Kobe Steel Group Integrated Report 2019 Kobe Steel Group Integrated Report 2019 Changing & Creating Printed in Japan This report uses environment-friendly ink and paper. 19103000KSL-EG KBC_CR19E_CV_0930_imac16.indd 2-4 2019/09/30 14:00 Core Values of KOBELCO The core values are the commitments of the Kobe Steel Group to society and express the values shared by the entire Kobe Steel Group. We provide technologies, products and services that win the trust and confidence 1 of our customers we serve and the society in which we live. We value each employee and support his and her growth on an individual basis, 2 while creating a cooperative and harmonious environment. Through continuous and innovative changes, we create new values for 3 The Kobe Steel Group’s the society of which we are a member. Promise to Stakeholders Six Pledges of KOBELCO The Kobe Steel Group has created the Core Values of KOBELCO, Men and Women which expresses its commitments to stakeholders as a corporate philosophy, as well as the Six Pledges of KOBELCO Men and Women, which defines a code of conduct for Group employees as they fulfill the Core Values of KOBELCO. We, the men and women of KOBELCO, in the spirit of honoring the Core Values of KOBELCO, make the following Six Pledges: Based on the Core Values of KOBELCO and the Six Pledges of KOBELCO Men and Women, 1 2 3 Kobe Steel is making every effort to restore trust with its customers, business partners, Heightened Sense of Ethics Contribution to the Society by Establishing a Comfortable and Professionalism Providing Superior Products but Challenging and other stakeholders while striving for sustainable corporate value enhancement and Services Work Environment through contributions to society and the environment. We not only follow the laws, corporate Guided by our “Quality Charter,” we provide We provide a safe and comfortable work rules and societal norms, but also safe, sound, and innovative products and environment, and we value each conduct our corporate activity in a fair services to our customers, and thereby employee’s character, personality and and sound manner with the highest ensure customer satisfaction and contribute diversity, and provide each employee sense of ethics and professionalism. to the advancement of the society. with a challenging work experience so as Quality Charter to allow each employee to use his and The KOBELCO Group will comply with all laws, public her fullest capability. standards, and customer specifications, and make continuous efforts to improve quality, with the goal of providing Trusted Quality in our products and services. 4 5 6 Living in Harmony with Contribution to a Respect for Local Community Sustainable Environment Each Stakeholder We make efforts to be a good “corporate We aim to build a richer and more We respect all of our stakeholders, citizen” in each local community which sustainable world, and we conduct including customers, business associates, serves as the base for our group. environmentally friendly manufacturing and employees and shareholders, as our contribute to the betterment of the natural colleagues and build good and sound environment through our technologies, relationships with all of them. products and services. Kobe Steel Group Integrated Report 2019 1 Looking at the Next Sustaining Growth While The Kobe Steel Group aims to achieve sustainable growth together with society by establishing three core business areas 100 Resolving Social Issues in materials, machinery, and electric power while resolving social issues. Years 2 Kobe Steel Group Integrated Report 2019 Kobe Steel Group Integrated Report 2019 3 Looking at Coexisting with the Next The Kobe Steel Group helps reduce CO2 emissions through Local Communities a variety of approaches. Together with the local communities in which it conducts business, the Group provides distinctive and Contributing to technologies, products, and services that contribute to 100 the Environment the environment and society. Years and Society Moka Power Plant of the Electric Power Business (left) and Moka Plant of the Aluminum & Copper Business (right). Both facilities are located in Tochigi Prefecture. 4 Kobe Steel Group Integrated Report 2019 Kobe Steel Group Integrated Report 2019 5 Looking at the Next 100 Years Our Unique and Diverse Human Resources Are the Wellspring of Corporate Value People are the most important asset of the Kobe Steel Group. All of our employees, who come from unique and diverse backgrounds, strive to create new value through ceaseless innovation so that we can provide reliable technologies, products, and services. 