Message from the President

Steadily Developing ESG Management as a Business Strategy

Working Hard as a Pioneer in the Expectation of Significant Returns

In mid-April 2022, I visited North America for the first time in almost two and a half years. Over the previous two years, the COVID-19 pandemic had forced us to hold meetings with employees of overseas subsidiaries online. It really had been a while since I could meet face-to-face with national staff members. We convened a town hall meeting that also served as a simple get-together and invited Group employees in Central and South America to participate online. In this way, I was able to talk with many participants through a hybrid format that integrated offline and online discussion. In addition, I gave a presentation on the Group's growth strategies, focusing on the NYK Group ESG Story 2022—issued in March 2022—and then answered questions. The seriousness of participants and their questions about the contents of growth strategies made it clear to me that an awareness of ESG principles is steadily being instilled in personnel. While trailblazing inevitably entails hard work and costs, the returns are commensurately large. For example, as the equipment and capabilities of ships become more sophisticated to meet ESG-related specifications, we will need crew members who can operate such advanced equipment. Beginning this process now will enable us to foster crew members with said experience and expertise ahead of others. We have no choice but to stay ahead of the curve. With this in mind, I have repeatedly emphasized that the NYK Group ESG Story is our growth strategy. The discussions in North America have given me a firsthand appreciation of the significant progress we are making toward the development of full-fledged ESG management.

Having Each Site Prepare an ESG Story

Our history as a provider of logistics infrastructure that supports society and industry has given rise to a corporate culture focused on not only earnings growth but also a social mission. Consequently, the NYK Group's basic culture lends itself to the adoption of an ESG-driven mindset. Even so, frontline personnel were unsure about how to incorporate ESG yardsticks into specific operations. I want each employee to create their own ESG vision and story. Accordingly, to instill ownership of ESG priorities in every employee, the ESG Management Promotion Group led a concerted Groupwide effort, which gradually made inroads through uninhibited discussions with frontline personnel. The ESG Management Promotion Group is still working hard in this respect. Gradually responding to these efforts, frontline personnel have steadily begun to develop their own ESG Stories.
ESG management cannot be just window-dressing. It calls for up-front investments and the passing on of costs to customers. The role of senior management team members is to keep ESG principles at the center of business management and ensure that frontlinegenerated ESG stories translate into concrete operations. While I realize that incorporating ESG yardsticks into the near-term operations of corporate divisions is not easy, I am encouraging all employees to be creative and gradually introduce these yardsticks. Mobilizing the creativity and ingenuity of the entire NYK Group is sure to make a big difference in five or 10 years' time.

Realizing True ESG Management by Taking the Initiative

Between roughly 2000 and 2010, the NYK Group faced a number of problems that called into question its corporate conduct. These problems included the ordering of large numbers of ships for the dry bulk business without the guarantee of corresponding future demand, violations of the Antimonopoly Act by the automotive transportation business, and the issuance of a Business Improvement Order by authorities to Nippon Cargo Airlines Co., Ltd. Since becoming president, one of my highest priorities has been to thoroughly instill a spirit of legal compliance by identifying why such problems occurred and sharing the reasons in-house without glossing over anything. In the process of conducting an overall review of the aforementioned problems, I came to realize that nobody made decisions with the intention of failing. Rather, in decision-making processes certain factors were overlooked, and this led to failures. Therefore, we have reformed decision-making processes, as evidenced by our thoroughly discussing the pros and cons of proposals at management meetings and taking detailed minutes of the discussions. Moreover, these minutes are made available to relevant parties within the Group and reviewed later on. The aforementioned reforms will further ensure the transparency of decision-making processes while heightening the quality of decision-making itself. In the coming age, true ESG management will entail identifying management issues in relation to sustainable growth and thinking and acting independently to solve them. More companies are sure to want to incorporate into their logistics supply chains corporate groups that continue tackling management issues proactively and autonomously. My goal in pursuing ESG management is to not just lead the NYK Group toward a position of superiority but also develop a corporate group that can evolve continuously. For precisely this reason, the NYK Group ESG Story 2022 also mentions the establishment of ESG stories by Group companies. I believe the beginning of ESG management at Group companies is a major step forward.
While the foundations of ESG management are undoubtedly continuing to be reinforced, we are finding that some employees are too preoccupied with their duties to think deeply about the NYK Group ESG Story. When people are preoccupied, their creativity tends to become circumscribed. Although a corporate group with 50,000 crew members and other employees, the NYK Group has relatively few head office employees. Currently, it is concentrating on augmenting its workforce by stepping up mid-career recruitment, particularly of technicians. Also, considering that approximately 70.0% of our employees are non-Japanese, I regret not being able to provide them with more opportunities to play active roles in operations. To become a corporate group that is based on mutual respect for diversity in terms of nationality and gender and where all employees can fully realize their talents and contribute significantly to operations, we will strengthen our workforce and organization with a sense of urgency.

In Conclusion

Fiscal 2022, the year ending March 31, 2023, will see the acceleration of discussions in preparation for the announcement of our next medium-term management plan. To their credit, executive officers have already led intensive discussions under the auspices of the ESG Management Committee and the Sustainable Growth Task Force. Our various ESG management projects will take about five years to produce results. Accordingly, the new medium-term management plan will also highlight the current progress of ESG management. At the moment, we are still predominantly talking about ESG management. During the period of the next plan, however, the aforementioned projects should begin producing concrete results.
In accordance with our basic philosophy of "Bringing value to life.," we are advancing a strategy that will greatly raise our corporate value. I want to thank stakeholders for endorsing this strategy and to ask for their continued, strong support. Over the current fiscal year, please look forward to seeing even greater progress in the evolution of the NYK Group's ESG management.

November 2022

Hitoshi Nagasawa