Citizen Group CSR Report 2009

Special Feature The Citizen Group’s Approach to Manufacturing: Good for People and the Planet Bringing the Eco-Drive solar-powered watch to our customers

Message from Management

Internal Audit & CSR Department at Citizen Holdings Co., Ltd. 6-1-12 Tanashi-cho, Nishitokyo, Tokyo 188-8511, Japan Establishing the human and Tel: +81-42-468-4776 Fax: +81-42-466-1280 organizational strength to Citizen website: http://www.citizen.co.jp/english/ adapt to future changes Published: June 2009

This report uses FSC-certified paper. This certification means that the paper is made using wood from forests managed appropriately in environmental, social, and economic terms. This paper is printed with CTP printing technology, which reduces the burden on the environment by avoiding film that uses developers. Waterless printing with no release of toxic effluents has been used. This report also uses highly biodegradable and de-inkable soy ink that facilitates the recycling of printed matter.

Citizen is a registered trademark of Citizen Holdings Co., Ltd. CONTENTS Editorial Policy

The aim of this publication, CSR Report 2009, is to provide all of our stakeholders with a straight forward outline of the Citizen Group’s Editorial Policy 2 business activities and the Group’s approach and initiatives in relation to its social responsibilities. The Citizen Group 3 The Special Feature section examines the process of bringing the Eco-Drive solar powered watch, one of our environmentally friendly Citizen Products and Technology products, to our customers, incorporating the thoughts of employees involved in business activities along the way. We have set out this in Use Here, There and Everywhere 5 section so as to give employees responsible for CSR a visible presence and create a real feel for our approach to CSR with the participation of Message from Management: Establishing the human all employees. and organizational strength to adapt to future changes 7 The rest of the report outlines our approach to individual activities from the standpoint of CSR, our CSR framework and the results of our activities. This year’s report features details of more activities at Group Special Feature companies than last year. In addition to informing as many members of the public as possible about our CSR activities, this report is also aimed at providing individual Citizen Group employees with an understanding of the Group’s CSR The Citizen Group’s Approach to Manufacturing: activities and sending out a message to encourage them to implement Good for People and the Planet 9 CSR as part of their respective duties. Bringing the Eco-Drive solar powered watch to our customers 11

Citizen aims to pursue its corporate social responsibility (CSR) Having taken on board comments made in fiscal 2008 by Riyako Base of CSR Godai and One Akiyama, to the effect that coverage was limited to the “plan” and “do” stages of the PDCA cycle rather than the Citizen Group CSR 15 with the participation of all employees as a “corporate group “check” and “act” stages and that initiatives should be laid out in a table so as to outline goals and achievements in an easy to Corporate Governance 19 contributing to and striving to be respected by the citizens of the world”. understand format, we have included a section entitled Goals and Progress with CSR Activities and a great many example Compliance 21 initiatives so as to provide specific details of our activities. In response to the comment that last year’s report Risk Management 22 contained too little information regarding issues faced and measures taken overseas given that Citizen is a global company, we have started to hold CSR Meetings at bases in China and are looking into monitoring activities at individual basis Citizen and Society and how best to proceed in the future. Citizen and its Customers 23 Scope of Report Citizen and its Shareholders and Investors 26 Economic and social data: Citizen and its Business Partners 27 85 domestic and overseas Citizen Group companies Environmental data Citizen and its Employees 28 41 domestic and overseas Citizen Group companies Citizen and Local Communities 31 Period Covered Citizen and the Environment Fiscal 2008 (April 1, 2008 to March 31, 2009) Some data from scal 2009 is also included. The Citizen Group’s Environmental Management 33

Guidelines Referenced Environmental Management 35 Business Activities and Sustainability Reporting Guidelines 2006 (GRI) Environmental Impact 37 Environmental Reporting Guidelines 2007 (Ministry of the Environment, Japan) Enhancing Products with Environmental Accounting Guidelines 2005 Citizen Environmentally-Friendly Products 39 (Ministry of the Environment, Japan) Reducing Hazardous Chemical Substances 40 Supplemental Information on Website Reducing Greenhouse Gasses 41

The symbol indicates topics for which more Effective Utilization of Resources and Reduction of Waste 42 detailed information, not included in this CSR report due to space limitations, is available on Third-Party Comments 43 the website. Online Information 44

Online CSR Report Date of Publication Japanese: June 2009 (Previous report: June 2008 / Next report: June 2010) http://www.citizen.co.jp/social/index.html Disclaimer English: This CSR report includes future projections based on the information http://www.citizen.co.jp/english/csr/index.html available when the report was written. The actual results of activities documented may differ from such future projections. We asked Citizen Group employees all over the world. What does CSR mean to you? 1 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 2 TheTheThe Citizen Citizen Citizen Group Group Group HarnessingHarnessingHarnessing world-leading world-leading world-leading compact, compact, compact, precision precision precision technology technology technology to to contito conti continuallynuallynually offer offer offer true true true value value value toto fulfillto fulfill fulfill people’s people’s people’s expectations expectations expectations and and and aspirations aspirations aspirations ElectronicElectronicElectronic Products Products Products We harnessWe harnessWe the harness compact, the compact, the precision,compact, precision, precision,low-power low-power low-power consumption consumption consumption technologies technologies technologies built built built BasedBased onBased the on Citizenthe on Citizenthe Group’sCitizen Group’s Group’s corporate corporate corporate philosophy philosophy philosophy of “contributing of “contributing of “contributing to and to andstriving to andstriving striving up byup the by Groupup the by Group thein the Group in watch the in watch thesector watch sector to offer sector to offercommercial to offercommercial commercial printers printers and printers other and other and other • CITIZEN• CITIZEN• CITIZEN(SHANGHAI) (SHANGHAI) (SHANGHAI) TRADING TRADING TRADING CO., CO., LTD. CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENWATCH WATCH WATCHCO., CO., LTD. CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENT.I.C T.I.C CO., T.I.C CO., LTD. CO., LTD. LTD. electronicelectronic electronicequipment equipment equipment for professional for professional for professional use in use a wide in use a wide rangein a widerange of businesses. range of businesses. of businesses. Having Having Having to beto respected beto respected be respected by citizens by citizens by citizensof the of world,”the of world,”the world,”we operatewe operatewe operatea wide a wide arraya wide array of arraybusinesses of businesses of businesses • CITIZEN• CITIZEN• CITIZENWATCH WATCH WATCH(CHINA) (CHINA) (CHINA)CO., CO., LTD. CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENELECTRONICS ELECTRONICS ELECTRONICS CO., CO., LTD. CO., LTD. LTD.• CITIZEN• CITIZEN• CITIZENSAITAMA SAITAMA SAITAMA CO., CO., LTD. CO., LTD. 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LTD. • CITIZEN• CITIZEN• CITIZENBUSINESS BUSINESS BUSINESS EXPERT EXPERT EXPERTCO., CO., LTD. CO., LTD.• MIYANOLTD.• MIYANO• MIYANO MACHINERY MACHINERY MACHINERY INC. INC. INC. DigitalDigital pedometersDigital pedometers pedometers and andproducts. andproducts. products. As part As part Asof ourpart of ourwatch of ourwatch business watch business business we aimwe aimweto create aimto create to a create wide a wide rangea wide range of range of of • SHIANG• SHIANG• SHIANGPAO PAO PRECISION PAO PRECISION PRECISION CO., CO., LTDPTE. CO., LTDPTE. LTDPTE. • CITIZEN• CITIZEN• CITIZENFINANCIAL FINANCIAL FINANCIAL SERVICE SERVICE SERVICE CO., CO., LTD. CO., LTD.• MIYANO LTD.• MIYANO• MIYANO SERVICE SERVICE SERVICE ENGINEERING ENGINEERING ENGINEERING INC. INC. INC. • SUNCITI• SUNCITI• SUNCITI MANUFACTURERS MANUFACTURERS MANUFACTURERS LTD. LTD. LTD. • CITIZEN• CITIZEN• CITIZENJEWELRY JEWELRY JEWELRY CO., CO., LTD. CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENSEIMITSU SEIMITSU SEIMITSU KAGOSHIMA KAGOSHIMA KAGOSHIMA CO., CO., LTD. CO., LTD. LTD. productsproductsproducts based based on based the on conceptthe on conceptthe concept of combining of combining of combining technology technology technology and andbeauty. andbeauty. beauty.We supplyWe supplyWe supply • CITIZEN• CITIZEN• CITIZENWATCHES WATCHES WATCHES（ INDIA（ INDIA）（ PVTINDIA） PVTLTD.） PVTLTD. LTD. • CITIZEN• CITIZEN• CITIZENPLAZA PLAZA CO., PLAZA CO., LTD. CO., LTD. LTD. • FUJIMI• FUJIMI• CO., FUJIMI CO., LTD. CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENELECTRONICS ELECTRONICS ELECTRONICS (CHINA) (CHINA) (CHINA)CO., CO., LTD. CO., LTD. LTD. • TOKYO• TOKYO• BIJUTSUTOKYO BIJUTSU BIJUTSU CO., CO., LTD. CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENYUBARI YUBARI YUBARICO., CO., LTD. CO., LTD. LTD. essentialessentialessential parts parts for parts personalfor personalfor personal computers computers computers and andelectronic andelectronic electronic equipment equipment equipment in electronic in electronic in electronic • CITIZEN• CITIZEN• CITIZENELECTRONICS ELECTRONICS ELECTRONICS（ NANJING（ NANJING（ NANJING） CO.,） CO., LTD.） CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENHEIWA HEIWA WATCH HEIWA WATCH WATCHCO., CO., LTD. CO., LTD. LTD.• SILVER• SILVER• DENKENSILVER DENKEN DENKEN CO., CO., LTD. CO., LTD. LTD. ElectronicElectronic Electronicdictionaries dictionaries dictionaries • CITIZEN• CITIZEN• CITIZENELECTRONICS ELECTRONICS ELECTRONICS（ SUZHOU（ SUZHOU（ SUZHOU） CO.,） CO., LTD.） CO., LTD. LTD. • CITIZEN• CITIZEN• CITIZENTOHOKU TOHOKU TOHOKU CO., CO., LTD. CO., LTD. LTD. • SILVER• SILVER• KIKAKUSILVER KIKAKU KIKAKUCO., CO., LTD. CO., LTD. LTD. 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LTD. cocomponents,mpcomponents,coonmpcocomponents,onm precisionpon precision controlprecision control components control components components for use for in use medicalfor in use medical in institutions medical institutions institutions and and and equipmentequipmentequipment that underpin that underpin that our underpin information our information our information society, society, based society, based on the based on likes the on oflikes the compact, oflikes compact, of compact, • BULOVA• BULOVA• BULOVA WATCH WATCH WATCHCOMPANY, COMPANY, COMPANY, INC. INC. INC. semicosemiconductorsemiconductorsemicon semicosemiconductorn devicesn devices and devices systemsand systemsand for systems games for games for consoles. games consoles. consoles.We also We also We also ultra-preciseultra-preciseultra-precise assembly assembly technologyassembly technology technology infused infused with infused Citizenwith Citizenwith DNA Citizen andDNA quartz andDNA quartz and oscillator quartz oscillator oscillator • BWI• BWIDE• MEXICO, BWIDE MEXICO, DE MEXICO, S. DE S. R. DE S.L. R. DEDE L. R.C.V DE L. 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BacklightBacklightBacklight • CITIZEN• CITIZEN• CITIZENWATCH WATCH WATCHEUROPE EUROPE EUROPE GMBH GMBH GMBH Unit Unit Unit • CITIZEN• CITIZEN• CITIZENWATCH WATCH WATCHITALY ITALY S.P.A. ITALY S.P.A. S.P.A. • CITIZEN• CITIZEN• CITIZENWATCH WATCH WATCHUNITED UNITED UNITEDKINGDOM, KINGDOM, KINGDOM, LTD. LTD. LTD. LED lightingLED lightingLED lighting • BULOVA• BULOVA• BULOVA SWISS SWISS S.A. SWISS S.A. S.A. • C-E•（ C-EDEUTSCHLAND•（ C-EDEUTSCHLAND（ DEUTSCHLAND） GMBH） GMBH） GMBH BowlingBowling alleysBowling alleys alleys • CITIZEN• CITIZEN• CITIZENSYSTEMS SYSTEMS SYSTEMS EUROPE EUROPE EUROPE GMBH GMBH GMBH AutomotiveAutomotiveAutomotive components components components • CITIZEN• CITIZEN• CITIZENMACHINERY MACHINERY MACHINERY EUROPE EUROPE EUROPE GMBH GMBH GMBH • MIYANO• MIYANO• MIYANO MACHINERY MACHINERY MACHINERY EUROPE EUROPE EUROPE GMBH GMBH GMBH WeddingWedding ringsWedding rings rings A lobbyA lobby lit Ausing lobby lit using LED lit using lightingLED lightingLED lighting • MIYANO• MIYANO• MIYANO MACHINERY MACHINERY MACHINERY UK LTD.UK LTD.UK LTD.

CorporateCorporateCorporate Profile Profile Profile SalesSales bySales Businessby Businessby Business Category Category Category SalesSales bySales Regionby Regionby Region NumberNumberNumber of Employeesof Employeesof Employees by Regionby Regionby Region MilestonesMilestonesMilestones in the in theCitizenin theCitizen Citizen Group’s Group’s Group’s Business Business Business

NameNameName CitizenCitizen CitizenHoldings Holdings Holdings Co., Co., Ltd. Co., Ltd. Ltd. Consolidated;Consolidated;Consolidated; FY2008 FY2008 FY2008 Consolidated;Consolidated;Consolidated; FY2008 FY2008 FY2008 Consolidated;Consolidated;Consolidated; as of as March of as March of 31, March 200931, 200931, 2009MarchMarchMarchMayMayJuneMayJuneJanJuneJanDecJanDecJuneDecJuneFebJuneFebOctFebOctFebOctFebAprilFebAprilAprilMarchMarchMarchAprilAprilAprilMarchMarchMarchAprilAprilAprilAprilAprilApril 9.7%9.7%9.7% 1.5%1.5%1.5% 191819181930191819301949193019491958194919581964195819641971196419711978197119781981197819811992198119921996199219961996200120012001200520052005200620062006200720072007200820082008 Watch exports to China commenced Watch exports to China commenced Watch exports to China commenced pure holding company system pure holding company system pure holding company system Precision Machinery Division established Precision Machinery Division established Precision Machinery Division established Holdings Co., Ltd. and transitioned to a Changed the corporate name to Citizen Holdings Co., Ltd. and transitioned to a Changed the corporate name to Citizen Holdings Co., Ltd. and transitioned to a Changed the corporate name to Citizen the forerunner of Citizen Watch Co., Ltd. Watch Research Institute established, the forerunner of Citizen Watch Co., Ltd. Citizen Watch’s predecessor Shokosha Watch Research Institute established, the forerunner of Citizen Watch Co., Ltd. Citizen Watch’s predecessor Shokosha Watch Research Institute established, Citizen Watch’s predecessor Shokosha Citizen Trading Co., Ltd. established Citizen Trading Co., Ltd. established Citizen Trading Co., Ltd. established Citizen Watch Co., Ltd. established Citizen Watch Co., Ltd. established Citizen Watch Co., Ltd. established established Systems and Peripherals Division established Systems and Peripherals Division company Boley, GmbH. established Acquired German machine tool Systems and Peripherals Division company Boley, GmbH. Acquired German machine tool company Boley, GmbH. Acquired German machine tool Building (Tokyo) Head Office moved to Shinjuku Mitsui Building (Tokyo) Head Office moved to Shinjuku Mitsui Building (Tokyo) Head Office moved to Shinjuku Mitsui Citizen Displays Co., Ltd. established Citizen Systems Japan Co., Ltd. and Citizen Displays Co., Ltd. established Citizen Systems Japan Co., Ltd. and Citizen Displays Co., Ltd. established Citizen Systems Japan Co., Ltd. and established Citizen Business Machines Co., Ltd. established Citizen Business Machines Co., Ltd. established Citizen Business Machines Co., Ltd. the Eco-Mark first for a watch. Solar powered Eco-Drive received the Eco-Mark first for a watch. Solar powered Eco-Drive received the Eco-Mark first for a watch. Solar powered Eco-Drive received Head Office moved to Nishi-Tokyo Head Office moved to Nishi-Tokyo Head Office moved to Nishi-Tokyo Mitsuyuki Kanamori named as President Mitsuyuki Kanamori named as President Mitsuyuki Kanamori named as President EstablishmentEstablishmentEstablishmentMayMay 28,May 28,1930 28,1930 1930 12.712.7% 12.7% % 45.245.2% 45.2% % New R&D Building established New R&D Building established New R&D Building established 11.211.2% 11.2% % 8,9418,9418,941 LocationLocationLocation 6-1-126-1-12 6-1-12Tanashi-cho, Tanashi-cho, Tanashi-cho, Nishitokyo, Nishitokyo, Nishitokyo, Tokyo Tokyo Tokyo of Headof Headof Office Head Office Office188-8511,188-8511,188-8511, Japan Japan Japan 15.915.9% 15.9% % 7.1%7.1%7.1% ¥296.8¥296.8¥296.8 44.644.6% 44.6% % ¥296.8¥296.8¥296.8 40.840.8% 40.8% % 19,19802,19802,802 RepresentativeRepresentativeRepresentativeMitsuyukiMitsuyukiMitsuyuki Kanamori, Kanamori, Kanamori, President President President and and CEO and CEO CEO billionbillionbillion billionbillionbillion 54.854.8% 54.8% % CapitalizationCapitalizationCapitalization¥32,649¥32,649¥32,649 million million (asmillion of(as March of(as March of 31,March 31,2009) 31,2009) 2009) 10,86110,86110,861 27.427.4% 27.4% % 29.129.1% 29.1% % EmployeesEmployeesEmployees 19,80219,802 19,802(consolidated; (consolidated; (consolidated; as ofas March ofas March of 31,March 31,2009) 31,2009) 2009) SalesSalesSales ¥296.8¥296.8 ¥296.8billion billion (consolidated; billion (consolidated; (consolidated; FY2008) FY2008) FY2008) ■Watches■Watches■■WatchesElectronic■Electronic■ DevicesElectronic Devices■ DevicesElectronic■Electronic■ ProductsElectronic Products Products ■Japan■Japan■JapanAsia■Asia■■UnitedAsia■United States■United States States ■Japan■Japan ■ Japan■ Overseas ■ Overseas ■Overseas ListingListingListing TokyoTokyo StockTokyo Stock Exchange, Stock Exchange, Exchange, 1st 1stSection 1stSection Section ■Industrial■Industrial■ MachineryIndustrial Machinery Machinery■Others■Others■Others ■Europe■Europe■EuropeOthers■Others■Others

