Corporate Social Responsibility Report

CSR Report 2018

ISEKI & CO., LTD

Contents■ CSR at ISEKI Group
Message from the President………………………… 3
Resolution of social issues and value
creation through business………………………… 5
CSR management at ISEKI Group…………………… 7
Results and targets of CSR activities………………… 9■ Corporate information
Corporate information…………………………………11■ Business development at ISEKI Group
Development and production…………………………13
Domestic business development………………………17
Overseas business development………………………21■ GovernanceCorporate governance…………………………………24
Compliance……………………………………………25
1

ISEKI CSR Report■ Social
Communication with customers………………………26
Communication with employees……………………29
Communication with investors and shareholders……32
Communication with suppliers………………………32
Communication with local communities……………33■ Environment
ISEKI Group environmental management……………35
Environmental targets and results……………………37
Initiatives for environmentally-friendly design ………38
Reduction of environmental burden in production……39
Preservation of biodiversity……………………………41
Evaluation by third parties……………………………41■ Third-party comments
Third-party comments…………………………………42

We strive to contribute to thecreation of a prosperous andsustainable society.
A dream awaited by all the people on earth.
ISEKI Group is in pursuit of food production that secures our daily lives.
The growth of agriculture is a top-priority issue that holds the key to global food problems.
To realize a sustainable growth of agriculture in the future, ISEKI Group will contribute to
the development of agriculture around the world.

Editing policy■ Editing policy
This report is edited to introduce the corporate valueof ISEKI Group exerted through activities in the threeareas of “governance,” “social” and the“environment” among the business activities of ISEKI
Group to a wide range of stakeholders in an easy-tounderstand manner.

■ Covered period
From January 2017 through December 2017
Part of this report includes information in and afterJanuary 2018.

■ Scope
As a general rule, this report covers the activities of
ISEKI & Co., Ltd. and ISEKI Group’s associatedcompanies in Japan and overseas. Notes will be addedin this report when the range of activities and/or data
is limited in certain part hereof.

■ Referenced guidelines▶GRI*: “Sustainability Reporting Guidelines 4th
Edition”▶Ministry of the Environment: “Environmental
Reporting Guidelines (2012 Edition)” and “Guide
to Descriptions in Environmental Reports (3rd
Edition)”*GRI is an international organization established with the objectiveof the creation and dissemination of international guidelines
regarding sustainability reporting by corporations.

■ Structure of CSR Report▶CSR Report
This report comprehensively covers the CSR
activities undertaken by ISEKI
Group.
▶WebsiteA section titled “Environment”
has been placed within the
CSR Reportwebsite to publish(this document)
environmental site reports,
Websiteenvironmental, social and“Environment”
governance (ESG) data, etc.
ISEKI CSR Report2

CSR at ISEKI Group

Message from our President

We strive to contribute to thecreation of a prosperous andsustainable society.
Eiichiro Kinoshita

Representative Director, President &Executive Officer, ISEKI & Co., Ltd.

Since its establishment in 1926, with the principle and philosophyof our founder Kunisaburo Iseki, “free farmers from exhaustinglabor” and “products that satisfy customers” as the cornerstone,
ISEKI Group has been striving to contribute to the modernization ofJapan’s agricultural industry as an integrated manufacturer
specializing in agricultural machinery. Over this period, we haveconsistently pursued efficiency and laborsaving advances inagriculture and have continued to provide products to the market bypioneering the development of a significant amount of revolutionary
agricultural machinery and facilities.
In light of the increase in the global population, food issues,
food self-sufficiency, land conservation, and global environmental
issues, the role agriculture plays is significant, and consequently, we

believe that the social mission of an agricultural machinery
manufacturer is becoming increasingly important.
To contribute to agriculture both in Japan and throughout theworld, ISEKI will continue its business activities under the basic
business philosophy to “provide products that satisfy customers.”
We believe that such activities will lead us to make contributions
to the “Sustainable Development Goals (SDGs)” adopted by theUnited Nations Summit with the targets to be achieved by 2030.
We are committed to making ongoing efforts to fulfill our
corporate social responsibility with the aim of “contributing to thecreation of a prosperous and sustainable society,” while working on
various types of issues in cooperation with our stakeholders.

CSR at ISEKI Group <Management philosophy and fundamental concept of CSR>
<Spirit of ISEKI – Passion of founder –><Company Motto>“I want to free farmers from exhausting labor”

Our management philosophy is to provide:

Agriculture was hard work, done by hand and with the help ofanimal power. To change this, Kunisaburo Iseki, the founder,
realized laborsaving through mechanization and endeavored tofurther develop agriculture.
“We produce good machinery that customers highly praise,”
Kunisaburo used to say. He devoted himself to provide productsthat made customers happy. The founder's passion has been
inherited in an unbroken line until today as “Iseki's spirit.”<ISEKI Group Code of Ethical Behavior>
In order for ISEKI Group to fulfill its responsibility as a member ofsociety and achieve development together with society, ISEKI
Group has established the “ISEKI Group Code of EthicalBehavior,” which is comprised of the common sense and basic<Fundamental principles> to be observed by all of its members,
as well as the more specific <Code of conduct>, both of which
serve as the basis for its day-to-day activities.

3*CSR: corporate social responsibility

ISEKI CSR Report

1. Products that satisfy customers;
2. A stable workplace to the employees;
3. Appropriate dividend to theshareholders;
and thereby we will fulfil our social mission.

