Nippon Paper Industries : Combined ESG Databook

Nippon Paper Group

Nippon Paper Group ESG Databook 2022

Nippon Paper Group publishes this ESG Databook to report to a wide range of stakeholders on its ESG (Environment, Society, Governance) initiatives. The Group also publishes an integrated report to communicate its long-term value creation.

This ESG disclosure has been prepared in accordance with the GRI Standards: Core option, and items are organized in line with the Group's important issues (materiality)*.

• Nippon Paper Group's important issues (materiality). https://www.nipponpapergroup.com/english/csr/npg_ir_e_materiality.pdf

Period Covered

Fiscal 2021: April 1, 2021-March 31, 2022

Includes information from before April 1, 2021 and after March 31, 2022. Dates are indicated in such cases.

Scope of Organizations Covered

The reporting entity is Nippon Paper Industries Co., Ltd. Data, however, were compiled as of March 31, 2022 for Nippon Paper Industries Co., Ltd. and all 54 of its consolidated subsidiaries.

Scope of Environmental Coverage

T h e s c o p e o f t h e r e p o r t c o v e r s t h e b a s i c environmental policies, systems, environmental accounting, environmental performance, and other data for the 16 companies, including 2 non- consolidated subsidiaries with production facilities, named below. All major production locations are included.

Consolidated: Nippon Paper Industries; Nippon Paper Crecia; Nippon Paper Papylia; Opal*1; Jujo Thermal; Siam Nippon Industrial Paper; Nippon Seitai; Kyouei Seitai; N&E; Daishowa Uniboard; Nippon Paper Development; GAC; Amapá Florestal e Celulose*2; Nippon Dynawave Packaging

*1 Paper Australia Pty Ltd.; Maryvale Mill.

*2 In some cases referred to as AMCEL in this report.

(The contribution to total consolidated sales of the companies listed here was 89%.)

(Sales data includes trading companies that are members of the Nippon Paper Group and sell Group-made products to outside buyers.)

Non-consolidated: Nippon Paper Liquid Package Product Co., Ltd. and Akita Jujo Chemicals Co., Ltd.

Referenced Guidelines

• Environmental Reporting Guidelines (2018) of the Ministry of the Environment
• Sustainability Reporting Standards issued by the Global Reporting Initiative (GRI)
• United Nations Global Compact
• SASB Standards (VRF)
• ISO 26000, etc.

Guideline comparison table https://www.nipponpapergroup.com/english/csr/gri/

Contents

Management Responsibility...........................02

Responsibility for the Sustainable Use of Forest Resources ..16

Environmental Responsibility........................26

Responsibility to Customers ..........................49

Human Rights, Employment and Labor Responsibility...54 Responsibility to Communities......................69

Other Data..........................................................71

Basic Policy, etc................................................73

Supplementary volume: Response to TCFD

Disclaimer

This report includes not only statements of fact and historical data but also plans, forecasts, and estimates (forward-looking statements) based on the business plans and policies of the Nippon Paper Group. These forward-looking statements are the result of assumptions or judgments based on currently available information as this report was prepared. It should be noted that forward- looking statements may differ significantly from actual results due to the impacts of a number of important factors.

Nippon Paper Industries Co., Ltd.

Head Office:

4-6 Kanda Surugadai, Chiyoda-ku,

Tokyo 101-0062 (Ochanomizu Sola City), Japan

Contact Information: Sustainability Management

Department

TEL: [phone]

Publication date: September 2022

Previous issue: September 2021

Next issue scheduled: September 2023 Website https://www.nipponpapergroup.com/english/csr/

1

Management Responsibility

Sustainability Management

Nippon Paper Industries signed and joined the UN Global Compact in 2004. The Company promotes sustainability management that pursues both social and environmental sustainability and the future growth of the Company by realizing the Group Mission based on the Ten Principles of the UN Global Compact in four areas (human rights, labor, environment, and anti-corruption).

