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‘First in Glass’

SustainabilityReport 2009

About this reportOur new format NSG Group Sustainability Reportretains much of the content of our former CorporateSocial Responsibility Report, but signals an importantchange in our approach.

In June 2009, we published our Group SustainabilityPolicy, which set out our sustainability agenda. Thisreport should therefore be regarded as transitional.Over the course of the calendar year 2010, we will be working to align our targets and performancemore closely to the achievement of sustainability.

Our next Sustainability Report will be published in the first quarter of calendar year 2011.

Contents

The NSG Group02 President and Chief Executive Officer’s introduction04 Global operations05 Business lines06 Glass manufacture

Management08 Responsible leadership10 Corporate governance

Special features12 Glass and climate change14 Glass in buildings16 Glass and solar energy18 Glass in vehicles20 Specialty Glass

Environment22 Environmental policies and management24 Energy and resource usage26 Minimizing environmental impact

Stakeholders28 Employees30 Customers32 Shareholders34 Suppliers36 Communities

Basis of reporting38 Global Reporting Initiative (GRI) Index40 Approach to reporting41 Further information

To keep the size of the printed report to aminimum, we have included additional information,charts and tables covering our performance on the sustainability section of our websitehttp://www.nsg.com/sustainability.

NSG GROUP Sustainability Report 2009 01

02 NSG GROUP Sustainability Report 2009

Our visionIn 2006, NSG and Pilkington came together with a commonshared aspiration. We aim to be the world’s number 1 glasscompany. Despite the recent global turmoil that has affected all our markets, our resolve to be number 1 remains unchanged.

We are judged by our three principal stakeholders. For ourcustomers, we need to be their preferred supplier, with quality the key to retaining that position. For our employees, beingnumber 1 means being their preferred place to work, withparticular emphasis on safety, and for our shareholders theirpreferred long-term investment.

We operate as an integrated international group, with amultinational management. We have principal operations in 29 countries and speak over 25 languages, with 80 percent of our employees outside Japan. We reflect diversity in our workforce,believing that the range of nationalities, skills, qualifications andexperience available in our many operations is a positive benefit to our business. Our management style is to put the best personin each job, regardless of nationality. More details on our policiescan be found in the Employees section of this report.

Key messageOver the past year, we have further strengthened ourcommitment to sustainability, with the publication of a Group Sustainability Policy. This underlines the importantcontribution our products make to addressing climate change and conserving energy, whilst recognizing that glass production is energy-intensive.

Our new policy represents a start, but we are aware that we still have much to do. We aim to move forward bybalancing the needs of all our stakeholders, managing ourenvironmental impacts, developing our people, encouraginginnovation in processes and products, working in harmonywith the communities in which we operate and encouragingour customers, contractors and suppliers to do the same.

We are all collectively responsible to those with whom weshare one world to try to attain a more sustainable future forthe next generation. As a global manufacturer of advancedglazing products that help save, manage and generate energy,the NSG Group has a significant role to play in this process.

President and Chief ExecutiveOfficer’s introduction

The NSG Group is fully committed to sustainability. Our policies underline the unique contribution our products can make to addressing climate change and the challenges we face in improving our own energy usage and resource management.


Glass and sustainabilityThe NSG Group is fully committed to sustainability. Our policiesunderline the unique contribution our products can make to addressing climate change and the challenges we face inimproving our own energy usage and resource management. Our product range and R&D efforts are geared to addressing the challenges of a low-carbon world.

In buildings, energy saving and carbon emission reductionrequirements are driving tougher specifications for energy-savingglazing. In vehicle glazing, energy saving and weight reduction are increasingly important considerations. Our Specialty Glassbusiness is developing battery technology for the next generationof electric and hybrid vehicles.

Although primary glass-making is energy-intensive, the ‘energybalance’ means that the energy expended in manufacture is quickly paid back over the lifetime of the products (see the section on Glass and climate change).

Key elements of our Sustainability Policy•We value the health and safety of all our people above all

other considerations.

•We develop innovative new products and processes that giveincreased sustainability benefits throughout their life cycle.

•We foster long-term partnerships with our suppliers, preferringthose who share our commitment to sustainability.

• In assessing the life cycle impacts of our products andprocesses, we seek to reduce adverse environmental impact,maximize the reuse, recycling or recovery of resources andminimize the production of waste.

•We manage all materials responsibly in a mannercommensurate with their environmental risk, and exerciseresponsible stewardship of those lands for which we are accountable.

We produce high-quality glass productsthat make an important contribution to improving living standards, to people’ssafety and wellbeing and to thegeneration and conservation of energy.

Corporate governanceIn June 2008, we strengthened our corporate governanceprocedures, replacing the traditional Corporate Auditor system with a ‘Company with Committees’ model of corporategovernance. More details can be found on page 10 of this report.

These changes reflect our development as an internationalcompany based in Japan, bringing us into line with a growingnumber of leading Japanese corporations and with best practice.

Code of ConductOur Code of Conduct defines the behavior we expect across allareas of our business. It applies to relationships with colleagues,customers, suppliers, business partners, the community and allothers with whom we have contact in daily business life. Moredetails can be found in the section on Responsible leadership.

Competition complianceFurther attention has been given over the past year to this issue.A new integrated Group Competition Compliance Policy andManual have further strengthened our rules. A training program for people in ‘key roles’, seen as those most likely to facecompetition compliance issues in their work, has been launchedGroup-wide.

Katsuji FujimotoPresident and CEONSG Group

We are all collectively responsible tothose with whom we share one world totry to attain a more sustainable future for the next generation.

As a global manufacturer of advancedglazing products that help save, manageand generate energy, the NSG Group has a significant role to play in this process.

The text of our Sustainability Policy can befound on www.nsg.com/sustainability

Our Code of Conduct defines the behavior we expect across all areas of our business. A summary document: ‘The Way we do Business’is issued to all employees in every language in which we operate.

Europe12,250 employees

•13 float lines.

•Automotive OE plants in 8 countries.

•BP downstream in 11 countries.

•Extensive AGR network.

•Specialty Glass operations in UK.

Japan5,150 employees

•4 float lines.

•BP downstream network.

•Automotive OE plants and AGR network.

•Specialty Glass operations.

North America3,850 employees

•6 float lines.

•Automotive OE in US, Canada and Mexico.

•Extensive AGR network in US.

•Specialty Glass operations in Canada.

South America2,300 employees

•6 float lines.

•BP downstream operations.

•Automotive OE in Brazil and Argentina.

•AGR network.

South and South East Asia2,500 employees

•2 float lines and Automotive operationsin Malaysia.

•Automotive plant in India.

•2 float lines in Vietnam.

•Specialty Glass operations in the Philippines.

China2,450 employees

•16 float lines.

•3 Automotive plants.

•Specialty Glass operations.

•Rolled glass for photovoltaics.

ArgentinaAustria

BelgiumBrazil

CanadaChile

ChinaCzech Republic

DenmarkFinlandFrance

GermanyHungary

IndiaItaly

JapanMalaysia

MexicoNetherlands

NorwayPhilippines

PolandRomania

RussiaSpain

SwedenUnited Kingdom

United StatesVietnam

Our operations support a worldwide customer base. We have principal operations in 29 countries, employingaround 30,000 people and marketing our products in over 130 countries.

Global operations


Building ProductsContribution to Group sales 48%

AutomotiveContribution to Group sales 42%

Specialty GlassContribution to Group sales 10%

Building Productssales by region 2009

Europe 51%Japan 31%Rest of World 10%North America 8%

Automotivesales by region 2009

Europe 51%North America 21%Japan 16%Rest of World 12%

Specialty Glasssales by product 2009

Thin LCD glass 29%Copier/printerlenses 21%Glass cord 13%Air filters 12%Battery separators 10%Other 15%

Business lines

We operate three worldwide business lines: BuildingProducts, supplying glass for the world’s buildings;Automotive, producing glass and glazing systems forvehicles worldwide, and Specialty Glass, operating in the display, office equipment and glass fiber sectors.

Fiscal year ended 31 March 2009

Glass for the world’s buildings

People9,700 employees in 21 countries.

ManufacturingPrincipal operations in 21 countries.Manage, or have a stake in, 49 Float linesaround the world.

Global spreadMajor presence in Europe, Japan, NorthAmerica. Also in China, South Americaand South East Asia.

Main products

•Solar control glass.

• Thermal insulation glass.

• Fire protection glazing.

•Noise control glazing.

•Safety and security glazing.

•Self-cleaning glass.

•Glass for solar energy.


Supplying every major vehiclemanufacturer in the world

PeopleAround 14,300 employees in 21 countries.

ManufacturingPrincipal fabrication facilities at 32 sitesin 16 countries. Major presence inEurope, Japan, North America, SouthAmerica and China.

Global spreadLeading share of the global OriginalEquipment (OE) and Specialized Transportmarkets. Largest player globally in Automotive aftermarket glazingdistribution and wholesale.

Main products

•Solar control glass.

•Glazing systems.

• Laminated glass.

• Toughened glass.

•Security glazing.

• Integrated antennas.

•Water-repellent glazing.


World leader in thin display glass andoptical devices for office machinery

PeopleAround 4,000 employees in 5 countries.

OperationsMajor fabrication facilities in Japan, China,the Philippines and Europe.

Global spreadWorld leader in thin display glass andoptical devices for office machinery.

Main products

•Thin LCD glass.

•Copier/printer lenses.

•Glass cord.

•Battery separators.

•GLASFLAKE.

•METASHINE®.

Our brands


Our Specialty Glassbusinesses operate underthe ‘NSG Group’ brand.

Our Building Products andAutomotive businessesoperate under the ‘Pilkington’ brand.

Raw materials

The economics of float glass

Melting furnace Float bath

Blended and conveyed into melting furnace.

In the Float Glass Process, raw materials and energy are the single largest elements of cost, followed by overheads and prime labor. Silica sand is the main component by weight of the ‘batch’ (raw material mixture). Soda ash is one of the most expensive raw materials used in glass manufacturing and represents about 16 percent of batch weight, but around 60 percent of batch cost.

Recycled glass (cullet) represents, on average, around 15 percent of the materials used. Its addition helps reduce the energy required in the process.

Average float production costsFiscal year ended 31 March 2009

Contains up to 2,000 tonnes of molten glass at 1,550°C.

Molten glass floats on molten tin in an inert atmosphere.

Raw materials

Silica sand 51%

Soda ash 16%

Recycled glass 15%

Dolomite 13%

Limestone 4%

Sodium sulphate 1%

Raw materials 20%

Energy 28%

Primary labor 12%

Overhead costs 9%

Depreciation 9%

Transport 12%

Other 10%

Melting furnace Float bath

Tin

At the heart of the world’s glass industry is the Float GlassProcess, developed by Pilkington in 1959 and now the worldstandard for high-quality glass production. The processmanufactures clear, tinted and coated glass for buildingsand clear and tinted glass for vehicles.

Glass manufacture

The float process


Float glass and environmental impact

Glass and CO2

The manufacture of one square meter of low-e double glazing leads to the emission of 25 kg of CO2.

However, industry studies show that the CO2 saved by replacing one square meter of single glazing with low-e double glazing in a typical European building is 91 kg per year, offsetting the CO2 emitted during manufacture after only 3.5 months in use.

If ordinary double glazing is replaced by low-e double glazing, the offset period is typically 10.5 months.

765 million tonnesCO2 emissions from buildings

140 million tonnesCO2 reductions using low-e double glazing

46 million tonnesCO2 generated by glass industry

Cooling/Annealing Lehr Cross cutters + Lift-off devices

To relieve internal stresses, the ribbon undergoes heat-treatment in a long furnace known as a lehr.

Computer-controlled cutters select plate sizes.

Cross cutting + Lift-off

Glass installed in buildings,

vehicles or specialty applications

Cooling/Annealing Lehr

>6m <6m

Effects of reducing the CO2 emissions of buildingsStudy covering 25 EU member states*

*For more information go to http://www.glassforeurope.com

A float plant, which operates non-stop for between 10-15 years,makes around 6,000 kilometers of glass a year. The processproduces clear, tinted and coated glass for buildings and clear and tinted glass for vehicles.

Globally, over 380 float lines are in operation, under construction or planned, with a combined output of about 1,000,000 tonnes of glass per week. We operate, or have interests in, 49 float linesworldwide.