<Fundamental principles>
1. To comply with laws and regulations
2. To respect basic human rights
3. To respect social common sense
4. To disclose information properly to fulfill social
accountability
5. To make efforts for environmental preservation

We aim to resolve social issues through our business while enhancing corporate value.
Contributing to Agriculture in Japan and around the World

Establishing a firm position in domestic and world market

Japan has been facing various issues including a decline in the
agricultural work force, an aging population, an increase in deserted
farmland, etc.
For the growth and development of Japan’s agriculture, ISEKI
Group provides support from both hard and soft aspects. It offers
not only improved agricultural productivity through efficiency
improvements and reduced work, the utilization of ICT and robotic
technologies, as well as energy-saving, low-cost, andenvironmentally-friendly products, but also research, verification,dissemination, support, etc., of advanced technologies. ISEKI Groupalso makes group-wide efforts toward dietary education and “local
production for local consumption” activities in an attempt toimprove food self-sufficiency.
The total world population in 2050 is expected to reach 9.7
billion people, so there is a need to significantly increase foodproductivity.
To cope with the recent global needs to increase foodproduction, ISEKI Group is actively ascertaining the various needs incountries and regions such as Europe, North America, China, and
the ASEAN countries to provide products accordingly.

ISEKI & Co., Ltd. is going to mark the 100th anniversary of its
foundation in 2025.
It has upheld the Mid-term Vision of establishing a firm position
as an integrated manufacturer specializing in agricultural machinery
also in the global market by its 100th anniversary of its foundation.
ISEKI is committed to developing products that can compete in
the global market and offering farm business proposals while
demonstrating its strengths. Through such group-wide efforts, ISEKI
aims to strengthen its responses to structural changes in thedomestic agricultural industry, expand its overseas businesses andstrengthen its organization and governance on a group-wide basis,
which will lead to the sustained improvement of corporate value.

Contributing to the development of a recycling-oriented societyWith respect to environmental issues, ISEKI Group has positioned acontribution to the development of a recycling-oriented society as
one of the management issues of the highest priority and introduced
an Environmental Management System (EMS) on a group-widebasis, covering overseas offices as well.
In addition, ISEKI Group has established tangible targets andthe promotion and management system since the initial productdevelopment phase in an effort for environmental preservation.
To convey the results of these approaches in an easy-tounderstand manner to all stakeholders including our customers,
ISEKI Group has set environmentally-friendly design standards, andwe are promoting the implementation of an “eco-productcertification system.” Under this system, based on the evaluation
results, environmental labels are used only for products that meet
our own standards.

Human resource development
ISEKI Group believes that what contributes to the solution of theseissues is people. We realize that “human resource development” isessential for us. ISEKI Group has promoted not only the
improvement and succession of skills and techniques indispensable
at production sites and the development of human resources whoare capable of offering comprehensive farm business proposals to
our customers or working actively in global fields, but also diversity
in the utilization of a wide range of human resources.
ISEKI Group is also committed to providing learning
opportunities including training for female farmers who play animportant role in agricultural and regional activities and dietaryeducation for children who will bear the future.

2020 Mid-term Management Plan -Henkaku (Change)–
In 2016, ISEKI has formulated the “Mid-term Management Plan”
covering a five-year period (2016-2020) as its significant step
toward the target vision to be achieved in 10 years. In light of thechanges in the environment and other factors since the formulation,in this year, ISEKI has reviewed the strategies for the three years up
to 2020 so that the path will surely lead us to the realization of theplan.
ISEKI is going to implement five basic strategies under the 2020
Mid-term Management Plan with “Henkaku (Change)” as the
keyword.
ISEKI strives to open up a new future with the essence of ISEKI
through CSR activities promoted and strengthened mainly by thecompany’s executives to meet the demands of society and create
new value through “Henkaku (Change)” utilizing ISEKI’s strengths.

2020 Mid-term Management Plan [2018-2020]<Corporate philosophy>
We are contributing to agriculture both in Japan andthroughout the world by“providing products that satisfy customers”<Mid-term Vision>
2025 marks the 100th anniversary of ISEKI Group“To establish a firm position both indomestic and world market”<Basic strategies>

Keyword: “(Change)”−Ensuring management transparency−−Commitment to earnings−

Five basic strategies

Strengthen responsiveness to drastic changes in agriculture in Japan
Expand overseas businesses
Strengthen profitability by optimizing development & production
Make active capital investment for growth
Enhance corporate value by reinforcing personnel & corporate
governance
ISEKI CSR Report

4CSR at ISEKI Group

Resolution of social issues and value creation through ISEKI Group’s business
ISEKI Group has worked on the resolution of social issues including agriculture and the continual creation of value utilizing various types ofcapital through its business. It is ISEKI’s corporate philosophy to contribute to agriculture in Japan and around the world through the “provisionof products that satisfy customers.” ISEKI is committed to contributing to the creation of a prosperous and sustainable society while aiming tocontinue with the creation of new value.

Needs and issuesof society

Stakeholders

Customers, employees, shareholders and investors,
suppliers and local communities▶A decline in and aging of the

agricultural work force▶Introduction of large-scale

farming and crop conversion

Global population
growth▶An increase in food demand▶Shortage in agricultural

population due to economic
development▶Laborsaving and improved
productivity throughagricultural mechanization

Environmental issues
such as climate change▶Climate change▶Reduction of environmental

ComplianceCorporate governance

Structural changes inagriculture in JapanISEKI Group Code of Ethical Behavior
Founding philosophy
Company Motto

Proactive communication
Partnership

Development

Production

Sales andservices

Development and manufacturing,domestic business and overseas businessburden▶Needs for machinery to be

used in environmental andlandscaping improvements“Strengths” that support ISEKI
A high level oftechnologicalcapabilities

CapitalHuman capital

5

Employees

ISEKI CSR Report

Human resource development
Human resource development at training facilities
specializing in the fields of development, production
and sales and services

