CHIYODA CORPORATION CSR Report 2006

CHIYODA CORPORATIONCSR Report 2006
Fiscal Year Ended March 31, 2006

12-1, Tsurumichuo 2-chome, Tsurumi-ku,Yokohama 230-8601, Japan
Tel: (81) 45-521-1231 Fax: (81) 45-503-0200
http://www.chiyoda-corp.com/

Printed in Japan on 100% recycled paper

TO FULFILL OUR ROLE

AS A RESPONSIBLE
CORPORATE CITIZEN
THROUGH CORE BUSINESS OPERATIONSThe Chiyoda Group has been a leading
corporation in the Japanese engineering
industry since its founding in 1948. We
have engineered and constructed petroleum, liqueﬁed natural gas (LNG), chemicaland other industrial plants in more than
40 countries. All these facilities have madesigniﬁcant contributions to industrial andsocial development. Through the years, wehave placed particular focus on energy andthe environment in our line of business. In
the 1950s, we performed engineering andconstruction for oil reﬁneries that werevital to meeting Japan’s energy needs. In
the 1970s, our accomplishments included
various facilities that help protect theenvironment. In recent years, we havebeen working on particularly projects forclean energy, such as LNG and sulfur-freepetroleum product, which have much lessenvironmental impact.
These achievements demonstrate how
we use business activities to play a directrole in tackling social and environmental
issues. We will continue to focus on solutions for three pressing global issues: thereliable supply of energy, environmental
conservation and the realization of sustainable social and economic development.

Petroleum plants that produce
gasoline, kerosene, diesel fuel,heavy fuel oil and other reﬁned
products

ECONOMYENERGYCONTENTS

Contribution to sustainable economic
development

Contribution to a stable energy
supply• Engineering and construction of petroleum
reﬁneries, petrochemical plants and otherindustrial plants to produce ﬁne chemicals,
pharmaceuticals, processed food products andother industrial goods• Economic development of countries whereplants are constructed• Engineering and construction of facilities thatmake possible the efﬁcient production andstable supply of reﬁned petroleum products,
natural gas and other energy sources• Provision of solutions by technologies to conserve energy and make other improvements at
industrial plants and complexes

A Message from the President
Chiyoda Group CSR Vision�����������
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Plants to produce sulfur-free gasoline and diesel fuel and energy
conserving plants of petrochemical complexes

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Customers’ Perspectives
Quality Management
Mutually Fair Collaboration with
Customers and Suppliers
Community and Social Activities
Corporate Governance

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Employees’ Perspectives
For the Beneﬁt of Employees
Occupational Health and Safety

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Shareholders’ Perspectives
For the Beneﬁt of Shareholders

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Global Network
Corporate Information
Editorial Policy

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CHIYODA CORPORATION CSR REPORT 2006

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Flue gas desulfurization plants, water
treatment plants and soil improvement������������

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Contribution to theEnvironment
Our Legacy for the 21st Century
Environmental Activities in Three
Categories of Operations
Original Technologies Contribute toEnvironmental Conservation�������������
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Pharmaceutical plants, foodprocessing plants and quality
assurance systems for pharmaceuticals and food products

Natural gas processing plants,
natural gas liquefaction plants and
LNG receiving terminals to supply
gas to utilities and power plants���������

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Petrochemical plants that supply
feedstock for plastics and synthesis textiles and fertilizer plants

Contribution to Society
LNG Projects: The Convergence ofBusiness and CSR
Providing Employment Opportunities
through Our Plant Construction
in Oman
Next-Generation Industrial Areas
for Optimum Energy Sharing

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SOCIETY

ENVIRONMENT

Contribution to sustainable social
development

Contribution to environmental
conservation• Technology transfer to countries where plants
are constructed• Training and other support involving technologies• Supply of facilities to produce clean-energy
sources with minimal CO2 emissions• Engineering and construction of facilities toprevent air and water pollution• Provision of solutions for environmental issues

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A MESSAGE
FROM THE PRESIDENT

Nobuo Seki
President & CEO
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CHIYODA CORPORATION CSR REPORT 2006

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FOR THE 21ST CENTURY����

our activities. I believe that applying thisstance to every project is what corporate social responsibility is allabout.
A member of the management of a major energy company
described our young staff as typical of all Chiyoda employees –“Moderate, Courteous and Digniﬁed.” I believe these complimentary words express the characteristics that we need to continue
to strive for within our organization. We will respect all parties
with whom we do business and work to earn the same respect inreturn. Building these relationships while maintaining sound communications is essential to the successful completion of the massive
and intricate projects that we undertake.

We are currently proceeding with a medium-term management
plan called “Double Step-Up Plan 2008.” The major goal is earning a
An Ever-Lasting Commitment
reputation as the “Reliability No. 1” Project Company, which means
to the Chiyoda DNA
that we intend to become the most reliable company in the world
by offering the best professional services to clients during project
implementation, including engineering, procurement and construcIn 1972, Chiyoda issued a booklet titled “Our Legacy for thetion. In project implementation as well as in corporate management,
21st Century” that described the need for harmony between
we are trying to be courteous and digniﬁed and to constantly focus
the advancement of humankind and conservation of theon the basics. Through this approach, we will show our respect for
natural environment. The publication declared that Chiyoda
others and earn their respect as well. By providing our highly reliwould always work on developing technologies that help
able services throughout the project, we will gain the respect of oursolve problems involving energy and the environment. Thisclients.
spirit is still passed on to the new generation of engineers so
Employees are our most valuable assets with regard to achievingthat our DNA remains the nucleus of all our technologies.
these goals. We will continue to expand and enhance the ways in(A Japanese-language copy of “Our Legacy for the 21st Cenwhich we foster their development.
tury” is available on the Chiyoda web site.)
We share with our employees the importance of reliability –vested in and aimed at by the Company – and we play a vitalrole in harmonizing hardware (manufacturing) and software (technologies and project������������������������
management) in order to respond to the��������������������������
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development. It is our mission to foster the��������������������������
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younger generation within Chiyoda Group������������������
operations to earn greater reliability andrespect and to enhance the overall value of�������������������������������������
the Group.
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Our CSR concept will be materialized in���������������������������������������������
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the way that we continue to offer cuttingedge technologies and differentiated services���������������������������������������������
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as a plant engineering and construction con�������������������������������������
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harmonization of manufacturing and services
to the next generations of Japan.
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“Reliability”
that begins with
“Respect”* OUR LEGACY���

Chiyoda’s core business is engineering, procurement and construction of energy, chemical and other industrial plants. Completingsuch projects requires the knowledge and expertise to provide
solutions as well as the skillful combination of hardware and various Recognizing the Importance of Mutual
services. Thus, plant engineering is an extremely complex busiRespect in a Manner of “Moderately,
ness that entails a massive number of tasks, and our projects have
Courteously and Digniﬁedly”
substantial and multi-faceted impacts on various ﬁelds.
The global scale of our operations further complicates the nature
Throughout our history, our operations have reﬂected a comof our business. Our activities must conform to international andplete understanding of the magnitude of the various impacts of our
local standards for behavior and corporate citizenship. Success isbusiness activities on society and the environment. Chiyoda itself
possible only if we strictly observe all rules and do business in thehas been well aware of these impacts and of the need to fulﬁll its
spirit of partnership.
obligations.
This is why we execute projects strictly in accordance withIn 1972, our founder Dr. Akiyoshi Tamaki issued a booklet titled agreements and common understanding established among the“Our Legacy for the 21st Century.”* The publication contains aparties concerned. We have long understood the importance ofclear message to the public about corporate
drawing a line between what we should
responsibilities concerning pollution, whichand should not do. We must manage ourwas then gaining recognition as a serious
projects under a rigorous framework ofsocial issue. Dr. Tamaki emphasized thechecks and balances. Without this stance,
importance of harmony between humankind
we cannot build win-win relationships
and nature and the proper balance between
with the world’s major energy companies
industrial activities and environmental preserand our other business partners.
vation. In essence, he was addressing a theme
We carry through on our commitThe Chiyoda approach to CSR
known today as “sustainable development.”
ments. We perform every task as bestMore than three decades ago, Chiyoda was
we can. This is the foundation for all

Aiming to Become the “Reliability No. 1”
Project Company

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guided by this resolute commitment to linking our core business
operations with actions to deal with social and environmental
issues on a global scale. Today, this spirit and underlying philosophy
remains the basis for everything that we do.