Extra ingredients can be added to the glass raw materials at the melting stage to produce tinted products. Modified propertiescan be produced by means of surface coating (on or off-line). Plies of glass are bonded or laminated together with a layer ofpolymer film in between for use in safety and security applications.Glass can also be heat-treated (toughening), shaped, bent,silvered (mirrors), surface-worked, installed in multiple glazed units and, in Automotive, assembled in modular systems.

Energy accounts for around 20 percent of total cost in the float process. Since the 1960s the glass industry as a whole has reduced specific energy consumption by approximately 1.5 percent per year. The rate of reduction is now slowing as the thermodynamic limits of the process are approached.



Key messageWe aim to achieve our sustainability objectives by balancingthe needs of all our stakeholders, managing the environmentalimpacts of our activities, developing our people, encouraginginnovation in processes and products, working in harmonywith the communities in which we operate and encouragingour customers, contractors and suppliers to do the same.

Our missionTo be the global leader in the manufacture and supply of glassproducts, through the best use of our people and technology, and the pursuit of innovation.

Our valuesPeople are the most important asset of our Company. We value:

• Trust and mutual respect.

• Integrity and professionalism.

• Teamwork and mutual support.

•Open communication.

• Initiative and creativity.

• Passion and resilience.

• Individual and social responsibility.

Our guiding principlesWe believe that success will be achieved by:

•An obsession with safety, in the belief that all accidents are preventable.

•Ensuring that all our decisions and actions add value to the Company.

• The development of the potential and motivation of all employeesto enable the use of the right people in the right place.

• The achievement of defined quality standards to satisfy internaland external customers.

• The development and use of market-leading technologies forproducts and processes.

•Monozukuri: having a passion for manufacturing excellence –through benchmarking, best practice and standard operatingprocedures.

•Genchi Genbutsu: making decisions after going to the source tounderstand conditions on the shop floor and in other workplaces.

•Making decisions based on data, facts and analysis.

•Seeking to improve continuously in all other activities, throughthe application of the PDCA (Plan, Do, Check, Act) methodology.

•Efficiency in everything we do, exploiting synergies andachieving cost leadership throughout.

• A commitment to high standards of social responsibility in thecommunities and environments in which we operate.

Responsible leadership

Our Code of Conduct sets out the sustainabilityresponsibilities shared by the NSG Group and its employeesin relationships with colleagues, customers, suppliers,business partners, the community and other stakeholdersin our business.

Mission

Values& Principles

Code of Conduct

Group policies and procedures


Our sustainability agendaWe are constantly working to develop innovative new products and processes, offering increased benefits to our customers andthe environment. We assess the life cycle impacts of our productsand processes, seeking to reduce adverse environmental impact,maximizing the reuse or recovery of resources and exercisingresponsible stewardship of land we hold. We aim to develop long-term partnerships with our suppliers, preferring those whoshare our commitment. We act as responsible members of ourcommunities, by generating economic growth and supportingsocial, educational and cultural development.

Glass for solar energy is an important potential growth area for theGroup. The number of manufacturers of solar power installationsis increasing and legislation on CO2 targets around the world isencouraging the use of solar as an energy source. We are wellplaced to supply products for all of the leading technologies.

The Float Glass Process is central to our operations. It revolutionizedthe world’s glass industry, making possible the use of largeexpanses of glass and bringing light into buildings. It alsofacilitated the development of energy-saving and solar controlproducts, allowing architects and car designers to use increasinglylarge areas of glass in buildings and vehicles without significantheat loss or solar gain. Since its inception, major environmentalimprovements have been made in the Float Glass Process.Emissions have been reduced significantly and substantialreductions have been made in energy consumption.

We believe that glass has a major part to play in society’s effortsto reduce greenhouse gas emissions and to mitigate the effects of climate change. Recognizing this, we support initiatives to utilizeglass in order to reduce the energy consumption of buildings,vehicles and equipment or to generate or conserve energy.

Our Code of ConductOur Code of Conduct defines for all employees what is expected of them. It reflects our values and principles, particularly theemphasis on safety, taking personal ownership for actions andcommunicating with openness and involvement.

The overriding basis of the Code is that we will carry out theseactivities in a safe, professional, legal and ethical manner and in a way that demonstrates corporate social responsibility andsustainability. Wherever possible, the Code defines a fair andcommon sense approach to doing business, with some elementsdictated by strict legal requirements.

The Way we do BusinessA summary document, ‘The Way we do Business’, covers the main points of the Code in a succinct pamphlet. Personalcopies have been distributed to all Group employees in their own language. Both the full Code and the summary document can be downloaded from the Group website.

People, health and safetyConsistent with the philosophy of the Sumitomo Group ofCompanies, to which we are affiliated, we believe that people are the most important asset of our Company. We value the health and safety of all our employees above all otherconsiderations and aim to ensure that we provide a workingenvironment that allows our people to reach their full potential.

Our safety programs emphasize the importance of improvingbehavior and of individuals taking personal responsibility. All injuries at work are regarded as unnecessary and avoidable. No matter how minor, each one must be reported andinvestigated. Only by investigating and learning from suchincidents will the desired levels of safety performance beachieved. Details of our progress on safety performance areshown in the Employees section of this report.

Our Code of Conduct reflects our valuesand principles, particularly the emphasison safety, taking personal ownership for actions and communicating withopenness and involvement.

Our principal raw materials are mineral in nature and we recognize our obligationto ensure that in obtaining those minerals,natural habitats and biodiversity arepreserved or enhanced.

Our stakeholdersWe aim to be judged as best in class by:

Our customersTo be their preferred supplier for glassproducts and related services.

Our employeesTo be their preferred place to work.

Our shareholdersTo be their preferred long-terminvestment.


Our governance structureThe Group is governed by its Board of Directors, which is appointedby resolution at the General Meeting of Shareholders. The Boardcomprises the Chairman of the NSG Group, the Vice-Chairman, five executive directors and four external directors. In the fiscalyear 2009, the Board of Directors met 17 times.

Key messageIn addition to complying with the requirements of laws andregulations, we had developed our own systems to helpimprove the soundness and transparency of our governanceby strengthening the separation of the directors’ functionfrom that of management. In June 2008, we adopted the‘Company with Committees’ corporate governance model,under the Japanese Companies Act.

Open Management System

The Board of Directors oversees the Group’s economic, social and environmental performance adherence to compliance withinternal and internationally agreed standards, codes of conductand principles.

Adoption of Company with Committees modelIn June 2008, shareholders approved the adoption by the Group of the Company with Committees model, replacing the formerCorporate Statutory Auditors model. Three committees,Nomination, Audit and Compensation have been established.

Nomination Committee decides the details of the agenda items tobe submitted to the General Meeting of Shareholders concerningthe appointment and removal of directors. The Committeeconsists of seven directors, including four external directors and its chairman is Yozo Izuhara, Chairman of the NSG Group.

Corporate governance

Corporate governance is a key element of the sustainabilityactivities of the NSG Group. We are committed to effectivestakeholder engagement in all our activities.

Supervision

Executive Officers

Executive Committee

Representative Executive DirectorExecutive Directors

Nomination Committee

Internal Audit Dept.

Board of Directors

Compensation Committee

Independent Auditors

Audit Committee

Recommendationsconcerning Executive Directors

Decisions on compensation

Decisions on compensation

Election/Dismissal of Executive Directors/Executive Officers

Election/Dismissal of Committee Members

Election/Dismissal of directors Election/Dismissal

Audit Report

Cooperation

Internal Audit

Audit Supervisionevaluation

Decisions on proposalson Election/Dismissalof Independent Auditor

Decisions on proposals onElection/Dismissal of directors

Audit

Report

General Meetings of Shareholders

SupervisoryFunction

ExecutiveFunction


Audit Committee, chaired by the Vice-Chairman of the Group,Tomoaki Abe and comprising six directors, including four externaldirectors. It conducts audits of the execution of duties by directors and executive directors and ensures that adequate risk management processes are followed. It also decides thedetails of agenda items to be submitted to the General Meeting of Shareholders concerning the appointment and removal of independent auditors.

Compensation Committee makes decisions on compensation of individual directors and executive directors. The Committee is chaired by an external director, George Olcott, and comprises six directors, including four external directors.

Evolution of our Company organizationThe process of integration, begun in 2006, is now largelycompleted, with all of the former Pilkington and NSG businessesoperating in three business lines: Building Products, Automotiveand Specialty Glass.

Each business line is managed on a global basis by a main boarddirector, with Mark Lyons leading Building Products Worldwide,Mike Fallon heading Automotive Worldwide and Keiji Yoshikawamanaging Specialty Glass Worldwide. Global functions providespecialist services across all business lines.

Japanese SOX Act (J-SOX)The Japanese SOX Act (J-SOX), formulated in 2006, stipulatesinternal control-related rules under the Financial Instruments and Exchange Law. The Group successfully met J-SOXrequirements by the 31 March 2009 deadline and submitted its first internal control report under Japanese financial reportingrules in June 2009. Our two-year, Group-wide J-SOX project hasinvolved the documentation, evaluation, improvement and testingof every major accounting process, not just within finance but including the areas of sales, purchasing and inventory.

Our two-year J-SOX project has involvedthe documentation, evaluation,improvement and testing of every majoraccounting process, covering not onlyfinance but also sales, purchasing and inventory.

Risk managementThe scope of our operations introduces potential risks to ourbusiness activities, requiring effective risk management. Ourenterprise risk management process enables the impact andlikelihood of key risks to be assessed in a standard format. The information is used to assess the cumulative risk exposure of the Group and promote effective global risk responses, thus strengthening our overall risk management structure.

ComplianceWe continue to develop our compliance system and to raiseawareness of it among our employees. The Executive Committeeis responsible for identifying areas of compliance that are ‘key’ or ‘high risk’. Where these exist, formal centralized compliancemonitoring and reporting must be implemented. The AuditCommittee independently monitors the overall program of compliance activity and the reported level of compliance,assisted by Group Legal and Group Internal Audit.

The program of compliance across the Group includes self-assessments and independent audits conducted by the relevantGroup functions and by Group Internal Audit. The results of theseactivities are used by the relevant functions to improve the level of compliance, and summarized for presentation to the ExecutiveCommittee and the Audit Committee. Reporting of Concernsprocedures allow employees to report, in confidence, any concernsthey may have on compliance.

We are committed to free and open competition and will competevigorously but with integrity and honesty. Competition Complianceissues are managed by the Group Competition Compliance Officer.A training program for people in ‘key roles’, seen as those mostlikely to face competition compliance issues in their work, is nowin operation Group-wide.

We operate a full program of complianceactivity across the Group. This includesself-assessments and independent auditsconducted by the relevant Group functionsand by Group Internal Audit.

Adopted Companywith CommitteesGovernanceStructure

Training for staff most likely to face competitioncompliance issues in their work, is in operationGroup-wide.

Further information on our corporategovernance and risk assessment procedurescan be found on our website.

In June 2008, we adopted the Company withCommittees corporate governance model,replacing the former Corporate StatutoryAuditors model.


Buildings and vehicles are central to the environment in whichmillions of people live and work every day. Recognizing the role of glass in reducing greenhouse gas emissions and mitigating the effects of climate change, we are supporting initiatives to use glass in order to reduce the energy consumption of bothbuildings and vehicles.

In the global discussions about climate change and energyefficiency, architecture has moved to center stage. Governmentsaround the world are becoming aware that buildings offer thebiggest energy-saving potential and that the technology to achievethis already exists.

Our climate change challenges and opportunitiesChallenges: The principal risks to our business introduced by climate change are those associated with potential damage to our plants and infrastructure. These include flooding and winddamage. We mitigate these effects through climate change riskassessment in our investment decisions. Price and availability of fossil fuels is also a risk for us, which we seek to minimizethrough energy conservation and the use of alternative energysources for our processes.

Key messageGlass has a unique role to play in promoting sustainability,reducing greenhouse gas emissions and mitigating theeffects of climate change. The ‘energy balance’ betweenmanufacture of high-performance glazing products and their use means that the energy used and CO2 emitted in manufacture are quickly paid back through the lifetime of the products. The energy involved in glass-making shouldtherefore be seen as an investment in future energy saving.

Opportunities: Our added-value products, such as low-e (low-emissivity) glass, solar control glass and glass for photovoltaicshave the principal purpose of reducing energy consumption inbuildings and generating energy from the sun. We are therefore in a strong position to help mitigate the effects of climate change byhelping to conserve energy in buildings and vehicles and to assistwith the generation of solar power. A significant part of our R&Deffort is dedicated to finding solutions to the challenges raised by climate change, reducing energy consumption and waste.