Support capabilities
to offer farmbusiness proposals

Innovation
based oncollaboration

Intellectual capital

Manufacturing capital

Patents in possession

Production sites in Japan and overseas
Sites for making proposals andproviding support(No. 1 in terms of the number ofregistrations in Japan per specialty field)(Dream Agricultural Research Institute)Growth and development of agriculture▶Provision of products and services in response to diverse needs(Contribution to improved productivity through means such aslaborsaving and low-cost farming)▶Proposals and support aimed at attaining promising (i.e., profitable)
agriculture

Human resource development▶Development and strengthening of human resources who undertake

manufacturing, services and support at ISEKI Group▶Development and improvement of human resources across the supply

chain▶Provision of learning opportunities for female farmers and children

Environment
demonstrate outstanding performance in landscaping▶Contribution to the development of a recycling-oriented society

2020 Mid-term Management Plan
Numerical targets
Consolidated net sales

190.0 billion yen
Overseas sales ratio

40%

Operating income

9.0 billion yen
ROE

8.0%
Dividend per share

50 yenSocial capital
Collaboration with partners
Suppliers, sales agencies, business partners
in overseas countries, public administrative
authorities, corporations, JA, etc.

Collaborative researchand development withresearch institutions,
universities, etc.

Natural capital
Natural resources(water, atmosphere, soil, sun, etc.)

Energy resources used in
production, etc.

To establish a firm position both indomestic and world market as anintegrated manufacturer specializing
in agricultural machinery▶Provision of environmentally-friendly eco-products and products thatContributing to the creation of aprosperous and sustainable society

Value provided to society

Financial capital
Shareholders’equityISEKI CSR Report

6

CSR at ISEKI GroupCSR management at ISEKI GroupCSR activities at ISEKI Group are aimed at “contributing to the creation of a prosperous and sustainable society” under the mission ofcontributing to society through agricultural machinery. ISEKI Group has fulfilled its social responsibility through business activities that areconscious of the three aspects of governance, society and the environment; and approaches to improve corporate value by engaging in CSR
activities focused on communication with stakeholders.

System for promoting CSR
Establishment of Corporate Social Responsibility Committee

Promotion of CSR activities

The “Corporate Social Responsibility Committee,” which is chairedby the director in charge of the Corporate Planning Department, aCSR-promotion department, and comprised of the members of the
Directors’ Operation Committee for deliberation, and thedepartment heads of CSR-promotion departments for promotion,
has been established to promote management activities based on
the PDCA cycle.

Departments in charge manage the implementation and progress ofmajor items, while relevant meeting bodies report to the company’s
executives and conduct verification and evaluation of the progress.

Meetings of the Corporate Social Responsibility Committee are held
twice a year to deliberate matters as follows∙ The vision and directions of strategies related to CSR management∙ The planning of initiatives to promote CSR on a group-wide basis
and relevant management progress∙ The planning of initiatives aimed at the penetration andentrenchment of CSR activities.
The Committee submits important matters to the Directors’
Operation Committee and the Board of Directors for their decision.

Corporate Social
Responsibility Committee<Major meeting bodies>
Activities in
Public Relations Liaison Committee
generalCustomers(products)

Product Planning Committee
Advanced Technology Strategic Committee
Quality-related Committee

Employees

Human Resources Committee

Environment Environmental Planning Group Meeting
Compliance Management Supervisory Committee

Process for making decisions on priority issues
ISEKI Group has identified social issues to be addressed by itself, evaluated them from the perspectives of the “degree of interest of
stakeholders” and the “materiality for ISEKI Group” to determine the priority issues, and thereby determined the “priority issues to be addressedby ISEKI Group” as part of its CSR activities.

Identification of social issues to beaddressed by ISEKI GroupTo respond to the diverse needs and demands that are obtained through communication
with its stakeholders, ISEKI Group identified social issues to be addressed by itself inreference to ISO26000, international standards related to corporate social responsibility,
the United Nations Sustainable Development Goals (SDGs), etc.

Evaluation of materiality
Identification of priority issues

ISEKI Group evaluated the “degree of interest of stakeholders” and the “materiality
for ISEKI Group” of the identified social issues to determine the priority issues foreach stakeholder in association with the Group’s management strategies.

Determination of priority issues

The identified eight priority issues are determined as the “priority issues to beaddressed by ISEKI Group” through deliberation by the Board of Directors.

Topic
ISEKI Group conducted the “Officers and Executives Seminar” for ISEKI
officers and approximately 70 executives of group companies in Japan andoverseas in January 2018, with the objectives of deepening, further
penetrating, and entrenching the understanding of its CSR activities, where
opinions were actively exchanged among the participants.

7

ISEKI CSR Report

Priority issues to be addressed by ISEKI GroupThe degree of interest of stakeholders and the materiality for ISEKI Groupare evaluated and eight items with particularly high materiality are
positioned as priority issues. The CSR-promotion departments haveestablished initiatives and targets (KPIs) for the promotion of CSR that arelinked with the Mid-term Management Plan and business plans.

In September 2015, the United Nations Summit formulated the“Sustainable Development Goals (SDGs)” comprised of 17 goals and 169
targets to be addressed in a joint effort by the whole world to attain asustainable society. ISEKI Group is committed to contributing to thedemands of global society through its business activities.

<Eight priority issues>
Stakeholders, etc.