3 3 Citizen3 Citizen CitizenGroup Group GrCSRoup CSR Report CSR Report Report2009 2009 2009 CitizenCitizen CitizenGroup Group GrCSRoup CSR Report CSR Report Report2009 2009 20094 4 4 Automotive Components LED backlight unit Leisure Facilities Combustion Pressure Time control system Marriage Ring Citizen Products and Technology Manufacturing (Car navigation) Operating Sensor (Ship) Clocks ﬁtted to Used in the components for bowling alleys buildings or other development of exterior surfaces, ABS, engines, and ice rinks in in Use Here, There and Everywhere etc. slimmer, energy often cherished as the Tokyo area Fitted inside engine cylinders symbols representing saving car Scratch resistant rings that keep Citizen’s wide ranging business activities make it an integral part of society. to measure combustion the local area navigation systems their shape Citizen products and services play a crucial role behind the scenes of our day to day lives. pressure

Glass substrates for Hard Disk Drives (notebook computer) Gyro Sensor (Digital still camera) Watch (Eco-Drive) Digital Pedometer Applied used of watch Image stabilization glass polishing and Used to help maintain and improve health, can for Digital Still Camera cutting technology First watch to be granted be attached to Eco-Mark certiﬁcation a computer to (1996) manage data

Liquid Crystal on Silicon* Zirconia ceramic parts for optical (Digital still camera (Hi-zoom)) communicator (Optical Network Unit) LED (Lighting) Used in viewﬁnders, slimmer and more Used in connectors Low-energy consumption, compact than for ﬁber optic cables long life, mercury free, optical equivalent environmentally friendly lighting

Compact switch (Digital still camera) Digital Thermometer, Digital Blood Used for shutter Pressure Monitor switches, etc. Designed with clear displays for ease of use

LED (Cellular Phone) Used for key lights, camera ﬂashes and CO Gas sensor (Boiler) backlights on mobile Used to detect phones, etc. carbon monoxide leaks

Quartz Crystal Devices (Cellular Phone) High reliable Liquid Crystal Display Essential for receiving and sending signals to (Gas meters) Durable speciﬁcations ensure uninterrupted even at high temperature conversation and humidity

Sports timer Quartz Crystal Devices (Television, Video Tape High visibility magnetic reversal displays, Recorder, Consumer Home Electronics) essential during Reference signals marathon used to ensure that broadcasts electronic equipment is functioning correctly Photo

Electronic View Finders (Broadcast & Professional AV Camera Recorder) Electronic dictionary High resolution Used to store Japanese and viewﬁnders capable bilingual Japanese-English of catching even dictionary data and medical, fast movements health-related and general during sporting information events

Thin-ﬁlm submount LCD for aberration compensator CNC-Automatic lathe Hardness Tester Measuring instruments Coreless Motor, LCOS* (Projector) POS Thermal Printers Photo Printer Memory Liquid Crystal Display (Blue-ray disc recorder) (Blue-ray disc recorder) for soft materials Gear Head, Encoders Machinery Used to issue (Electrical price tags) Used in video Ultra low-power Ceramic substrates Used to improve used to grind Meters used to Instruments used Used in sockets receipts, coupons measure the engines due to consumption technology with superior heat disc reading and metal to make to accurately on robots, etc. and tickets hardness of high deﬁnition radiation properties measure small Enabling easy photo printing at that maintains display writing performance high-precision soft materials and picture components locations such as supermarkets even without a power components quality and photo stores source * Short for “Liquid Crystal on Silicon”, LCOS are LCD panels that use silicon substrates.

5 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 6 Message from Management

Establishing the human and organizational strength to adapt to future changes

our operations in each of these sectors is Citizen DNA, based of experiences and create a corporate culture that is conducive on the pursuit of precision as the pinnacle of manufacturing. to taking on new challenges in the future without fear of failure. The essence of precision is to keep things as compact, fine and It is also essential for employees themselves to think about accurate as possible. I believe that these are our three key how they would like to shape the company they work for and strengths. come up with their own ideas and innovations. If we all share As compact technology such as this is required in virtually the same sense of determination, it will bring us a step closer to every field, the potential demand is essentially limitless as more the company that we would ideally like to become. I believe that and more new products emerge in the future. To provide a company’s president should act as a guide whose role is to people with what they need, when and where they need it, we help employees create the company they want. at the Citizen Group hope to put our ultra-small, ultra-precise, As we go about our work, we must never forget that we are low-power consumption core technology, as symbolized by the not only members of the Citizen Group but also members of slogan “Micro HumanTech” (“micro human technologies”), to society as a whole. In addition to clearly putting in place good use across a wide range of different fields so as to help to compliance, internal control and other key systems, I believe improve people’s lives. that we also need to maintain pride and a sense of morality as corporate citizens and members of society. Genuine CSR should be stem from this sort of natural deterrent. In order to promote CSR, it is therefore important to emphasize each Our vision for the Citizen Group individual employee’s human qualities as much as possible. In this drastically changing environment, what was the right When I was appointed President in April last year, I set out the thing to do yesterday may no longer be the right thing to do goal of becoming “a company where people thrive,” with the tomorrow. We therefore need to fundamentally reassess intention of instilling in individual employees a sense of everything we do rather than clinging to established practices to aspiration and fulfillment as part of their work in spite of difficult lay the necessary foundations to enable the company to adapt conditions. For any company, improving the standard of human of any potential changes. We will then build on those same resources is the key to improving overall performance. foundations to create a new Citizen Group in which everyone The Citizen Group’s response to the CSR and its place in the Citizen I therefore believe that it is the company’s responsibility to can thrive. current global recession Group’s business activities provide an environment that will bring out employees’ potential and enable them to thrive. Taking things a step further, I hope I am delighted to present the completed Citizen Group to provide employees with opportunities to accumulate a range CSR Report 2009. I would sincerely appreciate it if you could As a result of the sudden decline in demand the world over, the Based on the Citizen Group’s corporate philosophy of provide us with any comments or feedback and look forward to current business climate is harsher than anything we have “contributing to and striving to be respected by citizens of the your continued understanding and support of the Citizen Group experienced previously, especially given the high percentage of world,” we aim to provide products that are good for people and in the future. exports in the manufacturing industry. The Citizen Group is no the planet. For a company to fulfill its social responsibilities, it June 2009 exception and saw a sharp downturn in its figures during fiscal needs to secure fair profits from legitimate, reasonable business 2008. activities. Improving profitability makes it possible to give more To survive and prosper in such a rapidly and dynamically back to the company’s various stakeholders and contribute to changing world, companies need to have the underlying the local community and the environment. Establishing the strength and robust structure to enable them to adapt to each necessary foundations to ensure continued profits therefore and every change that the market throws at them. In other represents the first step in terms of implementing CSR activities. words, companies that manage to reestablish strong enough As such, our approach to CSR within the Citizen Group revolves foundations to cope with future changes in the environment will around enhancing corporate value in line with our stakeholders’ be best placed to reap the rewards within the resulting new wishes. environment. I believe that the current recession has given us an The Citizen Group has its origins in the watch sector and Mitsuyuki Kanamori opportunity to remold the Citizen Group into a truly excellent has always handled every step of the process from design, President and CEO company. development and manufacturing through to sales and Citizen Holdings Co., Ltd. after-sales services. Building on the Group’s accumulated technology and expertise in the field of watch making, we have since expanded into areas such as electronic devices, electronic products and industrial machinery. The one factor common to

7 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 8 Special Feature

Citizen Seimitsu Co., Ltd. Ultra-low power consumption, slim, lightweight, high contrast technology The Citizen Group’s Electronic Paper Cells Approach to Manufacturing: Electronic paper cells are slim, lightweight display elements that boast power saving, high contrast and memory capabilities. They are used to create image-based patterns for customizable mobile phones (Hitachi auW61H). Good for People and the Planet As this is ultra-low power consumption technology, the continuous standby time is more or less the same as a regular phone, even when equipped with a We continue to promote manufacturing that is good to people and the planet and have stepped up our large display.

efforts to develop a wide range of products and components certified as environmentally-friendly products Electronic Paper Modules: Features under the Citizen Group’s in-house certification scheme. We conduct environmental product assessments ■ Power consumption 1/100th that of existing liquid crystal displays Electronic paper modules from the development stages onwards and only certify products as environmentally-friendly products if they Ultra-low power consumption enables permanent display made by Citizen Seimitsu ■ Bright, high visibility display (high reflectivity, high contrast, wide

meet assessment criteria in seven categories. Having set ourselves the target of achieving a 100% Special Feature viewing angle) certification rate for new models, we managed to achieve a rate of 99% during fiscal 2008. We are aiming to ■Slim, lightweight, unbreakable plastic display, making it highly go all the way and achieve a rate of 100% in fiscal 2009. We also intend to develop and offer our customers shock resistant Citizen Super Environmentally-Friendly Products, which will undergo even more rigorous assessments. aeo S iie n oit Citizen and the Environment Citizen and Society Base of CSR Citizen Group Eco Products by CITIZEN Eco Products Citizen Watch Co., Ltd. Citizen Electronics Co., Ltd.

Citizen: Powered by Light Brightly shining eco products! Next generation energy saving light sources Citizen’s Eco-Drive R LED Lighting LED made by We successfully achieved our shipment target for fiscal 2008, with Citizen Electronics Eco-Drive solar-powered watches accounting for 80% of all products shipped worldwide. This really goes to show that Eco-Drive is ■ A lifespan 20 times longer than continuing to attract users from all over the world as a result of the incandescent light bulbs public’s growing desire to use environmentally friendly products. LED lights have an extremely long lifespan of 40,000 hours, The Eco-Drive radio-controlled watch is one of the products that meaning that they last roughly 20 times longer than incandescent encapsulate the concept of combining technology and beauty. It gives light bulbs, which have a lifespan of 2,000 hours. If used normally, us great pleasure to be able to there is no need to replace bulbs for around ten years. offer our customers a product that will always continue to work and tell the right time no matter where they are as there is light. ■ Mercury-free environmentally friendly lighting To coincide with Time Day on June 10, 2009, we launched the H610 model LED lighting is environmentally friendly because, unlike fluorescent equipped with a newly developed movement, using the slogan “Citizen: Powered lighting, it does not use mercury or contain other harmful by Light”. substances such as lead. As there is no need for glass tubing, as * An example light fitting The Eco-Drive radio-controlled watch features a 1/5 second chronograph and in the case of fluorescent lighting, there is also no danger of bulbs Comparison of light sources user friendly world time capabilities, complete with the world’s first disc-based city breaking in the event of an earthquake or other disaster. Citizen LED Compact Fluorescent Incandescent Halogen selection system. CL-L251 fluorescent light (40W) light bulb lamp In 1996, Eco-Drive became the first watch to be granted Eco-Mark LEDs are the clear winner in comparisons (single item) light (bulb) ■ Luminescent certification. 95 70 60 12 24 Citizen Electronics has developed commercial LED lights with efficiency (lm/W) Citizen Watch will continue to make every effort to Brightness 425 2,850 465 485 1,550 manufacture products that are good for people and the industry-leading luminescent efficiency. As a higher luminescent (lm) Power efficiency means that more light is produced per watt, this makes it 4.5 40 8 40 65 planet, now and in the future. consumption (W) possible to keep lights shining brightly whilst minimizing power Lifespan 40,000 12,000 6,000 2,000 3,000 (hours) Eco-Mark certiﬁcation number consumption. LED lighting enables a substantial reduction in 06 134 011 power consumption compared to regular incandescent light bulbs. (Citizen estimates)

Bringing the Eco-Drive solar powered watch to our customers 9 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 10 Special Feature

The starting point for environmentally-friendly manufacturing CreatingCre environmentally-friendly products CreatingCr design-oriented dials Evolving hand in hand with solar cells Earning the gratitude of our customers Reducing environmental impact Light through solar power generation Glass Green procurement initiatives in China ConductingC on environmentally-friendly products assessments Aiming to produce the world’s most beautiful dial In pursuit of ever more reliable quality Organizing training seminars for domestic sales staff Through the CS Center, we organize training seminars for The Citizen Group promotes green procurement based on the The Citizen Group has certified approximately 2,000 products as OOnene of the main difficulties posed by light transmissive dials, as used in the The solar cells and drive mechanism at the heart of the Eco-Drive What’s good for people is good for the eenvironmentnvironment Eco-drive dial watch repair technicians at sales outlets. Seminars teach preferential purchase of raw materials, components and other items environmentally-friendlyenvir products over the last three years, primarily solasolar-poweredr Eco-Drive watches developed and produced by Citizen system consist of ultra-compact, ultra-slim components Eco-DriveEco-D watches take in light via built-in solar cells and use it to generate members of staff how to dismantle watches and equip them Solar cell with low environmental impact. All hazardous chemical substances are inin theth watch sector. Focusing mainly on watches, but also covering SSeimitsu,eim is that it is impossible to see what the finished product looks like measuring a matter of microns. To maintain consistent quality electricitelectr y. The resulting energy is then stored in a secondary battery and used to with basic knowledge regarding the features of the Eco-Drive strictly controlled in accordance with our Green Procurement otherothe areas such as pedometers, blood pressure monitors and wwithoutitho making prototypes. We therefore have to continually manufacture levels and ensure that customers can use their watches with powerpowe the watch, meaning that there is never any need to replace batteries. confidence for a long time, we manufacture our products using a system and how it should be handled. We also organize 150 of Guidelines. Particularly high risk items are controlled on a priority compactcom printers, we have successfully increased the range of sasamplesmp so as to check each design along the way. As advances in technology EEco-Driveco-D products are also highly acclaimed from an ecological standpoint, not Secondary battery Movement additional seminars each year, including those aimed at sales basis, including undergoing inspections upon delivery. Many of our environmentally-friendlyenvir products. The next step will be to work out hahaveve made it possible to generate power from just a tiny amount of light, we constant quality control system. We pursue quality control with an least due to the fact that their secondary batteries do not contain any harmful staff. We provide support for more than 1,000 members of suppliers are based in China, where we exercise even stricter controls how best to showcase environmentally-friendly products to the now have greater freedom in terms of design, making design and communica- eye to ensuring long-term reliability. metalmetals and that no hazardous substances are used in the manufacturing process. staff, helping them to improve their knowledge and skills. Case over hazardous chemical substances. generalgene public. ttionion eeven more important as part of the process of manufacturing dials.

In an effort to improve the efficiency of operational capabilities such as The Subcommittee on Environmentally-Friendly Products assesses new models We are working to develop the world’s most beautiful Eco-Drive dial. We have As Eco-Drive watches become more and more compact whilst Watches equipped with Eco-Drive and other new capabilities may be As the batteries never need to be replaced, Eco-Drive watches do ordering, delivery, quality and cost management, which were previously put forward by individual companies each month and certifies those that pass their developed crystal clear black and white dials and even different materials and offering an increasingly wide range of capabilities, solar cell very convenient, but they are only worth half as much if the customer not generate any waste batteries. We have sold more than 30 handled by production bases according to each individual supplier, in assessment as environmentally-friendly products. In the case of watches, for instance, we components to create a metallic texture. We have been developing numerous specifications are also changing continually. The quality of solar cells doesn’t have a correct understanding of the product. That is why the million watches to date, focusing on Eco-Drives’ qualities as an December 2008 we established a new Supply-Demand Control Center in have put in place a mechanism for assessing models produced overseas and currently technologies for more than 30 years now and have recently started to see tremendous is determined by their functionality, external appearance and reliability, CS Center organizes training seminars for sales staff. We run a environmentally friendly product. With environmental awareness Southern China and put in place a framework to enable all external certify somewhere in the region of 200 environmentally-friendly products each month. growth amongst our younger employees, who have come up with technologies that specifications for which are determined based on actual usage and nationwide program of detailed seminars carefully tailored to suit the increasingly considered something of a status symbol these days, components to be ordered Raising the bar even further, we have also started to work have gone into mass production. These are important level of the participants in each case, in it gives us great pleasure to Ryoh Kurakata the customer’s perspective. We strive to Hiroyuki Kurihara centrally. We intend to further Hiroyuki Motomochi on Citizen Super Environmentally-Friendly Products. We Secretariat technologies that we intend to develop into the core offer our customers quality solar cells so Yuhichiroh Nagase terms of their basic knowledge of new Manager enable people to feel that they Hiroshi Itoh Masaaki Watanabe Technical Development Division, Watch Business Control Center, General Manager, Subcommittee on Environmentally- Manager CS Center, reinforce management intend to step up activities within the committee with the competency behind Eco-Drive dials as dial technology as to ensure that they are satisfied with Product Innovation Center product features and watches in general are making a difference in a truly Planning Department Supply and Demand Control Center Friendly Products Watch Appearance Division Domestic CS Department Citizen Watch Co., Ltd. Citizen Watch Co., Ltd. capabilities in the future. Sunciti Manufacuturers Limited aim of certifying the first such product later this year. Citizen Watch Co., Ltd. continues to evolve in the future. Citizen Seimitsu Co., Ltd. and cherish their Eco-Drive watch. and practical skills. Citizen Watch Co., Ltd. intimate way, via their own watch.

