KURARAY CO., LTD. Kuraray CSR Report 2017 Corporate Social Responsibility Report Tokyo Head Office Ote Center Building, 1-1-3, Otemachi, Chiyoda-ku, Tokyo 100-8115 Osaka Head Office Umeda Hankyu Building Office Tower, 8-1, Kakudacho, Kita-ku, Osaka 530-8611 TEL: +81-3-6701-1000 FAX: +81-3-6701-1005 http://www.kuraray.co.jp/

In an effort to enhance readability

This report uses an easy-to-read font based on the Universal

レスポンシブResponsibleル・ケア Care® Design (UD) concept. Origin of the Kuraray Group

Contents

Origin of the Kuraray Group 2

“ For people and the planet – Corporate Statements Kuraray Group Code of Conduct to achieve what no one else can.” Editorial Policy Overview of the Kuraray Group 4 In order to make today better than yesterday, and tomorrow better than today, we at Kuraray Corporate overview have made completely new and unique things by harnessing the power of chemistry. Business Outline Many industries and people around the world now choose Kuraray’s technologies, products, Breakdown of Net Sales by Segment and services. Data on Economic Efficiency We take pride in this fact and are deeply grateful to our customers around the world for making Kuraray Group Network this possible. TOP STATEMENT 6

Since our founding, we have valued the pioneering spirit. CSR Activities at Kuraray Group 8 We continually ask ourselves what we can do for the world of tomorrow and the people living in Process Used by the Kuraray Group for it. Creating Social Value “For people and the planet –to achieve what no one else can.” Identification of Materialities by Kuraray Group Passed down through the generations, this has been our constant motivation. CSR Activity Target and Results

Safety Activities 12 We still maintain this mission firmly today. It is Kuraray’s value and our driving force. We continue to cultivate our unique traits, in order to benefit society and the environment. Process Safety and Disaster Prevention, Our goal is continual corporate growth, and we have already taken the next step forward. Occupational Safety, and Logistics Safety Chemical products･Product Safety Topics 2016 Safety Activities

Approaches to the Environment 16

Corporate Statements Kuraray Group Code of Conduct Editorial Policy Environmental Management Global Warming Prevention ● Safety and Quality of Products and This report conveys the CSR activities that the Kuraray Group Our Mission Services Topics 2016 implemented in fiscal 2016 with the aim of boosting understanding We are committed to developing new fields of business using pioneering technology ● Disclosure of Corporate Information Reducing of Environmental Risks of them among all stakeholders. that improves the environment and enhances the quality of life throughout the world. ● Anit-Bribery/Rules for Donations Environmental Activities “For people and the planet ̶ to achieve what no one else can.” ● No Relationships with Anti-Social Reporting Period Group Activities at Workplace 22 ● Contribution to Society Fiscal 2016: Jan. 1 to Dec. 31, 2016 Our Values ● Environmental Preservation Scope of the Report Activities at Workplace Philosophy Guiding Principles ● Safety and Disaster Prevention Safety and Environment: Reports focus on Kuraray Co., Ltd. and domestic Topics 2016 ・ Respect for individuals ・ Safety is the cornerstone of ● Safe and Comfortable Workplace affiliated companies, but also include some overseas affiliated companies Activities at Workplaces ・ Close cooperation to attain shared goals everything we do ● Respect for Human Rights ・ Constant creation of new value ・ Customers’ needs are our top priority ●  Social: Reports focus on Kuraray Co., Ltd., but also include some affiliated ・ We act on ideas in the workplace Enhancement of Diversity, Equal Opportunity companies depending on their activities in the respective field. Interaction with Society 26 ● Compliance with Antitrust/ Economic: Kuraray Co., Ltd., consolidated subsidiaries, and equity method Competition Laws affiliates (total 40 companies) Interaction with Society Our Commitment ● Prevention of Unfair Competition Topics 2016 ● We will constantly develop and provide safe, high-quality pro ducts and services. ● Compliance with Laws Related to Referenced Guidelines Social Interaction ● We will maintain a sound relationship with society through go od communication. Exports and Imports In accordance with the CORE of the GRI Sustainability Reporting ● We will strive to preserve and improve the global environment , and to secure ● Prohibition on Entertainment and Gift Guidelines（G4） safety and health in all our workplaces. CSR Management 30 in an Excessive Manner Environmental Report Guidelines（2012 Edition） of Ministry of the ● We will value all members of the Kuraray community and respect their rights. ● Prohibition on Conflicts of Interest ● We will always conduct businesses in a free, fair and transparent manner. Environments（Japan） Governance and CSR Promotion Structure ● Prohibition against Insider-Trading ● We will honor all intellectual property and secure data and information in a proper Compliance manner. ● Protecting Trade Secrets Issue Date ● Protecting Intellectual Property May 2017 (Previous issue: May 2016; Next issue: May 2018 (planned))

2 Kuraray CSR Report 2017 Kuraray CSR Report 2017 3 Overview of the Kuraray Group

Data on Economic Efficiency

Actively undertaking business inside and Trends in Consolidated Total Assets, Trends in Consolidated Financial Results Net Assets, and Return on Assets Number of Employees (Consolidated) outside of Japan fully utilizing the Group Net sales Operating income Net income Total assets Net assets ROA* (100 million yen) (100 million yen) (100 million yen) % (Employees) 6,000 800 8,000 12 10,000 technologies rich in originality 7,254 4,852 8,590 4,500 600 6,000 9.5 9 Corporate overview 678 7,500 5,210 Company name : Kuraray Co., Ltd. Head offices : Tokyo and Osaka 3,000 404 400 4,000 6 5,000 Representative : Masaaki Ito Plants : Kurashiki, Saijo, Okayama, Niigata, Kashima, Tsurumi Director and Laboratories : Kurashiki Research Center, Tsukuba Research Center President 1,500 200 2,000 3 2,500 Group companies : 38 consolidated subsidiaries, 1 equity-method affiliate Established : June 1926 (as of Dec. 31, 2016) Capital : 89 billion yen Major operations : USA, Germany, Belgium, China, Singapore (as of Dec. 31, 2016) 0 0 0 0 0 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） ‘12 ‘13 ‘14 ‘15 ‘16 （FY） ‘12 ‘13 ‘14 ‘15 ‘16 （FY） Employees : 8,590 (consolidated) (as of Dec. 31, 2016) *ROA: Return on Asset

Business Outline Kuraray Group Network The figures are sales by region in hundred million Japanese yen and breakdowns of sales by region in %.

Kuraray was founded for the purpose of commercializing technology, we have made use of this unique technology chemical fiber rayon in 1926 in Kurashiki City, Okayama and have delivered a variety of one and only and number- Prefecture. Ever since becoming the first firm in the world to one products to the world as a specialty chemical EVAL Europe N.V. commercialize vinylon fibers after the war based on domestic manufacturer. (Antwerp) North North Europe JapanEuropeKuraray Europe GmbH Asia andJapan Asia and (Frankfurt) Kuraray Korea Ltd. America America Breakdown of Net Sales by Segment (Fiscal 2016)* Breakdown of Net Sales by Region (Fiscal 2016)* others others OOO TROSIFOL (Ulsan) (Russia) Others Kuraray Europe Moravia s.r.o 180.1 billion 65 billion % MonoSol AF, Ltd. MonoSol, LLC 4 (Czech Republic) （37％） （13％） Others (Hartlebury) (Merrillville) 11% North America 13% Kuraray America, Inc. Kuraray America, Inc. Japan (Houston) Trading 37% Kuraray China (Fayetteville)Asia and North 20% Vinyl Acetate Europe Japan 43% Europe 20% Co., Ltd. others America (Shanghai, China) Fibers and Textiles Asia and North 8% EuropeAsia billionJapan 26% 97. 2 Plantic others America Functional 9% Isoprene （20％） Materials 9% Kuraray Asia Technologies Pacific Pte. Ltd. Limited (Singapore) (Australia) 142.9 billion * Sales figures include sales to external customers and the amount of cross-segment internal sales and transfers. （30％） The figures do not include the adjustment expense of 103.2 billion yen.

The Kuraray Group Breakdown of Net Sales by Segment 38 consolidated subsidiaries/1 equity-method affiliate (40 companies including Kuraray Co., Ltd.) ●Kuraray site ■Domestic affiliated companies ▲Domestic Kuraray Group companies ◆Overseas affiliated companies Vinyl Acetate 253.2 billion Isoprene 51.1 billion Functional Materials 52.2 billion In this business, we manufacture and sell poval In this business, we manufacture and sell the In this business, we manufacture and sell Domestic ■▲ OKAYAMA RINKOH CO., LTD. ◆ OOO TROSIFOL resin, which features water solubility and world’s only synthetic isoprene chemical CLARINO man-made leather with a structure ●▲ Kuraray Co., Ltd. ●■▲ Kuraray Noritake Dental Inc. ◆ Kuraray Europe Benelux B.V. adhesive properties, poval film, which can be products and their derivative SEPTON, a and functionality as elaborate as natural ●▲ KURARAY ENGINEERING CO., LTD. ■▲ THE KURASHIKI KOKUSAI HOTEL, LTD. ◆ Kuraray Europe Moravia s.r.o applied to liquid crystal displays and is also thermoplastic elastomer, as well as GENESTAR leather, dental materials that enable repairs ■▲ KURARAY CHEMICAL CO., LTD.* ■▲ KURARAY AQUA CO., LTD. ◆ Kuraray Asia Pacific Pte. Ltd. used for single-use packets for detergents and a new polyamide resin with excellent heat that closely resemble natural teeth, and so on, EVAL, which has an excellent gas barrier resistance. methacrylate resin, which boasts excellent ■▲ KURARAY TRADING Co., LTD. ■▲ OKAYAMA RINKOH WAREHOUSE AND TRANSPORT CO., LTD. ◆ Kuraray Korea Ltd. property, and PVB film used as an interlayer for transparency and weather resistance. ■▲ Kuraray Plastics Co., Ltd. ●■▲ Kuraray Okayama Spinning CO., LTD. ◆ Kuraray (Shanghai) Co., Ltd. laminated glass. ■▲ KURARAYLIVING CO.,LTD. ◆ Kuraray Trading (Shanghai) Co., Ltd. ●▲ Kuraray Techno Co., Ltd. Overseas ◆ Kuraray China Co., Ltd. ■▲ TECHNO SOFT CO., LTD. Fibers and Textiles Trading Others ◆ Kuraray Holdings U.S.A., Inc. ◆ Kuraray Hong Kong Co., Ltd. 48.6 billion 119.5 billion 63.8 billion ■▲ Kuraray Travel Service Corporation ◆ Kuraray America, Inc. ◆ Plantic Technologies Limited In this business, we manufacture and sell In this business, we import, export and sell In this business, we manufacture and sell ●▲ KURARAY SAIJO CO., LTD. ◆ MonoSol Holdings, Inc. ◆ Plantic Tribond Pty Ltd. vinylon fiber used as a substitute material for wholesale fiber and textile products such as carbon material and highly functional ●▲ Kuraray Kuraflex Co., Ltd. ◆ MonoSol, LLC. ◆ Plantic Technologies (UK) Ltd. asbestos, MAGIC TAPE hook and loop fasteners, polyester filament, resin and chemical membranes and systems used in water ■▲ KURARAY FASTENING CO.,LTD. KURAFLEX nonwoven fabric used for lifestyle products. treatment, conduct an engineering business, ◆ MonoSol AF, Ltd. ◆ Plantic Technologies (Germany) GmbH products and industrial materials, and polyester as well as handle VECSTAR liquid crystalline ●▲ KURARAY TAMASHIMA COMPANY LIMITED ◆ Kuraray Europe GmbH fiber. polymer film, which is used mainly for flexible ■▲ Iruma Country Club Co., Ltd. ◆ EVAL Europe N.V. circuit boards.