�������������������A CSR Commitment That Started upon
Our Foundation�����������������������������������������������������������������������
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CHIYODA GROUPCSR VISIONThe Chiyoda Group achieves its core values based on the maintenance of close ties
with various stakeholders through its business activities. We believe activities that
accurately reﬂect our values are one and the same with CSR activities. To delineate
clear goals for our CSR activities, we have established the Chiyoda Group CSR Vision.
As an integrated engineering company, the Chiyoda Group pledges to constantly
strive to increase corporate value and earn the trust and understanding of all
stakeholders by adhering to the following principles.

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The Chiyoda Group’sCore Values

The Chiyoda Group’s
CSR Structure

The Chiyoda Group will use advanced technologies backed byextensive knowledge and expertise to constantly upgrade businessactivities for the purpose of contributing to the sustainable development of society.

At Chiyoda Corporation, the CSR Division was established in ﬁscal
2006 to coordinate full-scale CSR initiatives. In the CSR Division,
specialized ofﬁces were formed for each of the three core themes:social and environmental affairs, compliance and information security. The division and these three ofﬁces together implement CSR
programs at Chiyoda Corporation as well as at Group companies.
The CSR Committee was established in June 2005. Members
include representatives of the CSR Division and its three ofﬁces
along with representatives from corporate planning, personnel, general affairs, quality management, environment and safety and othersections of Chiyoda Corporation. Major roles of the committee include promoting awareness of CSR initiatives and offering directions
and plans associated with CSR activities. There is also the GroupCSR Committee, formed in 2005, which promotes CSR activities acrossthe entire Chiyoda Group.

A Reliable Company

CSR Medium-Term Targetsof the Chiyoda GroupWe are dedicated to earning a reputation among our customers andall others with whom we do business as the “Reliability No. 1” Project
Company by providing the highest levels of technologies and knowledge
in the world.

1. A Reliable Company

Chiyoda Corporation established the following CSR medium-termtargets to embody the CSR Vision in all Group activities.

Environmental Initiatives
We are dedicated to remaining a company that plays a vital role insociety by using sophisticated technologies to maintain the properbalance between environmental conservation and social and economic
development.

• Obtain the satisfaction of customers by
supplying industrial plants that haveoutstanding quality with “Reliability No. 1”
technologies• Share the principles of our CSR Vision withvendors, subcontractors and other business
partners

2. Environmental
Initiatives• Conduct business activities that help
conserve the environment

Social Contributions throughBusiness Activities

3. Social Contributions
through Business
Activities• Use business activities to contribute tosociety

We are dedicated to using our engineering business activities in Japanand overseas to contribute to society, such as helping people reach theirgoals, transferring technologies and protecting the environment.

4. Respect for Human
Rights• Create a lively and energetic working
environment and help develop employees’
talents

Respect for Human Rights
We are dedicated to respecting the human rights of all people. We will
create a corporate culture where the individuality and character of every
employee are respected, where people are motivated to do their best,and of which employees and their families are proud.

• Materialize social contributions throughthe provision of knowledge, expertise andactivities• Realize zero accidents

5. Commitment toFairness�������������������

• Develop and provide environmentallyfriendly technologies• Conduct business activities based on strict
compliance with laws and regulations and ahigh degree of transparency• Conduct a thorough risk management
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Commitment to Fairness
We are dedicated to achieving even greater transparency and stability byconducting our operations fairly in accordance with the highest ethicalstandards.

CHIYODA CORPORATION CSR REPORT 2006

CHIYODA CORPORATION CSR REPORT 2006

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LNG PROJECTS:

THE CONVERGENCE OF BUSINESS AND CSRCHIYODA’SSOCIAL CONTRIBUTION
THROUGH LNG

Natural Gas, an Environmentally Friendly Fuel
Natural gas is attracting attention worldwide as a clean-burning fuel. According to
the World Energy Outlook 2005 report,
annual demand worldwide for natural gas in
2030 will be 4.2 billion tons, twice the levelin 2000. This is the fastest growth rate ofany fossil fuel. Furthermore, natural gas is
projected to rise from 23% to 27% of global
energy consumption. Burning natural gas
produces anywhere from 20% to 40% less
CO2, a source of global warming, than coaland petroleum products. Nitrous and sulfuQalhat LNG plant in Oman
rous oxide emissions, a source of acid rain,
are also comparatively low. In the past, natural gas was used in limited areas since it could
only be piped. Today, it is being used throughout the world as it can now be liqueﬁed for
carriage to distant destinations. Furthermore, natural gas ﬁelds are located in many moreareas of the world than crude oil ﬁelds, and there are ample reserves. All these attributes
make natural gas an ideal fuel.

Fiscal 2006 LNG Projects at Chiyoda
Chiyoda has been involved in the engineering and construction of LNG plants since
1960s. Currently, we have constructed LNG
plants with a total annual output of 30
million tons. Chiyoda was involved in theconstruction of 14 of the 21 LNG receiving
terminals built in Japan.
In ﬁscal 2006, we received contracts
from Qatar for some of the world’s largest
LNG projects. We were selected to build
two LNG trains for Ras Laffan Liqueﬁed
Natural Gas (3) and two more trains of
LNG receiving terminal in Mizushima, Japanthe same scale for Qatar Liqueﬁed Gas
Company Limited (3 and 4). Each train will produce 7.8 million tons of LNG. In Japan, we
completed work on schedule at the Mizushima LNG receiving terminal. At this project, we
handled everything from engineering and procurement to construction and commissioning.

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CHIYODA CORPORATION CSR REPORT 2006

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LNG plant in Ras Laffan, Qatar

A Stable Supply of Energy for JapanThe United States, Korea, China, European nations and other countries have plans to increase LNG imports. Japan’s share of global LNG imports, currently about 40%, is certain to
decline. As the number of LNG buyers grows, it is becoming increasingly important to establish ties with suppliers to ensure a stable, long-term supply of energy for Japan. Throughthe construction of LNG plants, we have formed deep ties with gas-producing nations toensure Japan’s demand for energy is met.

Reduction of CO2 Emissions
To meet growing worldwide LNG demand, LNG plants themselves have become larger aswell. Compared with the plants in the 1970s, the LNG plants constructed today are almost
10 times larger in terms of production capacity. From the viewpoint of mitigating global
warming, operation of the liquefaction system, where most energy is consumed, is a criticalaspect of an LNG plant. We are therefore trying to develop larger equipment, which improves the liquefaction process and operating efﬁciency, to save energy and to reduce CO2
emissions.

CHIYODA CORPORATION CSR REPORT 2006

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PROVIDINGEMPLOYMENT OPPORTUNITIESTHROUGH OUR PLANT CONSTRUCTION IN OMAN
A Highly Successful Omanisation Program

United ArabEmirates

Oman
Saudi Arabia

Located on the east coast of the Arabian Peninsula, Oman is one of the world’s largest
producers of crude oil. The national government has an Omanisation program, in which aminimum level is set for the employment of Omani citizens at every project and businessconducted by companies in various sectors. We provided many jobs for Omani citizens at
the Oman LNG plant project, where construction began in 1996, and at the Qalhat LNG
plant project, which started in 2003.
At the Qalhat project, we set a number of records for the speed of construction andcommissioning. In November 2005, construction was completed in 33.4 months, 17 days
less than the scheduled 34 months. Only nine days after plant turnover had been accomplished, LNG production began and the ﬁrst shipment and exports were made within thenext 30 days. The customer was extremely pleased with these achievements. This plantcurrently produces about 3.3 million tons of LNG annually, most of which is exported toJapan and Europe.

A Unique Approach to Omanisation
In Oman, government agencies have been a major source of jobs. However, as the working
population of the nation has increased, there is now a need to raise private-sector employment opportunities. The inevitable depletion of oil reserves makes Omanisation even morepressing. Oman urgently needs to prepare for its transition from a provider of energy
resources to a provider of human resources.
We signed the contract for the Qalhat project with the Oman Ministry of Oil and Gas,
as Qalhat LNG S.A.O.C. had not yet been established. The Government of Oman wanted
to make this a model project for its Omanisation program. Accordingly, the target for hiring
Omani citizens was 35%, more than twice the 15% level normally applied to the construction sector. We were dedicated to meeting this ambitious goal. In addition, we recognizedthat Omanisation also entailed placing priority on contributions to the welfare of residents,
shops and companies in communities near the construction site. In an unprecedented
step for a construction site, we established the Sustainable Development Group devoted
exclusively to community issues. We then conducted our Omanisation program with thecooperation of national and local government agencies, subcontractors and, of course, thecustomer.
To verify our performance, we monitored quantitative data on a monthly basis using thefollowing Key Performance Index (KPI).