Priority issues

Related key SDGs

Degree of interest of stakeholders

Provision of products and services that satisfy customers
Customers
Provision of high-quality and safe products and services
Employees

Improvement of employee satisfaction (ES)Suppliers

Fair and equitable trade

Local community
Environment
Shareholders
andinvestors
Management

Contribution to society and the local community
Environmental preservation that allows for the creation of asustainable society
Improvement of corporate governanceThorough implementation of compliance

Materiality for ISEKI Group

Stakeholder engagement
ISEKI Group strives to build a strong relationship of trust with stakeholders through responsible and proactive dialogue. Opinions and requests
received through such dialogue will be compiled by departments in charge to be incorporated into business activities and will be reported to thecompany’s executives through Public Relations Liaison Committee meetings held at the beginning of every month.
ISEKI Group discloses information in a fair, timely and appropriate manner with the principle of “working to promptly and accurately disclose
information required from inside or outside of the Group in recognition of the importance of social accountability and thereby endeavor to
become a company with transparency” at the core.
Stakeholders

Major approach

Customers

Direct dialogue with sales and service representatives, user meetings,
trainings, seminars, exhibitions, demonstrations, proposal and supportof farm business technologies, corporate websites

Employees

Labor management council, internal IR meetings, Sales subsidiarymeetings, house magazines, information magazines, intranet, various
training sessions

Shareholders and General shareholders' meeting, quarterly briefing sessions, individualinterviews, conference calls, company information session, facility tours,
investors
corporate websites
Suppliers
Local community

IR information meetings for vendors, dealer meetings, inspections andtraining workshops, suppliers' business support, the ISEKI group Green
Supply Guidelines
Tours of factories and exhibition halls (IDG: ISEKI Dream Gallery),seminars, events, social contribution activities, volunteer activities<Initiatives for information disclosure>
Websites Reports and information magazines<Initiatives for enhancement of dialogue>S ecurities Reports
 usiness ReportsB orporate Governance Reports
C SR Reports
CI ntellectual Property Reports
F arm business information
magazinesP roduct brochures and DVDs
 ouse magazines, information
H
magazines, etc.
T imely Disclosure (TDnet) orporate websites
CF arm business information site,etc.

* The reports and information magazines, etc.,
are posted on the corporate website (some ofthose materials are only available in Japanese).

ISEKI CSR Report8

CSR at ISEKI Group

Results and targets of CSR activities
At ISEKI Group, the CSR-promotion departments have established implementation plans and targets to promote CSR activities based on thepriority issues that have been determined, as well as the management strategies and important themes. Relevant meeting bodies report to thecompany’s executives, and verify and evaluate the progress. The activity targets and results for FY2017 and the summary of the targets for
FY2018 are as follows:
Priority issue

Stakeholder

Management strategy andimportant theme

Department in charge▶ Provision of products and services

Provision of products and services
that satisfy customers
Customers

Employees

Fair and equitable trade

Suppliers

Improvement of corporate
governanceThorough implementation ofcompliance9

secure products and services that
respond to the trust of customers

Improvement of employee
satisfaction (ES)

Environmental preservation thatallows for the creation of asustainable society

ISEKI CSR Report

Business Division
Overseas Business Division
Development & Production
Division▶ Provision of high-quality, safe andProvision of high-quality and safe
products and services

Contribution made to society and the
local community

in response to changes in thedomestic agricultural structure(customer needs)▶ Provision of products andimprovement of services in linewith the needs of overseas
customers▶ Development and provision of
products that create new value
taking advantage of advanced
technological capabilities

Local community▶ Improvement of employee

satisfaction (ES)▶ Fair and equitable relationship with

suppliers (cooperation with
suppliers)▶ Contribution made to society andthe local community

Personnel Department

Business Division
Overseas Business Division
Development & Production
Division
Business Division
Overseas Business Division
Development & Production
Division▶ Promotion of environmental

Environment

Shareholders
and investors

Management

management▶ Provision of environmentallyfriendly business activities, products
and services▶ Swift and accurate responses tochanges in the management
environment and maintenance offair management▶ Promotion of compliance▶ Initiatives for fair trade

Development & Production
Division

Corporate Planning
Department

Compliance team

Major meeting body

FY2017 targets (excerpt)

FY2017 results (excerpt)

FY2018 targets (excerpt)▶ Announcement of 19 items and 44

Product Planning
Committee
Advanced Technology
Strategic Committee
Public Relations Liaison
Committee

Quality-related Committee

Human Resources
Committee
Management Supervisory
Committee

Public Relations Liaison
Committee
Environmental PlanningGroup Meeting▶ Launch of smart agricultural▶ Development and provision of▶ Implementation of quality assurance▶ Implementation of quality assurance▶ Implementation of safety training

machinery that responds tocustomer needs including“advanced technologies,” “lowpriced” or “vegetable farmingrelated” features▶ Strengthening of proposal
capabilities through the operationof the Dream Agricultural ResearchInstitute and branches in various
regions▶ Development and provision of new
products targeted at China and
ASEAN countries▶ Merchandising based on newtechnologies▶ Utilization of intellectual property▶ Improvement of large maintenanceand service facilities and humanresource development for service
representatives

examination for each step such asplanning, development andproduction

development in the fields ofdevelopment, production and sales
and services▶ Promotion of active participation byfemales▶ Holding of various types of

explanatory meetings, study
sessions, etc.
▶ Promotion of green procurement
development of local farming
industry▶ Educational activities regarding foodand agriculture▶ Reduction of environmental burden