All italicized product names in this report are trademarks of the Kuraray Group. * Merged into Kuraray Co., Ltd. effective January 1, 2017

4 Kuraray CSR Report 2017 Kuraray CSR Report 2017 5 TOP STATEMENT TOP STATEMENT STATEMENT FROM KURARAY’S TOP EXECUTIVE

coined and this sense of mission has been passed down At the same time, we consider that the employment of unbroken from generation to generation. female employees, expansion of their responsibilities and their I have always conveyed to our employees my aspiration of higher retention rate are crucial issues and have been wishing “ Kuraray to be a company that sustainably grows introducing specific measures to tackle with the issues. based on its own technology.” In other words, I wish Kuraray Lastly, talking about corporate governance, in Fiscal 2003, Vision: To be a to be a company to contribute to society through its business Kuraray established a management consultative committee, and to sustainably grow with all employees by making its increased the number of outside auditors and reinforced the strong core businesses stronger and larger, by expanding the functions of its board of auditors. In Fiscal 2008, Kuraray Company that scale of its businesses that are expected to grow using new appointed two outside board directors and this timing in technologies rich in originality and by increasing the profit of having outside board directors was relatively early for Sustainably Grows and new businesses and products. Japanese companies. Through these and other measures, Kuraray is active in enhancing corporate governance. A Kuraray governance report in compliance with the corporate Makes a Social CSR Activities of Kuraray in governance code that is introduced by Tokyo Stock Exchange Action is also compiled in English for disclosure to foreign shareholders. Contribution Based on The thought processes of Kuraray are explained above and one of the tangible activities of Kuraray is participation in the Thoroughness in Preventing Its Own Technology program called “Responsible Care (RC)” promoted by the Recurrence of Incidents world’s chemical industry. Kuraray expressed its approval of the Responsible Care World Charter when I signed our declaration in support of the charter and is promoting its RC In March 2016, the Fair Trade Commission of Japan made Masaaki Ito activities as core CSR activities of Kuraray. an on-the-spot inspection of Kuraray, involving competitive Representative Director and President The RC activities of Kuraray include activity items such as bidding on specified Vinylon products purchased by the Kuraray Co., Ltd. “Environmental conservation,” “Process safety and disaster Acquisition, Technology and Logistics Agency of the Defense prevention,” “Occupational safety and health,” “Logistics Ministry. Kuraray fully cooperated with the investigation safety,” “Chemical and product safety” and “Interaction with conducted by the commission. In March 2017, the commission society.” The Kuraray plants in Japan continuously improve ruled that Kuraray violated the Anti-Monopoly Law and issued their operations autonomously by rotating the PDCA cycle (a a cease and desist order. cycle consisting of steps for “plan,” “do,” “check” and “act”) for Immediately after the on-the-spot inspection, I issued a Higher Demands for CSR workstyle of its employees. Kuraray believes that this initiative each of these activity items. Our future challenge will be to message to all the Group employees stating “I do not want will eventually support the growth of Kuraray to be a corporation upgrade the level of our activities as group total activities any profits gained by violating a law or a regulation. Those Today, the demands for corporate social responsibility have with vitality where its diverse workers fully demonstrate their embracing the Kuraray Group in Japan as well as our overseas businesses that cannot produce profits without infringing a intensified. As one example, activities for E-S-G (environment, capabilities. affiliates. law or a regulation must be discontinued.” society and governance) have become critical themes for Lastly, corporate governance has increasingly become a Activities to reduce the emissions of greenhouse gases as a Additionally, a new version of the Kuraray Group Anti- corporate management. This approach is based on the critical challenge when corporations aim at enhancing their goal of the Paris Agreement will be undertaken as part of our Monopoly Law Compliance Guideline has been issued and concept that a steady and continued response to various corporate values. Kuraray aims at creating an efficient corporate RC activities when the Japanese Government presents specific distributed to raise the compliance awareness of the Anti- challenges by corporations based on these three viewpoints governance system based on the corporate governance code numerical targets together with a legal framework to the Monopoly Law among all our personnel. Measures for more becomes a motive power for a sound evolution and growth set by the Tokyo Stock Exchange. Kuraray is determined to industry. thorough compliance have been implemented, including for corporations that in turn contributes to the formation of a enhance its corporate values sustainably over many years while The next topic is improvement of our workstyles. Since as boosting of the compliance system within the organization.* sustainable society. maintaining appropriate relations with its diverse stakeholders early as 2015, Kuraray has engaged in an activity to recognize Nonetheless, in February 2017, the Fair Trade Commission As one recent topic in the area of the environment, the Paris and fulfilling its responsibilities to society. the value of time, which is a precious asset bestowed on all of Japan again conducted an on-the-spot inspection of Agreement that was adopted at COP21 in December 2015, people, instead of merely targeting the reduction of overtime Kuraray on suspicion of having violated the Anti-Monopoly and went into effect in November 2016, can be singled out hours. Law in connection with activated carbon used in water first. The Paris Agreement hammered out a goal of reducing The Path on which the Kuraray I believe it is extremely important for all employees to work purification facilities, waste incinerators and other facilities. We greenhouse gas emissions substantially to zero by the second within a giventime, to foster family members and households, deeply regret our failure to find this incident by ourselves. I half of this century throughout the world, targeted at Group should Tread to build relationships with communities and to aim at personal apologize to all the stakeholders including our customers and “controlling the average temperature rise of the world to 2°C growth. business clients for their concerns regarding this matter. or lower.” The basic approach of Kuraray toward CSR follows the belief Workstyles at companies are important to “lead a better Kuraray takes the series of these events seriously and This historic international agreement manifests a strong of our founder, Magosaburo Ohara, “Returning all assets gained life.” We have been proceeding with work style improvements sincerely and will implement all necessary measures to ensure sense of crisis entertained among the nations against the from society to society” and the philosophy of our second- where each one of the employees works in high quality, such incidents will never be repeated. spreading of adverse effects caused by climate change on a generation president Soichiro Ohara, “Any profit which a efficiency of workplace are improved by all the members and Kuraray is committed to more thoroughly comply with the global scale. I believe that we too in the Kuraray Group as a company might gain should be confined to those profits that a healthy mind and body is maintained while each one of us laws and regulations and to further devote itself to corporate whole should tackle this goal to realize a sustainable society. come from technological innovation and from consideration of uses precious time effectively and makes all effort worthwhile activities in maintaining good harmony with society in order Next, our next social challenge is the acceptance of diversity. the social and economic benefits it brings to the entire nation.” aiming at creation of new values and personal growth. to regain the trust of its stakeholders and to respond to their “Diversity” embraces a very broad scope such as human The basic approach of Kuraray embodies the mission “For When these improvements in workstyle are accomplished, the expectations. ethnicities, languages, genders and religions. First, Kuraray will people and the planet – to achieve what no one else can.” spectrum of activities of female employees, which has been a aim at creating workplaces, in which female workers can play Kuraray has the founder who had a clear approach toward social issue especially in Japan these days is expected to active roles, through continuous improvements of the corporate social responsibility long before the word CSR was expand.

* Please see page 31 for Kuraray’s specific measures in implementing its compliance activities. 6 Kuraray CSR Report 2017 Kuraray CSR Report 2017 7 CSR Activities at Kuraray Group

Process Used by the Kuraray Group for Creating Social Value

dialogues with stakeholders (shareholders and investors, customers manufacturer is to give maximum consideration not only to Stakeholder Communication Basic Approach to CSR and consumers, local communities, central and local governments, impacts on our stakeholders related to the entire material cycle Stakeholder Communication NPOs). The employees, suppliers, and partners, who participate ranging from the activities in which the Group is directly involved, As a corporate group engaged in manufacturing, Kuraray Group directly in business activities themselves, are also Important namely, procurement, development, production, selling, and Shareholders and General meetings of shareholders, plant tours, Investors meetings to explain settlement of accounts creates economic and social value through providing its excellent stakeholders. shipping, but also to processing, consumption, waste disposal, and Suppliers and Purchasing activities, safety councils, liaison products and services to the market. Kuraray is committed to propelling CSR through its business recycling after selling and shipping products to the customers. On Partners meetings, etc. We in the Kuraray Group believe that the most fundamental activities by further deepening dialog and cooperation further with the other hand, the Group believes that it is also an important Employee awareness surveys, labor-management Employees responsibility as a group of enterprises is to make a positive its stakeholders. responsibility to invest funds received from our shareholders and meetings, personnel evaluation interviews contribution to solve social issues such as resource saving, energy investors for business operation, to distribute the results earned in Responsible Care Regional Dialogue, Meetings with saving, environmental conservation and improvement of quality of local residents’ associations for exchange of views, such investment, to reinvest the funds in equipment and research Local Responsible consideration given to Plant tours, chemistry classes for boys and girls, life through businesses utilizing the unique technologies of and development for sustainable growth and to appropriately Communities Cherry blossom viewing parties, summer festivals Kuraray. These business activities are based on the foundations, our stakeholders return such earnings to employees, social contribution activities, and other events namely, “compliance,” “safety” and “risk management.” In the and other purposes. Central and Local course of these business activities Quality management for Kuraray Group is engaged in the business of providing its Governments, Plant tours, firefighting drills, volunteer activities manufacturing sustains the process of value creation. products and services by adding higher value to resources received NPOs and NGOs On the other hand, all company activities are supported by from society. The responsibility that needs to be fulfilled as a Customers and Sales and marketing activities, trade fairs (Eco- Consumers Products Fair and other fairs), questionnaires

Concept of CSR Growth strategy

Realization Realization of Corporate Statements “a high-profit specialty chemical company with a global presence.” Solving Social Problems

Corporate Value creation Medium-term Management Plan Resource saving, Statements through business "GS-STEP"（2015〜2017） energy saving Our Mission activities 「GS-STEP」 Value Environmental conservation Growth Strategy with Synergy, Technology, Our Values Quality Eco-friendliness and Profitability Enhancement of management quality of living Growth strategy Our Commitment • Deepening of core • Optimum allocation of business management resources →P2 Risk Compliance Safety management • Technological innovation • Contribution to the • Next-generation growth environment models

Involvement with Stakeholders

Shareholders and Investors Suppliers and Partners Employees Local Communities Central and Local Governments, NPOs and NGOs Customers and Consumers Kuraray will strive to expand its corporate value, Striving to build a relationship of mutual growth Kuraray will continue to create safe and healthy Giving its consideration to environmental We will continue to build sound and constructive Kuraray is committed to building a relationship of will return profits to its shareholders and investors with its suppliers and partners, Kuraray will workplaces in which its diverse human resources conservation and work safety and promoting relations based on transparent corporate trust over many years by providing “safe, trustful and will appropriately disclose information conduct fair and transparent transactions and are treated fairly and the employees can maximize positive communication, Kuraray will build a governance. and satisfactory” products and services and by available to it. SCR procurement activities. their capabilities and competences. good relationship of coexistence with the local providing appropriate information. communities.

Value Chain

Business Fund Distribution of Business Activities Earnings, Reinvestment Procurement Development – Production Processing, Consumption and Waste Sales, Marketing and Shipping (Raw Materials,Equipment, and Parts) (Waste Emission) Disposal (Recycling) Material Cycle

Material Cycle

8 Kuraray CSR Report 2017 Kuraray CSR Report 2017 9 10 Kuraray CSR Report 2017 Report CSR Kuraray Materiality Map of Kuraray Group Kuraray of Map Materiality future managementareposted. and (aspects) items material identification, Processof (materialities). 2014, Kuraray Group has been identifying priority issues since diversify, businessactivities our to related requirements social Identification ofMaterialitiesbyKurarayGroup CSR ActivitiesatKurarayGroup STEP STEP STEP For the purposes of meeting various codes and guidelines as guidelines and codes various meeting of purposes the For Materiality for stakeholders 3 2 1 Low Medium High Identification Prioritization items of Selection Low Materiality forKurarayGroup the changesoftimes. business activities. items forKurarayGroupintoconsiderations. agencies andotherentitiesareexpectingKurarayGrouptotakeactionweregivenpriority. local governments).Amongthem,about30itemsthatwererankedhighpriorityextracted. and central and communities local to (relations other and (recycling) disposal waste and consumption, parts),developmenttoproduction (waste emission), sales marketing and shipping, processing, and equipment, materials, (raw procurement are processes These points. into chain value of processes (RC). Care Responsible and 26000 ISO in requirements with indicator,coupled an as standard, aninternational Periodical reviews will be made to ensure appropriate selection and management of items meeting items of management and selection appropriate ensure to made be will reviews Periodical An approachformaterialitemswillbemadeinfuture. related for targets and tasks the in reflected and Committee CSR by validated were items Identifed Materiality and stakeholders for items Materiality taking by identified were items material 18 The ratingorganizations, research financial stakeholders, outside which for items time, same the At the in Group Kuraray on impact of degree the translating by evaluated were items 70 selected The is which 4.0,Version Guidelines Reporting Sustainability GRI using selected, were items Seventy Items (aspects)tobestudiedintermsofimportanceandprioritywereselected. Medium Effluents andwaste Emissions Water sourcesinregion Energy Materials Economic performance [Environment] [Economy] Material Items

Transportation and movement Traditional procurement practice in environmental aspect Presence in local community Compliance in environmental aspect Indirect economic impact Biodiversity Environmental assessment of suppliers Environmental complaint processing system [Environment] [Economy] High opportunity Diversity andequal Training andeducation and safety Occupational health Employment Overall Products andservices [Labor Practices]

Public policy Equal pay for male and female employees Prevention of corruption Labor and management relations Anticompetitive practices Assessment of impact of suppliers on society Compliance in social aspect Complaint processing system for labor customs Social impact assessment of suppliers Complaint processing system regarding social impact [Society] [Traditional LaborPractice] Chemicals andproductssafety Safety inlogistics prevention Process safetyanddisaster Customer healthandsafety Product andservicelabeling Local community [Product Responsibility] [Society]

Freedom of association and group negotiation Marketing communication Assessment of human rights Privacy of customers Assessment of human rights at suppliers Child labor, forced labor, investment, public- security customary practice, rights of indigenous people, Nondiscrimination Complaint processing system for human rights [Human Rights] [Product Liability] CSR Activity Target and Activity Materialities CSR Group Kuraray of *3 http://www.kuraray.co.jp/en/csr/report2017/environmental/ Rangewhere influenceoccurs◎Insideandoutsideorganization,○organization*2http://www.kuraray.co,jp/ir/pdf/account/170208_jp.pdf*1 Boundary: CSR ActivityTarget andResults Society Workplaces Environment Safety Management Welfare Fields Social and Environmental Academic, Cultural, in Contribution Body and Mind of Management Healthy balance work-life Diversity, accomplishing worth is work feel to employees allowing policy Personnel Accounting Environmental Waste of Utilization Effective emission substance chemical of Management Resources Water of Utilization Effective prevention warming Global Safety Occupational Prevention Disaster and Safety Process plan management Medium-term Activity Item