Political priorityIn every region of the world in which we operate, the need to save energy and reduce CO2 emissions is a political priority.Buildings account for almost 50 percent of the energy consumedin developed countries. Governments are putting increased focuson legislation and policies to improve their energy efficiency.

In North America, initiatives such as the environmental buildingrating system (LEED) run by the US Green Building Council arehelping to transform the market for added-value glazing, and thiswill continue. Similar opportunities are anticipated in Europe, forexample, through the development of an EU-wide Energy Labelingsystem for windows. In China, legislation is at an earlier stage, but the government has already introduced building regulations to improve the energy efficiency of new buildings.

Glass in buildingsEnergy issues are crucial to the building glass industry, as glass products can make an important contribution to combatingclimate change. Improving the energy efficiency of buildings bringsother benefits too. Buildings are more comfortable and cheaper to run for the owner and occupier. And from a social point of view, national economies and energy security will improve whenenergy-importing countries become less dependent on increasinglyexpensive supplies from other parts of the world.

Glass and climate change

Glass has a unique role to play in society’s attempt to reduce greenhouse gas emissions and mitigate theeffects of climate change. The energy used in making high-performance glass products is quickly paid back.


New productsOver the past year, we have launched a number of energy-efficientproducts across Europe. These include Pilkington Suncool™70/35, offering a solution to an ever-increasing need to achieveoutstanding energy efficiency within buildings withoutcompromising levels of natural daylight. Its very low total heat gain and extremely high light transmission maximize the thermalcomfort and aesthetics of a working or living environment.

We have also seen excellent growth in the sales of the range ofenergy-efficient products launched last year under the PilkingtonenergiKare™ brand, which offers all home owners the opportunityto improve the efficiency of their windows by up to 90 percent.

CO2 emissions and low-e double glazingThe European glazing trade association, Glass for Europe, of whichthe NSG Group is a member, published in 2005 a study into theCO2 savings potential of replacing ordinary single or double glazingwith low-e glass.

It showed that CO2 emissions from buildings which amount to 765 million tonnes of CO2 per year in the EU, could be cut by 140 million tonnes if the current glazing was replaced by low-edouble glazing.

Glass industries studies show thatemissions from buildings, amounting to 765 million tonnes of CO2 per year in the EU, could be cut by 140 milliontonnes if the current glazing was replacedby low-e double glazing.

Even taking into account the 4.6 million tonnes of CO2 releasedper year by the building glass industry in its production processesto manufacture the additional glass required (NSG Group inEurope released 1.7 million tonnes in 2008), the replacement ofobsolete glass in old buildings and specification of energy-efficientglass in all new buildings would result in a huge net benefit.

CO2 emissions and solar control glazingIn regions where the ambient temperature is often uncomfortablyhot, the increasing tendency is to install air conditioning and that,of course, brings with it an energy and carbon burden.

Glass for Europe has recently published a report, ‘Impact of SolarControl Glazing on Energy and CO2 Savings in Europe’, whichquantifies the potential CO2 savings in the year 2020 through the installation of solar control glass in air-conditioned buildings.

The study shows that installing solar control glass versus airconditioning under the current growth scenario would produceannual savings of around 1.1 million tonnes of CO2 by 2020. If airconditioning use in Europe were to approach the level of usage inNorth America, annual savings would be closer to 7 million tonnes.

Glass in vehiclesAs we describe later in this report, in the automotive industry, the shift to electric vehicles and plug-in hybrids marks a new era,with CO2 reduction a major focus. This ‘eco-innovation’ will driveglazing advances in solar energy control, weight reduction andenergy saving. We are well placed to meet these challenges. Our technology will be critical to differentiate us from low-pricedcompetitors and we are currently developing new products to meet the demands of the next generation of vehicles.

Our added-value products, such as low-eglass, solar control glass and glass forphotovoltaics have the principal purpose ofreducing energy consumption in buildingsand generating energy from the sun.

140million tonnesof CO2

Pilkington Suncool™ is a range of coated solar control products with high visible light transmittance and low emissivity in one off-line product.

Estimated 140 million tonnes of CO2 saved in the EU if current glazing replaced by low-edouble glazing.


Key messageArchitects increasingly seek to bring natural environmentalfactors into the interior of buildings by maximizing naturaldaylight. This has been achieved through the use of largerglazed areas in façades and roofs, and through entirely glazed façades where the glass is a structural component of the building.

Energy saving is a key driver. CO2-reduction targets havedriven tougher legislation for energy-saving glass and madeinsulated glazing units mandatory in many parts of Europe.This has now developed further into legislation requiringcoated low-e glasses that are particularly energy efficient.

In hot climates, the reliance on air conditioning, which would otherwise be increased by such larger glazed areas, is mitigated by the use of advanced solar control productswhich allow the sun’s light into the building while keepingmuch of its heat out.

Sustainability in buildingsGlass is used extensively in most buildings, both for exterior and interior use; as a construction material, for functionality, fordecoration and for interior fittings. Around the world, policy-makershave begun to realize how important the quality of our buildings is in relation to the quality of the environment and to the overallquality of people’s lives.

Policy and legislative activity addressing the building sector,including the glass products that are used in buildings, isincreasing worldwide.

Our products play a vital role in improving energy efficiency and reducing CO2 emissions. But they also offer other advancedfunctionality, protecting against fire, insulating against noise,offering safety and security, privacy, decoration and even self-cleaning properties

Energy efficiency in buildingsIn every region of the world in which we operate, the need to save energy is a political priority. Buildings account for almost 50 percent of the energy consumed in developed countries.Governments are putting increased focus on legislation andpolicies to improve their energy efficiency.

In North America, initiatives such as the environmental buildingrating system (LEED) run by the US Green Building Council arehelping to transform the market for added-value glazing, and thiswill continue.

Buildings account for almost 50 percent of the energy consumed in developedcountries. Our products have a beneficialrole to play in addressing some of themajor environmental challenges ofbuildings, new and old.

Glass in buildings

Our products are at the heart of modern architecture,engineering and construction. They have a beneficial role to play in addressing some of the major environmentalchallenges of buildings, new and old.


Similar opportunities are anticipated in Europe, for example,through the development of an EU-wide Energy Labeling system for windows. In China, legislation is at an earlier stage, but thegovernment has already introduced building regulations to improvethe energy efficiency of new buildings.

Thermal insulation – keeping heat in buildingsIn cold weather, low emissivity (low-e) products reflect heat backinto the building. Our thermal insulation products combineunrivalled thermal insulation with high light transmittance andlower reflectance for a more neutral appearance.

Our Spacia™ product was developed in Japan and was the world’sfirst vacuum glazing commercially available, offering the thermalperformance of conventional double glazing in the same thicknessas single glass. Sales for this product are developing worldwide,particularly for use in historic buildings.

For the residential market, we have developed products combiningthermal insulation and passive solar gain, helping domesticwindow companies meet homeowner demand for more energy-efficient windows.

Pilkington energiKare™ is a family of energy-efficient InsulatingGlass Units innovatively using low iron float glass PilkingtonOptiwhite™ in combination with Pilkington K Glass™, to provide the best possible energy-efficient performance. The product is being used in both replacement windows for homes and innewly built dwellings utilizing both double and advanced tripleglazing technology.

Advances in low-emissivity (low-e) glass technology have made windows an essential contributor to energyconservation and comfort, minimizingheat loss and internal condensation.

Solar control – keeping heat out of buildingsIn warm weather, our solar control products dramatically reduce or reflect the sun’s heat transmitted through the glass, whiletransmitting the majority of the light, minimizing the need for air conditioning.

Solar control is a key issue in terms of energy saving. In hotconditions or for buildings with high internal heat loads, solarcontrol glass is used to minimize solar heat gain, by rejecting solar radiation and helping to control glare.

In temperate conditions, it can be used to balance solar controlwith high levels of natural light. The correct choice of glass canhelp to reduce the capital outlay, running costs and associatedcarbon emissions of a building throughout the year.

Fire-protection glazingWe offer three types of technology to protect people and propertyagainst fire – wired glass, special modified toughened glass and a special proprietary clear intumescent interlayer technology. The products in this range provide not only protection againstflames and smoke, but also a high degree of protection againstthe heat of a fire, as well as from heat transfer mechanisms. Our fire protection glass products are well respected and used in a variety of building, marine and rail transport applications all over the world.

The correct choice of glass can help to reduce the capital outlay, running costs and associated carbon emissions of a building throughout the year.

Calculations show that installing PilkingtonenergiKare™ saves, on average, more than 20 tonnes of CO2 in the lifetime of each window, compared to basic single glazing.

The use of large glazed areas in façades, roofs and even entirely glazed façades, bringsnatural environmental factors into the interior of buildings.

50%proportion of energyconsumed in developedcountries by buildings

Buildings account for around half of all energyconsumed in developed countries. Glass has an important role to play in helping to reduceenergy consumption in buildings.


Key messageGlass has a key role in attempts to find cheaper and moreefficient ways of generating power from the sun.

Our products support the three leading solar energytechnologies; thin film and crystalline solar modules andconcentrated solar power applications.

Glass is an integral and important element of solar modules, used to convert solar energy into electricity. In traditionalphotovoltaics, the solar cells may be encapsulated usingtoughened high-transmission glass, which protects the cells from the elements.

Increasingly, electrically conductive glass is used in photovoltaicmodules as the front contact of the solar cell, to form a systemwhich generates a direct electrical current. Where the power feeds into a grid, it is first converted into alternating current.

The United States and the European Union in particular, are encouraging the production of renewable energy and in December 2008 the EU published the Renewable EnergyDirective. Carbon-trading schemes encourage CO2 reductions,adding further impetus to the development of renewable energy options. US government schemes designed to encourage‘green’ industries are also expected to play an important part in establishing renewable technologies.

Glass and solar energy

Glass has an important role to play in the development ofthe growing Solar Energy sector. The NSG Group suppliesproducts for all three of the leading technologies, convertingpower from the sun into clean renewable energy.


Government subsidies are increasingly playing a role in encouragingsolar generation, with feed-in tariffs in countries such a Germany,Spain, Italy and Greece making it economic for solar generators to feed power into the national grid systems. The authorities in Japan have indicated likely support for homeowner solarinstallations and US tax incentives are adding further impetus to these technologies.

Even without such subsidies, many systems already makeeconomic sense and costs are anticipated to fall further as the technology matures with grid parity expected to be achievedover the next few years.

Thin film photovoltaic solar modulesTechnology characteristics: Produces power at low cost per watt,but requires large surface areas for installations. Can be used in climates where the sun is not very strong and may be obscured by cloud.

Glass type required: Transparent Conductive Oxide Coating on floatglass. The glass both lets light through and helps conduct theelectricity produced.

NSG Group Products: Pilkington TEC Glass™ is a high-performance,highly durable, electrically conductive glass used in a wide rangeof markets including photovoltaics, where it is used to constructthin film PV modules. With the Group’s advanced technology, thecoating properties can be ‘tuned’ to a wide variety of Thin Film PVtechnologies, including silicon and cadmium telluride based.

Our products support the three leadingsolar energy technologies.

As one of the world’s leading glass-makers,we are well placed to supply the threeleading solar technologies and haveestablished a new Solar Energy businessunit to exploit this opportunity.

Crystalline photovoltaic solar modulesTechnology characteristics: Highly efficient, but the PV cells arealso expensive to make. So, best used in applications wherespace is at a premium. Requires reasonably high solar radiation,but can tolerate some cloud cover.

Glass type required: Low iron rolled glass plus anti-reflectivecoating, to ensure that the maximum amount of solar radiationhits the PV cells.

NSG Group Products: Pilkington Sunplus™ is a high-performance,low iron glass designed to maximize solar energy collectionthrough very high light and solar transmission. The high solarenergy transmission of Pilkington Sunplus™ makes it an idealchoice for crystalline PV photovoltaic solar cells.

Concentrated solar power applicationsTechnology characteristics: Typically large area mirror arrays.Requires a large area and lots of sunshine. Particularly effective in sunny deserts.

Glass type required: Low iron float glass.

NSG Group products: Pilkington Optiwhite™ is an ultra-clear float glass with very low iron content and its high solar energytransmittance makes it ideal as a base substrate for mirrors used in concentrated solar power applications.