Procurement Development and design Manufacturing Distribution Sales Customers

Transforming into an environmentally-friendly plant CombiningCo technology and beauty UsingUs delicate skills to assemble exquisite products Citizen as a modern global presence CreatingCr products that can be used indefinitely Efforts to reduce CO2 emissions as part of distribution Compliance with environmental restrictions in China TheThe world’s smallest Eco-Drive radio-controlled watch ManufacturingMa by master craftsmen and women Behind the scenes of Citizen’s success in the US market Citizen’s unique Duratect technology In OctoberOc 2008, we launched the world’s smallest Eco-Drive Combined shipping between ve watch industry companies Environmental restrictions are exceptionally strict in China. As surface treatment Based on the belief that a product’s quality is determined by the person who makes it, the Citizen has secured a more than 30% share of the mid-price market in the US UniqUniquely developed by Citizen to protect the original shine and beautiful radio-controlledradio watch as part of the Citizen EXCEED Ladies factories in particular are required to substantially reduce the volume of water environmentenviron in which they work and their attitude towards the manufacturing process, Citizen We operate a five-way combined shipping scheme via CITIZEN LOGISTICS SERVICE Co. Ltd., in and has established itself as the market leader. One of the factors that has finisfinishh of each watch from marks and scratches during everyday use, Collection.Collec Smaller than a one-yen coin, the watch uses the new used in processing and prohibited from using toxic substance cyanide, we are Heiwa Watch operates a quality assurance system whereby master craftsmen and women each conjunction with Seiko Watch, Seiko Clock, Rhythm Service and ORIENT WATCH. As all five contributed significantly to this success has been a consistent sales strategy. DuDuratectra is a form of surface treatment technology that involves H010H010 movement, and is the first Eco-Drive radio-controlled watch making every effort to transform our plant into an environmentally-friendly plant. workwork aaccording to different grades of product. The process of assembling finished products in companies used to handle deliveries separately previously, the introduction of this scheme has We launched Eco-Drive watches onto the market and began promotional apapplyingply a special processing treatment to watch casings and straps. forfor ladiesla to be equipped with calendar and Perfex* capabilities. It On the Tokyo side of things, too, we are working on initiatives such as using particularparticu requires tremendous concentration as the technician’s skills effectively shape the substantially reduced the number of trucks on the road, resulting in an equivalent reduction in activities in 1996. Eco-Drive branding has also been comprehensively DuDuratectra is designed to protect your beloved watch from minor is an exclusive ladies’ watch that combines both functionality and reverse osmosis membranes to collect nickel and recycling cleaning water face ooff the product. We have therefore established a dedicated workshop for high-end watches CO2 emissions. Switching to the combined shipping scheme has enabled each company to incorporated into other watch advertisements and promotions as well. With sales scrascratches,t which are unavoidable no matter how carefully you use your beautybeaut . using ion exchange resin and are actively introducing environmental technology, in MinamiMina Shinshu so as to create the ideal working conditions and also create an environment scale back its fleet of trucks. In addition to helping to reduce CO2 emissions, this is also good of more than 10 million watches over the course of the last ten years, Eco-Drive wawatch,tc and creates value that only increases over time. revolving primarily around the Production Innovation Team. that pprovidesr in which customers can come and purchase our products with confidence. news for our business partners, who now only need to take receipt of a single delivery. watches have recently begun to account for over 85% of all watches sold. * PerfexPerf watches are three-in-one watches that combine JIS Type 1 antimagnetic capabilities, shock detection capabilities and automaticauto time adjusting capabilities to display the time more accurately.

At Farbest Industries’ Surface Treatment Factory, we are currently focusing on areas We set out with the aim of developing a more compact watch equipped with When I assemble each watch, I imagine a customer wearing it and someone Whenever items are shipped, a shipping label bearing the name of the In order to remain at the top of the market, you need innovation in every Ordinarily, you tend to ﬁnd that your watch gets scratched after you’ve such as external IP and plating production, waste water from the plant and water calendar and other in-demand capabilities to establish a strong position within commenting on what a fine watch it is. Since becoming a certified Shinshu recipient is always attached to the packaging. It can get pretty hectic on days respect. On the product front, we have achieved success by selling high had it for a while. In some cases, just one little scratch can be very emission standards. To be honest, as the rivers in the vicinity of the plant are already the ladies’ watch market. Success was reliant on overcoming issues involved Master Craftperson in 2006, I have put even more energy into manufacturing. when large volumes of products are being shipped. The final step before quality products that offer added value, as typiﬁed by Eco-Drive. We intend to upsetting to the person wearing the watch. We don’t want them to lose far from clean by the time they flow past from upstream, there is a feeling that in scaling down technology and designing a watch that would still have I try to maintain a sense of rhythm in my day to day life as well and try not to taking receipt of items is always to check to make sure that everything is fully harness the image created by Eco-Drive, as a youthful, powerful brand, the thrill or uplifting feeling that they had when their watch was new. As a improving the quality of the plant’s waste water will make little difference. presence whilst measuring just 26mm. We nonetheless managed to create a watch much television so as to rest my eyes. At work, I always try to set an correct. Shipments to regular business partners and large volume shipments in all of our marketing and sales activities in order to further expand our result of continuous research and development aimed at resolving this Nonetheless, we will continue to actively push ahead with environmental watch that is accurate, easy to read and built to last whilst also retaining the are packed in reusable plastic containers presence in the North American market in the future. issue, we developed Duratect. We will example for junior members of staff. Kohichi Naoi improvements and legal compliance form and elegance of a ladies’ watch, continue to make every effort to create Shigeki Yoshikawa Etsuko Hashiba rather than cardboard. This helps conserve Yukiyasu Satoh L. Grunstein Deputy Manager Satoshi Okada Leader, Logistics Center initiatives in the short term in order to make Factory Manager, combining functionality with beauty. Marketing Division, Super-Meister President, products that guarantee satisfaction from Technical Development Division, resources and cut costs. Citizen Logistics Service Co., Ltd. Surface Treatment Factory Product Planning Dep.1 Watch Product Division CITIZEN WATCH CO. OF AMERICA, INC. Product Development Center our own contribution to China as a company. Farbest Industries Limited Citizen Watch Co., Ltd. Citizen Heiwa Watch Co., Ltd. the customer’s perspective in the future. Citizen Watch Co.,Ltd.

11 Citizen Group CSR Report 2009 12 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 13 Citizen Group CSR Report 2009 14 Special Feature

Procurement Development and design Manufacturing Distribution Sales Customers

11 Citizen Group CSR Report 2009 12 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 13 Citizen Group CSR Report 2009 14 Special Feature Base of CSR Citizen and Society Citizenzen and the Environment 16

, e utur f oup CSR Report 2009 Citizen Holdings Co., Ltd. Citizen Gr Toshiaki Ueda Toshiaki n en Te T

es set out d on the as social ribution and the environment in the cipl t e h members from each Group company in company in each Group members from and implement to formulate order to important issues relating measures as a whole, the Citizen Group affecting system including internal control trade control, management, security compliance with subcontracting security legislation, information and environmental measures management. such as social contribution and the environment in the future, based on the Principles set out under the UN Global Compact as our central code of conduct. General Manager, Internal Audit & CSR Department The Chinese version of Code the Citizen Group of Conduct distributed at companies in Guangdong province Hotline Corporate Ethics Corporate Ethics Hotline Each subsidiary The companies in Guangdong province

Head of CSR for the Group President of Citizen Holdings/ Citizen Holdings CSR Committee will make every effort to put in place the Promoting CSR in China Promoting in particular indicated that they are focusing on including employee awareness initiatives, distributing a translated Chinese version of the Citizen Group Code of Conduct to all employees. We necessary framework to actively address issues In December 2008, the heads of production In December 2008, bases at each of our 16 subsidiaries in Dongguan) and Guangdong province (Guangzhou, Jiangsu province (Suzhou) gathered together for a CSR Meeting to discuss matters such as questionnaire-based surveys and measures for the future. have also established a range of Citizen Group CSR Promotion Committee CSR Committee oice The CSR Committee consists of The CSR Committee Citizen members from representative Citizen Business Holdings Co., Ltd. and Expert Co., Ltd. CSR activities on a promote to In order basis, we have united Group-wide at each established CSR Committees CSR Group subsidiary and a Citizen Committee consisting of Promotion selected supervising personnel in charge of CSR at each company. We special committees consisting of V Internal Audit & CSR Department

will make Information Security Committee Internal Control System Coordination Committee Security Trade Control Committee Environmental Management Committee Committee on Appropriate Subcontracting Citizen Group CSR Citizen Group System Promotion Participating in the UN Global Compact CSR Promotion Framework CSR Promotion Having signed up to the United Nations Global Compact in April 2005, the as a whole strives to Citizen Group and put into practice uphold, respect We Principles outlined therein. the Ten have set out specific guidelines in the spirit of the UN Global Compact in the Code of Conduct, of the Citizen Group to relating which includes provisions for basic human rights, respect labor, of child and forced prohibition and prohibition measures environmental gifts and favors for of inappropriate civil servants. We foreign the enforce to rigorously every effort spirit of the UN Global Compact both in Japan and overseas in the future. The Citizen Group’s CSR activities are CSR activities are The Citizen Group’s of over by the President presided CSR-related Citizen Holdings, with recommended policies and measures by the CSR Committee, which in turn is run by the Internal Audit & CSR Department, a dedicated unit that the President. to directly reports form of Guidelines for the Implementation fair . specting and that . a pay their trust and strive to ensure We and transparent transactions with our to enable suppliers in order and develop us to grow together as business partners. sponsibility, Effective April 6, 2007 Effective in conveying it to our

spect individuals and diversity strive to actively communicate re

We and investors and with shareholders accurate them with timely, provide information in order and appropriate re to effectively meet their expectations. We working and strive to create in which all employees environments can work comfortably and with confidence. Suppliers ign countries, and contribute to spect the different cultures and cultures spect the different Shareholders lue and re cognize that implementing this Code of Ensure a safe and pleasant working environment a safe and pleasant working environment Ensure of our and encourage the development while re employees’ abilities and energies and diversity their characters, individuality, Respond to anti-social behavior by individuals in a decisive manner and organizations Va customs of fore the development of local communities. The top management of the Citizen group re Conduct is their personal re it they must take the lead not only in enforcing but within the company, business partners and suppliers. In addition, they must always be conversant with opinion within the company and outside it, develop an internaleffective system for compliance with the Code of Conduct, and work to ensure to corporate ethics. adherence thorough Employees 7 6 8 9 strive to make use of customer We feedback in every aspect of our to further business activities in order customer satisfaction. improve ment Customers for safety, for safety, Enacted by the Corporate Strategy Committee of the Citizen Group Enacted by the Corporate Strategy Committee of the Citizen . Local communities and engage these

t ateateate WILL ACT ACCORDING TO THE CODE OF CONDUCT. WILL ACT ACCORDING bodies vevel. regulatory por le NPO ngths. rporporrpor Government/ l lel le o ・ a co s uaua and strives to be respected by the citizens of the world, we will: by and strives to be respected CITIZEN GROUP CODE OF CONDUCT CITIZEN GROUP dudua WE WILL OBSERVE ALL LAWS AND COMPANY REGULATIONS AND REGULATIONS AND COMPANY ALL LAWS WE WILL OBSERVE NGO In keeping with a corporate philosophy stating that Citizen contributes to philosophy stating that Citizen contributes In keeping with a corporate . rk to communicate with the general public, alue symbiosis with local communities, and mote a wide range of egulatory authorities. elationships with our suppliers and govern V strive to contribute to society as a good corporate citizen. issues in a voluntary, proactive manner proactive issues in a voluntary, taking the initiative in making corporate information openly available, while at the same data management. time practicing responsible a issues are Recognize that environmental common concern of mankind and a crucial issue for management in terms of the survival and activities of the company, Wo r quality, and the environment. quality, and open competition transparent Engage in fair, in business transactions, and maintain healthy r Provide our customers with products and our customers with products Provide concern services that demonstrate our o ational community, ational community, n disciplinary measures upon determining the responsibility and authority of those involved. and authority upon determining the responsibility disciplinary measures The company and its employees will make untiring efforts to observe this Code of Conduct. If a efforts The company and its employees will make untiring it and the company will strive to resolve situation that contravenes this Code of Conduct arises, The company will also take strict public report. make an appropriate and recurrence, its prevent 4 5 1 2 3 pr ensure that all of our ensure communicate We social contribution activities in harmony with local communities and the inter based on our corporate philosophy We open corporate activities are with the and fair in accordance law and social norms and strive to act as good corporate citizens on an individual level. We with NGOs and NPOs to build up in order partnerships designed to harness our mutual stre The Citizen Group and its stakeholders The Citizen Group engage

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communicate with our stakeholders based on the Citizen Group Code of Conduct in an effort to put the Group’s Citizen Group based on the with our stakeholders communicate Group’s to put the in an effort Code of Conduct Relationship with stakeholders

Establishing the Citizen Establishing the Code of Conduct Group Citizen Group CSR Group Citizen Citizen Gr corporate philosophy of “contributing to and striving to be respected by citizens of the world” into practice. respected of “contributing to and striving to be corporate philosophy We The Citizen Group’s business activities The Citizen Group’s with a built on trusting relationships are wide range of stakeholders. We in communication with our shareholders in communication with our shareholders corporate to put the Group’s in an effort philosophy into practice. As part of the Citizen Group’s transition Group’s As part of the Citizen system in to a 100% holding company the Citizen Group April 2007, we set out all Group Code of Conduct to enable and employees act company directors with awareness based on a shared and fulfill their to stakeholders regard to even greater social responsibilities companies extent. Individual Group implement CSR activities based on the corporate philosophy of Group-wide “contributing to and striving to be by citizens of the world” and respected maintaining their own responsibilities, for company-specific factors respect such as operational and regional characteristics, history and corporate culture. Base of CSR of Base 15 Base of CSR

Citizen Group CSR

Goals and progress with CSR activities during fiscal 2008 CSR targets and Details of Citizen Group CSR initiatives that are not covered in the table on the right are initiatives summarized below. Code of Conduct CSR targetsCompany Initiatives during fiscal 2008 1 Disclosure and information management： With the Financial Products Exchange Law (J-SOX) coming into full effect in fiscal 2008, all Group companies worked towards the goal of All Citizen Eco-Drive mechanical watches have been granted We have been setting out and working Obtain Eco-Mark certification CITIZEN WATCH Eco-Mark certification. Certification is still pending for other Citizen efficiently running, evaluating and improving their respective internal control systems. Issues for mechanical watches. towards specific annual CSR targets at the future include maintaining existing internal control systems whilst also making improvements 1. Product safety and quality all Citizen Group companies since fiscal to increase their effectiveness. Causal analysis was conducted via priority quality meetings and preventive measures CITIZEN taken in the electronic components sector, with supervision and guidance provided 2007. 2 Social contribution activities： Group companies carry out activities that are designed to Reduce customer complaints FINETECH MIYOTA for affiliated plants using control charts. As a result, the number of complaints was Having set out CSR targets in line capitalize on the nature of their respective business activities to enable them to contribute to reduced to one during the first half of the year and zero during the second half. the local community. Manufacturing companies for instance run initiatives such as work with provisions contained in the Citizen Issues highlighted during an onsite inspection by the Kanto Bureau of