・Measures to prevent process accidents process prevent to ・Measures ・ •  Fund” Fureai • “Kuraray •  Girls” and Boys for Classes • “Chemistry •  activities: following of Implementation diseases related lifestyle- against measures and measures health mental of boosting and Continuation vacation paid annual unused • Minimizing style working • Refined •  employees to opportunities growth Providing  Overseas: and Japan Japan: Overseas: Japan: •  •  •  •  •  innovation • Technological •  (2015 2017) to "GS-STEP" community disability intellectual employees management persons individual measures of implementation steady resources Activity with emphasis on link to local local to link on emphasis with Activity with people for facilities work of Operation Sea” the Across Backpacks School “Sending female by participation active of Promotion activity safety of deployment Global of awareness safety of Enhancement and risks of understanding Comprehensive management of allocation Optimum models growth next-generation of Creation businesses core of Deepening sustainable continuation sustainable and activities) (Know-Why persons unexperienced to persons experienced from Transfer of operational skills and techiniques techiniques and skills operational of Transfer 【Environmental 【Environmental efficiency】 【Environmental efficiency】 【Environmental efficiency】 【Environmental efficiency】 【Environmental efficiency】 Fiscal 2010 (Target year 2020) 2010 year (Target Fiscal with 10% compared by Improvement 2020) 2010 year (Target Fiscal with compared 100% by Improvement Association Industry Chemical Japan the by designated 2020) 2010 year (Target Fiscal with 10% compared by Improvement 2020) 2010 year (Target Fiscal with 10% compared by Improvement consumption Energy Overseas: 2020) 2010 year (Target Fiscal with 40%compared by Improvement Emission of PRTR chemical substances substances chemical PRTR of Emission emissions gas Greenhouse Water consumption Water Targety generated Amount of waste waste of Amount

Local Local community health and safety Occupational Employment opportunity equal and Diversity employees to opportunities growth Providing Overall materials Raw waste and Wastewater atmosphere into Emission region in sources Water services and Products Energy services and products of Labeling customers for health and Safety safety products and Chemicals Logistics Safety Occupational Safety Prevention Disaster and Safety Process services and Products Economic performance Material Items Boundary* ◎ ○ ○ ○ ○ ○ ◎ ○ ◎ ○ ◎ ◎ 1 activity policy of the Kuraray Group. Kuraray the of policy activity contribution social the with accordance in fields welfare and environment science, and art culture, the on afocus with undertaken were Activities undertaken. were checks stress and sessions training self-care and mental-care employee supervisor-to- program, care amental of part As implemented. were measures other and scheme ahomeworking of phase first The scenes. business in employees female of participation active encourage further to culture acorporate promote to set were class manager general division the of personnel the for Workshops Japan. of outside and inside Group Kuraray the from persons 50 about by participated personnel, staff-level for undertaken were programs training other and training Short-term managers. section and managers general division of classes the in personnel the for provided was training group internationally, business conducting in part take actively can who resources human fostering of part As year). previous the for million (¥2,596 ¥2,359 million totaled expenses conservation environmental while year), previous the for million (¥420 million ¥382 totaled purposes conservation environmental for Investments as well. overseas in decreased also efficiency Environmental on. so and facilities additional of startup 2010 the to due fiscal to compared decreased was efficiency environmental However, maintained. were rates 2016 these also, fiscal In lower.” of:rate or 1% disposal landfill final and higher, or 90% of : waste of rate utilization effective “an maintaining been has Japan in Group 2007, fiscal Kuraray Since site. production each at regulation emission substance chemical each with comply we FY2010. Overseas, to compared improved efficiency environmental the and results, year's previous the than lower were Japan in substances PRTR of Emissions volume. production in increase the with increased consumption water Overseas use. effective make to strove we Japan, in target concrete set not have we Although decreased. consumption energy to as affiliates Overseas the of Efficiency” “Environmental hand, other the On Plan. Medium-Term the in envisioned 2016 fiscal of target the behind is performance this 2010. However, fiscal with compared improved Japan in Group Kuraray the of Efficiency” “Environmental 10,000tons-CO by emissions GHG reduce to measures Japan, In . 10 years past the in best the been have incidents occupational domestic and accidents process serious no are there aresult, As risks. against countermeasures and risks of grasping as well as activities) (Know-Why persons inexperienced to persons experienced from Techniques and Skills Operational of transfer of implementation by improved was level safety The policy). 2016 Management (2. December ended year fiscal the for summary financial the to 2015, refer please FY from started that "GS-STEP" plan management medium-term the of status progress the For 2 e were implemented. As a result, the the aresult, As implemented. e were Results Kuraray CSR Report 2017 Report CSR Kuraray information, Web site * site Web Web site* Web For more contact: please P25 P22 P29 P26 P21 P16 P15 P12 to to to to 2 3 11 Safety Activities

Process Safety and Disaster Prevention, Occupational Safety, and Logistics Safety

The Kuraray Group is promoting creating safe workplaces that are free of occupational incidents, process accidents, and disasters Safety Management Process Safety and Disaster Prevention Preparedness against earthquakes and by raising the safety awareness of our employees and operating a tsunamis safety management system for preventing occupational incidents In accordance with Corporate's Safety Activity Management At the Kuraray Group, we consider it a major responsibility to and process accidents through early discovery of the risks for them. Regulations, the Kuraray Group develops a safety plans every fiscal prevent the occurrence of explosions, fires, leakage of hazardous In 2017, Japan is observing the 22nd anniversary of the Great In preparation for accidents or disasters, we make efforts to year and operates them to ensure occupational safety, process materials, and other accidents that could have an immense impact Hanshin and Awaji Earthquake, 6th anniversary of the Great East Japan minimize damage and to prevent the recurrences accidents or safety, and disaster prevention. To be more specific, each year, at on society, as well as to curtail the damage in the event of any Earthquake and Tsunami and first anniversary of the Kumamoto disasters, such as emergency drills, sharing information of accidents the Safety Promotion Committee attended by the President and occurrence to the minimum level. For this purpose, we have Earthquake. Japan is an earthquake-prone country and preparedness or lessons. executives in charge, we makes an overall assessment and undertaken activities such as risk assessment related to process against earthquakes and tsunami is a social responsibility of discussion of safety activity performances of previous year and safety and disaster prevention, earthquake countermeasures for enterprises in Japan. Kuraray is implementing various measures to decides activity policy for the coming fiscal year, and we buildings and plants, and conditioning of the safety management minimize potential damage caused by earthquakes and tsunamis Guiding Principle on Ensuring Safety disseminate decided activity policy to all Group companies. In line system for facilities in all plants. including the Nankai Trough Earthquake, which is expected to cause with this policy, the Group companies are conducting safety We are promoting safety self-activities by implementing them large-scale damage in the future, and to ensure early recovery from “Safety is the Cornerstone of Everything We Do” activities that reflect the specific action plans of each plant and as planned: ① Risk assessment, ② Utilization of accident damage inflicted by earthquakes and tsunamis. department. A group of safety representatives from the information and ③ Transfer of technical background (Know-Why headquarters, including the executives in charge, visit every plant activity) in accordance with the “Activity Plan for Industrial Safety” Preparedness against Earthquakes Action Courses on Ensuring Safety (FY 2017) twice a year to conduct Internal Safety Audits on their safety compiled by the Japan Petrochemical Industry Association. ◦ Emergency evacuation using an emergency earthquake alert, emergency plant activity plans, progress management, and the results. We are undertaking risk assessment of unusual situations such shutdowns based on an earthquake flash and emergency shutting off of piping ● Ensure “Safety First, Production (Construction and as total power blackout and emergency stop and clarifying the ◦ An anti-earthquake diagnosis of buildings, plants, facilities, and structures will R&D) Second” criteria for discriminating abnormal situations in order to activate be conducted. Earthquake-proof reinforcement, rebuilding with and enhance effectiveness of risk assessment activities. earthquakeproof facilities and structures, and installation of evacuation shelters ● and other facilities will be undertaken as necessary Take 5 seconds before You Act, and Do “CHECK” in Additionally, CDP*1 activity and KMMS*2 are continuously ◦ Prevention of dispersion of chemicals, furnishings and equipment inside order to eliminate Unsafe Situation (action, behavior, undertaken to promote the transfer of operational skills and buildings and fixing of them to prevent them from falling over condition) techniques from experienced persons to inexperienced persons ◦ Lecture meetings for disaster prevention, emergency drills, evacuation drills incorporating the Know-Why activities. and emergency lifesaving training ● Act with sense of ownership and responsibility for In Fiscal 2016, unfortunately, one minor fire accident and three all employees, aiming to achieve zero accidents and accidents involving leakage of chlorofluorocarbon (CFC) gas from disasters. air conditioning equipment occurred inside of Japan. And one minor fire accident occurred outside of Japan. All these accidents had no impacts on the external environment or on human health and safety. Verification of Sites for Safety Activity at Kurashiki Plant In Fiscal 2017 and thereafter, we will continue to undertake the Experience in earthquake- proof techniques Earthquake-proof Targets and Performance in Safety Priority Activities safety self-activities to prevent accidents. (Kuraray plastic Ibuki) reinforcement of plant Evaluation: Ο Accomplished, Δ Nearly accomplished, Χ Not accomplished building (Kashima Plant) Seismograph FY2016 Item FY 2017 Priority Activities Target Performance Evaluation Number of Process Accidents Enhancement of process safety ･ Implementation of risk assessment of unusual jobs ○ manegement level Fires Explosions, ruptures Leakage Other ● ･ Transfer of operational skills and techniques utilizing Enhancement of safety Transfer of Operational Skills and awareness of individual career development program (CDP) incorporating Domestic Kuraray Group Overseas Affiliates Rebuilding into Techniques from experienced persons to persons Automatic stop in the "know-why" activities ○ Number of Process Accidents Number of Process Accidents earthquake-proof inexperienced persons (Know-Why ● Implementation of risk ･ Installation of new system that integrate education and case of an earthquake Emergency shut-off activities) and sustainable continuation assessment of unusual Jobs 6 6 building (Saijo Plant) training (Niigata Plant) valve (Kashima Plant) ● Implementation of Process Safety ･ Implementation of risk assessment aiming at improvement inherently safe 5 and Disaster Grasping of risks and countermeasures the comprehensiveness ○ countermeasures for Preparedness against Tsunami Prevention, against risks ･ Implementation of inherently safe countermeasures for 4 4 4 4 serious risks, or minimizing ◦ Building and maintenance of tide embankments and reinforcement of shore Occupational serious risks damage protection Safety 3 3 ･ KY (Kiken Yochi - hazardous prediction) before starting ● Capability of detecting ◦ Upgrading of critical equipment and facilities, prevention of inundation, operation Enhancement of Safety Awareness of abnormal signs and dealing 2 2 prevention of outflow of hazardous materials ･ Pointing & call activities ○ Individual Persons with abnormal situations ◦ Indication of elevations (above sea level), posting of information and ･ Educating and compliance with rules ●  Constructing the base for 1 1 1 1 1 1 1 1 1 dissemination of evacuation sites and routes, evacuation drills and anti- ･ Activity of taking a pause before acting globalization of safety disaster agreements concluded with local residents ･ Activating intercommunication with overseas affiliates 0 0 0 0 0 0 0 Constructing the base for globalization of activity management ◦ Stocking of emergency provisions, apparatuses and other articles to prepare ･ Construct the database "Global Safety Info" ○ safety activity management ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 for isolation for a protracted period ･ Globalization of occupational incidents evaluation system （FY） Numerical Target and Performance *1 CDP: A system to evaluate levels of knowledge, skills, techniques, technologies, and action characteristics needed for first-line operators in workplaces to visualize them In 2017, the Kuraray Group in Japan will set a new evaluation criterion for and to compile an assessment chart for mapping of capabilities of all personnel, to set 2015 2016 2017 safety performance aside from its objective goals. The Group will aim to targets for individual persons, and to provide training based on it. Criteria for improve its safety level to below half of the average performance in the past Actual Target Actual Target five years. Additionally, evaluation will be made based on the number of *2 KMMS: A facility management system based on the PDCA cycle (P: Plan making for evaluation occupational incidents that are evaluated as Rank AB in the labor accident maintenance, D: Do maintenance work, C: Check and evaluate activity results and Japan 3 0 4 1≧ evaluation ranking, instead of evaluation based on the number of days off reassess maintenance plan, and A: Act to review maintenance plan) by evaluating the Guide boards showing Boards indicating Stocking of emergency Number of taken due to an occupational incident. This evaluation ranking for Process Safety zero importance of each piece of equipment in a unit of production activity and by setting evacuation route elevation above provisions (Okayama) Outside occupational incidents is an indicator unique to Kuraray and rates the levels Accidents 1 0 1 none (Okayama) sea level (Tsurumi) Japan of seriousness of occupational incidents in accordance with the levels of an equipment management system in accordance with risks associated with each potential disorders and with the levels of faults that caused such accidents. equipment. By undertaking activities under this system, operators participate in cause Japan 6 0 2 AB rank 2 ≧ Number of Lost The rank AB is for severe accidents. On the other hand, in 2017, the Kuraray analyses of equipment problems and in reviewing countermeasures and equipment Time Incidents Outside affiliates outside of Japan will set evaluation criteria of their own, instead of management norms, for furtherance of human resource development and transfer of 17 0 13 none setting uniform evaluation criteria for the overseas Kuraray units. Occupational Japan techniques and technologies from experienced persons to inexperienced persons. zero The frequency rate of all occupational incidents is the number of all Safety Frequency Rate of Japan 1.32 0.8 ≧ 0.81 0.8 ≧ occupational incidents per million working hours. All occupational incidents All Occupational Outside are defined as incidents requiring at least minor medical attention, based on Incidents 7.26 4.0 ≧ 6.10 none the definition of a recordable incident by OSHA (Occupational Safety and Japan Health Administration) of the US. Tide embankment (Kurashiki) Emergency transport drill (Kurashiki)

