamaguchi); and three factory centers (Yamagata, Kofu, and Mie).

Upgrading to LED Lighting

The details and results of our LED upgrades during 2021 are summarized below.

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Plant	Location	Time frame	Type and number of bulbs	Reductions
				Electricity used (kWh)
Gifu Plant	Stair landings	June	Fluorescent: 12	858
Yamaguchi Plant	Throughout the plant (including distribution center)	December	Fluorescent: 1,015 Mercury: 606	671,000
THK NIIGATA Plant	Factory 3, 2nd floor Assembly/Manufacturing Promotion Unit office	July	Fluorescent: 74	1,733
	Quality Assurance Section office	July	Fluorescent: 8	212
	Employee entrance	November	Fluorescent: 12	348
THK INTECHS Mishima Plant	Factory 1 clean booth line	April	Fluorescent: 17	628
	In front of Factory 2 coating area	July	Fluorescent: 12	264
	Talk Plaza, 2nd and 3rd floors	August	Fluorescent: 226	7,215
THK RHYTHM Hamamatsu Plant	Development Building, 1st and 2nd floors (all lighting)	July	Fluorescent: 116	9,280
	Machining/assembly lines in the plant, logistics office, etc.	May to July	Fluorescent: 214	12,840
THK RHYTHM Kyushu Plant	Factory 1 machining and assembly lines	January to October	Fluorescent: 100	5,879
THK America	Headquarters office	June	Fluorescent: 292	38,234
TRA Michigan	Throughout the plant	January to October	Fluorescent: 360
THK Wuxi	Transformer substation	January to August	Fluorescent (36 W): 108 Fluorescent (45 W): 24	18,353

Efforts at Each Production Facility

Yamagata Plant

Effective Use of HVAC Equipment

Central Monitor Used for Demand Control

Heat Source Improvement Work

Kofu Plant

Cooling Tower Upgrade

Insulating Ceramic Coating

Yamaguchi Plant

Upgrading Compressors

Pursuing Energy-Saving Operations

Since November, the coolant air supply area in Factory 3 in Zone B has been running in energy-saving mode by using the optimal pressure for days the plant is not in operation. As a result, they were able to reduce CO₂ emissions by about 4.0 tons per year, or the equivalent of about 1.9 kL of crude oil.

THK NIIGATA

Updating HVAC Equipment

Preventative Maintenance Activity

Floor-Mounted Packaged Air Conditioner

THK INTECHS Mishima Plant

The Mishima plant ran a generator as an auxiliary power source for the compressors from early December 2020 to the end of March 2021 and again from early July to late September, during the times of the year with the heaviest power consumption due to heating and cooling. As a result, they were able to reduce CO₂ emissions by about 15.99 tons per year, or the equivalent of about 5.9 kL of crude oil.

THK RHYTHM Hamamatsu Plant

Roof Replacement

Compressor Upgrade

Consolidating Machines

The production lines were revised in November to improve efficiency. A concentrated layout was created for the (rack and pinion type) steering tie rod socket machining process by removing four NC lathes and two thread checkers from the line. As a result, they were able to reduce CO₂ emissions by about 2.5 tons per year, or the equivalent of about 1.5 kL of crude oil.

THK RHYTHM Kyushu Plant

Dry Machining (Eliminating Coolant)

Reducing Loss from Rolling Machine Idling

From January to September, an energy-saving timer was installed on nine rolling machines to reduce the loss from idling. As a result, they were able to reduce CO₂ emissions by about 8.5 tons per year, or the equivalent of about 6.2 kL of crude oil. The remaining three machines were scheduled to be completed by December.

TRA Michigan