Environmental PlanningGroup Meeting

Directors' Operation
Committee
Public Relations Liaison
Committee
Management Supervisory
Committee

machinery such as rice transplanters
equipped with linear-drive assisting
systems▶ Number of visitors to the Dream
Agricultural Research Institute forinspection: approximately 7,000(total); number of cases where
guidance regarding the farmbusiness and good agricultural
practice (GAP) is provided: 23▶ Introduction of large-sized tractors
produced in China for use in ASEAN
countries and general-purpose
combine harvesters▶ No. 1 in terms of the number ofpatent application registered inJapan per specialty field (otherspecial machinery sector) and No. 1
in terms of patent allowance rate(announced in 2017)▶ Number of training sessions onlarge-sized machinery held: 12
examination for each step such asplanning, development andproduction

machinery that responds tocustomer needs including“advanced technologies,” “lowpriced” or “vegetable farmingrelated” features▶ Strengthening of proposal
capabilities through the operationof the Dream Agricultural ResearchInstitute and branches in various
regions▶ Provision of products to newmarkets through strengthened
alliance with strategic partners▶ Development of new technologies
through collaboration with external
parties▶ Utilization of intellectual property▶ Holding of Service Skills Contests
and Support Proposal Results
Presentations(guidance on delivery, inquiries on
conditions of delivered products,
etc.)▶ Strengthening of human resource▶ Strengthening of human resource▶ Support for growth andPublic Relations Liaison
Committee

models▶ Development and provision of▶ Number of participants in various

training sessions: 1,429 in total▶ Female employee ratio: 18%▶ Number of IR information meetingsfor vendors of plants in Japan held:
3▶ Certified Green Suppliers ratio: 76%▶ Number of Nogyojoshi (female

farmers) Seminars held: 4▶ Number of visitors to the factory
tour, ISEKI Dream Gallery: 9,455

development in the fields ofdevelopment, production and sales
and services▶ Improvement of working
environment for females in relation
to childcare (such as theintroduction of a mentor system)▶ Holding of various types of

explanatory meetings, study
sessions, etc.
▶ Promotion of green procurement▶ Support for growth anddevelopment of local farming
industry▶ Educational activities regarding foodand agriculture▶ Reduction of environmental burden

through environmentally-friendly
business activities▶ Development and provision of
eco-products▶ CO2 emission volume: 28,700t▶ Responses to items regarding▶ Implementation of the Board of▶ Responses to the results of the▶ Full dissemination of the importance▶ Number of intragroup training sessions▶ Full dissemination of the importance

Corporate Governance Code thathave not been addressed yet▶ Enhancement of dialogue withstakeholdersof compliance▶ Ratio of eco-products to domestic

sales: 28.7%

Directors evaluations (questionnaire
surveys)▶ Number of IR information meetings
held: 4
related to compliance held: 41

through environmentally-friendly
business activities▶ Development and provision of
eco-products

Board of Directors evaluations(questionnaire surveys)▶ Holding of information meetings forindividual investorsof compliance

ISEKI CSR Report 10

Corporate information

Corporate information
Company profile
Company
name:

ISEKI & CO., LTD.

Head office:700 Umaki-cho, Matsuyama-shi, Ehime-ken, 799-2692 JAPANTokyo
headquarters:

5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPANFoundation:

August 1926

Paid-in
capital:Number of
employees:

23,344 million yen
Consolidated: 5,760(Development and Production Section: 1,830; Sales Section: 3,538; and Other Sections: 392)
Non-Consolidated: 730(as at December 31, 2017)

Details of business and offices in Japan and overseas
ISEKI Group develops its business activities centered around the development, production and sales of agricultural machinery related to rice
farming, vegetable farming, etc. ISEKI and its associated companies that engage in agriculture-related businesses are associated with one of thefollowing three sections: “Development and Production Section,” “Sales Section” and “Other Sections.”

Development and Production Section

Sales Section

The development and design of agricultural machinery are mainly
conducted by ISEKI & Co., Ltd., while the production of agricultural
machinery and parts processing related thereto are conducted byassociated companies.

In Japan, ISEKI Group conducts sales activities mainly through its
sales subsidiaries across the country. In overseas countries, ISEKI
Group conducts sales activities through its associated companies,
local sales agencies, etc.

Major offices in Japan

Kansai Office (IMPL)Head Office(Matsuyama Office)Tobe Office

Sales subsidiaries

Niigata Office
Tsukubamirai Office
Ibaraki CenterTokyo Headquarters

N.V. ISEKI EUROPE S.A. (Belgium)
Iseki-Maschinen GmbH Deutschland (Germany)
ISEKI France S.A.S.
PREMIUM TURF-CARE LTD. (U.K.)

11 ISEKI CSR Report

ISEKI Tokai Co., Ltd.
Mie ISEKI Sales Co., Ltd.
ISEKI Kansai Co., Ltd.
ISEKI Chugoku Co., Ltd.
ISEKI Shikoku Co., Ltd.
ISEKI Kyushu Co., Ltd.

Associated companies

Kumamoto Office

Major overseas offices and business partners

ISEKI Hokkaido Co., Ltd.
ISEKI Tohoku Co., Ltd.
ISEKI Kanto Co., Ltd.
Gunma ISEKI Sales Co., Ltd.
ISEKI Shin-etsu Co., Ltd.
ISEKI Hokuriku Co., Ltd.

ISEKI-Matsuyama MFG. Co., Ltd.
ISEKI-Kumamoto MFG. Co., Ltd.
ISEKI-Niigata MFG. Co., Ltd.
ISEKI-Shigenobu MFG. Co., Ltd.

Dongfeng ISEKI Agricultural
Machinery Co., Ltd. (China)(Xiangyang, Hubei Province andChangzhou, Jiangsu Province)

PT. ISEKI INDONESIA(Indonesia)
IST Farm Machinery (Thailand)
ISEKI (THAILAND) CO., LTD. (Thailand)

ISEKI Matsuyama Factory K.K.
ISEKI AGRI Co., Ltd.
ISEKI Logistics Co., Ltd.
ISEKI TLS Co., Ltd.
Kita-Nihon Shodo K.K.