12 Kuraray CSR Report 2017 Kuraray CSR Report 2017 13 Safety Activities

Occupational Safety Logistics Safety Chemical products･Product Safety Realizing that the safety and health of its employees are the basis To prevent damage to society at large caused by logistics of business activities, the Kuraray Group aims to create safe and accidents, the Kuraray Group is engaged in an ongoing promotion measures have been taken to ensure safety of the workers, accident free workplaces by striving to enhance the safety level of of activities to ensure logistics safety in the aspects of product Basic Policy on Product Safety environment and end users. each of its employees and organizations through appropriate shipment andstorage. In Fiscal 2017, the Kuraray Group plans to further strengthen its implementation of its occupational safety management system. The Kuraray Logistic Safety Conference, which is the core Targeting contribution to realizing an affluent and mechanism to evaluate product safety, in order to continue the In Fiscal 2016, the frequency rate of lost time incidents and organization for this activity, marked its 16th year. In Fiscal 2016, comfortable society by responding to customer supply of safe products in the future also. frequency rate of all occupational incidents of the Kuraray Group in filling work of hazardous materials and structures of transport needs thorough supply of products that are safe and Japan were 0.16 and 0.81, respectively, registering the best records containers were verified on site at the Kashima Operations. Specific reliable. since 2005. measures were shared with the companies outsourced for Chemical Substance Management On the other hand, in many of the cases that have taken place transport of hazardous materials to raise the awareness of them in Kuraray Group is managing chemical substances using an outside Japan, doctors order employees to take temporary leave dealing with the specific measures to prevent accidents in the information technology (IT) system. from duty even if injuries are minor in severity. transport of hazardous materials. (Nine companies outsourced for Product Safety In Fiscal 2016, improvement of and education on the software Therefore, the same frequency rate of lost-time accidents the transport of hazardous materials participated in these on-site of the IT systems of the Group were continued to better comply applied in Japan cannot be applied to the overseas units. verification examinations.) with the overseas laws and regulations. Periodic opportunities For this reason, the evaluation is made based on the frequency The first paragraph of “Our Commitment,” a statement of were provided to the managers and their staff for the management rate of all occupational incidents severer than minor incidents, Kuraray Group reads “We will constantly develop and provide safe, of chemical substances assigned to the group companies in Japan instead of lost-time incidents. high-quality products and services.” and to the corporate divisions, to ensure strict compliance with the The frequency rate for Fiscal 2016 was 6.10, lower than the 7.26 Topics 2016 A working group centering on the CSR Division staff has been laws and regulations. registered in the previous year. organized to study products that require a company-wide study of In Fiscal 2017, the Kuraray Group is striving to improve the Generally, the companies in Europe and North America safety and to verify product safety. The products to be studied quality of its product information supplied to the customers by undertake activities focusing on preventing severe accidents and include those that are ingested in the body and that use newly creating an opportunity to share information with the Group the frequency rate of occupational incidents including slight Risk Assessment of Chemical nanomaterials. companies outside of Japan and by advancing collaboration with accidents there tends to be higher than in Japan. Substances In Fiscal 2016, a committee was held on development projects them in order to boost the management of chemical substances In Fiscal 2017, the overseas Kuraray Group will be using an In 2012, some of the employees and former that handle various materials in accordance with the regulation on within the entire Group. industrial accident evaluation ranking of Kuraray’s own on a trial employees of an offset printing company in Japan, the handling of nanomaterials. As a result, appropriate safety basis so that the performances of the Group units outside Japan which used a chlorinated organic solvent as a can be evaluated using the same criteria as those for inside Japan. detergent, suffered gallbladder cancer, causing a Global safety meetings and global deployment of a management system for safety activities are planned beginning major social problem. Triggered by this accident, the 2018. These measures are intended to promote the sharing of Industrial Safety and Health Law has been amended. information on safety activities inside and outside Japan and to Beginning June 2016, risk assessment of chemical improve the frequency rate of lost-time incidents of the overseas substances has become an obligation for business Kuraray Group. Topics 2016 establishments handling 640 chemical substances that have a certain level of hazard or noxiousness. Based on risk assessments, the employers are Introduction and Utilization of IT System Dedicated to Management of Frequency Rate of Lost Time Incidents* required to improve manufacturing equipment or to Chemical Substances Domestic Kuraray Group Japanese chemical industry implement effective measures to safeguard workers The Kuraray Group has installed and is using an IT system for (SDS) that are supplied to the customers and for other purposes. Members of Japan Chemical Industry Association(Parent companies) against hazards or health disorders believed caused by integrated management of information on chemical substances As a general trend, the countries and regions of the world are 1.2 Frequency Rate such chemical substances. used to appropriately respond to laws and regulations of the reinforcing and adding laws and regulations related to chemical 0.8 0.81 Several chemical substances are used at worksites countries and regions that are amended frequently from time to substances. Kuraray is also facing increases in the number of of the Kuraray Group. In response to this law revision, time recently and to information supplied in the supply chain. management items as types and destinations of chemical 0.4 0.16 the Kuraray Group has reviewed and set new internal The IT system stores the information of the chemical substances substances that are used continue to increase. The IT system is 0.0 0.29 rules and regulations related to risk assessments of used by the Kuraray Group companies in Japan in a database. The currently used mainly in Japan. Kuraray is studying the use of the ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 chemical substances. The Group has inspected how system links to external databases that contain information on system in its overseas operations also in the future and is (FY Jan.-Dec.) chemical substances are handled at its operations and hazards and on laws and regulations for use in checking products contemplating building a system to effectively manage chemical * Frequency Rate of Lost Time Incidents：Number of Lost Time Incidents per plants in Japan and has verified that these chemical that are required new or additional actions as a result of an substances within the entire Group. million work hours. substances are handled appropriately in accordance amendment to a law or a regulation, in compiling safety data sheets with its internal rules and regulations. Frequency Rate of Lost Time Incidents*

Domestic Kuraray Group Overseas Affiliates Frequency Rate Kuraray Group inside and outside Japan Risk assessment is conducted by completing the following steps. 12.0 Step 1 Identification of hazards and harms of chemical substances and other materials 8.0 6.10 (Article 57-3 (1) of Industrial Safety and Health Act of Japan) Safety Activities Kazuhiko Kugawa, Director, Primary Executive Officer 4.0 Step 2 Estimation of potential risks by identified hazards and harms 2.24 (Article 34-2-7 (2) of Ordinance on Industrial Safety and Health of Japan) The actual frequency rate of all occupational incidents for Fiscal 2016 Japan in Fiscal 2016. Fortunately, these accidents were not major ones that 0.0 0.81 Step 3 Study of risk mitigation measures based on risk estimation Risk assessment for the plans in Japan stood at 0.81 compared with the target of 0.8 or less would have caused great impacts on the local communities or on our ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 (Article 57-3 (1) of the Act) (FY Jan.-Dec.) and was slightly below the target. Nevertheless, this was the best result business. We continue preventing process accidents as they would cause Step 4 Implementation of risk mitigation measures since 2005 and I would say that this figure could be highly evaluated. human damage, fires, explosions and other disasters even if they are minor * Frequency Rate of All Occupational Incidents：Number of all Occupational (Article 57-3 (2) of the Act) Incidents per million work hours involving minor incidents and more serious Aiming at causing no occupational incidents in Fiscal 2017, we are in scale. Our challenge will be to boost collaboration with our overseas Step 5 Dissemination of results of risk assessments to workers incidents. (Article 34-2-8 of the Ordinance) continuing our effort to further improve our performance. In process safety plants in overall safety activities as our business has rapidly been and disaster prevention, five accidents took place inside and outside of globalizing.

14 Kuraray CSR Report 2017 Kuraray CSR Report 2017 15 Approaches to the Environment

Environmental Management

We believe that the Kuraray Group’s mission as a material and Kuraray Group Action Guideline for the Global Environment intermediate material manufacturer is as follows: Environmental Management System Medium-Term Environmental Plan and • Contributing to society by providing the materials and intermediate Basic Guidelines Review of the Plan materials required for products that are needed to create a low- Kuraray Group has established Kuraray Group Global Environment We fulfill our responsibility to future generations through carbon society and an eco-friendly society; and Action Guidelines and Environmental Activity Policy. Furthermore, sustainable corporate activities that are in harmony with the Kuraray Group has mapped out its Medium-Term Environmental • Producing items with as low an environmental impact as possible. continuous improvements in its environmental activities are made global environment and the local community. In order to achieve Plan setting fiscal 2010 as a base year and fiscal 2020 as a target With this in mind, we are working consistently to implement by rotating the Plan-Do-Check- Act and improve (PDCA) cycle these basic guidelines, we will undertake the following activities. year and has been undertaking activities since fiscal 2011. Kuraray’s environmental conservation activities that include promoting among the plants, affiliates and head office in accordance with ❶ We will assign the highest priority to the environment and Medium-Term Environmental Plan incorporates an indicator called measures against global warming, managing chemical substance Kuraray Environmental Activity Management Rules. Kuraray plants safety in the course of our corporate operations. an “Environmental Efficiency*” to numerically assess the activity emissions, and the beneficial use of wastes. and affiliates have acquired certificates under ISO 14001 ❷ We will work to improve the global environment and ensure results. The targets are shown in the table on page 16 . Nonetheless, (Environmental Management Systems) and are undertaking its sustainability. the business environment of Kuraray Group has greatly changed environmental conservation activities by rotating the PDCA cycle. compared with the time when the plan was mapped out due to 【Note】 ❸ We will develop technologies and products that contribute to Please visit Kuraray’s website “Organization Chart of CSR Committee” As a result of the change in months in each fiscal year, the environmental data and the goal of improving the global environment. incorporating new business through large scale of M&A in information contained in this report including graphs are as follows. for more information about the environmental conservation overseas. These changes provided the situation that evaluation ・ Before fiscal 2013: Actuals in 12 months from April to March of the following year promotion organization of Kuraray Group. using the current "Environmental Efficiency" as an index no longer ・ Fiscal 2014: Actuals for 9 months from April to December + Actuals for January to Kuraray has been working on updating the ISO 14001 system as accurately reflecting the environmental improvement activities in March 2014 (or estimated value) [Partially overlaps with fiscal 2013] Policy of Environment and Industrial Safety Management planned to the 2015 version required to be revised by September ・ After fiscal 2015 (For reference purposes): Actuals for 12 months from January to Center for Fiscal 2016 the workplaces. For this reason, we believe that we need to December 2018. consider reviewing the plan including targets and evaluation index. ●The Kuraray Group tackle following themes We will set the new evaluation index and targets for both 1. Promotion of environmental conservation and environmental Kuraray Group in Japan and overseas affiliates within fiscal 2017 Environmental Targets and Results ★★★ : Largely achieved, ★★ : Achieved, ★ : Need to be improved improvement activities in accordance with the environmental and will start to operate together with the next Medium-term FY2016 Medium-term management system Management Plan from fiscal 2018. Scope FY2017 target environmental target Evaluation 2. Compliance with statutory requirements Target Actual performances (FY2020 target) 3. Continuous improvement of environmental load to accomplish * Environmental Efficiency = Net sales/environmental load Reduced by 10,000 tons-CO2e medium-term environmental targets Environmental load: volume of GHG emissions, chemical substance emissions, compared with FY2015 Implement measures to reduce Implement measures to [Environmental Efficiency waste generation, etc. Kuraray GHG emissions *1 by reduce GHG emissions by (GHG emissions)] Group in [Environmental Efficiency (GHG ★ 20,000 tons-CO e or more 12,000 tons-CO e or more Improve by 40% compared Japan 2 emissions)] 2 compared with FY2015 compared with FY2016 with FY2010 Global Improved by 5.1% compared Material Flow in Business Activities warming with FY2010 (Fiscal 2016, Kuraray Group in Japan) prevention [Environmental Efficiency (energy [Environmental Efficiency [Environmental Efficiency Kuraray Group uses large amount of energy, chemical Overseas consumption) *2] Decreased by 6.5% compared (energy consumption)] (energy consumption)] ★ substances and water resources in the course of its business affiliates Improve by 6% compared with with FY2010 Improve by 7% compared Improve by 10% compared FY2010 with FY2010 with FY2010 activities. We make quantitative surveys of used resources and emitted substances associated with our business activities. Material Flow（Kuraray Group in Japan） JCIA-designated PRTR substance emissions: 957 tons [JCIA-designated PRTR [Environmental Efficiency [JCIA-designated PRTR substance Management Kuraray substance emissions] (PRTR substance of chemical emissions] Group [Environmental Efficiency (PRTR Maintain the level of Fiscal emissions)] ★★ Raw materials…633,000 tons Products…441,000 tons GHG…1,303,000 tons-CO2e Wastewater (except seawater) substance Maintain the level of FY2010 in Japan substance emissions)] FY2010 emissions (1,104 Improve by 100% 3 …64.1 million m3 emissions emissions (1,104 tons), or less Water (except seawater) …72.1 million m Byproducts…194,000 tons NOx…1,700 tons Improved by 26.7% compared tons), or less compared with FY2010 Energy…427,000 kL (crude oil equivalent) Chemical substances…957 tons SOx…300 tons COD load…535 tons with FY2010 Product packaging materials…9,600 tons Product packaging materials Soot and dust…29 tons External recycling waste…66,800 tons Raw material etc. packaging materials …9,600 tons External disposal of waste materials …1,100 tons …1,300 tons Reduced by 1,400 tons Implement measures to reduce Implement measures to [Environmental Efficiency Kuraray waste by the equivalent of 1% [Environmental Efficiency reduce waste by the (waste generation)] Group ★★ relative to FY2015 (832 tons), or (waste generation)] equivalent of 1% relative to Improve by 10% compared in Japan more Decreased by 9.0% compared FY2016 (900 tons), or more with FY2010 Internal Reduction with FY2010 Product of Waste INPUT recycling OUTPUT [Environmental Efficiency (waste [Environmental Efficiency [Environmental Efficiency Overseas generation)] Decreased by 41.7% compared (waste generation)] (waste generation)] ★ affiliates Improve by 6% compared with with FY2010 Improve by 7% compared Improve by 10% compared FY2010 with FY2010 with FY2010 (Kuraray Group in Japan) CO2…11,100 tons Considering the geographical conditions of Kuraray Recycling of Internal recycling of waste NOx…83 tons Kuraray plants in Japan, we don’t set a numerical target for the (Kuraray Group in Japan) materials 20,500 tons Group ー ー ー time being. However we will continue to watch the used products 466 tons Product transport in Japan (* Kuraray site) Effective water usage and save it as much as possible. utilization of water [Environmental Efficiency [Environmental Efficiency [Environmental Efficiency (water resources (water usage except (water usage except Overseas usage except seawater)] Decreased by 40.8% compared seawater)] seawater)] ★ affiliates Improve by 6% compared with with FY2010 Improve by 7% compared Improve by 10% compared FY2010 with FY2010 with FY2010 Used products End users Retail stores Product processors *1 : Greenhouse Gas *2 : Almost all electric power and steam is purchased from external sources at Kuraray’s overseas affiliates. Because the source of supply has a large effect on GHG emissions (changes in emission factor), energy consumption is evaluated without incorporating the impact of the supply source in order to properly evaluate the activities of our overseas affiliates.