“Best Omanisation Company” in theconstruction sector8

1. Omani citizens as a percentage of the total workforce
2. Nearby residents as a percentage of all Omani employees(Surt Sharqiyah region)
3. Progress in upgrading skills of trainees
4. Employment of trainees
5. Use of local subcontractors and local procurement activities

CHIYODA CORPORATION CSR REPORT 2006

Rigorous Professional Training
and Language Programs
In Oman, we concentrated on recruiting individuals from nearby
areas to maximize our contribution to the regional economy, butmany people had little or no job experience. Moreover, the majority
could not speak English, the working language at the job site. Overall, the Omanisation goal of at least 35% presented more challenges
than we had expected.
Another project was already under way in the region where the
LNG plant was to be built, but this project
was unable to hire a sufﬁcient number offully or partially trained Omani citizens. Most
subcontractors, which had a large numberof local workers, educated their workers byusing training institutes.
Another challenge we faced was hiring people with no work experience at aconstruction site, a workplace that demands
constant attention to safety. All Omani
citizens who were hired had to attend special
safety classes and complete other necessary
training. In all, 3,106 individuals ﬁnished oursafety program. Thanks to these efforts, theQalhat project achieved 20 million manhours without an on-site accident. At our ofﬁce at the job site, our Omani staff received
language lessons from a British instructor as
Training at Technical and Administrative Training Institute (TATI)
well as the IT training needed to perform ofﬁce work.
All these initiatives resulted in a KPI of 95.67 when the project was completed, farabove the goal of 80. Omani citizens accounted for 37.5% of the workforce, well above thegovernment’s 35% target. During the project’s busiest phase, Omani employment rose to
1,362 a month and the total number of Omani employees reached about 27,000 for theperiod of construction.

Recognition from the Sultanate of Oman
In recognition of its accomplishments, Chiyoda was honored by the Omani government in
February 2004 and May 2006 as the “Best Omanisation Company” in the construction sector. We are the only company with no government ownership to receive this honor, which
we view as proof that we fulﬁlled the objectives set out by the Omani government. We
continue to use lessons learned in Oman to make similar contributions to countries andlocalities through our plant construction projects.

CHIYODA CORPORATION CSR REPORT 2006

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NEXT-GENERATION INDUSTRIAL AREAS FOR

OPTIMUM ENERGYSHARING
Heat sharing,
Fuji Oil Company

Integrated energy
monitoring system

New Approach Optimizes
Total Energy Use at Many
Sites

Border line

Fuji Oil Company

Sumitomo Chemical Co., Ltd.

Lower heat
power generation
Heat sharing,
Sumitomo Chemical Co., Ltd.

Integrated energy
monitoring system
Water supply for boiler

Research Project withNEDO
In ﬁscal 2000, we started a three-year
research program with Japan’s New Energy
and Industrial Technology Development
Organization (NEDO), which is afﬁliated with the Ministry of Economy, Tradeand Industry, concerning the use of pinch
technology for energy sharing among plants
within a particular area. The objective wasto seek methods to extend the applicationof this technology, until then restricted toa single plant, to cover industrial areas. We
examined the Chiba Industrial Area, one ofJapan’s largest, with the cooperation of 23
sites of the 20 companies at this location.
We concluded that optimizing energy use
for the entire area would theoretically yieldenergy savings equivalent to about 640,000
kiloliters of crude oil each year. Japan currently consumes this much crude oil in asingle day.

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Hot water from boiler

Pinch technology is a technique for optimizing total energy systems, including heat andelectricity, at industrial sites. We have examined practical energy systems that optimize
the balance between temperature levels andheat quantity. We are also studying the application of pinch technology for optimizing
energy systems for entire industrial areas.
Our plan is to start a new pinch technology business in order to conserve energy
by enabling several production facilities toshare energy sources.

Steam

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The Energy Sharing ProjectAt the energy sharing project at the Chiba Industrial Area, westudied data from more than 1,200 heat exchangers at the participating sites. We then held discussions with site engineers to devise
a proposal for eight projects with about 30 heat exchangers. The
resulting energy savings are equivalent to approximately 90,000
kiloliters of crude oil.
The next step was a further narrowing of the project basedon economic considerations. The highest priority was an energy
sharing project involving Fuji Oil Company and Sumitomo ChemicalCo., Ltd. because it would yield beneﬁts equivalent to about 10,000
kiloliters of crude oil. With NEDO providing some support, wedeveloped a three-year business plan starting in the second half ofﬁscal 2004.
We have also conducted energy conservation studies at otherindustrial areas in Japan. At Mizushima in Okayama prefecture, we
demonstrated theoretically a reduction in energy needs equivalent
to two days of Japan’s crude oil consumption. At Kashima in Ibaraki
prefecture, the potential saving is equivalent to 1.2 days of crude oil
consumption in Japan. These results led to the start of work on energy-sharing businesses. In ﬁscal 2006, we performed similar studies
at the Oita Industrial Area in Oita prefecture and the Ube-Onoda
Industrial Area in Yamaguchi prefecture.

Results of Energy Conservation Studies(Chiba, Mizushima and Kashima Industrial Areas)(Annual crude oil equivalent)

Chiba

Mizushima

Kashima

23

35

30

Total fuel consumption(heat + electricity)

2,885,000 kl

3,496,000 kl

2,039,000 kl

Total theoretical energy
conservation

641,000 kl

1,247,000 kl

740,000 kl

1 day

2 days

1.2 days

Number of plants

Equivalent amountto domestic crude oil
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Plant Lifecycle Engineering (PLE)

OUR LEGACY�����������������������������
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Conservation of the Environment — The Most Important Mission of All��������������

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Looking Ahead to the “Trilemma Age”
in the 21st Century
The 20th century is often referred to as the “dilemma age” between economic growth andthe need to conserve the environment. To cope with the “dilemma” challenges, we provided
technologies, including Natural Gas Liquefaction and Flue Gas Desulfurization, to many
plants worldwide.
In the 21st century, we are entering the “trilemma age,” adding the third challenge ofensuring a stable supply of energy. The population and economies of the world continue togrow. At the same time, the supply of coal, oil, natural gas and other fossil fuels is becoming
increasingly limited. Another serious problem is rapid global warming caused by the world’s
rising consumption of energy.
Our mission is to offer solutions that make possible sustainable development. We willcontinue to develop and provide technologies for reliable energy supplies and environmental
protection. We will take advantage of all our resources to ﬁnd the necessary solutions.

Plant Lifecycle Engineering (PLE),
a 21st Century Environmental System
We created our PLE concept for the engineering of plants. It is applied to maximize efﬁciency at every stage of a plant’s lifecycle, from planning, engineering and construction to operation, maintenance and decommissioning, thus minimizing the plant’s environmental impact.

Environmental
Management Systems
At Chiyoda, the Environmental Management
Review Committee, which is chaired by
the Company president, is responsible fordecisions on environmental activities. This
committee establishes Corporate Environmental Policy and periodically reviews theGroup’s activities.
The Executive HSE Management
Committee is responsible for overseeing
activities involving health, safety and theenvironment. Other committees oversee
activities at speciﬁc business sites: theYokohama Head Ofﬁce HSE Management
Committee, the R&D Center HSE Management Committee and the Project HSE
Management Committee.

