Message from the President

Adoption of ESG Initiatives as the NYK Group's Next Growth Strategy while Aiming to Be a Sustainable Business Contributing to Society through Total Innovation.

Keep the Logistics Lifeline Open

There is no doubt that many people take the maritime shipping and logistics industries for granted in much the same way as water and air. However, as infections by COVID-19 spread rapidly throughout the world, some regions are struggling with ongoing increases in cases even now. This situation has brought home to many the great social responsibility borne by the maritime shipping and logistics industries, which usually operate unnoticed, expressed by the NYK Group's mission statement, "Bringing value to life." The NYK Group operates over 750 vessels worldwide, staffed by nearly 20,000 crew members, which continue to carry the cargoes essential for society. It is our duty to keep the logistics lifelines open, upon which society depends, while making people's daily lives safer and more secure. In light of this, I would like to once again encourage all employees of the NYK Group to take pride in their work and carry out this great mission and responsibility faithfully.

The NYK Group uses its diverse human resources drawn from many countries worldwide as a strength, bringing them together in an open corporate culture based on respect for people. Here, a process of repeated "chemical reactions" among people has sparked innovation that has enabled the Group to continue operating in the core maritime shipping and logistics industries. If we can continue to be consciously innovative as a group and parlay this into real action, then we should be able to survive for another 150 or 200 years. Conversely, I am keenly aware of the danger that, if we lose this virtue, we might be eliminated from the market. Amid a rapidly changing society in an era of rising uncertainty that clouds the future, rather than merely toying with change, we must act as a united group and fully confront the many issues that appear before us while aiming to be a sustainable business through Total Innovation.

Utilizing ESG Initiatives to Become the Preferred Choice of Customers

ESG is the foundation for the NYK Group's aspiration to become a sustainable business entity. The logistics industry, and not only ships, uses a large amount of fossil fuels, which certainly has an impact on the environment. This puts the industry at a disadvantage in terms of responding to climate change and preserving the environment, and we need to understand that the industry is under constant pressure to improve. I believe that, to carry out its social mission, the Group must not only keep the logistics lifeline open but also lead the way in responding to environmental issues. In my opinion, this will become one of our growth strategies going forward. Rather than simply falling into line with other companies and following the mainstream, I am convinced that our way forward is to become a front runner, driven by various innovations.

When meeting with members of top management of other companies I find that ESG comes up as a topic of interest extremely frequently. These days, our customers are also anxious to partner with companies taking a firm approach to ESG initiatives and the Sustainable Development Goals (SDGs). The NYK Group can become the preferred choice of many customers as a company that is taking serious, concrete action on social problems, by making use of innovative technologies and providing modes of transportation that are highly environmentally conscious. We plan to increasingly approach customers with the idea that partnering with the Group will enable them to engage in cutting-edge, sustainable business operations.

Heading toward a Sustainable Business Structure for Growth Strategies Based on ESG Initiatives

Under our medium-term management plan, we have presented four key initiatives, including ESG, in line with the theme of "Digitalization and Green." This framework has not changed significantly; however, from now on, rather than placing ESG on the same level as other key initiatives, we will treat it as a compass that shows management's long-term direction while drawing up medium-term business strategies looking at a three- to five-year period to increase the NYK Group's corporate value. ESG initiatives will be the starting point when we begin devising this strategy. Among the themes of "Digitalization and Green" in the medium-term management plan, I see Digitalization as an important tool for accelerating our initiatives on the environment. For example, we are currently working with four laboratories, including Monohakobi Technology Institute Co., Ltd., on a project using big data and AI to analyze optimal operations and weather phenomena. If we can use the fruits of this project to improve fuel consumption, we will be able to reduce our CO2 emissions. Digitalization is also applicable for promoting workstyle reforms and responding to risks that have emerged in the past few years around information management and logistics system security. Furthermore, we expect to be able to create new value by combining the various data that we receive from our existing businesses with ESG concepts. On the other hand, under the Green aspect of the medium-term management plan, we are working to commercialize green businesses based on the theme of renewable energy. This involves organically linking our sales and engineering divisions and making use of the global network we have developed over many years to collaborate with leading partners in Japan and overseas. Among these collaborations, we have made steady progress in offshore wind power, with proactive support from the Japanese government following the enactment of a new law to promote offshore wind power in 2019. With regard to fuels for shipping, we will also step up our research and development efforts in such areas as hydrogen and ammonia. Decarbonization cannot be achieved by the NYK Group alone.
However, by cooperating with various stakeholders to make progress toward the same target, we can contribute to achieving it as early as possible.

The NYK Group's Latent Strengths and Total Innovation

Prior to my appointment as president in 2019, I was in charge of the Energy Division for many years. During that time, I created an environment where my team worked cheerfully and energetically while sticking to results in order to contribute to the NYK Group's earnings. As president, I still stick to results, but one thing that has fundamentally changed is how I now think constantly about all of the Group's stakeholders, including shareholders, instead of concentrating on just its employees. As I have become more conscious of a wider range of stakeholders, my sense of responsibility has also grown considerably. As part of this, I would like all employees to see the Group as a great stage upon which to express themselves to the best of their ability. If we can make such a group, it will surely be full of energy, happiness, and enthusiasm, giving rise to a sense of achievement. The entire Group will certainly head in a good direction. The NYK Group has a strongly established culture in which we naturally support each other in times of trouble, without trying to hold one another back. I would like us to treasure this wonderful culture that has been left to us by our predecessors. The sight of Group employees working cheerfully and with motivation is the best moment in my day.

As the Group's operations continue to expand globally, it is also essential to consider diversity and inclusion when hiring and assigning personnel. That means assigning the right people to the right place from a diverse group of human resources, regardless of their gender, nationality, or other characteristics. I would like NYK to be a company that enables the personnel it has trained and developed to find success, and allows all employees to thrive in their own ways according to their individual abilities and motivation. At the same time, we are also making revisions to the personnel system, as I suspect that we are not drawing out the full potential of the Group's employees. I would like the management team and our employees to take on their challenges seriously at all times. If we discuss matters seriously as we work, I believe we will get the right results every time.

Just to reiterate, ESG is an issue that we should address as a member of society, as well as an approach that we should thoroughly promote as a growth strategy to be explored by the NYK Group. Even when emergencies occur, you can count on the Group's latent strengths, as it continues to transport the cargoes that society needs, and on its Total Innovation inspired by ESG. We would like to ask for your continued support going forward.

November 2020

Hitoshi Nagasawa