16 Kuraray CSR Report 2017 Kuraray CSR Report 2017 17 Approaches to the Environment

Global Warming Prevention

Kuraray Group in Japan has been making CO2 reduction Among the 15 categories in total of Scope 3, we calculated 5 * GHG Protocol (Greenhouse Gas Protocol) is an initiative scheme to develop activities such as increasing biomass fuel volume, using of waste Power Generation by Biomass Fuel categories (①～⑤） that is available in 2016. We will also continue international standards and related tools on greenhouse gases and climate change led by the World Resources Institute (WRI) and World Business Council for plastic as a fuel, higher operating efficiency, installing of energy quantitatively to evaluate the CO2 reduction related to carbon life Sustainable Development (WBCSD) and participated by corporations, NGOs, saving equipment and steady energy saving activities. In fiscal At Kurashiki Plant of Kuraray in Japan, biomass fuel* (wood cycle of Kuraray Group products. government institutions and other organizations throughout the world. 2016, we implemented measures to reduce GHG emissions by chippings from construction debris and other sources) has been 10,000 tons-CO2e and total GHG emissions of Kuraray Group in used as a substitute fuel of coal and the consumption of biomass Japan were 1,303,000 tons-CO2e. fuel has steadily been increasing. In fiscal 2016, about 50,000 tons Image of Control on Emissions of Greenhouse Gases in Entire Scope 3 Supply Chain（① to ⑮ show categories of Scope 3） As a result, the “Environmental Efficiency” of Kuraray Group in of biomass fuel, roughly the same level as that in fiscal 2015, was Japan improved by 5% compared with fiscal 2010. However, this consumed, contributing to a reduction of about 75,000 tons-CO2e Downstream leased assets Capital goods Fuel and energy-related 8,000 tons-CO2e performance is behind the target of 24% improvement as of fiscal in its emissions. activities (except Scope 1 and 2) Franchises Investments 2016 envisioned in the Medium-Term Plan. Kuraray Group will continue its activities to increase the ratio of 97,000 tons-CO2e 11,000 tons-CO2e On the other hand, the energy consumption of overseas biomass fuel consumption accounted for by the fuel in boiler. 175,000 tons-CO2e affiliates was 437,000 kL (crude oil equivalent) almost equal to fiscal Scope2 * Biomass absorbs CO2 in the atmosphere as it grows and can be considered to Material and Equipment Procurement 2015 in spite of launching new production site by their energy Indirect emissions by the use of purchased energy emit no CO2 when the CO2 that is generated while biomass is burnt is subtracted Upstream transportation Purchased goods and services saving activities. from CO2 that is absorbed during its growth. and distribution However, the "Environmental Efficiency" of the Overseas affiliates has been decreasing since 2014, and in fiscal 2016 it was Kuraray Group in Japan Waste generation in operations below by 6.5% compared with the benchmark year of 2010. Reducing Environmental Load during 1,128,000 tons-CO2e This is because we have acquired the vinyl acetate business 643,000 tons-CO2e 32,000 tons-CO2e Product Transportation Scope1 which produces raw material of Poval resin to change our business Upstream leased assets Direct emissions by fuel combustion and other means Processing of intermediate products model from purchasing to self-manufacturing. For this reason, Kuraray is also reducing its environmental load in the distribution (Included in Scopes 1 and 2) 8 energy consumption increased. However the sales did not increase stage of delivering its products to the users, in addition to GHGs Business travel, Processing of sold products as much as energy consumption. emitted by itself during the manufacture of products at its plants Employee commuting Actual GHG emissions and energy consumption in 2016 are as and other facilities. Kuraray is continuously active in the “modal follows. shift” of changing transportation means from trucks to cargo trains, Disposal of products Use of products ships and other means. Since fiscal 2010, its emissions of GHGs and Total: 1,303,000 tons-CO2e End-of-life Use of sold Downstream Kuraray Group in Japan nitrogen oxides during product transportation have gradually been treatment of products transportation [FY2015 : 1,265,000 tons-CO2e] decreasing. In fiscal 2016, Kuraray emitted almost the same levels sold products and distribution 437,000kL (crude oil equivalent) of GHGs and nitrogen oxides as those of fiscal 2015. ❻, ❼, ❽ and ❾ were not calculated in 2016. 10, 11 and 12 are not disclosed because they are only very small portions of Kuraray Group products. Overseas Affiliates [FY2015 : 443,000kL (crude oil equivalent)] 13, 14 and 15 are not applicable to Kuraray.

Emissions of Scope 3 GHG

The GHG Protocol* classifies GHG emissions into three categories, Scopes 1, 2 and 3. Trends in GHG Emissions at Kuraray Group Topics 2016

e) Kuraray Affiliated companies in Japan Overseas affiliates 2 Scope 1; Direct emissions 2,500 937 GHG emissions generated by fuel combustion at the 2,000 plants and other facilities of own company Review of the Medium-Term Environmental Plan 455 1,500 Scope 2; Indirect emissions Kuraray Group has been taken up the review of the Medium- As a result, the achievement of environmental improvement 46 53 Term Environmental Plan (see page 16) as an issue since 2014 activities in the workplaces no longer accurately reflected through 1,000 GHG emissions generated by the use of purchased energy such as electricity, heat, and steam supplied when the business environment of Kuraray Group greatly changed the current plan starting in 2010 as the base year. 1,360 500 1,250 2 by other companies due to large scale of M&A in overseas and increase in production. In fiscal 2016, therefore, we discussed this issue in CSR 0 Scope 3; Other indirect emissions We have been working on the issue to revise the plan during the Committee and other conferences. Through the discussion, we

Amount of GHG emissions (1,000 tons-CO （FY） period of GS-STEP (Kuraray’s Medium-Term Management Plan) organized our basic concepts about the review of the Medium- ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 GHG emissions generated by other companies related to activities of their own company except from fiscal 2015 to fiscal 2017. Term Environmental Plan. In terms of the evaluation index, we have Scope 1 and 2 “Environmental Efficiency” as an evaluation index for been aiming to find out the new one and have made some case Trends in Energy Consumption at Overseas Affiliates environmental conservation activities, was defined as “sales/ studies by referring to the actual companies examples of inside environmental load” to enable us to evaluate “how business and outside of Japan. New index will have the benefits which 500 Acquisition of vinyl acetate business Mandated under the law by which businesses voluntarily activities were conducted with a small environmental load.” should not be easily affected by the changes of business calculate and report Scope 1 and Scope 2 to the government, we 140 400 have been reporting these to the government and publishing the Nevertheless, the business situations of Kuraray Group have environment and the achievement of environmental improvement results in our CSR Report and elsewhere. unexpectedly changed compared with the time when the plan activities in the workplaces will be appropriately reflected. 300 On the other hand, Scope 3 means the GHG emissions based on was mapped out. This was because we acquired vinyl acetate We will map out the revised plan within fiscal 2017 and will the entire supply chain related to Kuraray. We can understand how 200 213 business and food packaging film business which resulted in the start to operate together with the next Medium-term Management the indirect GHG emissions are generated from the viewpoint of drastic increase in energy consumption and the increase in the self- Plan from fiscal 2018. 297 100 life cycle such as raw material procurement, product distribution, product use and disposal as well as the direct emissions related to manufacturing ratio of raw material of Poval resin. 0 Kuraray’s business activities. Kuraray started Scope 3 calculations in

Energy consumption (1,000kL crude oil equivalent) ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） fiscal 2013.

18 Kuraray CSR Report 2017 Kuraray CSR Report 2017 19 Approaches to the Environment

Reducing of Environmental Load

Trends in the Amount of Waste Generation at Control on Emission of Chemical Substances Reduction and Effective use of Waste, and Overseas affiliates Effective Utilization of Water Resources Reduction of Landfill Waste 40 Based on the Law Concerning Reporting, etc. of Pollutant Acquisition of vinyl acetate business 11.2 Kuraray Group, including its overseas affiliates, is not engaged in Release and Transfer Register (PRTR Law), Kuraray Group in Japan Since fiscal 2007, Kuraray Group in Japan has been maintaining production activities in areas in which water resources are scant

checks, records and reports relevant chemical substances to the “an effective utilization rate of waste: 90% or higher, and final 30 and their business activities affect water sources of such areas. national government of Japan. Kuraray Group similarly discloses on landfill disposal rate: 1% or lower.” In fiscal 2016 also, these rates The volume of water intake (except seawater) of Kuraray Group its website and other places emissions of chemical substances not were maintained and the result of an effective utilization rate was in Japan totaled 73.1 million m3 per year and has been increasing only covered by the PRTR Law, but designated by the Japan 97.0% and final landfill disposal rate was 0.37%. 20 in the past few years due to the increase in the production volume. Chemical Industry Association (JCIA). In addition to them, “Environmental Efficiency“ of fiscal 2016 decreased by 9.0% Some Kuraray plants in Japan are reusing the water such as by persistent organic pollutants (POPs), volatile organic compounds compared with fiscal 2010. Waste generation of Kuraray Group in 28.1 recycling thermal resources from hot waste water and cooling (VOCs), hazardous atmospheric pollutants (HAPs) and particulate Japan has shown increasing trend for the past few years due to the 10 water for boiler operation. matter (PM) are considered to be chemical substances and Kuraray increase in production volume. However the plants and affiliates 5.1 Even though Kuraray plants in Japan are located in good places is taking action as explained in the table. are making continuous efforts to maximally reduce waste in terms of water resources, we believe that it is necessary to