experience and internship schemes and factory tours. Special Feature Group Code of Conduct, we operate a Ensure full compliance with CITIZEN Economy, Trade and Industry were rectified and approval obtained. Most Group companies carry out such initiatives and will continue to do so in the future. subcontracting legislation MACHINERY All departments were internally audited by the Subcontracting PDCA (plan, do, check, act) cycle 2. Business Compliance Committee and corrective measures taken. 3 Working environments and employees： Amidst a slump in sales and growing inventories due transactions whereby we summarize our A documentary checking system for documents such as contracts to major changes in the world economy, companies have been forced to scale back production achievements at the end of each fiscal Ensure sound business transactions CITIZEN CBM was established in line with the introduction of internal control system and even temporarily lay off employees, resulting in a decline in employee motivation. One of rules. The system will be managed on a combined basis with Citizen year in order to highlight issues for the the key issues next year will therefore be to work on revitalizing working environments. Watch in the future due to business integration. future. Each company’s results are 4 Contributing to overseas local development We ascertained the status of activities at Establish an internal control system An internal control system was established, regulations put in ： Base of CSR summarized in the form of CSR targets CITIZEN place and improvements made to the system. Evaluation results overseas Group companies via internal control checklists, took steps such as identifying and in accordance with the Financial FINETECH MIYOTA 3. Disclosure and Products Exchange Law from operational tests indicate that the system is effective. and Annual Achievements. resolving problems and conducted surveys focusing on social contribution activities. We are information The table on the right outlines also in the process of gradually delegating authority to Chinese members of staff. As a management Privacy Mark certification was renewed as a result of initiatives such company that has overseas plants and exports its products, we need to take a closer look at Step up personal data protection as implementing extensive Privacy Mark certified in-house selected details of our CSR targets and TOKYO BIJUTSU how we can make a more substantial contribution to overseas local development in the future. initiatives educational activities, reappraising personal data in the company’s initiatives during fiscal 2008. possession and reinforcing management of outside contractors. The staffed waste water treatment facility monitoring system was Top ics Prevent incidents resulting in CITIZEN SAITAMA extended from eight hours to ten hours. The scope of monitoring was Citizen and the Environment Citizen and Society environmental contamination extended thanks to the introduction of simple analysis equipment and 4. Environmental a new monitoring system put in place. Results of CSR Awareness Surveys management Q.1 Do you think engaging in CSR activities has strengthened your spirit of compliance? No issues were identified as a result of regular analysis and measurement of In an effort to ascertain the level of Implement safety and CITIZEN industrial waste water (four times), measurement of local noise levels (once), 0.3% 2.7% environmental measures ELECTRONICS testing of smoke levels (once) and testing of working environments (for 5.9% awareness of CSR and corporate ethics 14.0% 8.0% 7.8% ■Very much organic solvents) (twice). Such initiatives will be continued in the future. within the Citizen Group, we conduct CSR 3.2% ■Yes 34.0% Premises were opened up to local residents and students as educational ■Can’t really say Promote social contribution activities awareness surveys targeting employees at 7.7% CITIZEN facilities and junior high school work experience and internship schemes ■Not very much based on employee participation 39 subsidiaries (including temporary FY2007 FY2008 39.4% HEIWA WATCH organized. ■Not at all 5. Social employees). ■Don’t know contribution (1) Roughly 50 directors and employees have taken part in cleanup activities in the area around the No response Survey results for fiscal 2008, the 35.1% 42.2% ■ CITIZEN fifth station on Mount Fuji as part of the Mount Fuji Clean-Up Campaign every year since 1999. Contribute to the local community second time that the survey has been ELECTRONICS (2) Roughly 20 new recruits have participated in the Million Trees Campaign as part of their conducted on a Group-wide basis, induction training every year since fiscal 2000. indicate a marked improvement in Q.2 Do you think engaging in CSR activities is enhancing Citizen’s corporate value? A human resource development system was established and Establish a human resource CITIZEN “One-Up” training organized according to different levels and 2.3% employees’ level of compliance 0.2% development system SYSTEMS JAPAN subject areas, based on the principle of full participation from all 7.0% 9.5% ■Very much awareness compared to the survey in 15.6% 8.2% employees. 108 employees underwent training. ■Yes 6. Employees fiscal 2007. 2.5% ■Can’t really say Clearly define out-of-hours work as The flextime system was reviewed to ensure that it is operated When asked whether CSR activities 6.5% ■Not very much correctly. Training was organized for managers and other applicable FY2008 part of discretionary and assumed CITIZEN SAYAMA help to enhance Citizen’s corporate value, FY2007 ■Not at all work systems members of staff and application procedures carried out. 48.2% ■Don’t know the percentage of employees responding 33.1% 24.1% 43.0% Information on business partners was collected through channels ■No response Clamp down on illegal practices and “very much” or “yes” also increased. 7. Antisocial such as regular purchasing meetings and hotline services and unreasonable requests from antisocial CITIZEN SEIMITSU behavior business partners evaluated. All negative option billing from There has been a significant organizations or individuals organizations without previous business ties was refused. improvement in the level of awareness Are you aware of the Corporate Ethics Hotline (CSR Hotline)? regarding the existence of the Corporate Q.3 Nickel recovery equipment was installed and technology established 0.4% 0.1% Ensure compliance with environmental CITIZEN WATCH to enable 99% of nickel to be recovered from rinsing water and Ethics Hotline, which was around the 50% ■Yes restrictions at Chinese bases recycled for use as plating fluid. A system for recycling cleaning mark in fiscal 2007, as a result of efforts to 30.2% ■No 8. Overseas water used in plating was also installed and put into operation. publicize the hotline through channels ■No response local development Chinese managers were placed in charge of all departments as part of the process of delegating Train and make effective use of human authority to Chinese members of staff. In-house seminars and practical training were also such as posters and company 48.6% FY2007 FY2008 CITIZEN SEIMITSU resources at Chinese Plants organized for managerial staff from team leaders upwards in the interests of human resource newsletters. 69.7% 51.0% development. There will be an increasing focus on locally-oriented operations in the future. We will continue to implement In addition to profit (PMS), quality (QMS) and environmental (EMS) management Promote efforts to reform corporate sustained, ongoing initiatives aimed at systems, activities based on the 6Ss were also initiated as part of our corporate culture in an effort to become a company FY2007 (Citizen Group): 6,634 out of 9,177 (72.3% response rate) 9. Management culture reform (FMS). With the addition of “safety”, activities are now underway promoting CSR as part of our business with spirit and vitality and a company CITIZEN SEIMITSU FY2008 (Citizen Group): 5,776 out of 9,047 (63.8% response rate) based on the 7Ss. The ultimate aim is to establish a corporate culture in which customers enjoy visiting activities on a group-wide basis in the employees naturally do the right thing no matter what they are doing. future.

17 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 18 Special Feature Base of CSR Citizen and Society Citizen and the Environment 20 oup CSR Report 2009 Citizen Gr Internal Audit & CSR Department Independent Accounting Auditor President and CEO Executive Directors Shareholders’ Meeting Business Corporation Board of Auditors/Directors capabilities at over 7,400 companies capabilities at over 7,400 provides the around the world and investors and results to institutional As of April 1, other such organizations. Corporate 2009, ISS ranked Citizen’s (CGQ) in the top Governance Quotient 1.2% of Japanese companies.

Compensation Committee

Appointment Committee Board of Directors Management Committee ISS Corporate Governance Quotient Assessment from outside outside Assessment from organizations ● Services Inc. Institutional Shareholder governance (ISS) evaluates corporate The Citizen Group Corporate Governance Structure (as of April 1, 2009) The Citizen Group Corporate Governance Structure To achieve this, the Group Board of To achieve this, the Group To cater to the diverse needs As the first fiscal year in which the Internal System Control Auditors—consisting of full-time Auditors—consisting and auditors of Citizen Holdings controlling auditors of each business group-wide company—meets to share consistent audit policies to enable cooperation auditing functions through and the among Citizen Holdings business controlling companies. Having set out a basic policy on the construction of internal control systems to enable Citizen Holdings to fulfill its social responsibilities as a company, we are now working to enhance internal control systems on behalf of the Citizen Group as a whole in an effort to achieve our objectives in terms of sound, sustainable management. internal control reporting system under the Financial Products Exchange Law (J-SOX) came into effect, in fiscal 2008 we established a new Internal Control System Coordination Committee consisting of supervising personnel from Citizen Holdings and consolidated Group companies so as to ensure that our internal control systems function adequately and effectively and guarantee the reliability of financial reports. We are currently in the process of establishing, operating and evaluating internal control systems in conjunction with an outside auditing organization. anticipated as part of the internal auditing process, we have set up new internal auditing departments in the form of Auditing Offices at three other companies in addition to our four operational management companies and have appointed internal auditing managers at eight major subsidiaries. We intend to build up a Group-wide auditing network between individual companies’ auditing departments in order to maintain and improve levels of corporate governance and risk management. Each auditor checks whether the Another important role of the The Board of Directors determines The Board of Directors In addition, the management of the Roles of the Auditors and of Auditors the Board Roles of the Directors and and Roles of the Directors of Directors the Board The Citizen Holdings Board of Auditors consists of three members, including two independent outside auditors (as of March 31, 2009). Company is growing in a healthy and sustained manner, whether internal controls are functioning to uphold the trust of the public and whether laws and corporate rules are being followed. They also check execution of the general duties of directors by looking through important financial statements, examining operations and financial status and attending the Board of Directors and various other meetings. auditors of Citizen Holdings is checking the execution of directors’ duties at each business controlling company. The Citizen Holdings Board of Directors The Citizen Holdings including two consists of ten members, (as of independent outside directors March 31, 2009). management policies and other important items for Citizen Holdings and the Citizen Group, and supervises execution of directors’ duties. Presidents of important subsidiaries from among the business controlling companies are also appointed as part-time directors, enabling decision-making from a comprehensive perspective in consideration of the views of the business controlling companies. Group reflects the opinions of outside directors with abundant business experience in corporate management and related areas. We have also established the Nomination Committee and Remuneration Committee—consisting of outside directors and the president— to provide advisory support. 盤

の基

oup CSR Report 2009

Citizen Holdings is responsible for All of the Group’s lines of business Operations within the framework of are working to enhance corporate governance to ensure management transparency and achieve the management transparency corporate governance working to enhance ensure to are Base of CSR Base CSR Roles of the Pure Holding Roles of the Pure Company and the Subsidiaries

Basic Approach to Basic Approach Corporate Governance Corporate Governance Corporate optimal allocation of management resources in our multi-faceted business activities. our multi-faceted in resources of management optimal allocation We formulating management policies and making investment decisions in the interests of optimizing Group-wide management and oversees and supervises subsidiaries by monitoring their business activities to ensure that they adhere to management policies and their management practices to ensure that they are transparent. – watches, electronic devices, electronic products and industrial machinery – are governed by individual operational management companies, which are operated independently based on the nature of the relevant industry so as to enable more expedient management and increased profitability. Citizen Holdings, in areas such as human resources, finance, R&D, intellectual property management and brand management, have been configured so as to ensure that operational management company policies coincide with Group-wide policies. We have clarified the scope of responsibility and authority of Citizen Holdings and each of the subsidiaries that make up the Citizen Group.

The Citizen Group endeavors to The Citizen Group endeavors and contribute improve business value corporate to society through sustained the local activities in harmony with environment, community and the global under the business philosophy of “Contributing to and Striving to be Respected by the Citizens of the World.” In the continued pursuit of this business philosophy, the Group works to strengthen corporate governance toward ensuring management transparency and achieving the optimal allocation of management resources in its multi-faceted businesses. Citizen Gr 19 Base of CSR

Compliance Risk Management

We enforce compliance as one of our top priorities as part of the Group’s CSR activities, based on Citizen has established group-wide committees for each important business theme, including the Citizen Group Code of Conduct. Taking legal compliance as a starting point, we aim to promote security trade control, subcontracting and information security. activities that encourage morally and ethically sound practices.

●Information Security Committee Compliance Promotion Efforts at Each Group Internal Reporting Group companies in the future. Risk Management In terms of measures to guard against new The Information Security Committee has Structure and Education Company System strains of influenza, we have provided Structure established a new subordinate employees at all Group companies with organization in the form of the information on how to prepare and protect ●Compliance Activities ●Monitoring compliance ●Establishing internal and Information Security Coordination ●Establishing Group-wide committees themselves from infection and intend to external hotlines Committee. Whereas the Information We have established a CSR Committee Citizen Watch Co., Ltd. has set out In order to address the various risks inherent work on a BCP in the future. at Citizen Holdings Co., Ltd. in order to departmental requirements in the form Security Committee consists of We established the Citizen Group Corporate in the Citizen Group’s business activities, we promote CSR activities on behalf of the of CSR Activity Checklists to check the management personnel from operational Ethics Hotline in an effort to prevent any legal operate internal control systems and have entire Group and to handle all aspects of status of activities carried out by all established Group-wide committees for each management companies, the violations or misconduct stemming from Special Feature policy planning and recommendations in departments and ensure compliance Coordination Committee is made up of Efforts at Group dishonest actions and quickly identify issues important area. We will consider forming relation to CSR. Group companies each with the Citizen Group Code of Conduct. supervising personnel responsible for that could potentially result in such a violation, additional new committees in the future to Companies have their own independent CSR The results are rated according to practical aspects of information security thereby minimizing risks and helping to foster accommodate changing circumstances. promotion departments, which work in three levels, with audit plans then drawn at individual Group companies. The a self-regulating organizational culture. partnership with Citizen Holdings Co., up and internal audits carried out for all Information Security Committee is ●Introducing a safety The Internal Reporting System Rules ●Security Trade Control Committee Ltd. to implement initiatives such as activities rated at the two lower levels. responsible for approving proposals and confirmation system state that the reporting party’s privacy must The Citizen Group Security Trade dealing with any incidents that occur,

compliance awareness, education and If there are still any items that are Base of CSR be respected. They also state that all charges Control Committee is responsible for The safety confirmation system is designed training activities. On an individual level, non-compliant or in need of improvement, from organizing initial meetings to must be investigated in an open and fair implementing various measures and to be used by Citizen Electronics Co., Ltd. as each company organizes group training the relevant department is instructed to resolving the relevant issue. The role of manner, that the subject of the report must providing Group companies with advice, an emergency contact network in the event and video training sessions based on implement corrective measures. the Coordination Committee meanwhile be given the opportunity to refute claims education and information so as to of a disaster. their own educational framework, We intend to provide specific is to discuss specific issues and request made against them, that the reporting party ensure that security export controls are The system is essential from the standpoint designed according to level of their advice and make ongoing approval from the Information Security must be notified of the outcome of any enforced without exception throughout of business continuity, as a means of quickly employees. improvements in the future to enable a Committee in the case of key proposals, investigation and that the reporting party and effectively confirming that all employees

the Group, in accordance with the Citizen and the Environment Citizen and Society We also organize separate better understanding of the current such as those relating to changes in must not be subjected to unfair treatment. Citizen Group Security Trade Control (and their families and dependents) are safe educational CSR and compliance status of activities and improve security policy. In addition to the existing system, in April Rules. In order to promote such in the event of a large-scale disaster. sessions for eligible members of staff at coordination between departments so 2008 we also set up an external hotline to activities, we have also established an Other potential uses for the safety all Group companies as part of training as to improve standards and raise enable employees to file reports anonymously. Export Control Company Coordination confirmation system include the following. for new recruits and induction training awareness of CSR activities. Having publicized internal hotline services Committee consisting of members from Formulating a BCP to (1) Contacting all employees with urgent for new managers and new directors. extensively, we have created an environment 15 Group companies. Reduce Disaster Risks information, such as site closures due to ●Setting up a dedicated CSR in which it is easier for employees to seek heavy snow or changes to work hours ●Intellectual property management compliance webpage advice, resulting in an increase in the number ●Committee on Appropriate We have had in place the necessary (2) Contacting specific employees with of reports, as outlined below (see CSR urgent information Working in conjunction with intellectual Subcontracting framework and emergency plans in the In fiscal 2007, Citizen Electronics Co., Awareness Questionnaire Q3, p17). property departments at Citizen Group event of a disaster, including disaster Ltd. set up and launched a dedicated We dealt with reports during fiscal 2008 The Citizen Group Committee on Including Relocation Detection subsidiaries, Citizen Holdings Co., Ltd.’s prevention committees at all Citizen Group ● CSR compliance webpage on the by verifying the facts in accordance with Appropriate Subcontracting has continued Intellectual Property Department companies, for some time now. In fiscal Devices as a Standard Feature Group intranet. In addition to the 12 internal reporting regulations, taking any to reinforce education regarding operates a centrally controlled system 2008, the BCP Committee at Citizen domestic and overseas companies necessary action and providing the reporting subcontracting legislation as one of our In order to comply with the Foreign for the development of the Group’s Business Expert formulated a business under the umbrella of Citizen party with feedback as appropriate. priority measures during fiscal 2008. In Exchange and Foreign Trade Act, we intellectual property portfolio. On a continuity plan (BCP) in the event of an Electronics, the webpage features addition to existing basic seminars, the are working to prevent the illegal export, specific level, this means that all earthquake directly underneath Tokyo, details of Citizen Holdings’ corporate Breakdown of internal reports (Fiscal year) committee improved the contents of resale and relocation of machine tools intellectual property resulting from joint compiling manuals detailing specific philosophy, management, 2007 2008 educational activities from a more practical via Citizen Machinery Co., Ltd. We fit development undertaken by Citizen procedures in all areas and checklists to environmental and quality policies and Relationships in the workplace 1 6 standpoint in fiscal 2008, introducing new relocation detection devices to all of our Holdings Co., Ltd.’s R&D Division and enable procedures to be implemented annual CSR targets and is intended to Violations of internal rules 2 3 practical seminars aimed at highlighting products in every series as standard, Citizen Group subsidiaries or efficiently. BCP will be extended to all establish a stronger sense of solidarity Communication with superiors 1 2 incidents that have occurred within the irrespective of whether they are bound development undertaken within the Group. Employees can also Suspected compliance violations 1 2 Group in the past and teaching members for the domestic market or overseas single-handedly by subsidiaries is access the internal reporting system Mental health — 2 of staff how to deal with such situations in markets. Such devices are designed to coordinated from an overall perspective and Corporate Ethics Hotline via the Abuse of authority — 2 an appropriate manner. stop machine tools from working if they and centrally managed by Citizen same page. Customer relations — 2 Seven basic seminars and nine are relocated and can be used to control Holdings’ Intellectual Property Methods of disclosure 2 — practical seminars were organized during exports, by preventing the illegal use of Department. Information security 1 — fiscal 2008, with a total of 620 Group machine tools for instance or verifying Other matters — 1 employees taking part. Our aim is to the location of machinery. We also license Total 8 20 reinforce subcontractor compliance technology relating to such devices to (Reports) systems through human resource other machine tool manufacturers. development.