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GrowthConservationof theEnvironment�����������������
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StableSupply ofEnergyChiyoda’s “Trilemma” Technologies
CO2 reforming
process

A technology for
manufacturing gases used for
GTL, a next-generation energy
sourceHigh-temperature
air combustion
technology

A technology for highly
efﬁcient combustion in
incinerators

Pinch technology

An analytic method for energy
conservation

Chemical hydride
technology

An advanced technology
for hydrogen storage andtransportation

A technology for
upgrading /gashiﬁcation ofresidual oil

Effective utilization of residualoil

President & CEO
Environmental Management
Review Committee
SQE Division(HSE Management Office)(Quality Management Office)Executive
HSE Management Committee

Yokohama Head Office
HSE Management Committee

R&D Center
HSE Management Committee

Yokohama Head Office
Tsurumi Office, Koyasu Office

R&D Group

CHIYODA CORPORATION CSR REPORT 2006��������

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Corporate Environmental Policy
Chiyoda fully recognizes that all corporate activities must be performed in a responsible manner leading
to “sustainable development” by balancing the advancement of humankind and conservation of the global
environment.
To achieve this goal, all Chiyoda personnel, top management and each individual staff shall perform theiractivities in due consideration of the following policy, while cooperating with our customers as well as thecompanies concerned, governmental authorities and communities.
1. Provide plants and facilities to customers that have no undue environmental
impact by devoting Chiyoda’s technology and engineering ability for optimizing
usage of natural resources and energy and for reducing efﬂuent and waste
produced or recovering usable material therefrom.
2. Perform all activities in an environmentally sound manner through project
execution from planning, engineering, procurement and construction to operation.
3. Research and develop technologies which contribute to the prevention or
resolution of environmental problems and transfer globally such technologies andencourage the dissemination thereof.
4. Comply with relevant environmental legislation and regulations, and with otherrequirements to which Chiyoda subscribes.
5. Develop, maintain and continually improve an environmental management systemfor promoting activities of environmental conservation.
We will be the most reliable project company in the world through enhanced environmental activities.

International Project Operation

CHIYODA CORPORATION CSR REPORT 2006

13

Environmental Activities at Ofﬁces

ENVIRONMENTAL

ACTIVITIES IN THREE CATEGORIES OF OPERATIONS
Chiyoda is primarily engaged in the engineering, procurement and construction (EPC) of plants andother industrial facilities.These operations are supported by project management activities, support
services and R&D activities.
Procurement
Chiyoda has been dedicated to green procurement at its projects. In 2005, we beganbuilding a green procurement system. The
ﬁrst step was a September 2005 internalsurvey to determine the status of procurement activities at construction projects inJapan. This was based on directives of the
Ministry of the Environment (2005 edition).
Based on the survey ﬁndings, we set up theGreen Procurement Committee in 2006 to
establish green procurement guidelines thatreﬂect the nature of our operations. We
plan to announce these guidelines no later
than March 2007.

Ofﬁce work accounts for all tasks other than construction and R&D
activities. Consumption of electricity, water and paper are primary
examples of how ofﬁces impact the environment. We concentrateon using resources effectively and cutting down the amount ofwaste. For instance, there are no dustbins in ofﬁces. Instead, we
have collection bins in designated locations for speciﬁc categories ofrefuse. Ofﬁce workers are much more aware of the need to reduce
trash and recycle materials.

Environmentally Conscious R&D
In our R&D activities, we develop and improve environmental
technologies in two categories: methods to reduce the environmental impact and methods to reduce and prevent pollution. We thenprovide these technologies to our customers. For waste generated by R&D programs, we formulate plans prior to the start of anactivity to ensure proper disposal. In March 2005, we extended thescope of ISO 14001 certiﬁcation to R&D operations. Accordingly,
R&D operations now establish and manage targets for environmental activities.

Environmental patrol

Environmental Activities in EPC
Following the receipt of a contract for each project, we prepare a
project environmental management plan that includes the assessment of all environmental issues. This allows our managers in chargeof engineering, procurement and construction to do what is needed
to supply customers with plants and other facilities that have a
reduced environmental impact.

EPC• Design plants and facilities giving due consideration
to the environment• Construct plants and facilities in an environmentallysound manner

Ofﬁces• Build eco-friendly ofﬁces

R&D• Properly manage gases, chemicals and othermaterials required by R&D projects• Reduce waste generated by R&D activities• Implement R&D programs aimed at environmental
conservation

Environmental Targets
Fiscal 2006 Targets

Fiscal 2006 Performance (examples)

Fiscal 2007 Targets

EPC

Practical use and improvement of design checklist(FY2005-2007)
Design considering reduction of constructionwaste (FY2005-2007)
Reduction and proper processing of constructionwaste (FY2005-2007)

Prepared and established procedure for using
checklists for machinery and equipment
Prepared database for engineering checklist to
prevent trace levels of hazardous substances
Collected case studies on ways to procure only
the amount of materials required to avoid waste
generation
Conducted job site training concerning thecollection of waste by category

Practical use and improvement of design checklist
Design considering reduction of construction
waste
Reduction and proper processing of construction
waste

OfﬁcesParticipate in community activities
Reduce electricity consumption through energy
conservation campaigns and the use of energyefﬁcient equipment
Limit generation of waste, recycle and reuse
waste
Plant vegetation (on rooftops)

Participated in neighborhood cleanup activities
Gave tours of energy conservation systems andheld meetings with local government agencies, etc.
Installed environmental facilities (solar cells, windturbines, ice storage air conditioning, etc.)
Reduced waste incinerated per employee by 12%
vs. FY2005 level
Planted 200m2 of vegetation on head ofﬁce roof

<Promotion of communication about theenvironment in the neighborhood>
Promote an environmentally conscious community
by communicating with local society
Hold cleanup activities, patrols for the environmentand social gatherings regularly with neighboring
residents
Establish tours of eco-friendly facilities in ofﬁce
buildings<Construction of eco-friendly ofﬁces>
Promote greening campaigns both inside andoutside ofﬁces as well as improve the ofﬁce
environment by placing foliage, such as potted
plantsR&D

Use catalysts and new production methods toreduce the environmental impact(FY2006-2008)
Reduce laboratory waste by 5% vs. FY2005
Set up storage and management methods forchemicals and gases used in R&D(FY2006-2008)

Continued to work on R&D programs on scheduleAchieved a 75% reduction in laboratory waste
Prepared a list of substances used by eachresearch group and took other actions
Building the required systems

Use catalysts and new production methods toreduce the environmental impact
Reduce laboratory waste by 10% vs. FY2005
Set up storage and management methods forchemicals and gases used in R&D

Construction
Construction activities, particularly thegeneration of waste, have the most serious
direct environmental impact of all our operations. This is why we take various actions
at job sites as well as during planning. Ourconstruction plans incorporate plans for the
reduction, sorting and recycling of waste.
We have a rigorous system for ensuringthat these plans are carried out at the jobsite. Another constant theme is engineering
plants that hold down waste volume.

Our long-term goals for environmental
programs in all three categories ofoperations:

Engineering
As prescribed in the project environmental management plan, engineering operations prepare an environmental design checklist that
forms the basis for the following activities.
• Engineering to reduce the environmental impact during
the plant’s operation• Development of a plan to reduce the environmental
impact during construction• Proposals for plant and manufacturing equipment withless environmental impact

14

CHIYODA CORPORATION CSR REPORT 2006

CHIYODA CORPORATION CSR REPORT 2006

15

ORIGINAL TECHNOLOGIESCONTRIBUTE TO ENVIRONMENTAL CONSERVATION
Two Types of Flue Gas
Desulfurization Technologies
Chiyoda Corporation has developed two originaltechnologies for the removal of sulfur from ﬂue
gas. Both technologies are used in Japan andoverseas to mitigate air pollution.
CT-121In the 1960s, we developed an innovative technology using the wet
limestone-gypsum method for the highly efﬁcient removal of SOx
from fuel gases of boilers fueled by petroleum and coal. Called
Chiyoda Thoroughbred 121 (CT-121), the technology is currently
in use at more than 50 generating units that we constructed inJapan and overseas. Recently, we have been licensing this technology overseas. In ﬁscal 2005 and 2006, more than 10 licenses were
granted, primarily for coal-ﬁred power stations in the United States.
Demand for CT-121 is climbing due to expectations for even tighter
SOx emission restrictions in the United States, a clear indication of
the excellent reputation of this technology.

CASOX PROCESSA Catalyst to Reduce Diesel Fuel Sulfur Content

Flue Gas Desulfurization by catalytic SOx oxidation (CASOX PROCESS) is an innovative process that uses a newly developed, highperformance desulfurizing catalyst. The CASOX PROCESS is a simple
system in which ﬂue gas is desulfurized by passing it through thecatalytic layer. The sulfur dioxide in ﬂue gas is oxidized to produce
dilute sulfuric acid with water vapor, which can be removed. As
the dilute sulfuric acid is continuously removed from the catalytic
layer, the process can be successively operated without the need forcatalyst regeneration.
The CASOX PROCESS can remove more than 90% of sulfur
dioxide in ﬂue gas. The sulfur dioxide removal performance can bealtered in a wide range by adjusting the amount of the catalyst. The
process also makes it possible to lower investment and operating
costs by the use of the newly developed catalyst.
The ﬁrst commercial plant applying this process has been in
operation at an oil reﬁnery since April 2003. In mid-2006, the second
commercial plant successfully began operation in Indonesia.