Amount of Waste Generation (1,000 tons) 0 generation such as by improving product yields and taking some conduct its business activities by considering the long-term Classification Actions to be taken ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） measures. prospects of water supply such as risk of water shortage caused by ・Polychlorobiphenyl (PCB) Almost all of the additional volume of waste generation was climate change due to global warming. We will keep track of water Storing, managing, reporting and processing to render recycled to the material or thermal resources which resulted in Trends in Waste Effective Utilization Rate at consumption trends while continuously reducing our water harmless in accordance with the Law Concerning Special Kuraray Group in Japan Measures against PCB having kept high beneficial use rate of waste. Through this activity, consumption. Waste. (Fiscal 2027 is set as a time limit for harm-free we are taking care of not affecting to the external environment. Kuraray Affiliated companies Total Since fiscal 2014, water consumption of Kuraray overseas processing) POPs On the other hand, the production volume of Kuraray overseas 100 affiliates has been increasing due to incorporating new business ・Dioxin and the like affiliates is largely increasing due to incorporating new business 97.1 through M&A in overseas such as increase in the self- Emissions are measured for individual plants and other 97.0 through M&A (the volume tripled compared with fiscal 2010 manufacturing ratio of raw material of Poval resin. As a result, the business units (Please visit Kuraray website) 96.0 including the raw material of Poval resin). The volume of waste 90 88.3 “Environmental Efficiency” decreased by 40.8% compared with ・Substances other than the above Not applicable to Kuraray manufacturing and use generation also tripled in the same period in spite of making fiscal 2010. reducing efforts. For this reason, the “Environmental Efficiency” 86.9 VOC Included as substances in the pollutant release and 80 transfer register (PRTR) and emissions are measured and decreased by 41.7% compared with fiscal 2010. We will continue to HAP reported as PRTR substances. (Please visit Kuraray website work on watching future trend and taking reducing measures such for emissions by each plant) as by optimizing the operating conditions and recycling materials. 70 Emissions of particles of soot are reported in Material Flow The reason why the amount of waste generation of Kuraray PM 68.1 on page 17 of this report Waste effective utilization rate (%) overseas affiliates is very small compared with Kuraray group in 60 Trends in Water Usage at Kuraray Group Emissions of substances applicable to the law and to the Japan is that the utilities such as electricity are purchased from ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） list compiled by the Japan Chemical Industry Association PRTR outside suppliers and that wastewater treatment is outsourced to Kuraray Affiliated companies in Japan Overseas affiliates are measured and reported (Please visit Kuraray website for emissions by each plant) outside disposal companies so that soot and incineration residues Trends in Final Waste Landfill Disposal Rate at 80 from boilers and sludge from wastewater treatment facilities are Kuraray Group in Japan 72.5 72.1 ) In fiscal 2016, emissions of PRTR substances of entire Kuraray not generated physically. 3 60 Group in Japan totaled 957 tons (873 tons into atmosphere and 84 Kuraray Affiliated companies Total tons into water areas). 6 The “Environmental Efficiency“ of Kuraray Group in Japan 5.28 40 5 improved by 26.7% compared with Fiscal 2010. Even though the production volume has increased, we took 4 20 measures not to increase emissions such as changing the production 3.61

process from an organic solvent system to a water system. 3 Water Usage (1 million m 10.0 The emissions of Kuraray overseas affiliates shows increasing Trends in the Amount of Waste Generation at Kuraray 2.12 0 1.5 1.0 2 trend due to incorporating new business through M&A in overseas. Group in Japan ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） However we are working on the control on emissions complying 1 Kuraray Affiliated companies in Japan with the strict regulations for chemical substances of each country. 0.37 Emissions of Kuraray overseas affiliates totaled 431 tons in fiscal 120 Final waste landfill disposal rate (%) 0 0.22 2016. ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） 100 7.2 7.1 Trends in Chemical Substance Emissions at Kuraray Group 80

Kuraray Affiliated companies in Japan Overseas affiliates 60 2,500 93.2 Kazuhiko Kugawa, Director, Primary Executive Officer 40 82.9 Environmental Activities 2,000 2,064 20 Our production plants inside and outside of Japan have acquired ISO with our target of 20,000 tons-CO2e. Effective measures to reduce global

1,500 14001 (Environmental management systems) certification and are active in warming gases are decreasing, but the Kuraray Group will continue to 0 Amount of Waste Generation (1,000 tons) environmental conservation activities. In the five years leading up to 2015, reduce the emission through originality and ingenuity. At the same time, as ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） 1,000 905 the Kuraray plants in Japan reduced 140,000 tons-CO2e (target 100,000 a manufacturer of materials and intermediates, Kuraray will manufacture tons-CO2e) through the use of wood biomass as fuel for in-house power and provide materials and intermediates, which are required in building a Emissions (tons) 500 382 431 generation, installation of high-efficiency gas engine generators and low-carbon and low environmental-load society, at an environmental load 52 0 energy-saving activities. However, the reduction performance for the as low as possible. ‘05 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 （FY） Kuraray plants in Japan remained low in 2016, 10,000 tons-CO2e compared * Substances subject to the PRTR Act and substances designated by the Japan Chemical Industry Association

20 Kuraray CSR Report 2017 Kuraray CSR Report 2017 21 Activities at Workplace

Activities at Workplace

Through the Kuraray Group Global Human Resources (HR) The Kuraray Group Global HR Policy manager class and section manager class and short-term training Policy, Kuraray Group is making efforts to develop its organizational Training Program for staff personnel were provided among the planned training system regarding the promotion of diversity, fostering of human ❶ We will respect the human rights of individuals. programs. A total of slightly more than 50 persons from the ❷ We will abolish discrimination and respect diversity and individuality. resources, and fair and just evaluation of performances, as well as For the domestic Kuraray Group companies, we have organizations inside and outside of Japan participated in these ❸ We will carry out our HR activities in full compliance with applicable establishing a healthy corporate culture and creating new laws and regulations. established a companywide training scheme to support acquisition training programs. employment opportunities, so that each employee can work in a ❹ We will create HR systems that uphold equality, fairness and of the knowledge and skills required for jobs and career-building In Fiscal 2017, training for the classes of department general way which leads to personal growth through the fulfillment of his transparency. efforts by employees themselves. managers and section managers will be provided with a revised or her duties. ❺ We will strive to improve the environment of workplaces. The training is open not only to regular employees but also training content. ❻ We will strive to employ personnel who are able to contribute to the development of the Kuraray Group. parttime and contract-based ones, as necessary. In addition, ❼ We will place the right person in the right job. Kuraray plants and domestic group companies plan and ❽ We will implement evaluation and benefits systems that are fairly implement their own training programs and provide their Global Talent Development Program satisfactory. employees with finely tuned support for skill development and ❾ We will support professional development. Executive Management career-building. Kuraray also has an incentive system under which ❿ We will strive to promote communication and disclosure information as Training (EMT) appropriate. it furnishes grants for acquisition of certain public qualifications by employees for their own selfimprovement.

Sociality Goals and Actual Performance Advanced Global Management Training (AGM) Theme Goal Event and Result Evaluation and Challenges Fiscal 2017 Plan Department manager class ● Provided the program “Training for Designing One’s ● Companywide Training Programs at Kuraray Own Career” to employees in various age brackets Challenges are fixation of this system within the Group and ● Increased the number of career advisors from one to ● Fixation of “Mechanism to Support utilization in the activity to GTT follow-up two persons Autonomous Career Development”

promote participation by New employee training Section ● Opened a website page for transmission of Cross-company training

females as one approach manager class information on career development Basic training Global Team Training for Year 2 Follow-up training ● A mentor program to assign mentors to new Training (GTT) managerial workers has been continued and briefing ● Fixation of this system is a ● The mentor program is continuously promoted personnel Intercultural understanding

Implementing Training sessions for mentor candidates have been held to challenge being implemented Adviser system Staff Personnel Policy Hierarchical Provisioning of spread the objective of the program Allowing Mentor system Communication growth ● Employees to More Group employees and opportunities to Trainees Feel Work is countries from abroad are the Employees ● ● Worth GTT was undertaken, participated by seven overseas participating. How to keep and Continued implementation of the GTT Accomplishing Group companies (Please see page 23). increase the number of program Field leader participating countries is a development training Overseas safety training Area training challenge Global Talent Basic training ● In preparation for the introduction of a new globally Development Specialist training uniform personnel system (applicable to managerial ●

Smooth start up and subsequent Training Master training positions and higher) beginning Fiscal 2017, the new ● Fixation and improvement of the Selective Program fixation of the system are the personnel system was put in place. Information on globally uniform personnel system challenges Executive and manager candidate development training the new system was disseminated and briefing was A Fair, Impartial, and Transparent HR System provided to related persons ● Workshops for personnel in the department general manager class ● Subordinate management training HR System Promotion of Development of a future plan will be staged. active ● Workshops were staged for all personnel in the based on the results of Kuraray has instituted a personnel system in which elements ● Training and education programs are participation by division general manager class implementation in Fiscal 2016 is such as improvement of job execution capabilities, performance, female employees a challenge planned for the Group female Promotion of employees to raise their awareness Logical presentation

Training roles, and spirit to challenge demanding targets (as opposed to Diversity and and for other purposes. training Assessor training Business Skill seniority and personal factors) are reflected in remuneration. Work-Life ● Newly started a flextime system (To deal with ● The challenge will be to propose Refined working ● Expansion of a working system Balance teleconferencing with overseas staff) and implement tangible actions Specifically, we instituted a scheme of role ranks for management style tailored to diverse ways of working ● Implemented Phase 1 of the homeworking system to refine working style positions, under which remuneration slides with the role and ● The challenge will be to further Minimizing Training at outside business school or similar schools, scholarship for MBA acquisition performance, and one of skill qualifications for ordinary employees, ● Achieved 80% use of annual paid vacation on raise the rate of annual paid ● A study of specific measures to unused annual average (Please see page 24) vacations and to maintain the promote acquisition under which remuneration reflects the extent of skills and paid vacations Language training courses rate of 80% performance. ● ●

Continuation and Line-care training and self-care training was Implemented as planned. Training ● Training programs continuously continuously provided In Fiscal 2017, the globally uniform personnel system mainly for beefing up of Continuous implementation provided Education by correspondence, e-Learning Reinforcement Cafeteria-Type mental support ● Conducted a stress check within the Kuraray Group according to the plan is a the personnel in managerial positions will be introduced to further and Promotion of ● Stress check to be made measures in Japan. challenge Schemes for utilize and activate human resources working within the Kuraray Continuation and Management of ● Health improvement campaign : Sponsored health ● Continuation of health improvement Group.A review of wages, allowances, bonuses and work systems beefing up of Healthy Mind improvement events ● Continuation of measures is a campaign countermeasures will be continued to further enhance an understanding of the and Body ● ● No-smoking campaign : Sponsored no-smoking challenge Implementation of no-smoking Training for career design by self for lifestyle- employee treatment system. related diseases seminar campaign * Mentor: An elder employee who started in the Group earlier than a new employee and who is in the same workplace of a new employee or in a similar situation, to act as a mentor Career advisor system and a person to be relied upon for consultation and for support in expanding the human network for a new employee and in other purposes. Evaluation Career support Personnel are evaluated based on management by objectives, Number of Employees As of December 31, 2017 Trends in the Number of Employees Trends in Number of Employees by Region in which goals for job duties and competence development are set Total Male Female Kuraray Group companies Kuraray Japan Europe Americas Asia Others after consultation between superiors and subordinates, and actual Kuraray Group as a whole 8,590 7,119 1,471 （persons） （persons） performances of individual employees are evaluated. Assessor 9,000 9,000 Global Talent Development Program Kuraray only 3,386 3,031 355 8,590 8,590 training is continuously provided also. 8,000 65 295 6,000 Training is provided at each level of the organization to foster 7,000 1,277 Employee Turnover Rate FY 2016 personnel who can actively play a part on the global stage to 3,386 6,000 935 Number of those leaving 3,000 further accelerate global growth of the Kuraray Group. Turnover rate employment 5,000 6,018 In Fiscal 2016, group training (executive management training Personal reasons 36 1.1% 0 0 and global team training) for personnel of the division general （FY） （FY） Retirement 68 2.2% ‘12 ‘13 ‘14 ‘15 ‘16 ‘12 ‘13 ‘14 ‘15 ‘16

22 Kuraray CSR Report 2017 Kuraray CSR Report 2017 23 Activities at Workplace

Employment of People with Disabilities Promotion of Diversity In addition to meeting the statutory employment rate (2.0%),Kuraray is supporting self-sustenance of people with Topics 2016 Kuraray aims at enhancing its organizational power by disabilities in cooperation with communities and support groups maximizing the capabilities of its diverse human resources. In for people with disabilities.Kuraray has opened workshops for particular, in Fiscal 2016, workshops for personnel in the division people with intellectual disabilities in cooperation with local general manager class were staged to create a corporate culture in welfare facilities. order to promote more active participation by female employees with a focus on three points - employing more female employees, expanding areas of their responsibility at work and enabling female Rate of Employment of People with Disabilities (Kuraray) employees to work longer at their workplaces. Plans for Fiscal 2017 include workshops for personnel in the department general （％） Employment rate 2.5 manager class and training for female employees to enhance their 2.30 career awareness so that career development and household circumstances such as child rearing can be accomplished at the 2.0 Statutory employment rate* same time. 1.5 0 2012 2013 2014 2015 2016 （FY）