Emergency drill at our Tokyo Office

21 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 22 Citizen and Society

handful of full-time designers on staff, Activities at Each Group (3) Organizing automotive product Citizen and its Customers we intend to make the most of the studio’s fashionable location on Company departments and implementing the Omotesando to access the latest trends 4Ms (man, material, method and and interact with outside creative talent As the Citizen Group is largely reliant on exports, the harsh business conditions ●Customer satisfaction surveys machine) during the latter half of fiscal 2008 meant that our figures fell significant short of as part of our watch design creation activities. Having set ourselves the goal of putting (4) Improving individual skill levels projections. At times like these, customers demand products that offer even quality first in order to secure customers’ greater value than the price. This means that communication with our customers trust and improve customer satisfaction is absolutely essential. We need to develop and supply products that take on Voice as part of our ISO 9001 quality policy at As a result, we commenced mass board customers’ invaluable comments. It is also important to improve manuals Citizen Electronics Co., Ltd., we now production in 2008 and have received so as to offer customers the best possible support when they use our products. Combining capabilities as a conduct customer satisfaction surveys outstanding quality assessments from We are committed to making ongoing improvements so as to create products that satellite base for PR activities twice a year. Surveys are made up of our customers. We will continue to guarantee customer satisfaction. We will also continue to make operational detailed evaluation criteria divided into We intend to use the Citizen Design maintain and improve quality levels so 14 categories, including product improvements to our Customer Service Desk so as to deal with any unfortunate Tsuneo Nagai Studio as a combined satellite base as to ensure that our customers can reliability, delivery and problem issues that may arise as quickly as possible. President for PR activities and as a focal point use Citizen products with confidence in Citizen Watch Co., Ltd. resolution support. The most recent to enable us to exchange information the future. survey, targeting 20 selected with the likes of magazine editors companies in February 2009, received and members of the press, through ●Customer feedback Base of CSR Special Feature Transforming our Customer waiting times and will continue to work on more positive feedback than the Efforts at Citizen Watch ● events such as new product launches. As part of our electronic device Service Desk improving the quality of customer service previous survey. On a specific level in the future. however, companies were criticized in operations at Citizen Finetech Miyota From radio-controlled and other high the categories of price and information Co., Ltd., we strive to identify market performance watches to more on new products. needs as quickly as possible and develop and manufacture equipment ●Basic approach to customer fashion-conscious products, our We will continue to conduct satisfaction Customer Service Desk receives around customer satisfaction surveys in the and devices that combine innovative 250 inquires every day via telephone and future and incorporate customer and practical qualities in an effort to The domestic watch market is the inquiry form on our website, covering feedback into our operations so as to create lighter, more compact products experiencing increased demand for subjects such as product features, how secure customers’ trust and further that offer superior performance. As the products of a higher standard in all to purchase Citizen products and repairs. improve levels of customer satisfaction. technology involved in liquid crystal on respects, from quality to functionality Despite improving the product details silicon (LCOS) micro display manufacturing is particularly difficult to and design. Although Eco-Drive section of our website, the number of Series 8 launch event ●Guaranteeing the quality of radio-controlled watches in particular inquiries received by the Customer automotive products master, there are only a limited number Citizen and Society A typical example of our of manufacturers capable of mass have been a big hit with a wide range of Service Desk continues to increase. Dealing with customers on the Customer Service Desk customers, the number of customers design-oriented initiatives is Series 8 The Automotive Products Division at production. Inquiries to the Customer Service Desk released in September 2008, a Having concluded a contract for looking for more stylish watches or ●Opening the Citizen Design Citizen Electronics Co., Ltd. handles watches with individual designs is on simple yet stylish range of watches every stage of the process from design the development of LCOS panels, one 50,000 48,102 Studio the increase. In an effort to meet the based on the concept of “modern, and development to mass production of the key components in our 45,000 42,669 41,334 42,446 comfortable design watches.” The customer’s strategic products, we have needs of such a wide range of 39,769 We manufacture watches at Citizen and shipping of chip LEDs, photo

40,000 Citizen and the Environment customers, we are currently focusing on Watch based on a product policy of Series 8 launch event was held at the sensors and backlight units for use in been working on development, 35,000 offering wide range of products at combining technology with beauty. Citizen Design Studio and received vehicles. prototype production and evaluation for 30,000 Citizen Watch. We have been attracting The type of value demanded by our glowing feedback from the likes of Due to factors such as their purpose the past three years. Spurred on by the a great many customers recently thanks 25,000 customers has changed over the last distributors and magazine staff. and the fact that vehicles contain a customer’s expectations and to the development of slimmer, more 20,000 few years, from functional value to massive 30,000 components or more, enthusiasm based on a strong compact Eco-Drive radio-controlled 15,000 emotional value. Whilst maintaining the required level of quality for automotive partnership built up during this period, watches. 10,000 basic qualities such as safety and Manager components and devices is exceptionally we have managed to satisfy the most To further improve levels of 5,000 Marketing Division, high. The rate of defects is required to be demanding of specifications and in peace of mind, we believe that design is Advertising Department 0 2008 commenced deliveries. We have customer satisfaction in the future, we 2004 2005 2006 2007 2008 (FY) one of the most important ingredients to Citizen Watch Co., Ltd. kept under 10 parts per billion (ppb), will need to enhance the quality of our provide customers with products that which is regarded as a zero defect rate. received glowing feedback from the operations from a comprehensive Complaints Purchase inquiriesTechnical inquiries strike an emotional chord. In June Nobuhisa We implement the following customer in the form of a letter of PR-related Others standpoint, improving after-sales 2008, we therefore established the Kizaki initiatives in order to meet these appreciation for successfully mass services as well as product capabilities In view of the current situation, we Citizen Design Studio on Omotesando requirements. producing and shipping LCOS panels. in areas such as quality, functionality have been working to establish a in Harajuku with the aim of creating new We will remain committed to developing and design. Bearing in mind that framework capable of responding to designs to satisfy our customers. With a technology that meets our customers’ (1) Identifying and resolving all achieving higher levels of customer customers’ various inquiries quickly and expectations in the future. satisfaction will help enhance our brand precisely since the latter half of 2008. We quality-related problems and value, our Customer Service Desk is set have transformed the Customer Service issues at the design stages to play an increasingly important role in Desk into a comprehensive reception (alleviating/resolving problems and the future as a crucial point of contact system on both tangible and intangible risks, ensuring processing with our customers, giving us direct levels, focusing on making it easier to get access to customer requests and through by telephone, speeding up capabilities) queries. response times, handling inquiries more (2) Ensuring compliance with ISO/TS effectively and protecting personal data. 16949 (automotive quality We have already started to see results from efforts such as reducing customer systems ) Citizen Design Studio LCOS panel

23 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 24 Citizen and Society

Citizen and its Customers Citizen and its Shareholders and Investors

●Creating quality to mutually benefit ●Further improvements to ●Improving hospitality ourselves and our customers electronic manuals Citizen Plaza Co., Ltd. is one of a select Citizen Holdings Co., Ltd. aims to build strong relationships based on daily number of companies within the Citizen communication with all of its stakeholders, from customers and shareholders to We apply the JIS T 14971 standard for We make every effort at Citizen Group that interacts directly with suppliers and local communities, to improve its corporate value and shape the the application of risk management to Machinery Co., Ltd. to ensure that customers, dealing with upwards of company’s market value accordingly. With this in mind, we are committed to the medical devices as part of the customers can use our products 2,000 customers on busy days. In development of electronic thermometers correctly and safely, with the aim of disclosure of highly reliable information as and when needed and make every addition to working to improve levels of and blood pressure monitors at Citizen achieving “the world’s highest level of effort to ensure that our shares maintain a sound and fair price and are hospitality amongst all employees, we Systems Japan Co., Ltd. customer satisfaction.” circulating effectively on the financial markets. We continue to organize quarterly are also in the process of improving the As well as being used by medical The purpose of machine tool earnings announcements and briefings, one-on-one meetings and a range of operating structure of the newly institutions, electronic thermometers manuals is to provide the customer with other IR events and are also working to improve the content of our website in an Managing Director relaunched ice skating division based Citizen Holdings Co., Ltd. and blood pressure monitors are also accurate information regarding how to effort to create more opportunities to communicate with stakeholders. on the motto “safety first.” Key initiatives the most commonly used medical use the relevant product correctly and Osamu Yamada include (1) introducing an entry and exit devices on an everyday basis in the safely when they need it. In addition to system to continually monitor the home. To enable customers to use such supplying such information in the form number of skaters on the ice and devices with confidence, it is essential of printed manuals, in 2007 we began with our shareholders, we also put on a

enable skaters to move around the ice Base of CSR Special Feature to ensure not only that devices provide to provide electronic manuals on CD. Dividend Policy Information Disclosure and varied display of Citizen Group products safely, (2) making the rink twice as accurate readings but that they are also and try to structure meetings so that bright by installing new lighting, (3) Investor Relations Activities safe. The JIS T 14971 standard covers shareholders can easily voice their running continual rink safety patrols and more than 100 criteria and requires opinions and ask questions, thereby (4) producing a safety manual featuring At Citizen Holdings Co., Ltd., we At Citizen Holdings Co., Ltd., we believe improvements in areas such as design, ensuring that meetings run smoothly. precautions in English. To encourage that daily communication with manufacturing, labeling and instruction calculate the “ratio of return to children in particular to read the safety shareholders and investors helps create manuals, including (1) identifying all shareholders” based on the combined manual, we have included lots of a broader shareholder base and ensure hazards relating to the device, (2) total of dividends and share buybacks as pictures and details of actual accidents that the company’s share price remains Preventing insider trading assessing risk levels based on the a percentage of consolidated net income. that have occurred at the ice rink. in line with its corporate value. We severity and frequency of each hazard Ever since fiscal 2005, when we first Copies of the manual are distributed to therefore make every effort to disclose and (3) ensuring all hazards are made introduced this policy, we have continued children taking part in skating classes highly reliable information as and when safe. We have standardized procedure to work towards an average ratio of at We are in the process of rolling out the Electronic manuals and general customers in an effort to necessary to enable our shareholders for the implementation of JIS T 14971 in least 30% for each period of three to five necessary procedures to prevent insider raise levels of safety awareness. We will years. We try to determine dividends so and investors to make decisions. the form of our Risk Management Although electronic manuals were trading, including formulating and Citizen and Society keep up our efforts to ensure that our The focus of our IR activities is Regulations and Risk Analysis Manual initially only available for selected new as to strike a balance between reflecting revising regulations, throughout the customers have an enjoyable and placed firmly on ascertaining information and continually monitor implementation models, we are now in the process of the company’s consolidated performance Citizen Group. We operate an approval satisfying skating experience. needs and maintaining communication. through design reviews at every stage producing electronic manuals for all and maintaining stable dividends. Our aim system for all transactions made by As such, we organize quarterly earnings of the development process (planning, models currently on sale in response to in terms of share buybacks meanwhile is directors at Citizen Holdings and announcements and briefings and design, prototype development, trial strong demand from customers in to return profits to our shareholders by domestic consolidated subsidiaries and continue to provide more and more mass production and shipping Europe, the United States, and all over increasing earnings per share whilst also other members of staff potentially able

opportunities for communication through Citizen and the Environment approval). the world. In the interests of customer improving capital efficiency. to access important information. initiatives such as one-on-one meetings, usability, we are making improvements Composition of Shareholders by Category Product development process factory tours and participation in IR events such as including easy search functions (as of March 31, 2009) and conferences organized by securities Preceding mass production and evaluation and revising safety-related content. The 15.8% Assessments from Prototype production and evaluation Trial Mass production and evaluation companies. We are also taking steps to impact of electronic manuals is improve and expand the content of our Outside Organizations Productivity verification gradually starting to become evident 12.4% 41.1%

Product planning website and presentation materials. from an environmental standpoint as 380,353 Shipping well, including preserving resources by Thousand Since 2004, Citizen Holdings Co., Ltd. shares using less paper, conserving electricity has been selected for inclusion in the by using copiers for shorter periods of 17.2% 1.3% Open shareholders’ Ethibel Sustainability Index by Belgian “To all the Ice Fairies” socially responsible investment (SRI) time and saving storage space by 12.2% meetings switching formats to CD. One of our key safety manual assessment company Ethibel for five focuses for the coming year will be to Financial institutions Securities companies Other corporations in Japan consecutive years. Furthermore, our To enable more shareholders to attend, investigate other new means of Foreign entities Individuals/Others Treasury stock financial standing is currently rated as we always hold Citizen Holdings Co., providing information, including access “A2” by Moody’s Investors Service (as Ltd’s annual shareholders’ meeting in a to online manuals and integrating of March 2009), meaning that Citizen Trend in Dividends per Share large-capacity venue with easy access, manuals into actual machinery. (Yen) Holdings has a high level of trust and Post-production information avoiding days on which other major We will continue to provide our 25 poses an extremely low risk of 22.5 companies are holding their meetings. Risk management review and records customers with quality manuals when defaulting on debts. 20 Our June 2008 shareholders’ meeting they need them in the future, focusing Residual risk assessment 15 15 was attended by 337 shareholders. on customer usability, product safety 15 15 Risk control selection and implementation 11 7.5 7.5 10 To make it easier for shareholders to and environmental friendliness. 10 5.5 2.5 exercise their voting rights, we have Risk analysis and assessment 5 operated an electronic voting platform 5.5 7.5 7.5 7.5 7.5 0 for institutional investors since our 2004 2005 2006 2007 2008 (FY) shareholders’ meeting in 2007. In an

Risk management process Interim dividend Final dividend effort to establish a closer relationship

25 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 26 Special Feature Base of CSR Citizen and Society Citizen and the Environment 28

so that all e lunches Citizen Watch re erent erent oup CSR Report 2009 conducive to solve these issues, we Director Citizen Holdings Co., Ltd. Takeshi Kakishima Takeshi intend to continue Citizen Gr members of staff start to members of staff chnical Development naturally with one another that is more sources. As one of our initiatives, sources. aims last year was to transform In an effort to re In an effort ess our combined strengths as a key ess our combined strengths iculties maintaining communication with One of the Te Division’s within the division and develop the culture human re communication to we made improved harn to As a large division, we needed priority. two main issues, namely (1) address diff daily as part of all members of staff interaction operations and (2) insufficient between employees in diff departments. interact more an at work, creating when their paths cross atmosphere younger discussion. Feedback from has included comments members of staff such as “I was a bit nervous, but I was able to talk to the Division Manager and Deputy Manager for the first time and get to know lunches such as this in the future can take part. members of staff organize a series of two or th of a number each month whereby invited to join the Senior employees are General Manager and Deputy Senior General Manager for lunch. After having lunch together, them a little better” and “it was a good other opportunity to talk to people from departments.” We Lunch meeting Improving internalImproving communication Example initiative ）％

10,861 （ 1.58 7,209 FY2008 Overseas ％ ■ ） 3,518 1.64 4,000 6,000 8,000 10,000 FY2007 ports (as of June 1) by each 2,735 8,941 re （ 1,946 1,235 1,049 Japan 933 458 237 260 ■ 164 58 0 2,000 tation system between subsidiaries. tation system between . company to the Public Employment Security Office tches

Other Other actively employ people with Devices Promoting employment of people Promoting with disabilities Wa Industrial Products Electronic Electronic Machinery Employment rate

employees businesses ecruitment activities brought our ecruitment activities brought emain committed to employing more classifiable into specific segments Number of Employees by Business Segment 31, 2009) (as of March We disabilities based on our basic policy of Although our “working together.” employment rate for people with year disabilities fell short of the previous for fiscal to our statutory report according 2008 (dated June 1), subsequent r employment rate back up the year-ago 2009. We level by the end of March r the people with disabilities and increasing range of eligible job opportunities in the future ● *Refers to employees in management departments not Employment of People with Disabilities at Companies 17 Major Group Note: Tabulated from from Note: Tabulated * Group-wide also 91 32 51 10 61 123 FY2008 FY2008 spect individuals, sources. In terms of human resource development, during fiscal development, In terms of human resource sources. 41 52 35 87 122 163 FY2007 FY2007 . new graduate recruits on a regular on a regular new graduate recruits Total Male Total consider it to be the Citizen Group’s consider it to be the Citizen Group’s Male each company in the future and introduced a ro introduced and future each company in the the ongoing process of developing a framework within which to nurture and effectively and effectively a framework within which to nurture of developing the ongoing process harness re human at roles expected to take over management who are 2008 we identified personnel (employees) can excel. First and foremost, we believe that it is important to give we believe that it is important First and foremost, (employees) can excel. an use and create to put their skills to the best possible employees the opportunity this. Having started by can truly appreciate in which individuals environment working on companies, we are all Group at every level across examining individuals Our activities during fiscal 2008 revolved around the concept of “people-oriented concept of “people-oriented the around revolved during fiscal 2008 Our activities in which people an environment creating first step towards management,” as the hire Group Policy Group Recruitment activities and promoting Recruitment activities and promoting contract employees to permanent positions Female Respecting Diversity Female ecruits from a long-term perspective at ecruits from egular basis, depending on factors such ● We duty as a company to re an embrace diversity and create in which employees can environment thrive. ● We basis and experienced mid-career r companies. We all Citizen Group employees on fixed-term promote contracts to permanent employees on a r as their level of enthusiasm and capabilities. personnel, we focus on When recruiting individual skills, aptitude and drive, in an equal opportunities and to ensure effort diversity New graduates Citizen and its Employees and Citizen Mid-career recruits Mid-career Recruitment at 17 Major Group Companies Recruitment at 17 Major Group Co., Ltd.