Thin film photovoltaic solar modules producepower at low cost per watt, but require largesurface areas for installations.

Crystalline photovoltaic solar modules arehighly efficient, but the cells are also expensiveto make. So, best used in applications wherespace is at a premium.

Concentrated solar power applications. Typicallylarge area mirror arrays. Requires a large areaand lots of sunshine. Particularly effective insunny deserts.


Key messageThe global automotive industry is increasingly addressing thesustainability agenda. The shift to electric vehicles and plug-in hybrids marks a new era, with CO2 reduction a major focus.This requires glazing advances in solar energy control, weightreduction and energy saving.

As a world leader in automotive glazing, we are meetingthese challenges. We are developing automotive coatingtechnology and glass compositions to produce advancedinfra-red absorbing and high-performance infra-red reflectingtechnology. Our aim is to provide further opportunities for vehicle manufacturers to reduce CO2 output.

Lightweight glazingThere can be over 13 individual pieces of glazing on a vehicle, all of which contribute to the overall vehicle mass and contribute significantly to the overall weight of the vehicle and to fuel consumption.

Our developments have been heavily focused on the introductionof lightweight glass and glazing technology, with the launch ofreduced thickness laminated and toughened sidelights, backlightsand rooflights. Through continuous developments in our glassshaping capability to enable asymmetric windshield constructions,we are contributing to the future of automotive glazing products.

We are at the forefront of development of automotive glazing products thataddress sustainability issues, such as CO2 reduction, lighter and moreaerodynamic glazing, vehicle end-of-lifeissues and recycling.

Glass in vehicles

The shift to electric vehicles and plug-in hybrids marks a new era for the automotive industry, with CO2 reduction a major focus. As a leading global supplier of automotiveglazing, we are developing new products to meet thedemands of the next generation of vehicles.


With our developing glass-shaping technology it is now possible for vehicle manufacturers to reduce the mass of glasscomponents by up to 25 percent. Glass in vehicles offers moreproperties than simple transparency, so when designing vehiclesfor reduced mass in the components, consideration needs to be given to acoustics, stiffness, sealing and guiding systems and solar control.

Solar control technologyThe relationship between high-performance solar control glazingand vehicle CO2 emissions reduction has been recently identified by the California Air Resources Board (CARB), through its ‘CoolCars’ legislation. As a contribution to the state’s commitment to reduce its CO2 output, the first specification of glazingperformance requirements for vehicles has been legislated. From model year 2012, vehicles sold in California will need to be fitted with state-of-the-art glass technology to control theamount of heat energy entering the vehicle cabin.

The CARB research has established that control of the heat energy entering the vehicle will have a direct impact on mobile air conditioning usage and will lead to reduced fuel consumptionand CO2 output. We are committed to support our customers by development and delivery of innovative, cost-effective solarabsorbing and solar reflective glazing products.

Ancillary engine loading contributes significantly to overall vehicleCO2 output, with air conditioning usage imposing the largestancillary load on a vehicle engine. Our advanced solar controlglass can make a large contribution to the reduction of airconditioning usage by reducing solar heat gain.

Approximately 30 percent of the heat loading on a car’s interiorcomes through the windshield. Our vehicle glazing productsprovide advanced solar control by absorbing or reflecting the infra-red energy from the sun. Our range of optimized green and privacy solar absorbing glasses can reduce the heat enteringa vehicle by up to 65 percent.

Ensuring passenger comfort and safetyWe develop and supply not only glass but also glazing systemsthat are used to mount and seal the products in vehicle apertures.We are working constantly to decrease the component content,with a view to reduced cost and weight.

New technology areas, for example, integral seals, significantlyreduce processing steps and the amount of hardware needed to transform glass products to glazing products. Issues such as driver visibility and pedestrian safety overlay our work in the development of the next generation of automotive glazing.

Glass and end-of-life vehiclesGlass typically constitutes around 3 percent of the composition of an average car. The automotive glass industry has not beendirectly involved in the setting of end-of-life Vehicle legislation, but we are actively involved in work on the elimination of harmfulmaterials in glass, ink, solder and other components used forautomotive glass products.

Our range of optimized green and privacysolar absorbing glasses can reduce the heat entering a vehicle by up to 65 percent.

We are actively involved in work on theelimination of harmful materials in glass,ink, solder and other components used for automotive glass products.

30%of vehicle heat enters carsthrough the windshield

Control of heat energy entering vehicles has adirect impact on air conditioning usage, helpingto reduce fuel consumption and CO2 output.

Approximately 30 percent of the heat loadingon a car’s interior comes through the windshield.Solar control glass can reduce solar gain andreduce air-conditioner demand.


Key messageOur Specialty Glass business operates in a range of nichemarkets, including the manufacture of ultra-thin glass fordisplays and touch-screen technology. Our patented opticalproducts are used in office machinery, including a newgeneration of LED printer heads, offering the advantages of miniaturization, low power consumption and low-noiseoperation.

We are leading the development of the next generation ofautomotive batteries for use in electric and hybrid vehicles.

We are world leaders in the development of products usingglass fiber, which is now a high-profile, high-tech material in a variety of fields: it is light and strong, fire retardant, non-conductive and resistant to chemicals.

Our Specialty Glass products are used in environmentalimprovement schemes, including applications designed to reduce noise and pollution,

Battery separator technology – animportant role in the next generation of electric vehiclesWe are world leaders in the development of advanced glassproducts for use in battery separators; sheets of non-conductingporous material between positive and negative plates in storagebatteries. They prevent short circuits caused by plates bendingand touching and greatly increase the efficiency of batteries.

Moves to achieve a low-carbon society have focused theautomotive industry on the development of more fuel-efficientcars. Such vehicles, often using the Idling Stop and Start (ISS)system, require advanced performance batteries.

The aim of our research is to improve the capacity, stability, power and safety margins of the next generation of batteries. Such enhanced performance characteristics can enable the use of smaller and more powerful batteries in next generation lower-emission vehicles. We are rising to this challenge, developing and expanding sales of separators for these new batteries.

Displays in communications devices –helping to cut power consumption andeven reduce travelWe are a world-leading supplier of ultra-thin glass for small LCDapplications, helping to reduce power consumption in the displaymarket. Our Ultra Fine Flat Glass (UFF) is produced in thicknessesas low as 0.3 to 1.1mm.

These products are increasingly being used in the growing touchpanel market, particularly in mobile phones and computers. This technology helps reduce the need for additional peripheralequipment, such as keyboards and pointers.

We are developing and expanding sales ofseparators for smaller and more powerfulbatteries for use in the next generation oflower-emission vehicles.

Specialty Glass

Our Specialty Glass products support touch-screen technologiesand help reduce power consumption in printers and scanners.We are developing new battery technology, set to make a majorcontribution to the development of the next generation of electricand hybrid vehicles. Our glass fiber cords for automotive timingbelts help reduce fuel consumption.


LED print heads – reducing powerconsumption in office machineryWe have been involved with printer and scanner manufacturer Fuji Xerox in the joint development of a new generation of LightEmitting Diode (LED) print heads, using our proprietary SELFOC®Lens Array (SLA®) technology, which allows optical systems to be designed compactly and manufactured at low cost.

The new system uses self-scanning light-emitting devices andradially distributive refractive index rod lens arrays to provideimages up to 1,200 dpi. The new print head offers all of theadvantages of miniaturization, low power consumption and low-noise operation, while providing the image quality equal to or surpassing more conventional laser scanning units.

Improving the living and workingenvironment – glass sound insulation on expresswaysOur Nippon Sheet Glass Environment Amenity (NEA) operationsupplies the market for sound insulation systems for industrialuse, acoustic architecture, expressways and residences as well as electromagnetic wave shielding systems. In Japan, NEA recentlywon a contract to supply sound insulation systems for the secondKeihan Expressway, with other orders in the pipeline.

Although transparent plastics such as polycarbonates and acrylicsare also used for soundproof panels around expressways, glasshas significant advantages in terms of aesthetics and cost.

Our new range of advanced LED printheads offers the advantages ofminiaturization, reduced noise and lowerpower consumption in the next generationof printers and scanners.

Glass cord engine timing belts – helping to reduce fuel consumptionOur advanced glass fiber cord enables automotive timing belts to maintain performance for longer. A German belt manufacturerhas launched the first timing belt suitable for lifetime use inVolkswagen’s common-rail diesel engine – as fitted in the new VW Golf. The belt includes a new high-strength glass corddeveloped by our glass fiber businesses in the UK and Japan.

This new high-tensile strength glass fiber cord improves beltflexibility and stretch resistance significantly. These characteristicshelp to provide accurate valve operation timing for better fuelefficiency over the lifetime of an engine. In tests, belts containingthis cord have been run for 300,000 km without any deterioration.Our glass fiber cord products are making a significant contributionto reducing fuel consumption worldwide and helping to protect the environment.

We are developing advanced fiberglass separatorsfor batteries with enhanced capacity, stability,power and safety margins, for use in nextgeneration lower emission vehicles.

Light Emitting Diode (LED) print heads, usingour proprietary SELFOC®Lens Array (SLA®)technology allow optical systems to bedesigned compactly and manufactured at low cost.


NSG Group Environmental PolicyOur Group Environmental Policy defines our approach onenvironmental matters. In particular, it outlines our management of both current activity and the legacy of past and inheritedliability. It reinforces our commitment to using good scientificprinciples to try to predict and assess our impacts on theenvironment, both positive and negative.

We acknowledge that our activities will inevitably have an impact,but we have taken steps to minimize the adverse nature of anyimpact and have put in place systems to try to ensure that wemanage such impacts in a controlled manner.

Principal among the tools we use is our environmentalmanagement system, which as a matter of policy is certified to ISO 14001 for all our glass manufacturing and automotivemanufacturing sites.

More recently, there has been an increasing recognition that the environment is only one part of a wider sustainability agenda.Care and respect for the environment must go hand in hand withthe social and economic needs of society.

Key messageAs one of the world’s largest glass companies, we believethat we have a responsibility to go further and to set anexample to others. We all share one planet together and we have to play a full role in helping to manage the preciousresources on that planet to the mutual benefit of everyone.

This is the cornerstone of sustainability; meeting the needs of the present without compromising the ability of futuregenerations to meet their own needs. Our commitment is reflected in our policies and the way we manage ourenvironmental responsibilities.

We have decided, therefore, to state more clearly our position in our Sustainability Policy, which now sits above and iscomplemented by our environmental policy.

ReportingWe are committed to reporting on our performance both good andbad. In 2006, NSG acquired Pilkington. The two companies had up to that point operated different policies and data collectionsystems. In order to develop a meaningful data collection, recordkeeping and monitoring system, a great deal of effort has beenput into integrating and rationalizing our environmental controlsand data systems. We chose calendar year 2007 as a startingpoint for reporting on the progress of the enlarged Group.

Before the acquisition, both NSG and Pilkington reported onenvironmental and safety performance. There were, however,considerable differences in some of the parameters used and theGroup has undergone considerable restructuring since 2006.

Our environmental management systemis, as a matter of policy, certified to ISO 14001 for all our glass manufacturingand automotive manufacturing sites.

Our Automotive business was one of thefirst in the automotive industry to achievea corporate certificate for environmentalmanagement. A single DIN EN ISO 14001certificate covers Pilkington Automotivesites worldwide.

Environmental policies and management

We take our environmental responsibilities extremelyseriously. All our operations are required to meet alllegislative standards as a minimum, and where localrequirements are not considered sufficient to address an issue, our own corporate standards do.


Direct historical comparison is therefore difficult and it was feltmore useful to allow the past reports to remain on their ownmerits, whilst building a new reporting structure based on thecurrent business and geographic organization of the Group.

We continue to work with regulatory authorities worldwide on issues relating to historical industrial activity on and aroundGroup premises.

Data collectionEnvironmental and safety performance data is now collected rightacross the Group using an online electronic data reporting systemknown as Airsweb™. This database is multilingual and accessedover the corporate intranet. All sites are connected to the systemeither directly or via VPN, allowing monthly updating of relevantinformation.

Environmental data is collected under the broad headings of energy, emissions to air, water usage, recycling and waste. The data collected is based primarily on the core environmentalperformance indicator set of the Global Reporting Initiative (GRI).

In addition to the collection of environmental emissions andresource usage data, the Airsweb™ system also incorporates an incident reporting system. This allows the timely reporting and recording of incident data both safety and environmental, as well as provision for tracking the progress or remedial actionsand communication of learning points.