Scheme for Work-Life Balance * The statutory employment rate for disabled persons was revised from 1.8% to 2.0% in April 2013. Employment Systems and Average Working Hours Mechanism to Support Autonomous Career Development Kuraray has instituted systems for flexibility in employment. 1 These main systems include discretionary labor systems for Scheme for Management of Healthy Mind Beginning Fiscal 2015, the domestic Kuraray group Own Career” is undertaken for employees in three age adaptation to the nature of individual work, the “de facto working and Body hour” system for out-of office work, and variable working hour has inaugurated a “mechanism to support autonomous brackets (30s, 40s and 50s). In the two years up to 2016, system. We also have no-overtime days and are striving to improve Basic Policy for Occupational Health career development, ”aiming at creating organizations 196 persons received the training. After receiving the the r ate of taking yearly paid vacations. To provide a workplace environment where it is possible to in which each employee actively tackles his or her career training, the trainees are interviewed by a career advisor work in both a physically and mentally safe and healthy manner, development and engages with work enthusiastically. and receive support to attain their career goals. Trends in Total Average Working Hours and Rate of Taking we formulated the Kuraray Basic Policy on Occupational Health. As part of this scheme, “Training for Designing One’s Yearly Paid Vacations (Kuraray) Total average working hours Rate of taking yearly paid vacations Kuraray Basic Policy on Occupational Health （hours/year） （％） 2,000 100 In keeping with Our Commitment, the Kuraray Group 1,900 1,885 90 recognizes that ensuring the safety and health of 2 The message by Career Advisor 1,800 80 employees and other stakeholders is the basis of a This training scheme aims at More specifically, the following activities are 1,700 80 70 company’s business activity. Kuraray strives to provide a fostering individuals by awakening undertaken. ① Support of growth in the future keeping 0 0 healthy and safe work environment for its employees and （FY） each individual to the following four in mind a behavior modification. ② Sorting out of issues 2012 2013 2014 2015 2016 engages in health promotion activities. points. ① To be aware of career and problems in accordance with age, role in job, family independence and be free of composition, circumstances in the organization and Leave for Childcare and Nursing Care orientation to preserve the status other factors. ③ Counseling and support on human Kuraray has a scheme in place to support childcare and nursing Mental Health Care Schemes quo. ② To have a sense of relations, enhanced communication skill, intracompany care by its employees. In consideration of the timing of admission Kuraray has four care schemes including schemes for self-care into a day-care center, employees are allowed to take childcare and line care in an effort to reduce mental disorders. Kuraray has involvement in career development and to find diverse career and life career. leave either until the end of April in the year after the child turns implemented and is promoting a stress check, training for the possibilities based on being like oneself even though One year after initial counselling, the career advisors one or until the child is one year and six months old, whichever is prevention of a mental or physical disorder, a consulting system unanticipated situations occur. ③ To be active in follow up whether or not new risks and obstacles exist in longer. We recommend male employees to take childcare leave to such as counseling, and work attendance system allowing developing capability, in creating one’s own job and in realizing career goals. The career advisors also make encourage more fathers to get involved in child rearing. employees on a rehabilitation program to work on a time schedule shaping one’s own place for living. ④ To be able to proposals for creating a corporate culture and suiting their rehabilitation programs when they return to their contribute to the activation and growth of his or her organizations that place an emphasis on career Number of Employees Taking Leave for Childcare/ workplaces. Nursing Care (Kuraray) organization in response to expectations of one’s own independence. Fiscal year Childcare Male employees Nursing care Support for Health Improvement organization. (Career Advisor：Kunihiko Ogawa) FY 2014 46 7 2 Enhancement of health awareness of the employees is FY 2015 48 18 2 promoted through personal guidance on health, promotion of FY 2016 43 27 0 health improvement campaigns and other means. “Health Improvement Operation” is carried out companywide urging the employees to voluntarily deal with improvement of their lifestyles. Activities at Workplaces Kazuhiko Kugawa, Director, Primary Executive Officer System Allowing Employees to Take Temporary Health checkups featuring checkup items surpassing the checkup Leave from Duty to Live Abroad with Spouse items required by laws are provided to find employees who need As stated in the Statement from Kuraray’s Top Executive, Kuraray is certain level of results. Kuraray will aim at creating workplaces in which all Assigned to Overseas Post health improvement. implementing a variety of measures to “lead a better life.” As one example employees including female employees can work easier and better, A system has been established and implemented allowing employees to take a temporary leave from duty to accompany of these measures, a system has been established and implemented in including homeworking and flextime systems. Attuned to the rapid their spouse who is assigned to an overseas post or in a similar Japan allowing employees to take a temporary leave from duty to globalization trend of Kuraray’s business, a globally-uniform human circumstance. Those employees who take a temporary leave from accompany their spouse who is assigned to an overseas post, in order to resource system will be created within the Group in order to achieve an duty are allowed to return to their posts in the Kuraray Group when lower the employee turnover ratio of female employees, in addition to optimal allocation and effective utilization of human resources. the overseas assignment of their spouse terminates or when a systems that had been implemented. These measures have achieved a similar circumstance ends.

24 Kuraray CSR Report 2017 Kuraray CSR Report 2017 25 Interaction with Society

Interaction with Society

We in the Kuraray Group consider the sound and sustainable Kuraray Group Policy for Social Contribution Activities Activities in Science Field advancement of society a precondition for corporate growth and In fiscal 2016, the Kuraray plants sponsored the Chemistry Various Sports Events Sponsored prosperity, as well as the ultimate objective of corporate activities. To fulfill its responsibilities as a member of society, the Kuraray Classes for Boys and Girls, participated in outside events and It goes without saying that we see it as our duty to contribute to Group shall make vigorous approaches to social contribution sponsored sports tournaments to foster healthy juniors and Various plants of Kuraray are sponsoring sports events from the society through provision of products with genuine value to the activities in accordance with the following policy. teenagers by continuously supporting on-going activities. standpoint of fostering healthy juniors and teenagers. In Fiscal people. Beyond this, we consider assistance with the resolution of Types of Activities 2016, various sports and other events were hosted at the plants of social issues within an appropriate scope to be another important ● Activities that lead to a resolution of social issues Kuraray, including a tennis tournament for children at the Okayama form of social contribution in our capacity as a corporate citizen. ● Activities rooted in local communities where Kuraray's Chemistry Classes for Boys and Girls Plant that was started in Fiscal 2015. Kuraray is offering its baseball In fiscal 2016, the Kuraray Group carried out activities focusing establishments are based parks, gymnasiums and tennis courts to students of nearby schools on culture, science, environment and social welfare in accordance ● Activities emphasizing participation by employees on their Kuraray conducts the “Chemistry Classes for Boys and Girls” for the promotion of sports in neighboring areas. These activities with its policy for social contribution activities. own initiative program with the goal of enabling elementary school students to will be continued in the future. ● Activities that are sustainable in the long term experience the fun of chemistry through experimental work. In this Areas of Activities program, employee volunteers of Kuraray serve as lecturers and Priority areas: culture, science, environment, and social assistants in dedicated classrooms in Kuraray plant premises, as welfare well as in elementary schools and public facilities in the areas. This program has been sponsored every year since 1992 at Kuraray Goals and Actual Results in Social Interaction plants in Japan. In Fiscal 2016, 289 children and family members participated in thirteen class events. Tokyo Head Office Fiscal 2016 participated in the Children's Summer Chemistry Experiment Show Fiscal 2017 Goals Goal Actual Results Evaluation and Challenges held in Tokyo’s Chiyoda Ward. Kashima Plant participated in the Kamisu Festa held in Kamisu City, and the Science Festival for [Science] ● Delivered/7,732 backpacks ● The campaign was carried out ● “Sending School Backpacks Youths in Hokota City, all in Ibaraki Prefecture. Kuraray’s booths “Sending School Backpacks Across ● Advertise to collect school backpacks through the Kuraray as planned. This campaign will Across the Sea” campaign the Sea” campaign was steadily were visited by about 2,800 people. We will continue these events website and nearby elementary schools of Kuraray plants be hosted next fiscal year also. will be steadily undertaken undertaken in the future. ● Hosted 13 times in total with 289 participants (Twice at Children’s Tennis Tournament, Okayama Prefecture [Science] Kurashiki Plant, three times at Saijo Plant, twice at ● To sponsor events more than “Chemistry Classes for Boys and Girls” Okayama Plant,four times at Niigata Plant and twice at ● The event was carried out as once per year at each plant was hosted at the five plants and Kashima Plant) Additionally, Kashima Plant participated in planned. ● To sponsor events outside head office of Kuraray more than the Kamisu Festa and the Science Festival for Youths. the company once this year ● Tokyo Head Office participated in the Children's Summer Chemistry Experiment Show (held at Science Museum) Activities in Environmental Field [Social Welfare] ● To continuously employ the ● Number of people employed/Intellectually and physically ● The targeted number of Aiming at implementing forest conservation work and volunteer Operating workshops for people with same number of people at disabled: 36people,Instructors:12 people people were hired as planned. cleaning work carried out every year, in Fiscal 2016, Okayama Plant intellectual disabilities the workshops ● Activities that have been undertook “Kuraray Mirai no Mori (Kuraray Forest of Future) ● To continuously carry out the undertaken in the past could Activity,” and Niigata Plant undertook the “MIRABAKESSO Forest [Culture] [Science] [Environment] activities be steadfastly continuously [Social Welfare] ●  Creating Activity.” All the plants undertook volunteer cleaning conducted. Situations surrounding the To steadfastly undertake existing activities undertaken by the work. ● On-going activities were steadfastly undertaken ● A recapitulation of the activities at plants, sites and affiliated entire Kuraray Group situations surrounding the The Group companies are also periodically undertaking companies focusing on the including the overseas activities undertaken by the voluntary environmental work such as cleaning of areas around relationship with local communities operations are continuously overseas operations was being grasped. their plants. made. At each Kuraray plant, employee volunteers engage in forest conservation activities, cleaning parks, roads and mowing gardens in day nurseries in cooperation with local governments and NPOs.

Activities in Culture Field Okayama Plant has been holding the Elementary School Student The Kuraray Group continues to support the Ohara Museum of Painting and Calligraphy Contest annually since 2005. Having Art,which was established by Magosaburo Ohara, the first president become a fixture in the local community thanks to its ongoing of the company. The Group also supports cultural activities at its successes, this contest received numerous artwork entries from The Kamisu Festival (Kashima Plant) plants and sites. five elementary schools in Fiscal 2016. Winning entries are displayed at the local community center, and all entries are shown Number of Number of on the Kuraray website. This contest will be continuously Plant Class name classes participants sponsored. Kurashiki Plant Fun Chemistry House 69 1,840

Saijo Plant Exciting Chemistry Class 70 2,082

Okayama Plant Fun Chemistry Class 43 1,356

Niigata Plant Wondrous Laboratory 55 1,570

Kashima Plant Fun Chemistry Class 21 1,283

Total 258 8,131 Work scene in Kuraray Mirai no Mori (Kuraray Forest for the Future), Okayama Prefecture

The Ohara Museum of Art Contest on Painting and Calligraphy at Okayama Plant

26 Kuraray CSR Report 2017 Kuraray CSR Report 2017 27 Interaction with Society

Activities in Social Welfare Field Kuraray’s employees through sports events and other occasions. We eatablished the Kuraray Fureai Fund in July 1992.Under this CSR Procurement Policy of Kuraray Aiming to support and continue the employment of people These workshops and employment of those with intellectual fund, companies make donations consisting of those made by with intellectual disabilities and to undertake the Kuraray disabilities will be maintained and continued. their employees plus a matching gift of the same amount. Fureai(Rapport) Fund-Raising Campaign, Kuraray’s Kurashiki, Saijo, Employees endorsing the fund agree to donate amounts of less ❶ Respect for Human Rights Niigata and Kashima Plants operated workshops and donated than 100 yen from their salaries to it, and the company matches ❷ Observance of the International Respect for money raised in the campaign. Also, cherry blossom viewing this amount. The funds collected in this way are used for social Labor Organization’s core labor Human Rights standards parties were held at the Saijo and Niigata Plants tuned to the welfare programs. ● cherry blossoming season. Residents of nearby social welfare In Fiscal 2016, activities were undertaken contributing to local Guarantee of the right to organize and the right to facilities visited the plants and enjoyed viewing cherry blossoms. communities such as donating nursing care supplies, books and collective bargaining These activities will be continued. other articles mainly to welfare facilities,local governments and ● Prohibition of compulsory labor In cooperation with local welfare facilities, Kuraray has built schools in the neighborhoods of Kuraray plants. The fund will be ● Prohibition of child labor workshops for people with disabilities to support their continuously used for the sake of social welfare. selfsustenance by providing employment opportunities. In cooperation with Nakajo Town (currently Tainai City) and Niji ● Compliance policy no Ie (meaning ""Rainbow House"", operated by a social welfare Compliance ● Compliance systems corporation, Nanaho-kai) , the Kuraray Workshop of Kuraray’s ● Compliance education program Niigata Plant opened in 1997 for people with intellectual Workshop in Kurashiki Plant disabilities. The workshop sorts plastic waste generated in the ● Preparation of environmental production process for recycling and manufactures supplies and Types of Work Promotion policies and environmental reports fittings. In 2007, the Himawari Sunflower Workshop opened at of Green ● Green procurement Kurashiki Cleaning uniforms, labeling products Kuraray’s Saijo Plant. In 2011, the Kashima Plant opened its Aozora Procurement implementation plan and Blue Sky Works assisted by a social welfare corporation, Kamisu Saijo Product recycling, cleaning uniforms implementation apparatus

Keiai-en. 12 instructors and 36 workers now work at four of Kuraray’ ● Product recycling, manufacture of pot stands and aprons, ISO14001 certification Niigata s plants to accomplish a variety of job assignments,including those cleaning uniforms ● Education and awareness campaign employees at Kuraray’s Kurashiki Plant engaged in cleaning of Making double-ply product packing bags, separating Kuraray Library financed by Kuraray Fureai Fund (Saijo Plant) Kashima for green procurement uniforms and labeling on Kuraray products. They mingle with foreign matter in products History of Kuraray’s CSR Procurement Activities Continuation of CSR Procurement - 2016 Onward Promotes Green Procurement to Business Partners The Kuraray Group will continue to check the CSR procurement (2002~) activities of suppliers before purchases are made from new Under the Kuraray Group Action Guidelines for the Global suppliers. Environment (established in 1993), we formulated our Green In purchases of equipment and materials, a system has been Topics 2016 Procurement Standards in 2002 to promote global environmental built allowing checks of CSR procurement activities of suppliers preservation with the cooperation of our business partners. We through the Internet by renovating the purchasing system. This also distributed a booklet comprising the above standards to system will allow a more precise understanding of purchasing around 800 key business partners and evaluated the status of situations of suppliers. initiatives at each company by way of a checklist.