As one way to improve air quality, we take actions on a global scale to make diesel engine
exhaust cleaner. In Japan, oil reﬁning companies had already completed work needed to
produce sulfur-free (less than 10ppm) diesel fuel at the beginning of 2006. The EU andthe United States are also expected to switch to sulfur-free diesel fuel. Desulfurization is
performed using a hydrogenation process, which requires a highly active and stable catalyst.
To meet this requirement, we developed an ultra-deep desulfurization catalyst that employs
titania. We achieved a high level of catalyst activity by using a unique adjustment method toeliminate the shortcomings of ordinary titania catalysts.

CT-121 Global Activities
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Technology for the Effective Use of CO2
Natural gas is attracting much attention as a clean-energy source that canreplace petroleum. Since there is almost no sulfur or nitrogen in naturalgas, using this fuel is an effective means of conserving the environment.
Currently, interest in GTL (gas-to-liquid) technology is growing. This technique is used to chemically transform natural gas into liquid fuels, such as
methanol, DME and synthetic crude oil. Chiyoda is now developing a CO2
gas reforming process for the production of synthetic gases from naturalgas. By using a CO2 gas reforming catalyst, an original Chiyoda technology,
our system creates an effective means of using CO2 that is generated by
LNG plants and hydrocarbon gas ﬁelds containing large volumes of CO2 in
Southeast Asia.
Our CO2 gas reforming process has performed as expected on a trial
JOGMEC-GTL pilot plant (7BPSD)
basis at the JOGMEC-GTL project. Japan Oil, Gas and Metals National
Corporation (JOGMEC) plans to take the lead in developing technologies needed to commercialize this process in order to produce synthesis gas from natural gas.

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CHIYODA CORPORATION CSR REPORT 2006

CHIYODA CORPORATION CSR REPORT 2006

17

MUTUALLY FAIRQUALITY

COLLABORATIONMANAGEMENTWITH CUSTOMERS AND SUPPLIERS

Our devotion to quality management reﬂects a commitment to earning thesatisfaction and trust of customers.
Our primary mission is to supply the products and services that meet customers’ demands by bringing together
various technologies.
FLOW CHART FOR CONTINUOUS BUSINESS IMPROVEMENT
Senior Management

BSC

Corporate Quality
Management Policy

Mobilization Plan for
Project Personnel

QMS *1 Plan

Project Tasks (supply of products, quality assurance, quality control)

Supervision and Measurement

Degree of Customer
Satisfaction

QMS / Process

Products / Services

Analysis of individual data / evaluations / corrective and preventative measures / ideas for improvements

Analysis of aggregate data / evaluations / corrective and preventive measures / ideas for improvements

LLB *2QMS Management
Committee*1) QMS: Quality Management System*2) LLB: Lessons Learned Board*3) PMC: Project Management Committee*4) BSC: Balanced Scorecard is a management system that facilitates
the quantitative monitoring of progress from four perspectives: customers, ﬁnances, business processes, and employees and innovation.

18

CHIYODA CORPORATION CSR REPORT 2006

PMC *3The Quality Management
System at Chiyoda
Chiyoda earned ISO 9001:1994 certiﬁcationfrom BSI in 1994 for project management.
Certiﬁcation was switched to the ISO
9001:2000 version in 2002, which was thenrenewed in 2005.
Chiyoda establishes Corporate Quality
Management Policy and targets from thestandpoint of putting the customer ﬁrst.
At the end of each ﬁscal year, policies andtargets are reviewed at a senior management level.
In ﬁscal 2004, we started using the“Balanced Scorecard (BSC)*4 System” formanaging our operations, and all divisions
and departments established quality targets
and began taking actions to meet thosetargets.
We regard quality assurance and control as the core elements needed to achieve
our quality targets. Every Chiyoda department uses a process-approach perspective
to execute tasks extending from initialengineering to commissioning. Each step iscarefully reviewed and veriﬁed to be certainthat we have selected the best approach.
Customer satisfaction surveys are partof this process. We conduct periodic andas-needed surveys in Japan and overseas toreceive feedback from customers. Survey
results are fed back for a senior management review, serving as the basis for acontinual improvement cycle, which ensuresthat our quality assurance and control systems are always functioning properly.

The success of a project requires efﬁcient
procurement of the massive volume of materials,
collaboration with customers and suppliers andeffective control systems.
Constructing a plant demands the procurement of a massive
volume of materials and services. Suppliers are located in all areasof the world. As the scale of plants grows, so does the amount ofmaterials, equipment and other items that must be procured. We
are currently constructing three large LNG plants in the Middle
East. Collectively, the total volume of the items procured for theseplants would ﬁll Tokyo Dome (1.24 million cubic meters) 1.5 times.
Along with procurement of this volume of materials comes anequally high volume of transportation services. Further complicating
the task is the growing size of plants, increasing sophistication of theequipment used and demands for earlier completions of plants. All
these changes are making the selection of suppliers and operationof quality management systems even more important. We respondby promoting mutually fair ties with suppliers, and this stance allows
all Chiyoda Group companies to work together to create industrial
plants that can contribute to social and economic development.

Inspection prior to shipment

Our Approach to Procurement
We require our suppliers to cooperate with regard to thefollowing factors.
1) Compliance with laws, regulations and ethical guidelines
2) Environmental conservation
Establish ISO 14001 based environmental management systems
Earn external certiﬁcations
Reduce the use of hazardous chemicals
Conduct green procurement
3) Delivery of goods on schedule4) Continuous sound management of business operations5) Constant efforts to upgrade technologies6) Compliance with quality assurance program based on
Corporate Quality Management Policy
Further, Chiyoda pledges to1) Conduct educational programs concerning the Antimonopoly
Act, the Subcontract Act and related laws, and strictly comply
with these laws.
2) Establish a code of conduct for the Chiyoda Group to ensure
fair and proper procurement activities.
We will build solid ties with suppliers based on a spirit of partnership and a dedication to mutual understanding and trust.

Inspection prior to shipment

Unloading operations
CHIYODA CORPORATION CSR REPORT 2006

19

COMMUNITY ANDCORPORATESOCIAL ACTIVITIESThe Chiyoda Group uses its engineering operations along with its knowledge,
expertise and activities to contribute to society primarily in the following two ways.
Contributions throughBusiness Activities
We make social contributions in various ways,
including training of human resources, technology transfers and environmental conservation, as
we conduct our business operations. Examplesof these contributions – LNG technology, local
employment opportunities and energy conservation – are presented on pages 6 to 11 of thisreport.

Teacher training

Contributions throughSocial Activities
Teacher Training
In 2005, we invited seven teachers from publichigh schools and elementary schools to attend
classes at Chiyoda, where they received ﬁrsthand knowledge of the core values and training
programs at a private-sector organization. Our
hope is that this will help improve the management of school operation and the educational
programs for their students.

GOVERNANCE
The Corporate Auditor System

Corporate Auditors

As a company that has adopted Japan’s “company with corporate
auditors” system, Chiyoda has executive ofﬁcers to take responsibility of business operations and directors to oversee management.
The division of these two roles provides for the proper execution
and oversight of business operations.

Chiyoda has four corporate auditors, including two on a full-timeassignment basis at the Company. Three of these auditors qualify
as outside auditors. The auditors attend meetings of the Board of
Directors, the Executive Committee, executive directors and otherimportant meetings. One purpose is to verify that the actions of
the directors are proper and do not violate laws, regulations or thearticles of incorporation. The auditors also conﬁrm that management decisions reﬂect the best interests of the Company and its
stakeholders, and they state their opinions as required.

The Executive Committee
Chiyoda has eight directors on its board, including four representative directors. The directors supervise the execution of businessactivities by the executive ofﬁcers and make decisions concerning
management policies and the execution of business activities.
Some authority has been transferred to the Executive Committee, which is made up of the four representative directors. Thisfacilitates the speedy decision-making needed to allow businessactivities to respond to rapid shifts in the social and economic climate. The Executive Committee examines matters before they aresubmitted to the Board of Directors.
This committee, which meets each week as a rule, held 52
meetings during ﬁscal 2006.