Supplementing the routine monitoring of our business, we alsomaintain a number of central registers, used to guide our strategicdevelopment and maintain a high level of corporate governance in the sustainability field. For example, a register of all furnacestheir associated permits, relevant legislation and abatementcapabilities is maintained and used to support the assessment of any proposed changes in operation or design.

To ensure a consistent and innovative approach, we operate a number of multidisciplinary design panels whose task is to ensure full assessment and review of proposed changes. We utilize a stage gate process to ensure that an appropriate level of information and resource is applied to an issue at set points within the development of a project or proposal. This ensures the most efficient use of our resources andencourages the use of a wide range of skills to assist innovation.

For glass manufacturing plants we have defined our strategicapproach to abatement in order to ensure that across the worldwe hold fast to our principles even in parts of the world wherelegislative controls are less well developed.

CertificationWe aim to certify our manufacturing facilities to the internationallyrecognized ISO 14001 environmental standard. We now have 69 certified sites around the world, representing 70 percent of business by turnover.

A register of all furnaces, their associatedpermits, relevant legislation andabatement capabilities is maintained andused to support the assessment of anyproposed changes in operation or design.

70%of our operations take place on sitescertified to ISO 14001environmental standard

Co-generation equipment fitted to some of our float plants allows electrical power to bedirectly generated on site from waste gases,reducing environmental impact.

More details on our environmental policies and risk analysis can be found on our website: www.nsg.com.


The effect on our manufacturing base was dramatic. Some of ourfloat lines were put on hot hold (maintaining working temperature,but not producing glass). Some were mothballed (closed downwith a view to restarting when markets improve) and some wereshut permanently. Our Automotive and Specialty Glass operationswere similarly affected, with an unusual number of shutdowns and restarts.

Important structural changes included three new glassmanufacturing plants in China and Vietnam added in 2008 andthree Australian plants sold. For this reason, there has been aslight increase in the absolute consumption of energy resources.As we report our energy and resource usage on a calendar yearbasis, the full effects of this disruption in production will not show up until next year’s report.

Initiatives to reduce resource usageMajor initiatives to reduce energy in float production included the conversion of the Malaysian float line to natural gas and the switching of on-site electricity production in Moscow.

The Automotive business introduced an extensive survey programto study energy usage in detail at the production machine level in order to target a 3-5 percent reduction in energy usage on the previous year. These studies enabled the completion of many low-cost projects which made a considerable contribution to energy saving.

The dramatic onset of the financial crisis and its subsequentcollapse in demand led to a shift in the priority of the programmeto benchmark both shutdown and restart energy consumptions.Sites were able to significantly reduce consumption to minimallevels commensurate with maintaining the safety of the plant.

Absolute consumption was reduced in part due to lower production,but for the same reason specific consumption increased.

Key messageWe own or operate 49 float lines globally and have majorautomotive fabrication facilities in 32 locations worldwide. In response to the unprecedented global economic crisis,which began to affect our operations in mid-calendar year2008, we announced a major restructuring of the Group. The aim was to reduce our production capacity to matchcustomer demand.

Our energy usageNatural gasFor both environmental and financial reasons and whereverpracticable, we use natural gas as the fuel of choice for glassmelting. Natural gas emissions are discussed below, but from a production viewpoint the fuel is easy to control, does not usually demand a large investment in local storage and hasgenerally proved relatively reliable in delivery.

We used 1,014 million cubic meters of natural gas in 2008. This equates approximately to 35.8 PJ of energy, a 4 percentincrease on the previous year.

Heavy fuel oilOur second most utilized fuel is heavy fuel oil, readily availableand relatively low cost. It is therefore used when gas is notavailable. It provides good heat transfer and is considered a good fuel for glass melting. Its principal disadvantages lie in theemissions caused during combustion, its physical characteristicsand consequent difficulty in handling (e.g. it is very viscous at normal temperatures and therefore requires heated storage).

We used 297 million liters of heavy fuel oil in 2008, or 11.8 PJ; a 3 percent increase on the previous year.

Energy and resource usage

In all our manufacturing and processing activities, we seekto use as diverse a range of energy sources as practicable.We continuously work to minimize energy input into all ourprocesses, so that the usage of glass contributes net benefitto sustainability.

Natural gas TJ

Heavy fuel oil TJ

Diesel/gas oil TJ

LPG TJ

Electricity TJ

34,410

35,759

11,476

11,775

1,505

1,305

509

502

8,738

9,017

2007

2008

NSG Group energy usage


Diesel oil and liquid petroleum gasThe use of diesel oil and of liquid petroleum gas as fuels for floatfurnaces is generally limited by cost. Both are used as back-upfuels in case of the failure of the preferred fuel. Diesel oil is alsowidely used to power small engines and boilers.

In 2008, our consumption of diesel oil was 35.0 million liters, or 1.3 PJ (–13 percent compared to 2007) and that of liquidpetroleum gas 10.6 k tonnes or 0.5 PJ.

ElectricityElectricity is a major resource usage for the Group. The environmentalimpact associated with electricity is, of course, dependent on themethod used to generate it.

During 2008, we used 9.0 PJ (2.5 TWh) of electrical energy.

Our resource usageRenewable resourcesIt is often difficult to calculate the proportion of this energygenerated from renewable resources. Renewable electricity is acquired in a number of ways. Some electrical power is directlygenerated on-site from waste gases or using co-generationinstallations. Electricity supplied directly from wind or solarremains quite low. More is supplied via the existing grid supply

system under so called ‘green supply’ contracts. In a number of jurisdictions, electricity suppliers have a legal obligation to generate a proportion of electricity from such sources.

In 2008, we received 7.1 GWh from renewables and waste heatdirectly, plus a further 255 GWh from combined heat and power.The diversity of generation of grid supplies is taken into accountwhen calculating carbon dioxide emissions resulting from thegeneration of electricity by taking this into account when usingpublished carbon factors. No attempt has been made in thisreport to make a more accurate estimate of the overall renewablecontent of our supplied electricity, but this will be considered in the future.

The total energy used by the NSG Group in 2008 was 58.35 PJ(16.21 TWh).

Other resourcesTimberIn Europe, much of our glass is transported without packagingutilizing specialist vehicles known as ‘Floatliners’. In thesevehicles, jumbo size glass is transported on steel stillages, which do not require additional packaging. Outside of Europe,more of the glass is transported in boxes and containers, often made of wood. Although much of the timber we use comes from sustainable forestry, we are not yet in a position to be able to guarantee this worldwide and this remains an area for improvement.

We used 93,000 cubic meters of timber (wood) in 2008, mainly in the transportation of glass.

WaterThe glass-making process is not a particularly high user of water.Water is used for cooling in the process, but the majority of our plants operate with closed loop systems and so only requiretop up. Water is also used for washing glass within the plants, but there the need is for very high purity, so water is treated andthen reused.

We used a total of 23.6 million cubic meters of water in 2008. This is a 10 percent reduction on 2007 data.

Recycled glassThe other notable resource used by the Group is cullet (recycledglass) bought in from external sources and remelted to form newglass, so closing the recycling loop.

In 2008, we bought in 222,000 tonnes of cullet to supplementcullet from our own internal recycling. For comparison, we made4.7 million tonnes of glass for sale over the same period.

58.35 PJTotal energy used bythe Group in 2008

For both environmental and financial reasonsand wherever practicable, we use natural gasas the fuel of choice for glass melting.

The total energy used by the NSG Group in 2008was 58.35 PJ (16.21 TWh).

Natural Gas M m3

Heavy fuel oil MI

Diesel/gas oilx10 MI

Liquid Propanex10 kte

Total electricity/10 GWh

976

1,014

290

297

403

350

108

106

243

250

Total water usex10 M m3

262

236

Timber km393

93

Bought incullet kte

248

222

2007

2008

NSG Group resource usage


Our environmental impact analysis of the float glass andautomotive glazing production processes reveals that the onlysignificant emissions are carbon dioxide, oxides of nitrogen, oxidesof sulphur and, to a far more limited extent, particulate matter.

Progress against our targetsThe Automotive business achieved a 5.6 percent reduction inspecific electrical consumption (per square meter processed)against their 5 percent target, a 2 percent increase in specific

Key messageThe glass manufacturing process itself produces very littlewaste material. All trimmed glass is recycled back into themelting process and waste is limited to maintenance waste,occasional off-specification raw material which cannot beusefully blended and packaging waste. If glass is producedwhich cannot conveniently be remelted on-site, it is sent,where practicable, for external recycling.

gas usage, but this was following a 6.7 percent improvement theprevious year, and a 9 percent reduction in water usage against a5 percent target. The dramatic reduction in production at the endof the year will significantly impact on these figures going forward.

The installation of new capacity together with an increasedproportion of more energy-intensive low iron glass intended forsolar applications increased direct emissions of carbon dioxide.Steps taken to improve performance successfully held this to 2 percent despite early production difficulties in China. In Europe,verified direct carbon dioxide emissions were reduced 3.4 percent.

RecyclingGlass for recycling is a valuable resource. Wherever practicable,we recycle any glass off-cuts or cullet within our own glass meltinglines. Glass from our downstream operations and from those of our customers represents a potentially useful resource to us.

We gain a double benefit from the use of such cullet. Its use tomake glass reduces the requirement for raw materials and avoidsdisposing of what would otherwise be a waste material. There is

Minimizing environmental impact

Glass manufacture is an energy-intensive process, involving the melting of sand and other raw materials at high temperatures. Principal emissions from the processare to air and arise as products of the combustion of fuel and as CO2 from the decomposition of limestone and dolomite used in the process.

SOX/10 tonnes

NOX/10 tonnes

Glass for recycling/1,000 tonnes

Products for recycling/10 tonnes

Non-hazardous waste/100 tonnes

Hazardous waste tonnes

Air pollutants/10 tonnes

Total mass of CO2 for site excludingelectricity/1,000 tonnes

Total mass of CO2 from fuel excludingelectricity/1,000 tonnes

Total mass of CO2 for site/1,000 tonnes

1,292

1,144

2,656

2,732

476

449

9,630

6,373

804

814

11,073

6,964

4,222

4,144

4,076

3,084

3,978

3,000

5,134

4,965

2007

2008

Principal emissions from the NSG Group during 2008


also a net energy saving and consequent reduction in emissions.Our operations in Japan and Brazil achieve some of the highestlevels of recycling in the Group.

In 2008, we sent 476,000 tonnes of glass for recycling and boughtin 222,000 tonnes. In addition, a total of 26,000 tonnes of glasscould not be successfully recycled and was sent for disposal.

WasteThe classification of waste, hazardous or non-hazardous, isdependent upon local jurisdiction. Where this is unclear we defaultto the European Union waste classification system. We use the waste hierarchy to guide our disposal options. In this system,landfill is the least favored option. However, with significanttonnages of mineral materials arising for disposal we have noteliminated landfill completely.

We disposed of 66,022 tonnes of non-glass waste (a 3 percentreduction), of which 2,486 tonnes of hazardous (a 12 percentreduction) and 25,470 tonnes of non-hazardous waste (a 33 percentreduction) were sent to landfill. Hazardous waste has increasedsignificantly (+59 percent) due to a doubling of production of LCDglass units at Suzhou, with used acid being treated off-site ratherthan in the facility.

Emissions to airThese arise primarily from the combustion of fuel in melting the raw materials. The principal materials emitted are oxides ofsulphur and nitrogen. Some particulates arise partly from tracecomponents in the fuel and partly from the glass formation itself.

Oxides of sulphur and nitrogenThe fuels we use; oils and natural gas, all contain sulphurcompounds as contaminants. Natural gas, our preferred fuelcontains less sulphur than oil. Heavy fuel oil contains the highestlevels of sulphur of all our fuels and that readily available in Japanis particularly high. Our furnaces in Japan are therefore fitted with efficient emission gas-cleaning equipment. The combustion of such fuels can produce a mixture of sulphur oxides (SOx).

Most sulphate arising from soda lime glass manufacture is released as sodium sulphate, which is of low toxicity.

Nitrogen compounds released arise from the combustion air in which the fuel is burnt. At the high temperatures used in glass-making, the nitrogen in combustion air is oxidized to a mixture of nitrogen oxides (NOx). Actions we take to reduce or prevent the emission of these oxides of nitrogen are all detailed on our website.