Purchase Section Purchase Citizen Watch Co., Ltd. Citizen Watch Director Citizen Business Expert Haruo Kino Manager, General Affairs Dep., General Affairs Manager, Atsushi Yoshino Having actively exchanged opinions organize regular company policy organize regular also Initiatives at Citizen Machinery Explanation of company policy to suppliers step up our business philosophy. partnerships. such as market matters regarding quality and lead times during trends, our fiscal 2008, we plan to review Management Order Purchase Regulations and Supplier Selection Regulations during the first half of fiscal and 2009 as we continue to reinforce ● We information with briefings and share suppliers at Citizen Machinery Co., Ltd. to establish strong in an effort treat our suppliers as treat lationships. will continue to relationships of trust with suppliers is relationships communication. We important partners and exchange information with them as part of our daily operations. We technical and quality meetings to organize regular discuss key materials and components in an effort to establish mutual understanding with our goals and build suppliers based on shared re stronger CSR procurement Initiatives at Citizen Seimitsu ensure compliance with ensure Activities at Each Group Activities at Each Group Company ● Under the spirit of the Citizen Group Under the spirit of the Citizen Group Code of Conduct and the UN Global Compact, we try to build partnerships between the Citizen Group and between the Citizen Group suppliers that actively promote CSR, suppliers that actively promote taking into account factors such as legal compliance, the environment and legal compliance, the environment respect for human rights. respect ● To subcontractor and security export control legislation relating to commercial to commercial legislation relating control transactions and to maintain healthy relationships with suppliers, we conduct relationships internal at Citizen Seimitsu Co., audits Ltd. once a year. We Ltd. once a year. work on improving legal awareness legal awareness work on improving amongst employees and establishing partnerships based on mutual trust with suppliers in the future. suppliers in the future. also actively comply with subcontracting also actively comply achieve this, we convey the policies of achieve this, we convey manufacture manufacture have ency of transactions

procure materials and services materials procure The most important element in building strong The most important element in building strong oup CSR Report 2009 are constantly committed to building strong relationships with suppliers as one with suppliers as relationships to building strong constantly committed are

We With holding the transition to a pure ice The General Affairs Department’s Purchase Section Purchase Department’s The General Affairs for Co., Ltd. is responsible at Citizen Watch components for materials and electronic procuring materials. To watches and other indirect that guarantee customer satisfaction, it is products vital to develop new materials and capabilities, quality levels. stable supplies and control ensure This makes it essential to establish cooperative with suppliers. relationships Striving to build relationships with Striving to build relationships suppliers based on mutual trust Communication with suppliers hand in hand as business partners. To hand in hand as business communication with business partners daily through companies individual Group of supplies, the purchasing regarding improvements suggested and take on board an to create in an effort and delivery, price quality, to market trends, with regard can be bought and sold based on a shared in which supplies environment both sides. We understanding between Committee on Appropriate put in place the Citizen Group legislation and have educational and auditing activities. regular Subcontracting to undertake We we can grow and aim to work together so that top priorities of Citizen Group’s Basic Approach to Basic Approach Purchasing

Vo Citizen and Society and Citizen also continued to step up cooperation companies during fiscal between Group 2008, for instance by starting work on the development of a Citizen Group Supplier Database containing details of companies’ suppliers. all Group in accordance with all relevant legislation with all relevant in accordance the and continue to work on improving fairness and transpar capabilities at individual procurement subsidiaries and maintaining active communication with suppliers. We ● better quality of creating In the interests that our we aim to ensure products, and develop hand in suppliers grow in their hand with the Citizen Group capacity as business partners. with suppliers and building up based on mutual trust. relationships

company system in fiscal 2007, we have sought closer cooperation with our suppliers, including putting in place the necessary framework to reinforce Citizen and its Business Partners its Business and Citizen Citizen Gr 27 Citizen and Society

●Initiatives to Prevent Sexual Harassment and Abuse of Authority mentally healthy at work. We provide Citizen and its Employees employees with health advice and Example initiative Citizen Sayama secondary examinations if necessary based on the results of health checks. people who make it, the environment Cultivating Human Employee Usage of Child Care Leave Organizing training aimed at preventing harassment in the workplace We also provide workplace reintegration in which they work, and their attitude Opportunities at 17 Major Group Companies support and regularly monitor employees We organize training for all employees at that anyone can be guilty of, sometimes on a Resources towards manufacturing. Having FY2007 FY2008 who have been ill to give them added Citizen Sayama Co., Ltd. Group companies in repeated basis, without even realizing it. We documented the steps involved in this Male 0 0 peace of mind as they work. an effort to prevent harassment in the workplace. use check sheets designed to highlight the process, in September 2008 we received Female 50 51 To enable employees to improve ●Group Policy Training covers areas such as different types of likelihood of employees engaging in or falling the Japan IE Total 50 51 their health levels, we also provide Individual Citizen Group companies are harassment, the impact that harassment has victim to harassment to help them appreciate Documentation support to help quit smoking, organize responsible for training human resources on the workplace and individuals and the the feelings of those around them and modify Award at the walking events, put on a range of that are capable of adapting to their Employee Usage of Nursing Care Leave causes of harassment. their thoughts and actions if necessary. We are National Annual seminars, and provide health-related working environment, based on the Opportunities at 17 Major Group Companies Training is aimed at preventing psychological also publicizing and encouraging employees Conference on information via Group publications and respective company’s policy. With a range FY2007 FY2008 harassment in particular, which is something to use our Corporate Ethics Hotline. Industrial the intranet as part of health promotion of training schemes available, including Male 0 0 Engineering (IE). support activities. tiered training organized by Citizen Female 2 4 Holdings and educational activities Total 2 4 ●Reinforcing Mental Health Activities organized by individual Group companies, Example initiative Citizen Business Expert we have established a comprehensive training environment for human resources Japan IE Documentation Base of CSR Special Feature Mental health education at the Tokyo and Tokorozawa Offices and Tokyo Sales Center within the Citizen Group. Award plaque Having launched a Mental Health Project in 2004 and we also provide preventive consultations, for instance set up a Mental Health Committee in 2007, we Group-wide tiered human Promoting a work-life after stress assessments, and continually work in ● continue to step up activities in the field of mental partnership with individual workplaces to provide resource development program balance health. We adopt measures designed to prevent assistance for employees suffering from mental Health advice from a company doctor Working from a Group-wide perspective, mental health issues from arising, including health issues and help employees reintegrate into the Citizen Holdings Co., Ltd. organizes the ●Group Policy educational activities run by committee members in workplace after a period of leave. We intend to focus Citizen Family Day individual workplaces and annual stress assessments more closely on tiered training for the likes of new Citizen University training program, a We are working to put in place the Human Rights and Labor tiered program for Group company necessary framework to create an ideal for all employees, aimed at encouraging employees recruits, employees entering their 30s, newly employees at each level irrespective of working environment in which all Citizen to take better care of themselves and improving promoted senior staff, and managers in the future, Relations their line of work. Group employees can strike a balance Creating healthy, safe and working environments. Each workplace is then whilst also offering consultations for overworked provided with feedback based on assessment employees and providing workplace feedback, in an In addition to existing training between their work and private lives. comfortable environments We hold regular meetings between Citizen results. effort to improve mental healthcare via the chain of Citizen and Society schemes for younger staff, more senior Group companies and the labor union In addition to setting up internal and external hotlines, command. staff, and new managers, in fiscal 2008 ●Flexibly operating a range of acting on behalf of our employees to ●Group initiatives we expanded our range of training with leave schemes negotiate and discuss issues such as the introduction of a new scheme for Based on our broad policy of protecting management policy and working newly appointed directors. Through initiatives such as operating a the health and safety of all Citizen Group conditions and strive to forge stable Accidents Occurring at 17 Major Group Companies We are aiming to make training pooled leave system to enable employees to employees, we carry out activities with ●Safety activities at the Tokyo and relationships between labor and schemes for Group employees even more use lapsed annual leave and flexibly the aim of completely eliminating Tokorozawa Offices and Tokyo Sales Center FY2007 FY2008 management based on mutual respect for Citizen and the Environment effective in the future, introducing initiatives managing work patterns to suit conditions in accidents resulting in lost work time. No. of fatal accidents 0 0 the other party’s position. To protect the health and safety of such as voluntary application-based the workplace, we are creating an With this in mind, we set out priority No. of accidents resulting We will continue to discuss issues employees at our Tokyo and Tokorozawa in lost work time 6 3 schemes and training assessments in an environment in which Citizen Group measures and formulate annual plans in such as the Group’s operating structure Offices and Tokyo Sales Center, we have effort to make training more beneficial to employees can easily take leave via a range line with conditions at each Group and business restructuring in the future in drawn up clear goals and specific action those taking part. of different schemes. company and carry out activities an effort to enhance the corporate value plans in the field of occupational health As part of our ongoing efforts to support accordingly. of individual Group companies and next-generation development at Citizen We invite representatives from all and safety and are currently promoting Expanding our skill development improve levels of employee satisfaction. ● Watch, we have extended the duration of Group companies with manufacturing activities based on the slogan “Healthy system in the watch sector Management.” reduced work hours for employees raising divisions to attend Group Health and Example initiative children from the start of elementary school Safety Briefings twice a year. The aim is Bearing in mind that preventing minor In addition to training in watch-making accidents can help prevent more serious Citizen Labor Union Social techniques, we have in place a skill to the end of the third grade of elementary to summarize activities, plans and school. In terms of nursing care leave achievements at each company, share accidents, we implement a range of safety Contribution Awards development system at Citizen Watch education schemes in line with annual meanwhile, we have extended reduced relevant information and improve the Following in the footsteps of Citizen Co., Ltd. and organize training sessions plans at our Tokyo Office, including RST working hours from one hour to two hours to overall standard of health and safety Holdings’ Citizen of the Year scheme, the during the third week of every month, (rodosho-style training, a training system offer greater convenience. One of the main activities. At the November 2008 Citizen labor union presents employees revolving primarily around “Legal Mind set out by the former Ministry of Labor) issues for the future will be to create a briefing, we discussed two main topics with Social Contribution Awards once a Training” in practical legal skills. We are and KYT (Kiken Yochi Training, a training currently taking steps to refine our training working environment in which it is easier for —initiatives to promote health and year. Awards are given to employees who curriculum, which includes expanding male employees to take childcare leave. fitness and action to respond to new have been actively involved in a wide range specialist vocational training, and to On other fronts, we organize Citizen strains of influenza—to establish an of social contribution activities, in areas improve the standard of training in Family Days for employees’ children, chiefly understanding of the current situation such as social welfare and the environment watch-making techniques. at our Tokyo and Tokorozawa Offices. The and explore potential initiatives for the protection, in their private lives rather than At Citizen Heiwa Watch, meanwhile, aim of this scheme is to enable children to future. through their work. A total of ten employees we are seeking to secure an edge in terms see where their mothers and fathers work have received awards since the scheme of domestic production. Our brand is built and what sort of work they do on a ●Health promotion support was launched in 2003. on the intangible foundations that day-to-day basis, thereby helping to improve We carry out a wide range of activities underpin each product, namely the family communication. designed to ensure that Citizen Group employees remain physically and

29 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 30 Citizen and Society

Citizen and Local Communities Domestic activities Cleanup campaigns and other environmental and aesthetic Article 5 of the Citizen Group Code of Conduct states that the Citizen Group will activities always “value symbiosis with local communities and strive to contribute to society Employees at Citizen Seimitsu Co., Ltd. get actively involved in local as a good corporate citizen.” As a member of society, we try to ensure that our cleanup activities to help preserve the business activities benefit society as a whole and make the most of the ties that beautiful natural environment for future Group companies have built up with local communities to help revitalize generations. Roughly 600 employees took part in the Mount Fuji Cleanup communities. Campaign and the Fujikawaguchiko We also work with the likes of local governments, NGOs/NPOs and volunteer Town Cleanup Campaign, both of organizations as essential partners to enable us to fulfill our duties as a good which were organized by the Mount Shiro Hisada Fuji Beautification Foundation. corporate citizen. President Citizen Seimitsu Co., Ltd. Providing assistance for victims Cosponsoring health events of the Sichuan earthquake We cosponsor a range of events In an effort to assist with rescue and through Citizen Systems Japan Co., recovery support activities in the Ltd., providing health-related The Citizen of the Year ● Kazuya Ito (deceased) wake of the massive earthquake in equipment such as pedometers in an Base of CSR Special Feature The Citizen of the Year award scheme recognizes citizens (Kakegawa city, Shizuoka prefecture) China’s Sichuan province, we pledged effort to keep people fit and healthy. who have worked behind the scenes to inspire people and Kazuya Ito made the most of his expertise a total of ¥50 million in donations and This year we cosponsored the 13th relief on behalf of the Citizen Group Tokyo International Three Day March contribute to the development, happiness and overall appeal to assist with agricultural projects in via organizations such as the (Koganei, Tokyo) and the 31st Japan of their local community. The scheme was established in war-torn Afghanistan in an effort to help Japanese Red Cross, the Japanese Three Day March (Higashi Matsuyama, 1990 to mark the company’s 60th anniversary, as a fitting create a greener country capable of Business Foundation (Keidanren) and Saitama prefecture). award sharing the same name (Citizen). growing enough food to feed its children. the Chinese Red Cross. Recipients of the 19th Citizen of the Year award in fiscal 2008 were as follows. ● Kawasaki Owner-Driven Taxi Cooperative Association (Kawasaki city, Kanagawa prefecture) Sharing the joys of manufacturing The members of the Kawasaki Owner-Driven Taxi Co-up We actively organize work experience and internship schemes for junior high school have been taking children from students at all Citizen Group companies. At Citizen Tohoku for instance, we organize factory tours for local fourth and fifth grade elementary school students

Shiinoki Gakuen, a local facility Citizen and Society for students with an intellectual and have even launched a watch-making school in an effort to encourage the next generation to take on the challenges of manufacturing. Students look through disability, on excursions in their microscopes and move parts around with tweezers. They also enjoy assembling taxis for the past 30 years. sundial watches. A total of 347 students from nine organizations had taken part in such initiatives as of March 2009.

● Izumi Municipal Sho Junior High School

(Izumi city, Kagoshima prefecture) Citizen and the Environment The students at Sho Junior High School have been working together to monitor Making a social contribution via Protecting the Shijimiaeoides and keep official records of our table tennis club Divinus butterfly the local crane population Citizen Holdings Co., Ltd’s table tennis We organized the 4th Parent and Child The Fiscal 2008 Citizen of the Year Award Ceremony during the early mornings in club, which has a history dating back Outing at Citizen Finetech Miyota Co., winter each year for more than more than 40 years and boasts many Ltd’s Kitamimaki Works with the aim of The Citizen of the Year 50 years. talented members, organizes table helping to restore the local population http://www.citizen.co.jp/english/csr/region/area/coy.html tennis courses and training sessions of the endangered Shijimiaeoides throughout Japan. A total of 2,980 Divinus butterfly. According to the people took part in the 22 sessions Chairman of the Shijimiaeoides Divinus organized by the club in nine different Protection Society, “the population has Overseas activities prefectures during fiscal 2008. recovered to the same level as 30 years ago, with the number of butterflies Blood donation activities Education support activities in China doubling in recent years”. at Saraburi Hospital (Thailand) At Goodrington Co., Ltd. in China, we provided 37 students from In fiscal 2008, we organized blood donation activities for the Guangdong provincial senior technical school of light industry with second time via Royal Time Citi Co., Ltd. Inspired by an assistance with the aim of encouraging them to become employee’s husband, engineers in the future. We also organize factory tours and assist Preserving traditional culture through the Fire Festival and Ryujin who has leukemia and with practical work experience schemes, as part of which 11 Festival requires large graduates are currently working at Goodrington (as of May 2009). We actively take part in local traditional events and do our bit to help revitalize local quantities of blood for communities. Citizen Electronics Co., Ltd. and Citizen Seimitsu Co., Ltd. dedicated transfusions as part of taimatsu pine torches at the Yoshida Fire Festival, which is known as one of the big his treatment, a total of three unusual Japanese festivals, to give thanks for safety of mountain climbers and 82 employees the success of the companies. 104 employees from Citizen Finetech Miyota Co., Ltd. participated. We will meanwhile took part in dancing at the Ryujin Festival. continue to take the initiative and organize further blood donation The Citizen Group’s social contribution activities activities in the future. http://www.citizen.co.jp/english/csr/region/area/group.html

31 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 32 Citizen and the Environment

The Citizen Group’s Environmental Management

Given the Citizen Group’s philosophy of “contributing to and striving to be respected by the citizens of the world,” our number one priority is clearly the provision of products that are good for people and the planet. Nonetheless, we also consider it to be our duty to follow manufacturing practices that are good for people and the planet as well. Focusing on the four strands of the Citizen Long-Term Environmental Plan 2010 as Environmental Targets and Results for Fiscal 2007 and Targets for Fiscal 2008 Achieved Nearly achieved Not achieved a set of Group-wide environmental guidelines ((1) promotion of environmental Targets for FY2008 Results for FY2008 Evaluation Targets for FY2009 References management, (2) promotion of environmentally-friendly products, (3) promotion of 1. Enhancing environmentally-friendly products 1. Enhancing environmentally- environmental management at factories and (4) promotion of ecologically aware, friendly products ecologically sustainable lifestyles), we are working our way slowly but surely towards Takeshi Kakishima Increase the ratio of environmentally- achieving Citizen’s Vision for the Environment and Society in 2025. Director Increase the ratio of environmentally- Achieved in 100% of electronic friendly products among new models to 100% products and 99% of watches friendly products among newmodels to Citizen Holdings Co., Ltd. 100%