Establishment of Policy and System

1993

2003

2004

2005

2008

2016

2022

• Formulated Environmental Charter (Nippon Paper Industries)
• Established the CSR Committee to promote the building of a management system to fulfill its corporate social responsibility
• Formulated the "Philosophy and Basic Policy on Product Safety," "Philosophy and Basic Policy on Human Rights, Employment and Labor," "Philosophy and Basic Policy on Safety and Health
  Measures" and "Philosophy and Principles for Social Contribution Activities"
• Formulated the "Principles and Basic Policies Concerning Raw Materials Procurement"
• Established the CSR Division to reinforce CSR management
• Formulated the "Basic Policy on the Preservation of Biodiversity "based on the Philosophy of "Nippon Paper Group Environmental Charter"
• Formulated the "Nippon Paper Group Human Rights Policy" to enhance the effectiveness of its efforts to respect human rights, with the aim of achieving the Group Mission
• Revised the "Principles and Basic Policies Concerning Raw Materials Procurement" to enhance the effectiveness of its efforts to address social issues, including human rights and climate change

Promotion Structure

The Board of Directors of NipponPaper Industries

Report

Oversight

President of Nippon Paper Industries

General Manager of CSR Division of Nippon Paper Industries

* Number of reports made in FY2021 Reports to the Board of Directors: 3 times

Reports to the Management

Executive Committee: 2 times

CSR Division
Sustainability Management Department
Risk Management Department	Compliance Office
Public Relations Office
Cooperate	Cooperate
Departments in charge of business execution	Group companies

Initiatives regarding Sustainability

■ Employee Education

Educational achievements (FY2021)

	Themes and topics	Number of participants
Relationship between SDGs and the Group's products and services*1	4,670*2
Relationship between SDGs and the Group's corporate activities*1	4,743*2
*1	Implemented for the Nippon Paper Group
*2	Target of aggregation :Nippon Paper Industries (as of July 8, 2022)

■ Providing Awareness-raising Opportunities

The Company holds lectures provided by external experts to business partners and Group employees, with a theme selected from a viewpoint of sustainability, on a periodic basis. In FY2021, it streamed a seminar entitled "Aiming for Carbon Neutrality by 2050: Roles Played by Forests," which was viewed by about 850 participants.

2

Management Responsibility

Enhancement of Governance

》Corporate Governance Policy (see P. 73)

》Basic Policy for Establishing the Internal Control System (Japanese only)

https://www.nipponpapergroup.com/ir/governance/internal_control_system/

》Corporate Governance Report

https://www.nipponpapergroup.com/english/ir/governance/

Initiatives for Strengthening Corporate Governance

FY2006 ● Formulated the Basic Policy for Establishing the Internal Control System ● Shortened director terms to one year from two

FY2013 ● Adopted an executive officer system

● Began appointing one independent outside director

FY2015 ● Established the Corporate Governance Policy

● Began evaluating the effectiveness of the Board of Directors

FY2016 ● Established the Personnel & Remuneration Advisory Committee ● Increased the number of independent outside directors to two

FY2019 ● Increased the number of independent outside directors to three

● Appointed one female outside director and one female outside Audit & Supervisory Board member

● Ensured the Personnel & Remuneration Advisory Committee consists mainly of outside directors

● Introduced the Board Benefit Trust as a stock compensation system

FY2020 ● Revised part of the Corporate Governance Policy concerning the policy for determining director remuneration

FY2021 ● Added quarterly reports on operational issues as part of the agenda for meetings of the Board of Directors, in addition to existing monthly reports on operations

Corporate Governance Structure

Overview

Type of

Organization

Chairperson of the

Board of Directors

Directors

Audit & Supervisory

Board Members

Independent

Officers

Board of Directors

Meetings Held in

FY2021

Audit & Supervisory

Board Members

Meetings Held in

FY2021

Independent

Accounting

Auditor

Company with Audit & Supervisory Board Members

Chairperson and Director: Fumio Manoshiro

9 (including 2 male and 1 female outside directors)

4 (including 1 male and 1 female outside Audit & Supervisory Board member)

5 (including 3 outside directors and 2 outside Audit & Supervisory Board members)

Number of meetings: 13

● Average rate of attendance by directors: 100.0% (outside directors: 100.0%)

● Average rate of attendance by Audit & Supervisory Board members: 100.0%

Number of meetings: 14

● Average rate of attendance by Audit & Supervisory Board members: 100.0%

Ernst & Young ShinNihon LLC

3

Management Responsibility

Corporate Governance Structure (As of July 1, 2022)

General Meeting of Shareholders

Appoint

Cooperate

Appoint

Cooperate

Appoint

Audit & Supervisory Board Members

Audit

Board of Directors

Audit

Accounting Auditor

(4Audit&SupervisoryBoardmembers,including2outsidemembers)

(9 directors, including 3 outside directors)

Oversight

Personnel&RemunerationAdvisoryCommittee

Cooperate

Representative Director

Cooperate

Management Executive Committee

Group Management Strategy

Committee

ManagementAudit Office

Cooperate

CSR Division

Risk Management Department

Compliance Office	Corporate Lawyer
Cooperate

NipponPaper Group Audit & Supervisory	Monitoring
BoardMembersLiaisonCommittee	(audit/oversight)	Cooperate