Tackling carbon emissionsDirect emissions occur from our furnaces and from fuel used in bending and toughening furnaces in Automotive and BuildingProducts. The majority of electricity generated worldwideconsumes fossil fuels and releases carbon dioxide, thus raisingthe issue of how to account for these indirect emissions. In 2008, the NSG Group was responsible for the emission of 5.1 million tonnes of total carbon dioxide. Our direct emissionswere 4.1 million tonnes.

Direct carbon dioxide emissions include any released as a result of directly generating electricity on our own sites. Indirectelectricity-related emissions are calculated using data provided by the energy supply company or publicly available data sources.

Heavy oil to natural gas conversion has helped to almost halvecarbon emissions over the past 40 years, and a combination ofdesign and operational innovations has made further progress.

Glass for recycling is a valuable resource.Wherever practicable, we recycle anyglass off-cuts or cullet within our ownglass melting lines. We also recover glassfrom our downstream operations and fromthose of our customers.

In 2008, we sent476,000 tonnes ofglass for recycling

In 2008, we sent 476,000 tonnes of glass for recycling and bought in 222,000 tonnes. In addition, a total of 26,000 tonnes of glasscould not be successfully recycled and wassent for disposal.

Total CO2 emissions (million tonnes)

Direct CO2 emissions (million tonnes)

1.81 0.75 0.49 0.62 0.58

1.66 0.63 0.46 0.55 0.52

Europe North America South America Japan China and South East Asia

NSG Group manufacturing carbon emissions 2008

Our management philosophy, ‘people are the most importantasset of our company’, is deeply rooted in the 400-year-oldSumitomo Spirit to which we subscribe. It has therefore been a cause of great regret that the initiatives we have had to takeover the past year have led to significant headcount reductions. As of 30 December 2009, 6,500 employees had left the Groupsince June 2008. We have taken special measures to mitigate the effects on both those employees leaving the Group and those remaining.

Employee engagement is also being given a high priority, with training for managers and supervisors in communicationskills and additional briefing to keep employees informed ofdevelopments. We continue to promote the health and wellbeing of our people against new challenges such as that presented by A (H1N1), as well as the stresses caused by the global financial turmoil. We aim to play a responsible and responsive role in our local communities worldwide.

Key messageWe operate as an integrated international Group, with amultinational management and 80 percent of our employeeswork outside Japan. We reflect diversity in our workforce andbelieve that the range of nationalities, skills, qualificationsand experience available in our many operations are a positivebenefit to our business. Our management style is to put thebest person in each job, regardless of nationality or region.

Employees

Our management philosophy values people as ‘the mostimportant asset of our company’. Around 30,000 peoplework in the NSG Group, manufacturing in 29 countries and speaking over 25 languages. Safety and Qualityunderpin everything we do, with the principle of ‘opencommunication’ central to our employment policies.

DiversityOur Code of Conduct acknowledges internationally proclaimedhuman rights and the impact these have on employment.Employment standards have been set, derived from externalinternational human rights employment guidelines and our ownbusiness requirements.

The Code and our overall employment policy provide employeeswith reassurance on how they will be treated, and guideemployment policy and practice in individual businesses. Ourequal opportunity policy aims to prohibit discrimination on thebasis of race, color, creed, religion, age, gender, sexual orientation,national origin, disability, union membership, political affiliation orany other status protected by law. This policy operates in allemployment-related decisions.

Safety performanceWe measure safety performance using two key performanceindicators. The Lost Time Injury Rate (LTIR) records work-relatedaccidents or illnesses preventing individuals involved being able to report for work on the following day or shift. These are expressedas a rate per 200,000 hours (approximately the time worked by 100 people in one year). The LTIR was 0.25 in 2009; animprovement of 14 percent.

As the LTIR has improved, it has become less useful as an indicatorof performance and the Significant Injury Rate (SIR) is now ourprimary reactive indicator. This records injuries requiring medicaltreatment or the reallocation of duties to allow an individual tocontinue working. The SIR was 0.9 in 2009; an improvement of 28 percent. There were 111 lost time injuries and 294 injuriesclassified as significant in the year, for the then total of 32,500


0 7.005.00 6.004.00(rate per 200,000 hours)

3.002.001.00

08

09

04

05

03

02

01

00

99

98

97

06

07

Lost Time Injury Rate (LTIR)NSG Group employee distribution

Europe 45%Japan 18%NAFTA 13%China 8%South America 8%Rest of Asia 4%Philippines 4%

Group employees. We have also introduced a number of proactivemeasures of safety performance, targeted at changing behavior.

Consultation and open communicationWe operate a comprehensive formal cascade system of regularcommunication and briefing within all businesses, includingeffective mechanisms for two-way communication. All employeesreceive regular updates on Group and local business objectives, targets, results and best practice at central andbusiness line levels.

Every employee receives a monthly briefing in his or her ownlanguage written by the head of the respective business line.Everyone also receives a copy of the Group’s employee magazine, MADO, every eight weeks in his or her own language.The Group Intranet, NSG Group Inside, is available to everyemployee on the company network.

We operate formal mechanisms to brief unions and employeerepresentatives on Group operations and future plans, as appropriate to local circumstances and requirements.

During the current global economicdownturn, some employees have beenlaid-off for varying periods. To address this issue, special initiatives werelaunched to raise awareness of the safetyrisks inherent in stopping and startingoperations in a non-standard way.

Despite the current emphasis on costreduction, we continue to invest in thefuture of employees. The training anddevelopment of our people as individualsand as professionals remains a priority.

Group-wide employee surveyWe conduct a global employee survey every two years. The purposeof the survey is to obtain employees’ assessment of their level of job satisfaction within the Group. The first global employeesurvey since the acquisition of Pilkington, conducted in 2007,revealed a positive result worldwide, with almost 70 percent ofemployees assessing their level of motivation and satisfaction as ‘good’ or better.

The results of the survey also identified the need to improveinternal communications in some areas of the business. Actionplans, including a program, ‘Project Messenger’, to improvecommunications skills in managers and supervisors, were initiated to address this. The 2009 survey is currently underwayand the results and action plans will be covered in the 2010Sustainability Report.

Maximizing the potential of individualsDespite the current emphasis on cost reduction, we continue to invest in the future of employees and the training anddevelopment of our people as individuals and as professionalsremains a priority. Education and training programs are providedfor employees so as to raise global professional standards.

Our people development policy emphasizes the importance of thetraining, retraining and continuous development of all employees.On-the-job training is significant and focuses on raising safetystandards and performance, and enhancing skills through plannedinitiatives in the workplace.

Although English is the common language of the Group, training isalso arranged in local languages, to ensure maximum participationand effectiveness. Our key course for junior managers, ED1, isreplicated in Japanese and a Senior Management Workshop isprovided for Japanese local senior managers, to help acceleratethe integration process.


Employee training in safety procedures is given a high priority in the NSG Group.

KEY SAFE BEHAVIOURS

ALWAYS USE THE CORRECTISOLATION/LOCKING OFF MECHANISM

Our Machinery Safety Policy aims to establishbest international standards for machinerysafety at all manufacturing sites Group-wide.

80%of our employeeswork outside Japan

Key messageWe aim to be the supplier of choice of our customers. This means that all our businesses must be the mostefficient, most reliable and most responsive supplier.

Most efficient means having the lowest delivered unit cost of what we supply.

Most reliable means that, having committed to a customerorder, we deliver what they ordered, with the promised quality, when they expect it, in full, on time, every time,without quality issues or paperwork mistakes.

Most responsive means that when our customers contact us by whatever method, they get an answer immediately. In other words, they know where they stand with us.

Customers

Highest quality and service are key features in building relationships with our industry customers and end-consumers.

Highest qualityQuality is key because high quality can reduce waste throughoutthe supply chain, while improving production efficiencies. Thescope of quality extensively encompasses design, development,manufacture, delivery, assembly and price of glass, as well ascustomer support. In the NSG Group, the achievement of highquality is supported by the use of rigorous quality managementsystems and standards.

In the Building Products business, the Group has ISO 9000:2000quality management certification in Europe, Japan, North andSouth America. New certifications have been achieved in Russiaand China over the past year.

Our European Building Products business has been a leadingplayer in the development of new glass product standards for the European building industry. These standards have provided aroute for glass manufacturers to meet the European ConstructionProducts Directive and apply to virtually all NSG Group productsused in buildings. Global supply chains in Building Products are increasing and the Group is actively contributing to the development of new global product standards throughcollaboration with working groups set up by organizations such as the International Standards Organization.

The global Pilkington Automotive Original Equipment organizationoperates a single quality management system to ensure the consistent quality of its products from wherever they are manufactured and supplied. It has a corporateISO/TS16949:2002 (which is the internationally recognizedautomotive quality standard) certificate and is well advanced in its plans to extend this certification to operations in Japan and other parts of Asia.

We are now a leading supplier of glass products for solar moduleproduction where quality standards are set by customers withelectronics industry quality experience. A global quality strategy is in place to respond to the higher quality expectations inmanufacturing organizations. At the same time, we arecontributing to the working groups that will produce the first set of product quality standards for glass used in photovoltaicapplications.

Our Building Products Commercial website includes an electronic‘Product Directory’ to inform customers on the Group’s productrange and the specific benefits offered by each product category.


Katsuji Fujimoto (right) accepts a Mazda Performance Award for 2008/09on behalf of the NSG Group – one of only 13 out of 400 Mazda suppliersselected for the honor.

Customer health and safetyOverall, we aim to provide customers with products that havesafety, environmental and in-service benefits. These includepersonal protection, security, energy saving, solar control, noisereduction, fire protection, improved styling and enhanced visibilityfor vehicles, and self-cleaning properties for glazing in buildings.Support is also provided to customers in the selection andapplication of products, in their safe handling and storage and in evaluating their environmental impact. Capital projects(even small ones) have a number of checklists to cover thepotential environmental and health and safety impact.

Awards won for quality and marketing

Building Products•Pilkington Activ™ marketing and sales team received the

Bronze Award in the Institute of Practitioners in Advertising (IPA) Effectiveness Awards (UK).

• Pilkington Activ™ campaign received the SWOT Marketing Award (UK).

• Pilkington Building Products UK won a Health and Safety Award at the UK G08 glazing industry awards 2008.

Automotive•Toyota Superior Quality Control Award from Toyota Motor

Corp. (Japan).

• Achieved Ford’s Q1 Quality Standard (Italy, Poland, Finland).

•National Economic Award from a Polish Business Newspaper(Poland).

•Received Supplier of the Year Award from Panasonic AutomotiveSystems America Inc. (PASA) (North America).

•Mexicali plant recognized as one of the top three companies in Mexico City in an annual productivity award scheme (Mexico).

Specialty Glass•First-Class Value Engineering Proposal Award from

Bridgestone Corporation for the streamlining of plasma TV production (Japan).

• Excellent Quality Award for LCD panels from Stanley Electric Co., Ltd. (Japan).

•Chairman Encouragement Award from the Japan Air Cleaning Association for the study of air filters (Japan).

• Excellent Supplier Award from Panasonic Storage Battery(Shenyang) Co., Ltd. (China).

•Best Supplier Award for Nanox by telecommunicationsmanufacturer NEC Infrontia Thai Ltd. (Philippines).

CE markingDemonstrating confidence in our quality management systems and the quality of our products, Building Products Europe applies the CE mark, which confirms achievement of harmonizedEuropean Norms (hENs) for all products marketed inside the EU.

In glass manufacturing, CE Marking means that the productsatisfies all the provisions of Directive 89/106/EC on constructionproducts and other applicable marking directives. In addition, theCE Marking declares that the product carrying the mark complieswith the hENs, which are European technical standards, and hasundergone appropriate conformity assessment procedures.


Akira Kitayama, assistant manager ofautomotive manufacturing at the Maizuru,Japan plant, received the 42nd Ceramic Awardfrom the Ceramic Society of Japan in 2009.

Building Products applies the CE mark,confirming achievement of harmonizedEuropean Norms for all products marketedinside the EU, demonstrating confidence in ourquality management systems and products.

Annual and Interim reports are produced in both Japanese andEnglish and widely distributed to other parties who may have an interest in our performance. These documents are also madeavailable on our websites.

The Group Chief Executive and Group Finance Director makeregular reports to the Board on investor relations and on specificdiscussions with major shareholders. The Board receive copies of all research published on the Group. Shareholders have an opportunity at the General Meeting of Shareholders to askquestions of the Chairman and the Board.