Develop Citizen Super Environmentally- Yet to reach planning and Develop Citizen Super Environmentally- Friendly Products development stages Friendly Products We have set out Citizen’s Vision Citizen Long-Term Citizen’s Vision for the P39 Environment and Society and for the Environment and Society in Environmental Plan 2010 Utilize LCA Disclosed LCA data on Prepare for compliance with EuP Directive Citizen and Society Base of CSR Special Feature 2025 and are confident that we will calculator printers Long-Term Environmental Plan Promotion of Environmental Management be able to make it a reality by slowly 1.Proactively respond to global environmental laws and Enhancing green procurement operations Implemented green procurement Establish management system for chemical Citizen’s Vision for the Environment but surely building on our regulations and trends. substances contained in products in 2.Communicate with stakeholders, and incorporate at relevant companies and Society in 2025 specifies the achievements. To achieve our vision, results into management practices. accordance with REACH regulation orientation of the Group’s activities to we have also mapped out our goals 3.Develop environment management throughout the Group. Prepare to establish management system Introduced management system in achieve a sustainable society and for fiscal 2010 in the form of the for chemical substances contained in accordance with REACH regulation Citizen Long-Term Environmental Promotion of Environmentally-Friendly Products products in accordance with REACH protect the global environment for regulation* many years to come. Plan 2010. As such, we are currently 1.Reduce the product’s environmental footprint 1) During planning and development Based on the Citizen Group’s focusing on implementing the four Promote smaller products 2. Environmentally-friendly business activities 2. Environmentally-friendly core elements outlined therein, Enhance commonality of components and business activities philosophy of “Contributing to and P35 namely promoting environmental uniformity of materials Striving to be Respected by the Develop long-lasting products Each department is to implement at least 84 themes implemented in 25 Tokyo Each department is to implement at least P36 Citizens of the World,” we continue to management, environmentally-friendly Promote Life Cycle Assessment (LCA) one theme (Tokyo, Tokorozawa) departments/ 39 themes implemented one theme (Tokyo, Tokorozawa) make every possible effort to provide products, environmental factory 2) During use in 11 Tokorozawa departments Promote development of products that use products that are always close to management and ecologically aware, lowenergy 3. Reducing greenhouse gases 3. Reducing greenhouse gases people’s hearts and that are useful, sustainable lifestyles. We intend to Promote development of products that do not good for people and the planet and fulfill our social responsibilities as a require battery change 3) At time of disposal Reduce CO2 emissions at Tokyo offices Reduced CO2 emissions by 49% Reduce CO2 emissions at Tokyo offices respectful of human nature. Similarly, member of a larger recycling-based Promote recycling by 44% (13,300 tons) compared with FY compared to fiscal 1999 (12,064 tons) by 50% (11,900 tons) compared with we always have our sights set on a society by ensuring that all Citizen 4) At time of packaging 1999 FY1999 Promote reuse of packaging materials brighter future as part of our Group products are environmentally- P41 Promote material recycling of packaging waste Reduce CO2 emissions at Tokorozawa Reduced CO2 emissions by 16% Reduce CO2 emissions at Tokorozawa environmental activities and are friendly products and by reducing Reduce the amount of packaging offices by 14% (10,533 tons) compared compared to fiscal 1999 (10,195 tons) offices by 17% (10,080 tons) compared Citizen and the Environment committed to laying the foundations CO2 emissions at all production sites, 2.Publish information about product’s environmental with FY1999 with FY1999 and completely eliminating waste. footprint for a sustainable society in which Reduce group-wide CO2 emissions by 1% 10% compared to FY 2007 Reduce group-wide CO2 emissions per people can enjoy richly rewarding Promotion of Environmental Management at per unit of sales compared with FY2007 (per unit of sales) unit of sales by 1% compared with lives with confidence. Factories FY2008 1.Make effective use of resources Use resources efficiently 4. Promoting waste reduction activities 4. Promoting waste reduction Promote zero waste activities Enhance efforts to reduce chemical emissions 2.Reduce CO2 emissions Reduce and manage industrial waste at Reduced 78% (123 tons) compared Reduce and manage industrial waste at Citizen’s Vision for the Environment Reduce CO2 emissions (to 90% of FY2000 levels) Tokyo offices with FY1999 Tokyo offices Implement high-efficiency energy systems 3.Strengthen green procurement and Society in 2025 Reduce and manage industrial waste at Reduced 53% (80 tons) compared Reduce and manage industrial waste at Strengthen the management system of chemical Tokorozawa offices with FY1999 Tokorozawa offices P42 substances contained in the products in cooperation with suppliers Based on our philosophy of “Contributing to and 4.Promote environmental technologies Reduce group-wide waste output by 1% 3% compared to FY 2007 Reduce group-wide waste output per unit Striving to be Respected by the Citizens of the World,” Promote technologies to meet global environ- per unit of sales compared with FY2007 (per unit of sales) of sales by 1% compared with FY2008 mental regulations we contribute to a citizen-based sustainable society in which people can enjoy life with a sense of security Promote Ecologically Aware, Ecologically Achieve a 98% group-wide recycling rate 98% Achieve a 99% group-wide recycling rate Sustainable Lifestyles and fulfillment. (Contribute to a Sustainable Society) 1.Disseminate and publicize Environmentally- 5. Reducing chemical substances 5. Reducing chemical substances Citizen offers products that are always close at hand Friendly Products and are good for people and the world. 2.Cultivate human resources Implement employee training systems P40 3.Promote communication with local societies Advance cyanide compound alternatives In progress at relevant companies Advance cyanide compound alternatives group-wide group-wide Enacted July 20, 2004 Promote communication with local authorities and societies Revised April 1, 2007 * REACH regulation : Regulation concerning the Registration, Evaluation, Authorization and Restriction of Chemical substances within the EU Tokyo Office : Citizen Holdings, Citizen Business Expert, Citizen Watch, Citizen Systems, Citizen Logistics Service Enacted July 20, 2004 Tokorozawa Office : Citizen Holdings, Citizen Business Expert, Citizen Watch Revised April 1, 2007 ( As of March 31, 2009 )

33 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 34 Special Feature Base of CSR Citizen and Society Citizen and the Environment 36

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re conducted surveys on the usage y. Environmental risk risk Environmental management CITIZEN FINETECH MIYOTA CITIZEN FINETECH MIYOTA CITIZEN MACHINERY CITIZEN TOHOKU work as soon as the earthquakes struck to taken to we that struck Iwate in June and July 2008 and surface tr all of our wastewater tr check our facilities, piping in combined-use channels and surface tr Once recovery work had been completed Once recovery organization to conduct an independent analysis once a month and carry out combined-use channels occurred outside work hours, managers at occurred da irregularities. Emergenc hour and the monthly patrols to check piping in monthly patrols Results of soil and groundwater surveys and progress with countermeasures surveys and progress Results of soil and groundwater Our environmental risk management risk Our environmental cover Group activities within the Citizen as compliance with such areas legislation, management environmental contained in our of chemical substances waste and recycling products, to combat governance and measures contamination. We soil and groundwater deemed to be at high risk of contamination aim to implement effective measures at measures aim to implement effective companies based on all Group via the Group information exchanged Management Committee. Environmental We substances at all of history of hazardous bases, both in Japan our production and overseas, in fiscal 2006 and taken on a evaluated measures five-point scale. We of carrying out voluntary soil process surveys at sites and groundwater If the relevant surveys reveal evidence of surveys reveal If the relevant contamination at any of our bases, we the matter to the authorities will report and take steps to re as instructed.

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uth organize annual also carry out simulated On other fronts, we have put in On other fronts, Month (June) During Environmental Environmental education education Environmental activities and awareness A screening of the film An Inconvenient Tr A screening Packets of flower seeds for distribution part of a broader educational part of a broader framework, including a training scheme We for new recruits. educational sessions for environmental managers and internal auditors and compliance assessment environmental responsible training for members of staff activities in each for environmental department. We emergency drills in production departments that handle toxic or substances. hazardous place our own Business License System to motivate employees to qualifications in capacities obtain official Pollution Control such as Environmental Operator or Energy Manager. Month Prevention and Global Warming (December), we run initiatives such as films and environmental screening distributing packets of flower seeds bearing ecological messages to employees as they arrive at work. In the interests of promoting of promoting In the interests management, it is environmental every one of the essential that each and the employees appreciates Group's activities. importance of environmental for instance, we Office At our Tokyo a range of have introduced education initiatives as environmental

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of each company’ 8 employees (r nment." re also carry out activities aimed at 14 ro We At our overseas production At our overseas production ctor Our activities ar ducing environmental impact at Environmental Environmental Group management at companies aking on challenges as a family companies meanwhile, we focus on crucial to initiatives that are manufacturing environmentally-friendly procurement including green products, and chemical substance management, and continue to make steady progress in terms of ISO 14001 certification. All 28 of our domestic production production All 28 of our domestic ISO 14001 companies have obtained environmental certification and promote based on the management activities lines of their respective of nature business. the natu re non-manufacturing companies, based on T took up the challenge of which the scheme has been fully up and the envi slogan "having fun saving money and emissions as a family in fiscal 2009 running, Subcommittee on Environmentally- Friendly Products

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ro ro ro ro warming is the mass consumption of take action to comfortable day to day lives. energy and how ef O envi scheme aimed at raising awar are commended based on their activities are scheme r envi envi around the home so that they can around ascertain how much CO mind, pr individuals h Environmental household accounting scheme Environmental have established a group-wide environmental management system and continue to promote environmental management aimed management environmental continue to promote system and management environmental a group-wide have established have established a gr omote specific measur spective ar ficiently and precisely pr ficiently and precisely Subcommittee on Energy Savings Citizen and the Environment and the Citizen Environmental Environmental Management System

Example Initiative Environmental Management Environmental at optimizing activities throughout the Citizen Group and producing results efficiently and reliably. efficiently results and producing Group the Citizen activities throughout at optimizing We yearly envi targets and common issues and make with activities at each compan the Citizen Gr also pr subcommittees whose We Group companies decisions acco and envi envi ef envi pr including energy re envi meetings twice a year Envi Environmental Environmental Management System Citizen Gr 35 Citizen and the Environment

Business Activities and Environmental Impact

We accurately ascertain the total input of energy and chemical substances, and total emissions of CO2 and waste, for the Group and apply this knowledge to well-planned activities to reduce environmental impacts. Environmental Accounting http://www.citizen.co.jp/english/csr/environment/accounting.html INPUT Business Activities OUTPUT

Total energy input Japan 2,453,088 Chemical substances Japan 559 CO2 emissions Japan 97,753 BOD emissions Japan 21 (gigajoules) Overseas 883,960 input (tons) Overseas 1,534 Production (Tons-CO2) Overseas 34,113 (Tons) Overseas 55

Water resource input Japan 1,703 Containers and packaging Japan 709 P40~42 NOx emissions Japan 8 COD emissions Japan 13 (thousands of cubic meters) Overseas 1,560 used (tons) Overseas 774 (Tons) Overseas 3 (Tons) Overseas 57

Repeated use of water Japan 527 SOx emissions Japan 4 Waste generated Japan 6,647 within the organization (thousands of cubic meters) Overseas 5 (Tons) Overseas 4 (Tons) Overseas 1,845 Water drainage Japan 1,386 Waste land-ﬁlled Japan 59 (Thousands of cubic meters) (Tons) Input at group Companies in Japan Logistics / Sales Overseas 985 Overseas 1,179

Gas Used Citizen and Society Base of CSR Special Feature Total Energy Input (Gigajoules) Electricity Used (Megawatt hours) (Thousnds of cubic meters) P42 Output at group Companies in Japan 2,734,3952,686,654 5,863 5,972 213,272 218,795 4,646 5,053 2,778,638 2,666,1512,453,088 220,157211,353 207,494 4,837 CO2 Emissions (Tons) NOx Emissions (Tons) SOx Emissions (Tons)

Material Purchasing 116,921 24.8 110,503 178.1 22.0 117,524 112,288 97,753 P39 143.0 16.1 111.7 87.2 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 6.9 （FY）（FY）（FY） Heavy Oil Used Water Resource Input Repeated Use of Water within the 3.7 (Thousnds of liters) (Thousnds of Cubic Meters) Organization (Thousnds of Cubic Meters) 8.3 ■Tap water ■Ground water ■Industrial water 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 580 Use （FY）（FY）（FY） 536 * 2,089 508 510 527 Water Drainage 6,696 1,861 5,894 186 1,852 1,818 P39 BOD Emissions (Tons) COD Emissions (Tons) 1,703 (Thousands of cubic meters) 191 202 223 5,008 223 1,189 3,402 1,009 960 1,757 26.4 18.0 935 885 24.6 1,5331,533 1,489 14.7 1,386 21.7 21.5 20.9 14.3 1,424 13.4 12.9 714 661690 660595 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 （FY）（FY）（FY） Development and Design Chemical Substances Input Containers and Packaging used (Tons) Paper Used (Tons) (Tons) P39 ■Plastic ■Paper 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 113 1,051 （FY）（FY）（FY） 896 103 862 818 97 100 816

719 716 87 143 Waste Generated (Tons) Composition of Waste Recycled (Tons) Citizen and the Environment 476 230 709 559 625 231 Recycling / Waste Disposal ■Amount recycled ■Amount incinerated ■Amount land-filled ■Thermal recycling ■Chemical recycling ■Material recycling 229 7,588 7,3987,372 7,379 93 7,402 755 695 322 6,937 719 6,647 6,4806,564 6,499 575 586 478 P39.42 93 59 396 120 163 113 89 4,225 4,3834,772 5,015 4,486 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 6,4806,564 6,9377,402 6,499 （FY）（FY）（FY）

1,209 1,259 1,200 1,283 936 Input and output data does not include environmental impact * The amount of heavy oil used increased as a result of the 1,046 922 965 1,104 1,077 at the distribution/sales, usage or procurement stages. installation of cogeneration and power generation facilities 2004 2005 2006 2007 2008 （FY） 2004 2005 2006 2007 2008 （FY） Yearly ﬁgures may vary from last year's report due to revised calculations. in ﬁscal 2004.

Environmental Accounting Actual Economic Beni t Associated with Environmental Material Balance and Environmental Accounting The Consolidated environmental Environmental Conservation Costs（ Millions of yen） Preservation Activities (Millions of yen) Reporting Period: April 1, 2008 to March 31, 2009 accounting was calculated for Citizen Category Major Initiatives Investment Costs Benifit Amount Amount Boundary for Calculaion of Material Balance Holdings and its main group Business areas costs 180 994 Operating revenue from the sale of valuable resources Japan Revenue produced through business activities 385 Prevention of air, water and sound pollution A total of 21 companies: CITIZEN HOLDINGS; CITIZEN BUSINESS EXPERT; CITIZEN WATCH; CITIZEN manufacturers and supliers. The 1) Pollution prevention 60 578 SAITAMA; JAPAN CBM CORPORATION; CITIZEN T.I.C.; CITIZEN TOHOKU; CITIZEN LOGISTICS SERVICE; Reductions in energy costs through energy conservation accounting of economic costs and 2) Global environmental conservation Energy conservation 117 217 201 CITIZEN HEIWA WATCH; CITIZEN ELECTRONICS; CITIZEN ELECTRONICS TIMEL; CITIZEN ELECTRONICS HACHINOHE; CITIZEN ELECTRONICS FUNEHIKI; CITIZEN FINETECH MIYOTA; CITIZEN SYSTEMS;

Breakdown 3) Resource circulation Waste reduction and recycling, effective water usage 3 199 Saving on water usage costs and wastewater processing benefits considers only the actual results Cost 38 CITIZEN MACHINERY; CITIZEN SEIMITSU; CITIZEN SEIMITSU KAGOSHIMA; CITIZEN SAYAMA; CITIZEN Recycling of containers and packaging, use of the Eco Mark 0 21 costs through resource conservation Upstream/down stream costs Reduction YUBARI; CITIZEN PLAZA; and does not take into consideration the Reductions in waste disposal costs through resource Environmental education, operation of environmental management 29 Overseas various benefits associated with risk Administration costs 6 367 conservation and recycling A total of 20 companies: CITIZEN DE MEXICO; ROYAL TIME CITI; CECOL; C-E(DEUTSCHLAND); systems, tree-planting and beautiﬁcation at Company facilities C-E(HONG KONG); C-E(SINGAPORE); CITIZEN ELECTRONICS(CHINA); CITIZEN ELECTRONICS(NANJING); avoidance. Other reductions 21 Research and development of LED lighting, solar-powered watches CITIZEN ELECTRONICS(SUZHOU); FIRSTCOM ELECTRONICS; XUNKE ELECTRONICS; TECHNO RICH R&D costs 177 482 LCD FACTORY; CIMEO ELECTRONICS DEVICES(SUZHOU); GUANZOU MOST CROWN ELECTRONICS; Total investment for the period was and basic technology of watch Total 674 MASTER CROWN ELECTRONICS(WUZHOU); CITIZEN SYSTEMS(JIANGMEN); CITIZEN MACHINERY ASIA; ¥17,272 milllion, with total R&D cost at Social activity costs Social contribution activities 0 3 CITIZEN MACHINERY EUROPE; WALOP HUA DU FACTORY; WALOP DA WANG SHAN FACTORY ¥12,312 millon. Environmental remediation costs Pay-as-you-go charging for air pollution 0 40 Environmental Accounting Boundary Total 363 1,907 The 21 Group companies in Japan, given abouve

37 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 38

Citizen and the Environment

Enhancing Products with Reducing Hazardous Chemical Substances

Citizen Environmentally-Friendly Products In-keeping with the provision of Environmentally-friendly products, we continue to implement initiatives aimed at eliminating, We are keenly aware of the impact that the Citizen Group’s products have on the environment and endeavor to improve the environmental reducing or replacing hazardous chemical substances as part of production processes, both at home and overseas. quality as well as the reliability and safety of our products.