AGCO Group(Atlanta and Jackson, U.S.)Major products
Cultivating and mowing machinery
Tractors, tillers, high-clearance
multipurpose vehicles and mowers

Planting machinery

Harvesting and processing machinery

Rice transplanters andvegetable transplanters

Combine harvesters, binders,
harvesters, rice hullers, dryers, ricegraders and vegetable harvestingand processing machinery

Implements, spareparts and repair fees

In-ridge partial fertilizer (implements)

Tractors

Rice transplanters

Other agriculture-related business

Combine harvesters

Agricultural facilities and materials

MowersVegetable transplanters

Hydroponics facilities

Rice hullers

Financial highlights (Overview of the operating results for the fiscal year ended December 2017)
Net sales (consolidated)

Operating income (consolidated)

158.4 billion yen

4.0 billion yen

Ordinary income (consolidated)

Profit (consolidated)

4.2 billion yen

2.8 billion yen

Net sales composition ratio by product
Other agriculture-related business27.8 billion yen (17%)

Cultivating and mowing machinery

53.4 billion yen (34%)

Net sales

Implements, spare parts and repair fees

158.4

42.4 billion yen (27%)

billion yen

Harvesting and processing machinery

Planting machinery

22.1 billion yen (14%)

12.7 billion yen (8%)

Consolidated operating results

Total assets (liabilities and shareholders' equity)(100 million yen)
2,000(100 million yen)
1,976
2,000

(100 million yen)
100

1,691
74

1,574

2,011

2,033

2,013

711

681

671

709

1,584

1,531

1,452

2,041

1,000

50

1,000
40

687

25

Net sales−50FY2014
ended Mar. 31

FY2015
ended Mar. 31

50
FY2015
ended Dec. 31

FY2016
ended Dec. 31

FY2017
ended Dec. 31

Ordinary
incomeLiabilities
0

FY2014FY2015FY2015FY2016FY2017
ended Mar. 31 ended Mar. 31 ended Dec. 31 ended Dec. 31 ended Dec. 31

Shareholders'equityNote: As a transitional treatment, nine-month results were included in the consolidated results for the fiscal year ended December 31, 2015.

ISEKI CSR Report 12

Business development at ISEKI Group

Development and Production
We strive to contribute to agriculture in Japan and aroundthe world by drawing on its technological capabilities.
The environment surrounding agriculture is drastically changing.
In Japan, structural changes, such as the introduction of large-scale farming due to theconsolidation of farmland, conversion into field crop and vegetable farming, etc., haveprogressed. Meanwhile, the world has been facing major issues such as an increase in foodproduction following population growth and the preservation of the global environment.
We are engaged in research and development as well as production activities under the
motto of contributing to agriculture in Japan and around the world by accurately recognizing
such changes and issues and by providing products that satisfy customers.
In order to establish a firm position as an integrated manufacturer specialized inagricultural machinery both in the domestic and global markets with an eye toward the 100th
anniversary of our founding in 2025, we will work to “strengthen profitability by optimizing
development and production” with “advanced technologies,” “low prices,” “crop conversion”
and the “global environment” as the keywords with our technological capabilities mobilized to
the fullest extent.

Osamu Hyodo,
Director & Senior Corporate Officer, General
Division Manager, Development &Production Division

Social issues
Social issues

Domestic
marketGlobal market

Issues arising out of structural changes inagriculture▶ Consolidation of farmland and theintroduction of large-scale farming▶ Conversion into field crop and vegetable
farming
Issues of global population growth and anincrease in food production▶ Mechanization of agriculture

Diverse needs

Laborsaving and lower costs
Simple specifications and low prices
High efficiency and durability
Increase in the size of machinery
Field crop and vegetable farming machinery
Utilization of advanced technologies and application ofrobotic technologies
Environmental consideration

Initiatives at ISEKI
Product development aiming at the creation of new value
taking advantage of ISEKI's advanced technological capabilities
ISEKI provides products that respond to changes in the market in a timely manner by thinking independently, taking on thechallenge with an all-out effort for the resolution of social issues surrounding agriculture, and achieving Henkaku (Change) to a
“strong manufacturing group.”

Priority strategicareas in researchand development

13 ISEKI CSR Report

1. Achievement of smart agriculture based on “advanced technologies”
2. Development of “low-priced” agricultural machinery that meets various needs
3. Establishment of integrated vegetable growing system that accommodate“crop conversion”
4. Promotion of development of eco-products that are friendly to the“global environment”

Research and development and intellectual property strategies that support manufacturing
In terms of the activities to create core technologies for agricultural machinery and related products and intellectual outcomes such as theinventions and creations obtained through such activities, ISEKI works on “business activities that place importance on intellectual property,” where
rights in relation to such activities and intellectual outcomes are strategically registered and utilized and thereby result in the creation of new value.

Starting point of manufacturing

Research and development system

ISEKI sets "satisfaction," "safety," "security" and "environment" as
the starting point of manufacturing and promotes research anddevelopment based on these points.

The development, production and marketing departments work
together to demonstrate their overall capabilities and promoteresearch and development. ISEKI determines the direction for the
product strategy and research and development based on the needs
and market trends in each region and carries out planning andproposals that promptly meet the needs of domestic and overseas
customers.

Satisfaction

SafetyManufacturing

Environment

ISEKI collaborates with test and research institutions, universities,
etc., to promote joint research and development with the aim ofachieving swift and efficient technology development.

Joint research in FY2017
Research institutions:

12 themes

Security

Universities:

2 themes

Development of high-quality and low-cost products
ISEKI works to produce high-quality and low-cost products based on manufacturing technologies cultivated over many years.
A system for proposing improvements targeting quality improvement, cost reduction and man-hour reduction has been put in place underwhich active improvement activities are conducted including 57,000 proposals made in FY2017. Value engineering (VE) activities that allow forcost cutting through improvements in products designing and manufacturing methods, parts procurement methods, etc., are also conducted to
manufacture products at a lower cost.