Cleanup Campaigns

Chiyoda employees participating in a cleanup campaign

The neighborhood association where the
Chiyoda head ofﬁce is located holds a cleanup
campaign twice a year.Volunteers from the headofﬁce participate in this program, working sideby-side with residents to keep the surroundingarea clean.

Residents touring energy conservation facilities at Chiyoda head ofﬁce

20

CHIYODA CORPORATION CSR REPORT 2006

We established the Compliance Management Ofﬁce in April 2003
to ensure the strict adherence to laws and regulations. At the sametime, we announced the Chiyoda Corporation Code of Corporate
Behavior and issued compliance cards bearing the code to executives and employees to heighten awareness of the Company’s compliance standards. In April 2006, the code was renamed the Chiyoda
Group Code of Behavior and extended to all seven consolidated
subsidiaries in Japan. We continue to take actions to reinforce anawareness and understanding of the code among all Group executives and employees.

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Ofﬁce Tours
We invite nearby residents to our ofﬁces to see
our energy conservation systems. These tours
give the public a better understanding of ourcommitment to the environment.

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Chiyoda Group personnel are loaned touniversities to serve as instructors in various
subjects. This program aims to make university
students broaden their understanding of ourtechnologies and expertise and to deepen ties
with universities.

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�������������CHIYODA CORPORATION CSR REPORT 2006

21

OCCUPATIONALFOR THE BENEFIT OF

HEALTH AND SAFETYEMPLOYEESWe respect every employee as a professional and extend support so that ourpersonnel can further reﬁne their skills as professionals. We assist all personnel toachieve their career objectives as self-reliant individuals. People are the basis for all
our activities, and we offer the programs to develop the skills of our personnel.
Corporate Policy for Employee Training
Our human resources training and development activities reﬂect two basic elements: growing individuals into
professionals and reinforcing our organization and management. These two elements form the foundation for the
Chiyoda Group’s employee training framework.

Career Development Program (CDP)
CDP begins with a self-assessment by an individual of his or her aptitude and career goals. A career path is thendetermined through consultations with his or her supervisor, after which Chiyoda extends the required support toreach each individual’s goals. All workers whose career at Chiyoda is within the range of 15 years since employed
are eligible to take CDP. Individuals themselves prepare a career development path and track progress with speciﬁc
items in the speciﬁed format, which will be conﬁrmed together with their supervisors to keep motivation high.
Training progress reports are also used in a review conducted every three years to prepare mobilization plansfor project personnel and conﬁrm that employees are assigned to positions where they can be most productive.

Project Key Personnel (PKP) Training
The PKP training program is conducted to reinforce organizational and management skills. There are two objectives.
First is training key personnel for projects, such as project managers, engineering managers and business managers.
Second is upgrading overall project management skills, the core competence of the Chiyoda Group.
Chiyoda Group Training Programs
Category

Management Skills

Executive ofﬁcers• Training for newly appointed
executive ofﬁcers

Senior managers

Associate managers

Employees

Development ofProfessionals

22

CHIYODA CORPORATION CSR REPORT 2006

Corporate Policy
The Corporate Safety Management Policy was established on March
17, 1993. In April 2003, when Chiyoda started using an occupational
health and safety management system, the policy was renamed the
Corporate Occupational Health & Safety Policy. We review thispolicy every year. In addition, we translate the policy into actions
rigorously, such as issuing directives and designating points for
improvement at job sites.

The Occupational Health and Safety
Management System
We review the record of our progress regarding Company-wide
health and safety targets of the previous ﬁscal year, including
directives issued by job site safety audits. And we also examine
the causes of accidents, including near misses. Based on the above
review and examination, Chiyoda annually establishes new healthand safety targets and a new occupational health and safety program
based on the new targets. In line with these speciﬁc action guidelines, we protect the health and safety of workers and perform
health and safety management that incorporates a PDCA cycle.

Health and Safety Training at Job Sites• Training for individuals who
evaluate others• Assignment of employees touniversities• Occupational health andsafety course• Training for department
managers• Assignment of employees tostudy overseas• Environmental management
system (EMS) course• Assistance in acquisition ofofﬁcial certiﬁcations• EMS internal auditor course• Participation of employees ininternal and external seminars• Project, engineering andbusiness manager courses

New employees

SQE Specialist Training

Chiyoda fully recognizes that health and safety are essential for the welfare and morale ofhumankind and also important for contributing to corporate growth.
In order to ensure the health and safety of all people concerned, all Chiyoda personnel,
from top management to each employee, shall comply with the Corporate Occupational
Health & Safety Policy, promote the occupational health and safety management system andcontinually improve its performance.

• EMS workshop

All individuals who work at job sites, whether in Japan or anywhere
else in the world, undergo a new job site training program at theconstruction site. In addition, workers engaged in dangerous tasks
attend a special safety class. As part of job site safety activities, wehold a Tool Box Meeting and Risk Forecasting Circle prior to thestart of construction work.

Our Fiscal 2006 Health and Safety
Performance
The table below shows our job site health and safety performancein Japan and overseas during ﬁscal 2006. We studied the causes ofeach accident so that lessons learned can be used to prevent similar
problems at all job sites in the future. We remain devoted to putting
safety ﬁrst at all our projects, with the goal of completing construction with no accidents.
Chiyoda Construction Job Site Accident Frequency Rate andSeverity Rate vs. Rates for Japanese Construction Industry(FY2002 to 2006)
Chiyoda Group

Japanese Construction
Industry

Fiscal Year

Frequency
Rate

Severity
Rate

Frequency
Rate

Severity
Rate

2002

0.21

0.01

1.61

0.47

2003

0.21

0.39

1.04

0.28

2004

0.00

0.00

1.61

0.25

2005

0.13

0.01

1.77

0.57

2006

0.21

0.21

0.97

0.14

Frequency rate: (Individuals involved in accidents* / Total working hours) X 1,000,000* excluding accidents with no loss of working time
Severity rate: (Lost-time days / Total working hours) X 1,000• Environmental laws andregulations workshop• Quality management training• New employees’ training

CHIYODA CORPORATION CSR REPORT 2006

23

Report Proﬁle

FOR THE BENEFIT OFSHAREHOLDERS
Corporate Policy for Information
Disclosure
Chiyoda’s policy for disclosure is ﬁrmly rooted in a commitment to“disclose corporate information willingly and fairly” as stated in the
Chiyoda Group Code of Behavior.
To realize higher corporate value over the medium and longterms, the role of our IR activities is to “establish and maintain a fairrelationship between shareholders and other investors” throughthe balanced composition of shareholders.
Our goal is to conduct the disclosure program that is expectedof the “Reliability No. 1” Project Company, which is the Groupmanagement vision.

Information Meetings for Stakeholders
Information meetings on statements of accounts
After reporting ﬁscal year-end and ﬁrst-half operating results at
the Tokyo Stock Exchange, we hold an information meeting on thesame day where we distribute our ofﬁcial release along with supplementary information. To ensure the fair disclosure of this information to individuals and overseas investors, the same information isposted in Japanese and English on our web site. Beginning in 2006,
we are using a telephone conferencing system to announce our
performance in the ﬁrst and third quarters.

Information meetings for overseas investors
We hold information meetings for overseas investors at least
once a year. In addition, there are about three or four conferences
conducted by a securities company and a quarterly telephone
information meeting. We are determined to disclose information
fairly, preventing any differences between access to information by
Japanese and overseas investors.

Annual shareholders’ meeting
For several years, the Chiyoda shareholders’ meeting has beenscheduled to minimize conﬂicts with other shareholders’ meetingsof Japanese companies. We also send shareholders’ meeting notices
early and take other steps to maintain close communications withshareholders.

24

CHIYODA CORPORATION CSR REPORT 2006

Comparison Table with the GRI
Sustainability Reporting Guidelines 2002

1. Vision and Strategy

2.20 Policies and internal practices to enhanceand provide assurance about the accuracy,completeness, and reliability that can be placedon the sustainability report.

Page 29

2.22 Means by which report users can obtain
additional information and reports about
economic, environmental, and social aspects of
the organisation’s activities, including facilityspeciﬁc information (if available).