Shareholder engagementOur Investor Relations (IR) Policy reflects our aims to be open and fair and to comply with corporate ethics. The NSG Group is listed on the Tokyo Stock Exchange (TSE) and the OsakaSecurities Exchange and we disclose information in line with the TSE ‘Rules on Timely Disclosure of Corporate Information by Issuers of Listed Securities’.

Where information does not fall under the category of timelydisclosure rules, our policy is to communicate it swiftly and fairly,once it has been determined that the disclosure of suchinformation is beneficial to investors.

Key messageIn communicating with our shareholders, potential investors,the financial community regulatory authorities and the media,our aim is to provide transparency, timeliness and accuracy.

Our overall objective is to provide as much information aspossible to help our shareholders and potential shareholdersunderstand our strategy and performance, to enable them totake investment decisions.

Shareholders

Effective communication with all our stakeholders is a priority for us. We aim to keep our shareholdersinformed through a focused international investor relations program. This encompasses regularcommunications throughout the financial year, throughmeetings, publications, plant visits and our websites.

Communicating our performanceWe hold half-year and year-end financial results briefings for securities analysts and investors in Japan, with furthercommunications in the intervening quarters. The CEO and Group Finance Director (GFD) personally present and discussfinancial results, charting our progress against our strategy and the future outlook for the Group.

Supplementing this, the GFD and IR team give backgroundbriefings to analysts and investors following the release of financial results. From time to time, visits are arranged to our operations, to enable analysts to see for themselves.

Over the past year, we have increased our focus on non-financialaspects of our performance relating to sustainability. The currentreport is an important channel for communicating our progress in meeting these requirements and we intend to develop thisprocess further.


Financial institutions 40.33%Securities companies 1.67%Other corporate entities 5.87%Foreign corporations and foreign individuals 31.15%Other individual investors 20.77%Treasury stock 0.21%

Composition of NSG Group shareholders(Shareholding ratio by ownership)

Shareholding ratio by ownership 669,551 thousand shares (as of 31 March 2009)

Evolving shareholder compositionA major issue for us has been the significant changes inshareholder composition over the past three years. Theacquisition of Pilkington plc in 2006 transformed NSG from a regional Japanese glass company to an international groupheadquartered in Tokyo. Following the acquisition, the proportionof non-resident foreign corporations and foreign individuals owning NSG Group shares has risen markedly.

We have consequently expanded our global IR effort to meet the requirements of shareholders and potential investors aroundthe world, including a range of publications published in bothJapanese and English. We organize ‘road shows’ for analysts,investors and potential investors outside Japan, when appropriate.

Communicating our strategyWe are following a 10-year, 3-phase strategy, published in July2006, following the acquisition of Pilkington plc. Our Medium-TermPlan represents Phase 1 of our strategy and remains central to our long-term vision. The basic objectives remain in place,although the current downturn in world trade has required someadjustments to the timetable.

The increase in the proportion ofshareholders outside of Japan since theexpansion of the Group in 2006, presentsnew challenges.

We have adapted our communications to address this, with all major IRcommunications now issued in bothJapanese and English.

Create a new entity focused on differentiatingourselves from competitors, and maximizingproductivity and operational quality while re-establishing our financial foundations.

Explore new areas for future growth.

Explore new businesses by both leveraging ourcustomers and our technical and operationalcompetencies.

Pursue acquisitions, mergers, and alliances in adjacent areas.

Achieve aggressive growth in the flat glassbusiness.

Geographically expand into emerging countries.

Improve competitiveness, launch major newproducts, improve R&D and foster technologies.

2007

2011

Phase 1 4 years

Phase 3 3 years

Phase 2 3 years

2017

2014

10-year, 3-phase strategyExecute growth strategies through 3 phases

30%shareholders basedoutside Japan


We hold half-year and year-end financial resultsbriefings for securities analysts and investors in Japan, with further communications in theintervening quarters.

More details on our Investor Relations can befound at www.nsggroup.net/ir/

Our Supplier Code of ConductThe wide range of issues addressed in the Code reflect the manyand diverse activities in which our suppliers are involved. Whereverpossible, the Code defines a fair and common-sense approach todoing business, while incorporating all relevant legal requirements.

The content of the Code also takes into account our Values andPrinciples, particularly the emphasis on safety, taking personalownership for our actions and communicating with openness and involvement. It is the responsibility of all of our suppliers to follow the principles of this Code to ensure compliance with our requirements.

To manufacture and supply superior quality glass products to our customers, we aim to build strong relationships with suppliers,based on a framework of trust, cooperation and sustainability.

Key messageOur manufacturing processes use materials, products and services procured from suppliers throughout the world.Our suppliers are therefore crucial to the achievement of our sustainability objectives. To manufacture and supplysuperior quality glass products to our customers, we aim to build strong relationships with suppliers that are based on a framework of trust, cooperation and sustainability.

In June 2009, as part of our Sustainable ProcurementProgram, we launched a new Supplier Code of Conduct. It outlines behaviors, processes and procedures which we observe as the standards we expect from our suppliers.

Suppliers

We purchase materials, goods and services from over3,000 direct and critical indirect suppliers worldwide. Our Supplier Code of Conduct and related audits helpensure that our suppliers understand and comply with our standards.

The standards we expectWe expect our suppliers to achieve and maintain high standardsthroughout the supply chain, but particularly with regards to the following:

Ethical behaviorOur suppliers must accept personal responsibility for behavingprofessionally, ethically and with integrity and fairness.

Social behavior – human considerations in the workplaceAll our suppliers must conform to the relevant International LaborOrganization Labor Standards as a minimum requirement.

Environmental behaviorOur suppliers must recognize the crucial importance of their role in reducing environmental impact. They must play their part in creating a prosperous and sustainable future by continuallyseeking to achieve best practice in environmental protection.

AuditConformance to the Code now forms part of our supplier audits. A team of 10 supplier development engineers, covering all regions,is responsible for validating compliance. Around 120 selectedsuppliers are currently being audited and will now be subjected to these additional checks. Any that fall short will be given animprovement program. We expect the whole cycle may take a year,or longer if improvements are needed.

Previously, our audits focused very much on quality issues. Now,we have widened the audit’s scope in line with our SustainabilityPolicy. We categorize our suppliers and those which are identifiedas posing a high risk to sustainability are prioritized and auditedagainst the requirements of the Supplier Code of Conduct. Anysupplier failing to meet our basic requirements will be expected to agree an improvement action plan with us or be removed fromour supplier list.

Previously, our audits focused very muchon quality issues. Now, we have widenedthe scope of our audits to reflect theexpectations of our Sustainability Policy.


Communication and CooperationIn line with our Sustainability Policy, we communicate with and work constructively with our suppliers and governments,regulatory agencies, the scientific community and other relevantstakeholders, to develop and encourage business and communitypractices that make progress towards the common aim ofsustainable development.

We expect our suppliers to uphold the same standards in dealingwith their own suppliers, contractors and sub-contractors – and tobe able to provide evidence of this if requested.

Supplier-related activitiesOur procurement activities and projects demonstrate ourcommitment to sustainability. Where possible, we implement them across our operations in all regions. Good practice is shared through Global Procurement Category teams and spread throughout the Group. We are able to leverage our Global Procurement function to achieve this spread of goodpractice effectively and efficiently.

We expect our suppliers to uphold ourstandards in dealing with their ownsuppliers, contractors and sub-contractorsand to be able to provide evidence of thisif requested.

RecyclingIn the Automotive business line, all supplied materials areregistered in the global IMDS (International Material Data System)system to ensure that the Group has complete visibility of materialcontent to identify hazardous materials and also the opportunityfor recycling. This data is shared openly with our automotivecustomers, to support their own recycling efforts.

CulletWe recover cullet (broken, waste glass) for use in the float glassprocess. Glass manufacturing plants are designed to ensure thatcullet is recovered efficiently and returned to the manufacturingprocess. Not only does this increase recycling but it also reducesthe raw material and energy required to melt glass.

Polyvinyl Butyral (PVB)PVB is used to manufacture laminated glass, mainly forautomotive windscreens. PVB trims from the edges of thelaminated glass are returned to PVB suppliers to be recycled in their manufacturing processes.

PackagingWe are increasing the use of returnable, reusable packaging.Wooden crates used to transport glass for the automotive glass replacement market are reused 10 times or more, thusminimizing our consumption of wood resources. The wood used in the manufacture of these crates is also purchased only fromsustainable sources.

Maintenance partsWe have developed detailed processes to encourage the repair of used maintenance parts, such as motors. Usually, these repairsare carried out by suppliers local to our plants to minimizetransport.

Water managementWe seek to minimize our water consumption by working withsuppliers to recycle water and to install cutting edge watertreatment facilities. This not only reduces the consumption of wateritself but also the chemicals used in the treatment of the water.

120selected supplierscurrently beingaudited


Our float plants are designed to ensure thatcullet is recovered efficiently and returned to the manufacturing process. This increasesrecycling and reduces the raw material andenergy required to melt glass.

More details on our Supplier Code of Conductcan be found in the Sustainability section of our website.

Around 120 selected suppliers are currentlybeing audited and will now be subjected tothese additional checks. Any that fall short will be given an improvement program.

Aims and objectivesWe want our operations to function in healthy, thriving communitiesand to be seen as a good neighbor to those communities. We know that if we want to operate effectively and to be able to expand or change when the time is right, we need the goodwillthat comes of being an active supporter of the community.

The local communities throughout the world in which the NSGGroup operates are the foundation of our business and the lives of employees. Without a relationship of mutual benefit with these communities, the Group as a whole could not sustainits operations.

We carefully monitor the impact of ouroperations on the local communities in which we operate. We work hard tominimize potentially negative effects,such as pollution, noise and trafficcongestion.

Key messageWe employ around 30,000 people, with principal operations in 29 countries throughout Europe, Japan, North and SouthAmerica, China and South and South East Asia. We do this in around 550 separate facilities worldwide – some large and some small. Each has an impact on the community inwhich it is based, by providing employment, investment andother benefits, but also having an impact on the environment.

All these aspects present unique challenges and opportunities,ranging from employment and education to social welfare and support for local and national organizations.

As a responsible and often prominent member of thecommunities in which we operate, we believe it is importantto be involved actively by leveraging our core business and management resources to help to address local issues.

Communities

As a responsible member of the communities in which weoperate, we ensure we are actively involved, leveraging ourcore business and management resources to help addresslocal issues, through a variety of direct grants and employeeinvolvement at all levels.

In addition to our business investments, helping to sustain local operations, we also invest in the communities in which we operate. We aim to help through direct cash donations tocharities and other projects or through in-kind resources – toimprove the health of the community or tackle specific socialissues. We operate programs that assess and manage theimpacts of our operations on communities, including entering,operating and exiting.

We also involve our staff in providing a lead in developing ourrelationships with the communities in which we operate. This cantake the form of matching contributions raised by staff or allowingstaff time to make personal contributions of time and effort inlocal projects

Highlights of our community action over the past year

Community exchanges and volunteer work•PR support for Eco-Glass at the Sakura Night Festa in

Sagamihara, (Japan).

• Educational activities for elementary and junior high-schoolstudents in Yokkaichi City (Japan).

• In Poland, the Sandomierz Foundation, linked to our operationsin the town, launched a new series of 15 training courses, to help local people affected by the economic downturn.

•Employees of VASA in Argentina carried out building repair work at local schools (Argentina).

Support for education and training•Sponsors of the Royal College of Art Vehicle Design Award (UK).

•Nippon Sheet Glass Foundation for Materials Science andEngineering (Japan).

• Asian research students of the Japan International CooperationAgency (JICA) attachment to the Yokkaichi City Plant (Japan).

•Sponsors of the Arkwright Scholarship scheme for students of technology (UK).

Support for sport and the arts•Sponsorship of The World of Glass museum, St Helens (UK).

•Co-sponsorship of international music festival in the City ofSandomierz, (Poland).


Natural disaster assistance and social welfare activities•Donation to Red Cross Aid for Sichuan earthquake in China.

•Assisted earthquake-stricken areas in Abruzzi regions (Italy).

•Supported eradication of drug abuse in Sweden.

• Funded Agam, a social service institution dedicated to children(Brazil).

•Sponsored Aeta Community in Sapang Bato, Angeles City(Philippines).

Public support for a low-carbon society•Sponsored an energy summit for sustainable buildings.

•Popularized Eco-Glass through the Flat Glass Association of Japan.