6 Kobe Steel Group Integrated Report 2019 Kobe Steel Group Integrated Report 2019 7 To Our Stakeholders The Kobe Steel Group is keen to show stakeholders how it is changing and what lies ahead through carrying out measures to prevent a recurrence of the misconduct, reforming its corporate culture, and strengthening its profitability and business foundation. In Integrated Report 2018, I said “I am determined to make every effort to regain the trust of all our stakeholders and earn their confidence that Kobe Steel has truly changed.” Kobe Steel is taking various steps to restore the trust that was lost due to the quality misconduct,* including efforts to increase the awareness of each and every Group employee and reform our corporate culture, as well as implementing measures to prevent a recurrence of the misconduct. In order to increase employee awareness and reform the corporate culture, I continue to focus my energy on talking directly to Group employees to instill the meaning of the Core Values of KOBELCO, our corporate philosophy, and the Six Pledges of KOBELCO Men and Women, our code of conduct for realizing these core values. I intend for Kobe Steel to break away from the mind-set that led to the misconduct. I am also striving to instill a desire for change and a healthy sense of crisis in the Company. While implementing these measures to restore trust, it is crucial for the Kobe Steel Group to not let any growth opportunities slip by in the meantime. From fiscal 2016 through fiscal 2018, the Kobe Steel Group successfully consolidated upstream processes in the steel business and put in motion two new projects in the electric power business under the Medium-Term Management Plan in order to attain KOBELCO VISION “G+,” its medium- to long-term business vision that aims to establish a business enterprise consisting of the three core business areas of materials, machinery, and electric power. However, it came to light that some issues are still in need of attention, including profitability and monozukuri capabilities. In the “Rolling” of the Medium-Term Management Plan through fiscal 2020, which was announced in May 2019, Kobe Steel is taking proper steps to address these lingering issues, in addition to advancing its medium- to long-term growth strategy centered on reducing the weight of automobiles. For Integrated Report 2019, we have updated the content of our measures to prevent a recurrence of the misconduct, as well as showing how Kobe Steel is changing and what lies ahead by strengthening its profitability and business foundation. The Kobe Steel Group aims to sustain growth by harnessing its comprehensive capabilities arising from its wide range of technologies, products, and services, as well as its diverse human resources. Through our business activities, we contribute in our own distinctive way to the environment and society. Kobe Steel aims to restore trust by advancing sustainability management that can contribute to realizing a low-carbon society and the United Nations’ Sustainable Development Goals (SDGs). Dialogue with stakeholders is essential to the development of the Kobe Steel Group. I hope that you provide feedback on this Integrated Report from various points of view, which will create opportuni- ties for constructive dialogue with our stakeholders. I thank you for your continued guidance and encouragement. August 2018 * This refers to the act of falsifying or fabricating inspection data (hereinafter, “the misconduct”) for products falling short of public standards or customer President, CEO and Representative Director specifications, and shipping or delivering those products To Our Stakeholders to customers as if they conformed to the public standards or customer specifications. 8 Kobe Steel Group Integrated Report 2019 Kobe Steel Group Integrated Report 2019 9 The Kobe Steel Group’s Value Creation Story The value creation story of the Kobe Steel Group entails further increasing corporate value by pursuing distinctive Group synergies while addressing the issues and needs of customers and communities in Japan and overseas. Moreover, we act in accordance with the Core Values of KOBELCO and the Six Pledges of KOBELCO Men and Women. Vision The Group will continue to implement business models, business activities, and growth strategies in line with its original value creation story. In this way, we will increase our corporate value while helping to resolve social issues. Code of Conduct for Each Group Employee to Increasing We will also work to steadily restore trust by addressing the expectations of our customers, business partners, Follow to Fulfill the Core Values of KOBELCO corporate value shareholders, investors, and other stakeholders, and by fulfilling our responsibilities. 1. Heightened Sense of Ethics and Professionalism 2. Contribution to the Society by Providing Superior Products and Services 3. Establishing a Comfortable but Challenging Work