Page 24

Editorial Policy

For the Beneﬁt of
Shareholders

3. Governance Structure and Management Systems
Pages

Disclosed Elements

Corporate Governance

Pages

Disclosed Elements

Structure and Governance

1.1 Statement of the organisation’s vision andstrategy regarding its contribution to sustainable
development.

C2, Pages
1, 2, 3

Core Business Operations,
A Message from the
President

3.1 Governance structure of the organisation,
including major committees under the board of
directors that are responsible for setting strategy
and for oversight of the organisation.

Page 21

1.2 Statement from the CEO (or equivalentsenior manager) describing key elements of
the report.

Pages
2, 3

A Message from the
President

3.6 Organisational structure and key individuals
responsible for oversight, implementation, andaudit of economic, environmental, social, andrelated policies.

Pages
5, 12, 13

The Chiyoda Group’s CSR
Structure, Environmental
Management Systems

3.7 Mission and values statements, internallydeveloped codes of conduct or principles, andpolices relevant to economic, environmental,
and social performance and the status of
implementation.

Pages
4, 13, 21,
22, 23

Chiyoda Group CSR Vision,
Corporate Environmental
Policy, The Chiyoda Group
Code of Behavior, For
the Beneﬁt of Employees,
Occupational Health and
SafetyPages

Disclosed Elements

Organisational Proﬁle
2.1 Name of reporting organisation.

Cover,
Page 28

Corporate Information

2.2 Major products and/or services, including
brands if appropriate.

C2, Pages
1, 28Core Business Operations,
Corporate Information

2.3 Operational structure of the organisation.

C2, Pages
1, 26, 27Core Business Operations,Global Network

2.4 Description of major divisions, operatingcompanies, subsidiaries, and joint ventures.

C2, Pages
1, 26, 27Core Business Operations,Global Network

2.5 Countries in which the organisation’s
operations are located.

Page 28

Corporate Information

2.6 Nature of ownership; legal form.

Page 28

Corporate Information

2.8 Scale of the reporting organisation: numberof employees; products produced / services
offered (quantity or volume); net sales; and total
capitalisation broken down in terms of debt
and equity.

Page 28

2.9 List of stakeholders, key attributes of each,and relationship to the reporting organisation.

C2,
Page 1

Corporate Information

Stakeholder Engagement
3.9 Basis for identiﬁcation and selection ofmajor stakeholders.

C2,
Page 1

Core Business Operations

3.11 Type of information generated bystakeholder consultations.

Pages
18, 19Quality Management,
Mutually Fair Collaboration
with Customers andSuppliers3.12 Use of information resulting fromstakeholder engagements.

Pages
18, 19Quality Management,
Mutually Fair Collaboration
with Customers andSuppliers

Overarching Policies and Management Systems
3.13 Explanation of whether and how the
precautionary approach or principle isaddressed by the organisation.

Report ScopeC4

2.11 Reporting period (e.g., ﬁscal / calendar
year) for information provided.

Page 29

Editorial Policy

2.13 Boundaries of report (countries / regions,products / services, divisions / facilities /joint ventures / subsidiaries) and any speciﬁclimitations on the scope.

Pages
28, 29Corporate Information,
Editorial Policy

For the Beneﬁt of
Shareholders- major programmes to improve performance;

Pages
5, 15

CSR Medium-Term Targetsof the Chiyoda Group,
Environmental Targets

Pages
4, 5

Chiyoda Group CSR Vision,
The Chiyoda Group’s CSR
StructurePages
12, 13

Environmental Management Systems, Corporate
Environmental Policy- internal and external auditing; and- senior management review.

4. GRI Content Index
Reporting Elements and Indicators

Pages

Disclosed Elements

4.1 A table identifying location of each element of
the GRI Report Content, by section and indicator.

Pages
24, 25Comparison Table with
the GRI Sustainability
Reporting Guidelines 2002

5. Social Performance Indicators
Reporting Elements and Indicators

Pages

Disclosed Elements

Health and Safety
LA5. Practices on recording and notiﬁcationof occupational accidents and diseases, andhow they relate to the ILO Code of Practiceon Recording and Notiﬁcation of Occupational
Accidents and Diseases.

Page 23

Occupational Health and
SafetyDiversity and Opportunity
LA10. Description of equal opportunity policies
or programmes, as well as monitoring systems
to ensure compliance and results of monitoring.

Page 22

For the Beneﬁt of
Employees

Training and Education
LA16. Description of programmes to support thecontinued employability of employees and to
manage career endings.

Page 22

For the Beneﬁt of
Employees

LA17. Speciﬁc policies and programmes forskills management or for lifelong learning.

Page 22

For the Beneﬁt of
Employees

Labour Practices and Decent Work

Page 21

Corporate Governance

Product Responsibility

Pages
18, 19Quality Management,
Mutually Fair Collaboration
with Customers andSuppliers

Page 18

Quality Management

Pages
22, 23For the Beneﬁt of
Employees, Occupational
Health and Safety

Customer Health and Safety
PR1. Description of policy for preserving customer health and safety during use of products
and services, and extent to which this policy isvisibly stated and applied, as well as descriptionof procedures / programmes to address thisissue, including monitoring systems and resultsof monitoring.

Pages
12, 13

Environmental
Management Systems

Products and Services
PR8. Description of policy, procedures / management systems, and compliance mechanisms related to customer satisfaction, including resultsof surveys measuring customer satisfaction.
Identify geographic areas covered by policy.

Page 18

Quality Management

Page 28

Corporate Information

Core Business Operations

2.10 Contact person(s) for the report, including
e-mail and web addresses.

- priority and target setting;- internal communication and training;

Reporting Elements and Indicators

Reporting Elements and Indicators

Page 24

3.19 Programmes and procedures pertaining to economic, environmental, and social
performance. Including discussion of:- performance monitoring;

Reporting Elements and Indicators

2. Proﬁle3.17 Reporting organisation’s approach to
managing indirect economic, environmental, andsocial impacts resulting from its activities.

Contact address

3.16 Policies and/or systems for managing upstream and downstream impacts, including:- supply chain management as it pertains to
outsourcing and supplier environmental andsocial performance.

Page 19- product and service stewardship initiatives.

Page 18

Mutually Fair Collaboration
with Customers andSuppliers
Quality Management

Economic Performance Indicators
Customers
EC1. Net sales.

CHIYODA CORPORATION CSR REPORT 2006

25

CHIYODA CORPORATIONGLOBAL NETWORK(As of July 31, 2006)

Head Ofﬁces

Major Subsidiaries & Afﬁliated Companies

Overseas Ofﬁces

Yokohama Head Ofﬁce

Abu Dhabi Ofﬁce

12-1, Tsurumichuo 2-chome
Tsurumi-ku
Yokohama 230-8601, Japan
Tel: (81) 45-521-1231
Fax: (81) 45-503-0200

Clock Tower Bldg.
Al Najda Street
Abu Dhabi, U.A.E., P.O. Box 43928
Tel: (971) 2-671-7161
Fax: (971) 2-671-7162

Koyasu Ofﬁce

Beijing Ofﬁce

13, Moriya-cho 3-chome
Kanagawa-ku
Yokohama 221-0022, Japan
Administration Department
Tel: (81) 45-441-1268
Fax: (81) 45-441-1297
Research & Development Center
Tel: (81) 45-441-9132
Fax: (81) 45-441-9728

Room No. 1028
China World Tower 1
Jianguomenwai Street
Beijing 100004, China
Tel: (86) 10-6505-2678
Fax: (86) 10-6505-1118

Korea Representative Ofﬁce Singapore Human Resources1358-8, Tal-dong, Nam-ku, Ulsan
Ofﬁce
Korea
Tel: (82) 52-256-5721/5722
Fax: (82) 52-256-5723

Milan Representative Ofﬁce
Viale Della Liberazione 16/18
20124 Milan, Italy
Tel: (39) 02-303517-111
Fax: (39) 02-303517-35

Middle East Headquarters
Doha Ofﬁce

Jakarta Ofﬁce
9th Floor, MidPlaza Bldg.
Jalan Jenderal Sudirman Kav. 10-11
Jakarta, 10220, Indonesia
Tel: (62) 21-570-7579
Fax: (62) 21-570-6276

Al Mana Tower, Airport Road, Doha
Qatar, P.O. Box 20243
Tel: (974) 462-2875/2876
Fax: (974) 462-2716

10 Anson Road, #03-02
International Plaza
Singapore 079903
Tel: (65) 6324-0080
Fax: (65) 6324-0090

The Hague Ofﬁce
President Kennedylaan 192517 JK The Hague
The Netherlands
Tel: (31) 70-385-9453
Fax: (31) 70-346-3779

Tehran Ofﬁce
2nd Floor, No. 16, Mahtab St. Aftab St.
Vanak Avenue, Tehran, Iran
Tel: (98) 21-8803-6391, 8805-8592
Fax: (98) 21-8805-8967

Project Companies
Oman, Qatar, Russia

The Netherlands
Italy

Oman

China
India

MyanmarThailand

Malaysia

Korea

Japan

U.S.A.