Expanding our range of Example Initiative Citizen Watch Reducing usage of Example Initiative Citizen Seimitsu environmentally-friendly hazardous chemical Efforts to reduce cyanide usage at factories in China products Replacing all batteries with mercury-free equivalents substances From 2011 onwards, button batteries containing mercury At Citizen Seimitsu’s Watch Appearance Division, we have been working to reduce the usage of cyanide compounds since 2004. Plating and supplementary fluids for gold, We continue to promote and all products fitted with such batteries will be prohibited We have been working to reduce the in the US state of Maine. As a company committed to the silver and gold-copper alloy plating accounts for approximately 70% of the cyanide environmentally-friendly product usage of substances such as chlorinated compounds that we use. The remaining 30% is used in the active treatment of metallic environment, we therefore decided to replace the button initiatives and carry out environmental organic solvents and chlorofluorocarbon surfaces prior to plating (pretreatment). Unfortunately, there is no viable alternative to batteries in all of our quartz movements and finished alternatives (HCFCs) as part of various cyanide plating fluid at present. Nevertheless, we have developed a cyanide alternative product assessments focusing on watches with mercury-free equivalents by the end of 2008. component manufacturing processes for use in pretreatment and have already brought it into use at all of our domestic numerous different areas from the As such, we began to implement this policy starting with the since fiscal 2003. We have continued to factories. development stages onwards. Only first batch of production in January 2009. We currently use approximately 300kg of cyanide compounds annually as part of products that meet all of our assessment Although our Eco-Drive solar-powered watches have investigate the most suitable alternatives the pretreatment of metal watch faces at Walop Ltd. in China. Although we have pca etr aeo S Citizen and Society Base of CSR Special Feature criteria, including resource and energy never used mercury in any form, the full-scale introduction of for each process to modify production completed inspections at the experimental stages, including the addition of corrosion efficiency, reuse and recycling, long-term mercury-free batteries also covers finished watches not processes and install new equipment control processes, we still need to work on wastewater facilities and completely change featured in the Eco-Drive range, our Q&Q brand and licensed the line composition before we can start using cyanide alternatives. Work is scheduled usability, environmental conservation An advertisement in accordingly. We are currently focusing on to commence before the end of fiscal 2009, economic conditions permitting. brands. Having launched the industry’s first externally EURO-STAR magazine developing alternatives to cyanide (hazardous chemical substance marketed movements to be fitted with a mercury-free battery announcing the full-scale Current processesProcesses after discontinuing use of cyanide management), the provision of in 2005, we will now be replacing all mercury batteries with introduction of mercury-free compounds as one of our priority initiatives. in pretreatment environmental information and packaging, mercury-free equivalents. batteries Pretreatment treatment Corrosion control Pretreatment Finishing Finishing Coating are certified as environmentally-friendly Coating Printing Printing Plating Plating Blanks Blanks products. During fiscal 2008 we set out assessment criteria and started to work Exhibiting at Eco-Products 2008 on Citizen Super Environmentally-Friendly alternative Cyanide cyanide Processes using process Additional

Products, which will undergo even more cyanide using Processes rigorous assessments. Compliance with the

Eco-Products exhibition PRTR Law* http://www.citizen.co.jp/english/csr/environment/ecoproducts-exhibition.html We report PRTR substances according Volume of PRTR substances handled, released and transferred in fiscal 2008 (Tons) We continued to work towards the Example Initiative Citizen Electronics on an individual Group company basis. Volume released Volume transferred target of achieving a 100% ratio of The table on the right summarizes Released Released Disposed of Volume Released Transferred environmentally-friendly products as a Promoting green procurement substances reported by the Citizen Chemical into into soil at by landfill at Transferred handled into to sewage Citizen and the Environment substance public business business offsite percentage of all new models during Group overall during fiscal 2008. We atmosphere system We strive to guarantee the environmental quality of our products (by removing waters premises premises fiscal 2008. We have successfully hazardous chemical substances) as one of the key elements in the development of used six substances that are required to increased the ratio since 2005, when we Environmentally-friendly products. Based on an underlying policy of upstream be reported and handled approximately Xylene 13.4 2.7 0.0 0.0 0.0 0.0 4.6 began this initiative in earnest, and management whereby we neither include nor use hazardous chemical substances, 42 tons in total, one ton more than in Nickel compounds 11.4 0.0 0.0 0.0 0.0 0.0 9.9 we promote the exclusive use of green components and materials, particularly at the achieved a fiscal 2007. The total volume of Hydrogen fluoride ratio of design stages, and the exclusive procurement of green components and materials substances released or transferred and water soluble 11.0 0.0 0.6 0.0 0.0 0.0 8.6 from green suppliers at the procurement stages. In order to achieve this, in 2003 we salts 99% in set out and began to implement three management standards. We have since during fiscal 2008 came to 28 tons, fiscal 2008. Bisphenol-A epoxy introduced a database system containing data on components, materials and representing a 92% reduction compared resin (liquid) 3.9 0.0 0.0 0.0 0.0 0.0 0.0 The TW700 pedometer suppliers, started to use x-ray fluorescence spectrometers to conduct regular to levels in fiscal 2003 (351 tons). As a inspections of procured components and materials and organized a range of events result of revisions to the PRTR Law, the Toluene 1.1 0.1 0.0 0.0 0.0 0.0 1.0 Ratio of Citizen Environmentally-friendly as and when necessary, including seminars on how to number of substances required to be Inorganic cyanide Products among New Models 1.0 0.0 0.0 0.0 0.0 0.0 0.0 deal with legal and customer requirements. Activities reported has increased from 354 to 462. compounds actual result target level such as these have produced results in terms of We therefore intend to investigate Total 41.8 2.8 0.6 0.0 0.0 0.0 24.1 （％） 99 environmental quality and have received glowing 100 feedback from our customers. whether or not any of the newly included 88 （100）（100） We will continue to make every effort to PRTR substances are contained in Amount of PRTR Substances Discharged and Transported 77 （t） 80 adequately comply with REACH regulation and satisfy purchased products in the future in an 400 70 （（80）80） other legal and customer requirements in the future. A seminar on REACH regulation effort to ensure compliance with the 351 60 350 （（60）60） revised PRTR Law. 300 （50）（50） 40 258 Life cycle assessment (LCA) initiatives 250

20 200 Transferred offsite Transferred to sewage system 150 129 0 2005 2006 2007 2008 (FY) Disposed of by landfill at business premises 100 Released into soil at business premises 50 38 Released into public waters Life cycle assessment (LCA) initiatives 28 28 0 Released into atmosphere http://www.citizen.co.jp/english/csr/environment/lca.html 2003 2004 2005 2006 2007 2008

39 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 40 Citizen and the Environment

Reducing Greenhouse Gasses Effective Utilization of Resources and

We continue to carry out a range of Group-wide initiatives in an effort to address the serious environmental issue of global Reduction of Waste warming by reducing the amount of energy consumed by the Citizen Group as a whole. We are continually striving to reduce waste in every area of the workplace, from the factory floor to offices and employee cafeterias, and are also working to improve recycling so as to help create a recycling-based society.

Reducing greenhouse Example Initiative Citizen Finetech Miyota Promoting Waste Example Initiative Citizen Machinery gas emissions Fuel conversion to reduce greenhouse gases Reduction Activities Switching to forged materials We have switched fuels as part of project aimed at formulating a New Energy Vision for As part of the turning process used to manufacture components for our Cincom NC In an effort to efficiently and consistently the Miyota Region. Having received subsidies from the Ministry of Economy, Trade and We implement initiatives aimed at automatic lathes, we have started to forge processed materials (heating and press Industry and the Ministry of the Environment under a scheme to promote the use of casting metal) in an effort to shorten processing times and reduce chips. reduce CO2 emissions, we have set up eliminating garbage rather than disposing alternative fuels, in fiscal 2007 we started the process As we previously used round steel bars, half of the total weight was wasted in the Subcommittee on Energy Savings of it as waste in an effort to contribute to of switching kerosene powered facilities to gas. the form of chips. The introduction of forged materials however has enabled us to as a channel for representatives from The process involved installing gas pipes, the creation of a recycling-based society. process materials that are closer in individual Citizen Group premises to replacing aging equipment and modifying burners*. During fiscal 2008 we worked shape to the finished product. As a Reducing chips by forging materials report on their respective activities and To date (as of February), we have managed to towards the twin goals of reducing the result, we have managed to reduce the take on board initiatives that have reduce CO2 emissions by approximately 1,888 tons volume of waste per unit of sales by 1% weight of materials purchased from pca etr aeo S Citizen and Society Base of CSR Special Feature proven effective at other sites. compared to fiscal 2007, far outstripping our target compared to fiscal 2007 and achieving a 6.3kg to 3.7kg (a reduction of 41%) reduction of 934 tons. Our goal for fiscal 2008 was to 98% recycling rate. and cut processing times by four * Burners: Equipment used to produce high temperatures by minutes per item. reduce Group-wide CO2 emissions by combining gases or liquid fuel (in gas form) with air As a result, we were able to achieve Upgraded absorption refrigeration Although we had previously Round steel bar 1% per unit of sales and by 1,500 tons units a Group-wide recycling rate of 98% and envisioned using forged materials, the compared to fiscal 2007. Although the completely eliminate garbage at 13 processing costs involved always total volume of emissions fell by a domestic premises (recycling rate of 99% meant that it was unfeasible. As substantial 12,500 tons due to Example Initiative Citizen Yubari or higher). material costs have soared recently deteriorating economic conditions, In terms of waste reduction, the however, it is now possible to forge materials for roughly the same cost as Forged emissions per unit of sales increased by Installing a new air conditioning system volume of waste*1 fell by 750 tons due to material using steel bars. With 400 items being We have installed a displacement ventilation air conditioning system with the aim of 10%. The total volume of emissions current economic conditions. Waste per used per month, due in part to the saving energy at our new factory, which has been up and running since October during fiscal 2008 was down 20% unit of sales on the other hand rose by 3%. crossover of components with different 2008. compared to 2000. We will continue to implement such models, we have effectively reduced Unlike the previous air conditioning system, which was a mixed-air system that chips by approximately one ton and Our goal for fiscal 2009 is to reduce circulated air around the entire inside of the factory, the new system is a displacement activities in fiscal 2009 with the aim of Finished product processing times by 26 hours a month. Group-wide CO2 emissions by 1,500 ventilation system that efficiently vents exhaust heat rather than releasing it into the air. increasing the Group-wide recycling rate tons and by 1% per unit of sales. Harnessing the updraft from exhaust heat produced by machine tools inside the to at least 99%, thereby completely On a CO2-equivalent basis, factory, the system quietly lifts warm air upwards for ventilation (air conditioning). eliminating garbage, and reducing the emissions of the five other greenhouse This effectively reduces the flow of air required for air conditioning and places less volume of waste by 1% per unit of sales. Example Initiative Citizen Sayama of a strain on the system’s fans. By actively taking in air from outside, the new system gases apart from CO2 totaled 337 tons has also reduced running times for refrigeration units. We are currently in the process Achieving a 100% recycling rate in fiscal 2008, down from 679 tons in of gathering data so as to calculate the effect that the new system has had. fiscal 2006 and 575 tons in fiscal 2007. We are starting to see the effects of our recycling initiatives aimed at completely

*2 Citizen and the Environment Group-wide Waste Production eliminating garbage and efforts to cut waste handling costs at Citizen Sayama Co., Ltd. Ventilated Ventilated Entirely natural emissions air air Recycled Land-filled We have provided repeated explanations in individual workplaces and have Incinerated Per unit of sales successfully refined the process of separating plastic waste. Having called on all From air conditioning units From air conditioning units workplaces to help out wherever possible by dismantling composite products Non-air conditioned area (Tons) (Tons per 100 million yen) Air conditioned area Air conditioned area Ceiling 10,000 2.00 containing a mixture of metals, substrates, plastics, electric wiring and other materials, which have previously been disposed of at landfill sites, we have managed Air outlet Air outlet 7,840 Machine Machine Machine Machine 7,587 to put in place an effective material recycling system. We have also reappraised tools tools 1,697 7,379 1.60 Air conditioned area tools tools 8,000 92 Group-wide CO2 Emissions 119 6,647 6,581 waste handling contractors based on 1.49 93 89 26 Previous mixed-air system Displacement ventilation system 322 59 40 information provided by the Subcommittee on (Tons-CO2) (Tons of CO2 per million yen) 6,000 1.20 Waste Reduction, enabling us to sell waste 140,000 0.7 11,79,795 1.12 1.14 1.13 from 35 of our 90 products at a profit. As a 1.02 121,836 Example Initiative Citizen Electronics 4,000 0.80 result, we successfully achieved a 100% 120,000 0.6 10,993 112,289 recycling rate in fiscal 2008 and reduced waste 110,503 4,3486,938 7,4026,499 6,515 9,245 7,336 97,753 96,775 handling costs by 30% compared to fiscal 10,428 3,848 Saving energy in the office 2,000 0.40 100,000 3,810 0.5 14,023 9,526 2004 (an annual reduction of approximately 9,333 3,988 3,948 We have been working to establish energy saving practices as part of our environmental 15,531 15,842 15,683 800,000 yen). We will continue to focus on 80,000 13,568 0.4 management activities for around ten years now. In addition to ongoing initiatives such as 0 0 2000 2006 2007 2008 2009 (FY) selling waste at a profit instead of paying for it （（0.3230.323） turning off lights on a companywide basis during lunch breaks and using intermittent Target （0.293）（0.293）（（0.3200.320） to be collected in the future. A selection of composite products 60,000 （0.268（0.268） 0.3 lighting in accordance with JIS illumination standards, we have recently started to （（0.2520.252） containing different materials effectively save energy through additional initiatives such as fitting reflective plates to Groupwide Recycling Rate (%) 40,000 0.2 fluorescent light covers to increase efficiency and fitting light shielding to south-facing 100 75,453 78,110 94 91,082 74,075 73,334 windows to improve insulation. 98 98 99 20,000 0.1 As we develop, manufacture and supply 90 mercury-free environmentally friendly LED lighting 80 0 0 designed to consume less power and last longer, we 2000 2006 2007 2008 2009 (FY) 70 Target have installed lighting equipped with LEDs Distribution-based initiatives manufactured in-house in the lobby of our main 60 Electric power Gas Heavy oil building and in other locations around our premises. 55 Others Per unit of sales 50 We will continue to install LED lighting in the future so 0 as to save more and more energy. 2000 2006 2007 2008 2009 (FY) LED lighting on company premises Target *1 Volume of waste = industrial waste + general waste Distribution-based initiatives *2 Waste production = industrial waste + general waste + valuable resources http://www.citizen.co.jp/english/csr/environment/distribution.html 41 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 42 Third-Party Comments Online Information

Riyako Godai One Akiyama To enable a full understanding of all of the Citizen Group’s CSR activities, Critic President of Integrex Inc. extensive details are featured on our website, including initiatives that did not fit in this report. Chairman of the Citizen of the Year Screening Committee

ダミダミー http://www.citizen.co.jp/english/csr/index.html

The Citizen Group Citizen and the Environment Amidst harsh economic conditions as a result of the Last year, I wrote that a company’s CSR report represents a current worldwide recession, I believe that the key to commitment to implementing initiatives based a cycle of effectively fulfilling corporate social responsibilities is a planning, doing, checking and acting (PDCA) in an effort to put ● Citizen’s Vision for the Environment question of integrating CSR activities into the company’s its principles into practice. My comments this year are once Citizen Products and Technology ● Environmental policy core operations and ensuring a high level of awareness again based on this same point of view. in Use Here, There and Everywhere and participation amongst individual employees. In that 1. Favorable aspects ● The Citizen Group’s Environmental Management respect, the opening page featuring employees holding up Following on from last year, Citizen has continued to engage in business activities based on its underlying philosophy of ● Environmental Management boards saying what CSR means to them, as the individuals Message from Management: Establishing the human “contributing to and striving to be respected by the citizens of Progress with ISO 14001 certiﬁcation responsible for implementing CSR, is very effective. The and organizational strength to adapt to future changes outline of the Citizen Group and its products, the message the world.” In addition to summarizing the company’s initiatives ● Business Activities and Environmental Impact from top management and the overall image of the report according to four categories, this year Citizen has reintroduced are all clear and colorful and feel fresh and upbeat. tables outlining CSR priorities and progress with initiatives in line Environmental Accounting Special Feature In terms of the Citizen Group’s core manufacturing with its Code of Conduct, indicating that it is effectively ● Enhancing Products with Citizen operations, the fact that Citizen has managed to meet all implementing the PDCA cycle as part of its activities. The number Environmentally-friendly Products seven environmental standards and certify 99% of new of examples of initiatives being undertaken by Group ● The Citizen Group’s Approach to Manufacturing models released in fiscal 2008 as Environmentally-friendly companies has also increased, conveying the sense that Evaluation criteria for Environmentally-friendly Products products is impressive, as is the company’s enthusiasm in initiatives are pervasive throughout the Citizen Group. ● Bringing the Eco-Drive solar powered watch Eco-Products exhibition to our customers striving to achieve a rate of 100% in fiscal 2009 and set In terms of environmental management, this year’s report Life cycle assessment (LCA) initiatives once again features targets, achievements and assessments for out new, more rigorous standards. Base of CSR The Citizen Group’s environmentally friendly products the current fiscal year and targets for next year, reflecting a ● Reducing Hazardous Chemical Substances based on “precision technological capabilities forged in the commendable commitment to implementing the PDCA cycle ● Reducing Greenhouse Gasses micro-world,” including electronic paper cells offering low on an ongoing basis. The report features example initiatives in ● Citizen Group CSR ● power consumption and LED lighting offering superior other countries as well, indicating that initiatives are underway at Effective Utilization of Resources and Reduction of Waste luminescent efficiency, signal the direction in which the all of the Group’s manufacturing bases. ● Corporate Governance Distribution-based initiatives Group intends to head in the future. 2. Areas requiring work and improvement ● Compliance With regard to the special feature on Citizen’s flagship Although there is a keener awareness of the PDCA cycle in Eco-Drive products however, I felt that cutting out the top evidence compared to last year’s report, the inclusion of a table ● Risk Management half of each section and focusing more closely on the assessing initiatives and outlining targets for next year, as in the ● History of CSR activities comments from members of staff below would have case of environmental management, would help the report to helped get the point across more effectively. I would have flow more clearly. It is particularly important to review initiatives preferred a simpler structure, with less content crammed (check) and make improvements (act) in areas in which Citizen and Society CSR Report (Environmental Report) in so as to encourage more people to read the entire environmental management targets have not been achieved. feature. Whereas the report gives the sense that Citizen is making In terms of progress with CSR activities, the survey of an effort to address issues and implement initiatives in other ● Citizen and its Customers Employees: “What does CSR mean to you?” 39 Group companies shows that levels awareness countries, I would like to see even more information about ● Citizen and its Shareholders and Investors regarding compliance and the CSR Hotline have improved overseas activities. As CSR meetings are now being held at ● Citizen and its Business Partners significantly. Furthermore, with individual companies’ Chinese premises to monitor ongoing activities and discuss progress with specific issues examined from various plans for the future, I would expect details to be included in next ● Citizen and its Employees different angles, this year’s report really captures Citizen’s year’s report. ● Citizen and Local Communities eagerness to visibly set out its targets and achievements. 3. Expectations for the future Looking ahead, I have high hopes that Citizen’s By “contributing to and striving to be respected by the citizens Basic Policy of Social Contribution Activities people-oriented human resource development policy, of the world,” Citizen is demonstrating its commitment to being The Citizen of the Year a genuinely socially responsible company, a quality that I believe based on respecting the diversity of core employees, will The Citizen Group’s Social Contribution Activities contribute to the future of the company by not only will be crucial to sustain growth in the future. I expect Citizen to enabling employees to develop their skills but also laying put this philosophy into practice on a companywide basis in the the foundations for an open and dynamic corporate future, based on full participation from all employees, so that it culture that will enable the development of new can maintain an approach to manufacturing that is good for technologies. people and for the planet.

43 Citizen Group CSR Report 2009 Citizen Group CSR Report 2009 44