Develops into CSR Procurement (2005~) Kuraray’s Activities for Purchases of Green In 2005, we formulated the Kuraray CSR Procurement Policy Commodities based on the 10 principles of the United Nations Global Compact, which are both international and universal. This policy has become In 2002, Kuraray set its Green Procurement Guidelines for more comprehensive than before as it has added sections on purchases of 107 items in nine product categories needed for its (Photo through courtesy of JOICFP) “Respect for human rights and individuality” and “Compliance” to business operations, including stationery, office equipment and the “Promotion of Green Procurement” section. We requested the automobiles. Since then, the Kuraray Group has been undertaking (Photo through courtesy of JOICFP) understanding of this policy from business partners and grasped activities to preferentially and actively purchase Green The “Sending School Backpacks Across the Sea” the CSR procurement status of around 700 key business partners Commodities that are low in environmental load. These activities Campaign by conducting questionnaires about CSR procurement. Following will continuously be undertaken. the survey, we provided feedback and improvement requests to "Sending School Backpacks Across the Sea” is an international contribution business partners in Japan with some problems. activity in which elementary school children in Japan send used school backpacks to children in Afghanistan and other areas, who are deprived of education opportunity by war. The backpacks are donated every year together filled with stationery and (Photo through courtesy of JOICFP) letters. Up to now, these backpacks have been sent to Afghanistan, Mongolia and Nepal. Kazuhiko Kugawa, Director, Primary Executive Officer Number of Number of Social Interaction FY FY Backpacks Backpacks On the 13th anniversary of the campaign that was launched in 2004, 7,732 school 2004 8,514 2011 11,14 4 backpacks were donated in Fiscal 2016 from various parts of Japan. In cooperation Kuraray is the manufacturer of CLARINO®, artificial leather. CLARINO® children of Afghanistan in the past years. I witnessed the sorting of school 2005 12,076 2012 8,326 with JOICFP, a public interest incorporated foundation, the school backpacks were has a market share of more than 70% as a material for school backpacks. bags for Fiscal 2017 the other day as a volunteer while cherry trees were in 2006 5,504 2013 6,396 sorted and packed by volunteer groups and the employees of Kuraray Group. From Beginning in 2004, the activity “Sending School Bags across the Sea full bloom. About 7,000 school bags will travel to Afghanistan this year also. October to December the school backpacks were sent to 11 elementary schools in 2007 6,894 2014 7,908 Campaign” has been kicked off to present used school backpacks to Above all, the continuation is of paramount importance for social Nangarhar Province, Afghanistan. Many volunteers cooperated in shipping them via 2008 7,022 2015 7,111 children of Afghanistan in response to the voices of children and their contribution activities such as “Sending School Bags across the Sea oceans. So far, a total of 105,122 school backpacks have been sent as presents. 2009 7,522 2016 7,732 parents who donated school bags to give these bags a second lease of life. Campaign” . Steady efforts will be continued. Kuraray wishes to expand this contribution activity to other countries in the future. Cumulative In Fiscal 2016, the activity marked its 13th anniversary. We are very glad that 2010 8,973 105,122 total as many as 100,000 school bags have crossed the sea to be delivered to the

28 Kuraray CSR Report 2017 Kuraray CSR Report 2017 29 CSR Management

Governance and CSR Promotion Structure Compliance

of pure risks such as natural disasters and infringement of laws and Corporate Governance Structure regulations that cause only negative impacts when such risks take Basic Approach to Compliance Whistleblower System place. Kuraray considers it is vital and necessary not only to maintain Additionally, critical risks selected from all these risks that need “Our Commitment” states the principles of our conduct wich we As a whistleblower system to prevent and to identify and sound relations with our various stakeholders including our to be managed on the company management level are extracted should observe in doing our business. “Kuraray Group Code of troubleshoot any compliance violation at an early stage, Kuraray shareholders, to assist the improvement of our performance and and actions and measures are taken on them on a priority basis. Conduct” serves as guidelines to implement the commitment in Group Employee Counseling Room has been set up for all sustainable growth as a company but also to implement corporate performing day-to-day work. Top management of Kuraray Group employees of domestic Kuraray group including part-time governance to fulfill our responsibility to society. has declared that we will comply with laws and regulations and employees, contract employees and dispatched staffs. Kuraray in Fiscal 2003 separated supervision and business “Our Commitment” under any circumstances. In order to share Whistleblower contact windows are also provided at major execution by reinforcing its board of corporate auditors by Quality Management these principles and commitments among all Kuraray Group subsidiaries in Europe and North America. In recent years, increasing the number of outside auditors, setting up a personnel throughout the world, Compliance Handbook has been globalization of Kuraray Group has accelerated rapidly through management advisory council, shortening the terms of office of Within Kuraray Group, quality management is carried out by compiled containing the foregoing declaration by the top person M&A and other activities and the group is building a system at directors, introducing an executive officer system and other implementing quality management systems such as ISO 9001 at and explanations of “Kuraray Group Code of Conduct.” subsidiaries that do not have such contact windows yet, allowing measures. From Fiscal 2008, outside directors have been elected. each manufacturing site. The divisions have built a mechanism for In order to disseminate these principles and commitments all employees of the group inside and outside Japan to access a These measures contributed to putting corporate governance into each of their businesses to supply products that incorporate the among all Kuraray Group employees, a compliance handbook has contact window. effect. In Fiscal 2015, the Basic Policy for Establishment of Internal requirements of customers. The corporate CSR Division undertakes been distributed to the Group employees throughout the world. Control System was amended to strengthen the governance activities aiming at reinforcing quality management within the The handbook contains the foregoing declaration by the top system for Kuraray Group. entire group. executive and explanations of the Kuraray Group Code of Conduct Number of Consultations at Kuraray Group Employee Among Kuraray’s divisions, the EVAL Division beginning Fiscal and is written in eight languages, Japanese, English, German, Counseling Room 2012 and GENESTAR Division beginning Fiscal 2015 have been Corporate Governance Report Chinese, Hangul, Russian, Flemish and Czech. continuing their ICS activity aimed at enhancing customer FY 2012 2013 2014 2015 2016 http://www.kuraray.co.jp/ir/strategy/pdf/ We plan to appoint compliance officers at Plants, Offices and governance_170404.pdf satisfaction such as by undertaking a cross-sectional improvement Laboratories of Kuraray and group companies and to organize a Number of Consultations at activity. compliance committee in each region to effectively and Kuraray Group Employee 5 1 1 3 4 Counseling Room As a new initiative, beginning Fiscal 2016, a scheme called sustainably promote and implement compliance activities within “Saiteki Activity(meeting to discuss quality management)” was the group as a whole. CSR Promotion Structure launched. Under this scheme, the divisions and CSR Division together verify the current statuses of and improvements made in In 2003, Kuraray set up CSR Committee by integrating Social quality management at the divisions. The scheme enables Environment Committee and In-house Ethics Committee, and checking of common items to be reinforced with respect to quality Actions Taken for More Thorough Compliance with the Law bolstered its CSR promotion structure on a Group level. Three management of the entire Kuraray Group, triggering improvement committees of experts (Social Responsibility and Economic activities involving all the divisions. In March 2016, the Fair Trade Commission of Japan made an on-the-spot inspection of Kuraray, involving competitive bidding Subcommittee, Environmental and Industrial. Safety Subcommittee, As part of this scheme, the seminar aimed at improving the on textile products purchased by the Acquisition, Technology and Logistics Agency, Defense Ministry. and Risk Management and Compliance Subcommittee) are quality of automotive materials was hosted. Subsequently, in March 2017, the commission ruled that Kuraray had violated the Anti-Monopoly Law and issued a cease-and- organized under CSR Committee. Nine working teams are In Fiscal 2016, Kuraray Group quality handbook was compiled to organized in each committee of experts. These committees of share the concepts “quality as contemplated by Kuraray” and desist order. Responding sincerely to this fact, Kuraray has implemented the following measures to enable each of the officers experts and working teams study company-wide policies and “quality is customer satisfaction” based on the company statement and employees of the Kuraray Group to more thoroughly comply with the laws and regulations. targets and propose them to the management. Departments, that of the Kuraray Group. Furthermore, companywide education was Nevertheless, in February 2017, the Fair Trade Commission of Japan made an on-the-spot inspection again at Kuraray on the are responsible for special issues, constituiting these committees launched using this handbook. manufacture and sale of activated carbon used in water purification facilities, waste incinerators and other facilities. We take the and working teams collaborates with various organizations in Kuraray Group in addressing respective theme in accordance with series of these events seriously and sincerely and will implement all necessary measures to ensure such incidents will never recur, company-wide CSR policy. We will reorganize the structure and the Handling of Product Complaints as we fully cooperate with the inspection by the commission and will clarify the points that should be improved on the following Within Kuraray Group, information on complaints and claims operation system of the CSR committee in 2017, aiming at the aspects and will reinforce the countermeasure. more workable CSR implementing body. received from the customers is managed by its divisions, so responses to customers can be promptly made and action is taken swiftly to prevent the recurrence of same flaws. Material complaints Status of Activities and claims are handled in accordance with the “Regulations on Risk Management Product Liability-related Accident Response and Quality Complaint [Message from Top Executive] [Enlightenment, Education and Training] Report.” In Fiscal 2016, no product recalls or accidents that cause In response to the on-the-spot inspection by the Fair Trade An outside expert was invited to seminars held by Kuraray on the Anti- Within the Kuraray Group, the President formulates and conveys severe damage to health or damage to property such as fire were Commission of Japan, the top executive issued a message to all the officers Monopoly Law attended by the sales personnel of Kuraray, as well as all the a Group policy on risk management to the entire organization each reported. and employees of the Kuraray Group instructing stricter compliance with managerial personnel in the Tokyo and Osaka Head Offices. All the Kuraray year. This policy consists of two parts, namely, a long-term and the Anti-Monopoly Law. The message from the top executive was posted employees in Japan received a course of e-learning lessons to further raise continuous “basic policy” embracing overall Group risk on Kuraray’s intranet, bulletin boards and other places in order to ensure their awareness about compliance with the laws and regulations. management and “annual themes” that are dealt with in each fiscal information dissemination and stricter compliance. year in light of social situations and trends of the Kuraray Group [Creation and Updating of Rules] and other companies. This system allows flexible and prompt [Amendment of Guidelines on Compliance with the A variety of measures have been implemented including a revision of actions to be taken against changes in the risk environment while Anti-Monopoly Law] the employment rules with an emphasis on compliance with laws and maintaining the basic approach in responding to risks. To assist and ensure more thorough compliance with the Anti- regulations and the setting of new rules of contact in dealing with other companies in the same trade. The Kuraray Group’s risk management is characterized by a two- Monopoly Law, Kuraray’s Guidelines on Compliance with the Anti- tier approach to risk management: “vertical” and “horizontal” risk Monopoly Law were newly published, adding an easy-to-understand management. In vertical risk management, the business units, explanation of those matters that should receive attention in divisions, offices, plants and affiliates identify risks facing their accomplishing routine work as viewed from a global perspective. The newly published guideline handbook was distributed to the officers and individual organizations, evaluate such risks by themselves and employees of Kuraray and related parties in Japan. In the light of the appropriately devise and implement actions and measures to be violations and other cases, all the divisions checked their transactions taken. In horizontal risk management, the corporate staff thoroughly. department evaluates and conducts cross-sectional management

30 Kuraray CSR Report 2017 Kuraray CSR Report 2017 31