Philippines
Singapore

Indonesia
U.A.E.
Qatar

26

1177 West Loop South, Suite 680
Houston, TX 77027, U.S.A.
Tel: (1) 713-965-9005
Fax: (1) 713-965-0075

Chiyoda Singapore(Pte) Limited
14 International Business Park
Jurong East, Singapore 609922
Tel: (65) 6563-3488
Fax: (65) 6567-5231

Chiyoda Asia Paciﬁc(Pte) Ltd.
14 International Business Park
Jurong East, Singapore 609922
Tel: (65) 6425-0368
Fax: (65) 6569-6102

Chiyoda Malaysia Sdn. Bhd.

Chiyoda (Thailand) Limited

IranNigeria

Chiyoda International
Corporation

15th Floor, Menara Maxisegar
Jalan Pandan
Indah, 4/2 Pandan Indah, 55100
Kuala Lumpur, Malaysia
Tel: (60) 3-4297-0988
Fax: (60) 3-4297-0800

RussiaSaudi Arabia

Overseas

CHIYODA CORPORATION CSR REPORT 2006

Head Office
Overseas Offices
Project Companies
Subsidiaries &Affiliated Companies

Sriracha Ofﬁce
4th Floor, Laemchabang
Tower 283, Sukhumvit Road
T. Tungsukhla A. Sriracha, Cholburi
20230, Thailand
Tel: (66) 38-352-315/316
Fax: (66) 38-352-321
Bangkok Head Ofﬁce
140/39 ITF Tower II
Suite H, 18th Floor
Silom Road, Kwaeng Suriyawong
Khet Bangrak
Bangkok 10500, Thailand
Tel: (66) 2-231-6258/6259
Fax: (66) 2-231-6260

PT. Chiyoda International
Indonesia
MENARA HIJAU
10th Floor, Suite 1001
Jl. MT. Haryono Kav. 33
Jakarta Selatan 12770, Indonesia
Tel: (62) 21-798-4680
Fax: (62) 21-798-6174

L&T-Chiyoda Limited
B.P. Estate, National Highway No. 8
Chhani, Baroda-391740
Gujarat State, India
Tel: (91) 265-2771003/2772855
Fax: (91) 265-2774985

Chiyoda Philippines
Corporation
Chiyoda Bldg.
Meralco Avenue Corner
General Araneta Street
Pasig City, Metro Manila, Philippines
Tel: (63) 2-636-1001~8
Fax: (63) 2-636-1013/1023

Chiyoda Petrostar Ltd.
Al-Khobar Ofﬁce
P.O. Box 31707, Al-Khobar 31952
Saudi Arabia
Tel: (966) 3-864-0839
Fax: (966) 3-864-0986
Jeddah Head Ofﬁce
P.O. Box 6188, Jeddah 21442
Saudi Arabia
Tel: (966) 2-647-0558
Fax: (966) 2-647-1908

Chiyoda Nigeria Limited
Abuja Ofﬁce
C/O Peniel Apartments
Room No. B2C, Plot 137
Ibb Way
Adetokunbo Ademola Crescent
Wuse II, Abuja, Nigeria
Tel: (234) 9-4130961
Fax: (234) 9-4130961

Lagos Ofﬁce
Plot PC-43 (2nd Floor)
Nurses House
Afribank Street,Victoria Island
P.M.B. 12541
Lagos, Nigeria
Tel: (234) 1-2613291
Fax: (234) 1-2612565

Chiyoda & Public WorksCo., Ltd.
Sedona Hotel, Rooms 307-309
No. 1, Kaba Aye Pagoda Road
Yankin Township,Yangon, Myanmar
Tel: (95) 1-545605
Fax: (95) 1-545227

Chiyoda Corporation(Shanghai)
29th Floor, Room E/F
Pufa Tower No. 588
Pudong Road (S)Pu Dong New Area
Shanghai 200120,China
Tel: (86) 21-5877-6266
Fax: (86) 21-5877-6366

Chiyoda Advanced
Solutions Corporation
Computer Aided Engineering
Analysis, Plant Lifecycle Engineering,
Risk Management and Utilization ofSpace Environment

Chiyoda U-Tech Co., Ltd.
Consulting for Industrial, Social andRegional Development and Human
Resources Supply

IT Engineering Limited
IT Solutions and Software
Development

Arrow Business Consulting
Corporation
Consulting Services for Finance andAccounting

Arrowhead International
Corporation
Travel and Air Cargo Agent andSpare Parts Supply

Arrow Mates Co., Ltd.
Human Resources Supply andTraining

Domestic
Chiyoda Kosho Co., Ltd.
Plant Engineering, Construction and
Maintenance and Insurance Service

Chiyoda Keiso Co., Ltd.
Electrical and Instrumentation
Engineering and Equipment Supply,
Installation and Maintenance

Chiyoda TechnoAce
Co., Ltd.
Consulting, Engineering andConstruction of Pharmaceutical
Plants, Laboratories and ResearchCenters

CHIYODA CORPORATION CSR REPORT 2006

27

CHIYODAEDITORIAL

ENGINEERING AND CONSTRUCTING
INDUSTRIAL PLANTS AROUND THE WORLDPOLICY

Chiyoda Corporation was established in January 1948 as anintegrated engineering company.Today, the Chiyoda Groupconsists of Chiyoda Corporation, 18 consolidated subsidiaries
and 5 equity-method afﬁliates. As a diversiﬁed engineeringorganization, the Group is mainly engaged in the engineeringand construction of industrial plants of all types on a global
scale. By adhering to common core values, the Chiyoda Group isdedicated to operating in a manner that earns the respect andunderstanding of all categories of stakeholders.

For many years, there has been a steady increase in public interest
in CSR. Chiyoda Corporation long ago recognized that business
operations themselves serve as an effective means of fulﬁlling
its CSR obligations to society. In ﬁscal 2006, we reinforced ourorganizational structure regarding CSR by forming the CSR
Division and the CSR Committee. Also, we established the
Chiyoda Group CSR Vision and formed medium-term action plansto further promote CSR programs.
We issued our ﬁrst Environmental Report in ﬁscal 2004 and the ﬁrst English version in ﬁscal
2006. These publications were intended as a report to stakeholders on our environmental
programs. This year, we have renamed the publication the CSR Report and extended its
contents to cover all CSR activities, including environmental initiatives. We hope this information gives you a better understanding of our overall CSR activities.

Corporate ProﬁleName:Main Ofﬁces:

Chiyoda Corporation
Yokohama Head Ofﬁce (Tsurumi-ku,Yokohama, Japan)
Koyasu Ofﬁce (Kanagawa-ku,Yokohama, Japan)
Paid-in Capital: ¥12.9 billion (As of March 31, 2006)

Scope of this Report
This report covers the Chiyoda Group (Chiyoda Corporation and its consolidated subsidiaries in Japan), but some information covers only Chiyoda Corporation. Financial ﬁgures
include all consolidated subsidiaries in Japan and overseas.

Major Business Domain
Consulting, planning, engineering, procurement, construction, commissioning, operation andmaintenance for petroleum reﬁneries / natural gas processing plants / LNG plants, petrochemical plants, chemical plants, environmental plants and other industrial facilities

Writing Style of this Report
We have attempted to avoid the use of technical terms to make this report easy to readfor a general audience. However, the use of some terminology was unavoidable due to thenature of our business operations. We have provided explanations of these terms as muchas possible.

Consolidated Financial Highlights(Year Ended March 31, 2006)
New contracts:¥804.2 billion
Revenues:¥390.9 billion
Ordinary income:¥23.1 billion
Number of employees:
2,787
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This report covers activities in ﬁscal 2006, the year that ended on March 31, 2006.

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28

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CHIYODA CORPORATION CSR REPORT 2006

29