Education on intellectual property and transfer of creation techniques
ISEKI Group proactively undertakes education on intellectual property and creativity so as to invigorate creativity on a group-wide basis anddemonstrate its technological capabilities to the fullest extent. Level-specific education on intellectual property according to the number of yearsof experience has enabled the creation of advanced technologies and high-quality inventions.
Meanwhile, the transfer of invention and creation expertise from veteran engineers to young engineers is promoted with the aim of
invigorating and facilitating the development of creative skills and creation activities.
ISEKI Group works to strengthen human resource development by setting up
training facilities specialized in “development” and “production,” respectively.
For more details, please refer to “Communication with employees” on p. 29.

Mutual study within the group
Holding of technology research presentations
Technology research presentations are held annually for parties including thecompany’s executives to share the outcomes of research and development andinvention information and to conduct repeated discussions with the aim ofraising the level of such matters on a group-wide basis.
In addition, ISEKI Group invites external experts, etc., to present lectures on
relevant themes in the pursuit of technological studies and knowledge
improvement.

ISEKI CSR Report 14

Business development at ISEKI Group

Innovations taking advantage of ISEKI's advanced technological capabilities
Since its foundation in 1926, ISEKI has developed and provided to markets a great deal of revolutionary agricultural machinery ahead of others,
driven by the passion, “I want to free farmers from exhausting labor.” Such proactive technology development efforts to develop, launch andcommercialize new technologies are exemplified by the high number of patent application registrations in Japan per specialty field, awards
received in recognition of the inventions, and high patent allowance rates. ISEKI endeavors to differentiate its products from those of competitors
by taking advantage of its “strengths” that by this intellectual property.

No. 1 in the “other special machinery sector”■Number of patent application registrations in Japan per specialty fieldYear

2000-2006
2007-2014
2016
Numberoflaid-open
patentNumberofpatentapplication
Category
applications per specialty fieldregistrations per specialty fieldand Other special
Specialty field Agriculture
Other special machinery
fisherymachinery
Rank
No. 1

■Patent allowance rate

The Patent Administration Annual Report has previously published the number oflaid-open patent applications in Japan per specialty field (the results for the year before
the previous one); however, starting from the 2017 edition, the results of the numberof patent application registrations in Japan per specialty field for the previous year
(2016) are being published.

No. 1 in “all industries”

Year

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Patent allowance rate (%)

84.6

83.7

90.4

89.3

85.8

88.5

91.8

91.8

94.7

97.0

99.2

97.5

100

Rank

No. 1

No. 2

No. 1

Patent allowance rate = number of patent allowances / (number of patent allowances + number of decisions of refusal + number of withdrawals and abandonments)

Technology collaboration with
Porsche-Diesel

Representative
innovations taking
advantage of ISEKI's
technologies

1963

1926

Development of two-wheel ricetransplanters equipped withbackward-tilting
seedling tanks

1971

1966

Commenced business withfully-automated rice hullers

Selected as one of the"100 Postwar Japanese Inventions"

Development of world's firstauto-threshing combine harvesters

Special Award of the NationalAwards for Inventions

Major awards and recognitions▶ “Invention Award of the National
Invention Award”(reaping and threshing machines)▶ “President's Award of the Association toCommemorate a Century of Agricultural
Experimentation and Research”(development and dissemination of
auto-threshing combine harvesters forcommercial use)

Invention Award of the NationalAwards for Innovations
Reaping and threshing machines

Rice harvesting machines withbinding device

Special Award of the NationalAwards for Inventions
ISEKI & Co., Ltd.
foundedAutomatic wind power control
device of revolving thresher

1926

1952

15 ISEKI CSR Report

President’s Award of the Japan
Institute of Invention andInnovation of the NationalAwards for Inventions

1960

1970

Research and development targeting further evolution
ISEKI aims to further enhance the strategic research and development of a wide variety
of products in collaboration with administrative organs, research institutions, universities,
JA, corporations, etc. ISEKI is committed to contributing to the sustainable developmentof agriculture in Japan and around the world by creating new value through research anddevelopment taking advantage of the strengths of ISEKI.

Manned monitoring-based robot tractors(slated to be put on the market in 2018)

Received Special Development Award under theDevelopment Award of the Japanese Society ofAgricultural Machinery and Food Engineers (2016)

Development of industry's firstplant growth diagnosis device
Development of a rotary-typetransplanting rod that haschanged the times

Development of industry's firstcombine harvester capable ofseven-row reaping

1986

2009

Received the 7th Robot
Award: Award of Excellence

Development of industry's firstvariable fertilizing ricetransplanter

2015

2016

1978

Encouragement Award of the Commissioner of the Japan
Patent Office of the Regional Awards for Inventions
Cultivating and mowing rotors forride-on rice transplanters

Encouragement Award of the Minister of
Education, Culture, Sports, Science and Technologyof the Regional Awards for Inventions

Development of large-sizedtractors produced in Japan

The Asahi Shimbun
Award of the NationalAwards for Inventions

Development of ride-on ricetransplanters

Invention Award of the
National Awards for Inventions

Speed control units for power vehicles

Encouragement Award of the Director-General of the Science and Technology Agency of
the Regional Awards for Inventions
Gear-change transmission devices for combine harvesters

215 awards
and recognitions
up to
FY2017

Methods of raising of seedlings

Travel units for seedlingplanters

Iseki has received awards from the Japan Institute ofInvention and Innovation every year.