Departments in charge of business execution, Group companies

Board of Directors

• The role of the Company's Board of Directors is stipulated in the Corporate Governance Policy. The
  Board is chaired by the Chairperson who is a director without representative authority.
• The Board of Directors shall bear the supervisory function of management as a whole and make the most appropriate decisions for the Company through deliberations, etc. on the execution of important business issues that are to be decided, under laws, regulations, and the Articles of Incorporation, by the Board of Directors. The Board of Directors shall also oversee the status of the execution of duties by the president and representative director and other corporate officers.
• In view of the importance of environmental and social challenges related to sustainability, the Board of Directors shall raise awareness among officers and employees, strive to facilitate the sustainable development of society, and enhance the corporate value of the Group by promoting active efforts to resolve challenges while giving consideration to stakeholders.
• The Company's Board of Directors is made up of internal directors who have excellent abilities to execute and manage each business in their charge and outside directors who have specialized knowledge and extensive expertise. In this way, the balance and diversity of knowledge, experience, and abilities are ensured.
• One-thirdof the Company's Board of Directors is made up of outside directors. Furthermore, the
  Company has appointed one female outside director and one female outside Audit & Supervisory Board member.
• The Company made a list of skills it expects each director in November 2021. Each skill has been identified from the standpoint of management strategies and priority issues, and designated taking into account management priorities toward achieving the basic Policy of the 2030VISION and the Group Mission.

Nippon Paper Group's important issues (materiality). https://www.nipponpapergroup.com/english/csr/npg_ir_e_materiality.pdf

4

Management Responsibility

Directors' Skill Matrix

						Skills
Position	Name	Corporate	ESG/	Finance/	Personnel/	Risk	Technology/	Sales	Purchasing/	Internationality
Human	management/
		management	Sustainability	accounting	resources	Governance	R&D		Procurement
Chairperson and Director	Fumio Manoshiro	〇	〇		〇				〇
President and Representative Director	Toru Nozawa	〇	〇	〇		〇
ExecutiveVicePresidentandRepresentativeDirector	Kazumori Fukushima	〇			〇		〇	〇
Director	Masanobu Iizuka	〇					〇			〇
Director	Tomoyasu Itakura	〇		〇		〇
Director	Tomomi Nojiri		〇				〇	〇
Outside Director	Makoto Fujioka	〇	〇			〇
Outside Director	Yoko Hatta			〇		〇				〇
Outside Director	Yutaka Kunigo	〇	〇						〇

* The above list does not represent all the knowledge and experience held by each director.

Director Attendance at Board of Directors Meetings (FY2021)

	Name	Attendance in FY2021
Position
Chairperson and Director	Fumio Manoshiro	13/13	100.0％
President and Representative Director	Toru Nozawa	13/13	100.0％
Executive Vice President and Representative Director	Kazumori Fukushima	10/10	100.0％
Director and Managing Executive Officer	Atsushi O'haru	10/10	100.0％
Director and Managing Executive Officer	Masanobu Iizuka	13/13	100.0％
Director and Executive Officer	Tomoyasu Itakura	10/10	100.0％
Outside Director	Makoto Fujioka	13/13	100.0％
Outside Director	Yoko Hatta	13/13	100.0％
Outside Director	Yutaka Kunigo	13/13	100.0％

■ Management Executive Committee

• Usually, the Company's Management Executive Committee meets once a week to deliberate on important business issues under the authority of the president to assist in the execution of the president's duties.
• Committee membership is basically composed of the president, other directors (excluding outside directors) and general managers who do not serve as directors.
• Meetings of the Management Executive Committee, held once a month, are attended by outside directors and general managers of the Company's mills in order to share information on monthly financial results among management.

■ Group Management Strategy Committee

• The Company's Group Management Strategy Committee meets as necessary and deliberates on management strategies by business segment and other important matters related to the Group.
• Committee membership is composed of the Company's management, including outside directors, and presidents of major companies of the Nippon Paper Group.

■ Audit & Supervisory Board Members and Audit & Supervisory Board

● The Audit & Supervisory Board members of the Company attend important meetings, such as meetings of the Board of Directors, the Management Executive Committee, and the Management Strategy Committee. In addition to strict monitoring of the execution of business by directors, the auditors also audit whether all company operations are conducted strictly legally and appropriately by means of on-site audits of each division, business site, and company in the Group.

● The Audit & Supervisory Board periodically holds meetings with the representative directors, working to deepen mutual understanding.

● The Audit & Supervisory Board also strives to enhance group audits by strengthening cooperation with auditors of each Group company.

5