Cooperation with business groups•Supporter of the Sumitomo Foundation (Japan).

•Membership of Business in the Community (UK).

•Nippon Keidanren 1 percent Club member (Japan).

Employee involvementOur employees are encouraged to participate in their localcommunities and appropriate community organizations, either onan individual basis or with help from the Group. As needs varyfrom community to community, each of the Group’s business unitshas some flexibility to identify the most appropriate way to growwith their respective communities.

We believe that, as well as generating goodwill in the community,involving employees in community projects can also help theirdevelopment as potential managers and team leaders.

Impact of the economic downturn on our communitiesLike many companies, we have been affected over the past year by the unprecedented global downturn, which has significantlyimpacted our trading and investment. We have also had torestructure the Group to match our capacity and output to that of our customers. That has led to over 6,000 people leavingthe Group since June 2008, with inevitable consequences forindividuals and the communities in which they live.

Where we have sold businesses to other companies as goingconcerns, the impact on employment has been relatively low.However, in some parts of the world we have had to announce the closure of whole plants or, in some cases, ‘mothballed’ lines,awaiting the upturn. In all cases, we have made special efforts to mitigate the effects, through counseling and special assistancein relocation for staff leaving the Group and direct support for communities affected.

Although the global disruption in trade has required us to reduce our overall investments, we nevertheless invested around ¥43 billion in plant, machinery, training and upgrades in our operations in FY09, benefiting not only the efficiency and effectiveness of our operations, but also the communities in which we operate.

We made direct contributions to localcommunities totaling ¥112,890,000 in FY09In FY09, we made contributions worth around ¥112,890,000(approx. €868,385) to our local communities. Our grants helpedthe arts, medicine, welfare, job creation and urban renewal. This is very slightly down on the total in the previous year. By region,Europe and Japan accounted for 72 percent of this total. The bulkof the remainder was spent on activities in South America.

These contributions complemented the efforts of employeesaround the world who have supported voluntary programs byraising money and providing their time and skills for education and community welfare purposes.


Staff from our VASA business in Argentinavolunteered to help refurbish a local school.

The World of Glass museum and visitorattraction in St Helens, UK, teaches childrenand other visitors how glass is made and how it has changed the world. We have supportedthe museum since its establishment in 1999.

Our operations in Toledo OH, in the US, havebeen recognized as Pillar Award supporters of the nationwide United Way charitableorganization.


As a global business, we have chosen to assess our performanceagainst the GRI (Global Reporting Initiative). The GRI aims topromote common conventions and to enable comparability, suchas currently exist in financial reporting, in corporate reporting on economic, environmental, and social performance.

The NSG Group is among some 1,000 organizations in over 60 countries that have announced their decision to use the GRI Reporting Framework for sustainability reporting, including agrowing number of Japanese corporations publishing CSR reports.

We believe the GRI approach is consistent with our aim to make steady incremental progress on improving our sustainabilityperformance and its criteria are a good match with our ownsustainability objectives.

In this, our first Sustainability Report, we have self-assessed our application of the GRI framework to be at level C. Our clearobjective is to improve on this rating for our 2010 SustainabilityReport, which we will publish in January 2011.

We report our financial, social and environmental performance via three main channels:

•NSG Group Annual Report 2009 (AR)

•NSG Group Sustainability Report 2009 (SR)

•NSG corporate website, www.nsg.com. (Web)

The table below shows where to find information on ourperformance on the criteria on which we are reporting this year.

Global Reporting Initiative (GRI) Index

GRI Where to findIndicator Criteria this information

1 Strategy and analysis1.1 Statement from the most senior decision-maker SR Page 2

of the organization about the relevance of sustainability to the organization and its strategy.

2 Organization profile2.1 Name of organization. Page 412.2 Primary brands, products and services. Page 52.3 Operational structure of the organization, Page 4 & AR

including main divisions, operating companies, subsidiaries, and joint ventures.

2.4 Location of organization’s headquarters. Page 412.5 Number of countries where the organization Page 4

operates, and names of countries2.6 Nature of ownership and legal form. AR2.7 Markets served (including geographic Pages 4/5

breakdown, sectors served, and types of customers/beneficiaries).

2.8 Scale of the reporting organization. AR2.9 Significant changes during the reporting period AR

regarding size, structure or ownership2.10 Awards received in the reporting period. Page 313 Report parameters3.1 Reporting period. 3.2 Date of most recent previous report. Page 403.3 Reporting cycle. Page 403.4 Contact point for questions regarding the report Page 41

or its contents.3.5 Process for defining report content, including: Page 40

determining materiality; prioritizing topics within the report; and identifying stakeholders the organization expects to use the report.

3.6 Boundary of the report. Page 403.7 State any specific limitations on the scope or Page 40

boundary of the report.3.8 Basis for reporting on joint ventures, AR

subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and/or between organizations.

3.10 Explanation of the effect of any restatements Page 23of information provided in earlier reports, and the reasons for such restatement.

3.11 Significant changes from previous reporting Page 22periods in the scope, boundary, or measurement methods applied in the report.

3.12 Table identifying the location of the Standard Pages 38/39Disclosures in the report. Identify the page numbers or web links where the following can be found.


4 Governance4.1 Governance structure of the organization. Page 104.2 Indicate whether the Chair of the highest AR

governance body is also an executive officer. 4.3 For organizations that have a unitary board AR

structure, state the number of members of the highest governance body that are independent and/or non-executive members. State how the organization defines ‘independent’ and ‘non-executive’.

4.4 Mechanisms for shareholders and employees ARto provide recommendations or direction to the highest governance body.

4.14 List of stakeholder groups engaged by Pages 2/3the organization. & 28-37

4.15 Basis for identification and selection of Page 40stakeholders with whom to engage.

EC EconomicEconomic performance

EC1 Direct economic value generated and distributed, ARincluding revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

EC2 Financial implications and other risks and Pages 12/13opportunities for the organization’s activities due to climate change.

EN EnvironmentMaterials

EN1 Materials used by weight or volume. Pages 24/25 & Web

EN2 Percentage of materials that are recycled Pages 26/27 input materials. & Web

EN3 Direct energy consumption by primary Pages 24/25 energy source. & 26/27

EN4 Indirect energy consumption by primary source. Page 24EN5 Energy saved due to conservation and Web

efficiency improvements.Water

EN8 Total water withdrawal by source. Pages 24/25Emissions, effluents, and waste

EN16 Total direct and indirect greenhouse gas Pages 26/27emissions by weight.

EN17 Other relevant indirect greenhouse gases by weight. WebEN19 Emissions of ozone-depleting substances by weight. WebEN20 NOX, SOX, and other significant air emissions Page 27

by type and weight.EN22 Total weight of waste by type and disposal method. Page 26EN23 Total number and volume of significant spills. Web



EN26 Initiatives to mitigate environmental impacts Web of products and services, and extent of impact mitigation.

Compliance

EN28 Monetary value of significant fines and total Webnumber of non-monetary sanctions for non-compliance with environmental laws and regulations.

Product responsibility Customer health and safety

PR1 Life cycle stages in which health and safety Webimpacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures.

Product and service labeling

PR3 Type of product and service information Webrequired by procedures, and percentage of significant products and services subject to such information requirements.

Customer satisfaction

PR5 Practices related to customer satisfaction, Webincluding results of surveys measuring customer satisfaction.

Marketing communications

PR6 Programs for adherence to laws, standards, Page 31and voluntary codes related to marketing communications, including advertising, promotion and sponsorship.

Labor practices and decent workEmployment

LA1 Total workforce by employment type, Webemployment contract, and region.

LA2 Total number and rate of employee turnover Webby age group, gender, and region.

Labor/Management relations

LA4 Percentage of employees covered by collective Webbargaining agreements.

LA5 Minimum notice periods regarding operational Webchanges, including whether it is specified in collective agreements.

Occupational health and Safety

LA7 Rates of injury, occupational diseases, lost days, Pages 28/29and absenteeism, and number of work-related & Webfatalities by region.


Training and education

LA10 Average hours of training per year per employee Webby employee category.

LA11 Programs for skills management and life-long Weblearning that support the continued employability of employees and assist them in managing career endings.

LA12 Percentage of employees receiving regular Webperformance and career development reviews.

Society Community

SO1 Nature, scope, and effectiveness of any Webprograms and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting.

Public policy

SO5 Public policy positions and participation in Webpublic policy development and lobbying.

Anti-competitive behavior

SO7 Total number of legal actions for ARanti-competitive behavior, anti-trust, monopoly practices and their outcomes.

Compliance

SO8 Monetary value of significant fines and total ARnumber of non-monetary sanctions for non-compliance with laws and regulations.

Approach to reporting

All environmental and safety performance data relates to CalendarYear 2008, but financial performance figures are based on theFinancial Year 2009, ending 31 March 2009. Unless otherwisestated, the Report covers those businesses that make up the NSG Group.

This Sustainability Report has been prepared in accordance withthe Global Reporting Initiative (GRI) G3 Sustainability ReportingGuidelines, which provide a globally recognized framework forreporting on an organization’s economic, social and environmentalperformance and responsiveness. We have self-declared ourperformance at application level C.

To keep the size of the printed report to a minimum, we haveincluded additional information, charts and tables covering our performance on the Sustainability section of our website.

The printed report can also be downloaded from our website athttp://www.nsg.com/sustainability.

This report forms part of our non-financial performancecommunications, and reflects Group, regional and site-levelreporting. Our environmental and social performance is of interestto our stakeholders and important to our business success and we have been reporting on these matters since 2002, in successive environmental, social activity, or CSR reports.

The 2009 NSG Group Sustainability Report marks an importantchange in our approach. We decided to widen our reporting tocover all aspects of sustainability and the changed title of thereport reflects this.

In June 2009, we published our Group Sustainability Policy, settingour sustainability agenda, and in December 2009 established a Group Sustainability Committee to direct, coordinate and monitorour efforts to improve our approach to sustainability.

This report should therefore be regarded as transitional, as over the course of the Calendar Year 2010, we will be working to align our targets and performance more closely to theachievement of sustainability.

This report was published in January 2010 and is an annualreport, relating to the operations and stakeholders of NipponSheet Glass Co., Ltd. (referred to in the Report as the NSG Group,or ‘the Group’).


Further information

Company informationCompany name: Nippon Sheet Glass Co., Ltd.Unified global brand: NSG GroupHead office: 5-27, Mita 3-Chome, Minato-ku, Tokyo 108-6321 JapanEstablished: 22 November 1918Capital: ¥96,147 millionTotal assets: ¥1,025,221 millionNet sales: ¥739,365 million (consolidated)Employees: 31,436 (as at 31 March 2009)NSG Group companies: 254Web http://www.nsggroup.net/ir/annual.html

WebsitesNSG Group Corporate Website (English) http://www.nsg.com

NSG Group Corporate website (Japanese) http://www.nsg.co.jp

Commercial website (BP and Automotive)http://www.pilkington.com

This report is printed on Revive uncoated, a 100% recycled papermade from post-consumer collected waste. Revive uncoated ismanufactured to the certified environmental management systemISO 14001.

Published by NSG Group Corporate Communications DepartmentDesigned by Likemind Printed by Royle Corporate Print

We produce a regular flow of publications intended to providecurrent and potential investors with as much information aspossible about the Group, the industries in which we operate and the organization, strategy, targets and progress of the Group.The range of these publications is shown below.

Publications

Annual Report and Accounts 2009Published annually in July, covering the financialperformance of the Group in the previous financialyear. Editions in both English and Japanese.

To our ShareholdersPublished twice a year, in June and December,designed to keep shareholders informed ofprogress against our strategy. Editions in bothEnglish and Japanese.

Pilkington and the Flat Glass industry 2009Published annually in November. Detailed analysisof the world’s Flat Glass industry and the NSGGroup’s position within it. Published in English.

This is PilkingtonGeneral introduction to the Building Products andAutomotive businesses of the NSG Group, whichaccount for 90 percent of our turnover. Publishedin all languages used in the Group.

The Way we do BusinessProduced for Group employees in all of thelanguages in which the Group operates,summarizing the main points of the Group’s Code of Conduct.


Nippon Sheet Glass Co., Ltd.

Head Office: 5-27, Mita 3-chome, Minato-ku, Tokyo 108-6321 JapanTelephone: +81 (0) 3-5443-9477Email: www.nsggroup.net/contact

www.nsg.com

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