Number of awards received (cumulative total: as of December 2017)
National Awards for Inventions: 18 (including 2 special awards)
Regional Awards for Inventions: 197 (including 34 special awards)

1980

1990

2000

2010

2017 (Year)
ISEKI CSR Report 16

Business development at ISEKI Group

Domestic business development
Developing initiatives to cope with the agriculture facing significant
changes, we will further expand our domestic business.
Agriculture in Japan has been facing the advancement of structural changes, such as theintroduction of large-scale farming due to the consolidation of farmland, conversion into fieldcrop and vegetable farming, the entrance of corporations into the agricultural industry,development into the sixth sector industrialization, etc., owing to the structural reform thataims to transform agriculture into a growth industry.
We will respond to changes in the market from both hard and soft aspects with a basic
strategy of “strengthening responsiveness to drastic changes in agriculture in Japan.”
We are committed to contributing to the sustainable development of agriculture in Japanby proposing “laborsaving and highly-profitable agriculture” as the “Supporter for the farming
industry full of dreams.”

Yukio Nawata,
Director & Managing Corporate Officer, General
Division Manager of the Business Division

Social issues▶ A decline in agricultural work force▶ Aging of agricultural work force (an increase in the ratio ofpeople who are 65 years of age and older)▶ A significant increase in production of vegetables→ Additional production of 2 million tons
▶ Reduction of production cost in wetland rice cultivation
National average in 2011:
16,000 yen/60kg → Reduction of 40% is expected■Agricultural work force and, among which, the ratio of■Production targets by item under the Basic Plan for Food,people who are 65 years of age and older
Agricultural work force

Agriculture and Rural Areas

Ratio of people who are 65 yearsof age and older

2013

2025

Rice for staple food

859

752

Rice for rice flour

2

10

Rice for feed

11

110

Wheat

81

95

Soybean20

32

Vegetable

1,195

1,395

(10,000 people)

300

60.3%

66.5%

312
251

200
182
100

0

2007

2012

Item (10,000 tons)

59.3%

2017

* Excerpt from the “Statistics concerning Agricultural Work Force” published by
the Ministry of Agriculture, Forestry and Fisheries* Excerpt from the “Basic Plan for Food, Agriculture and Rural Areas” published by the
Ministry of Agriculture, Forestry and Fisheries and the “Japan Revitalization Strategy”

Initiatives at ISEKI
Proposals and support to attain the farming industry full of dreams(i.e., profitable agriculture)
Amid the drastic changes in the environment surrounding agriculture, ISEKI works, as the Supporter for the farming industry full of
dreams, to help producers attain agriculture full of dreams (i.e., profitable agriculture) by making wide-ranging farm businessproposals from both hard (agricultural machinery) and soft (production management and farm business technologies) aspects.

Proposals aimed
at new-age
agriculture

17 ISEKI CSR Report

1. Product lineup tailored to a wide variety of needs
2. Enhancement of products in response to the introduction of large-scale
farming and services including the establishment of large-scale facilities
3. Strengthening of capabilities for offering farm business proposals and support
with the Dream Agricultural Research Institute acting as a hub

Product lineup tailored to a wide variety of needs
Product lineup that includes simple and low-priced specifications to achieve low-cost agriculture
The products are designed to make proposals that are tailored to customer needs, ranging from simple specifications contributing to the
reduction of production material costs to rich specifications incorporating automated technologies that utilize laborsaving ICT and otheradvanced technologies on the back of the labor shortage. ISEKI Group provides a wide-ranging product lineup centered around tractors, ricetransplanters and combine harvesters with the aim of reducing production costs for rice farming.

The TJX series, large-sizedtractors with simple
specifications, are offered at
low prices with carefully
selected functions while
having ample basic features,and contribute to the reductionof production material costs.

TJX3 series tractors

NP series rice transplanters(simple specifications)

HX series combine harvesters

Supporting improved productivity through mechanization
Efforts toward creating areas for producing vegetables using rice paddies
have been spreading to various locations.
Under the situation where mechanization in the field of vegetable
farming has been slower compared with rice farming, ISEKI Group has beenworking on the development and commercialization of vegetable farming
machinery that is suited for the cropping systems in the region. ISEKI Group
provides support, along with expertise on how to utilize agricultural
machinery, to promote the mechanization of vegetable farming.

Received “2017
Development
Award” of theJapanese Societyof Agricultural
Machinery andFood Engineers
Fully-automated vegetable transplanter PVZ1

Enhancement of products in response to the introduction of large-scale farming and services including the establishment of large-scale facilities
Provision of smart agricultural machinery aimed at laborsaving
ISEKI Group is working to develop and promote thewidespread use of smart agricultural machinery andfarm business management software that utilize
advanced technologies such as ICTs and robot
technologies with a view to achieving improved
productivity and efficiency.
Amid aging and a decline in the
agricultural work force, advanced
technologies are expected to contributeto laborsaving and the elimination of
the shortage of skilled operators.

Straight-travel assisting rice transplanters that makeplanting in a straight line easier for new farmers who
are not accustomed to the machine operations

All-round cultivation system for rice farmingthat utilizes ICTs and advanced technologies

Establishment and improvement of large maintenance and service facilities
ISEKI Group has been establishing and improving large maintenance and service facilities capable of handling swift maintenance and services forlarge-sized machinery that supports the introduction of large-scale farming in all regions across the country.

Chiba Service Center, ISEKI Kanto Co., Ltd.

Obihiro Maintenance Factory, ISEKI Hokkaido Co., Ltd.
ISEKI CSR Report 18

Business development at ISEKI GroupStrengthening of capabilities for offering farm business proposals and support with the Dream Agricultural Research Institute acting as a hub
Strategic hub for farm business proposals and support

Dream Agricultural Research Institute (Yumesoken)
ISEKI Group has been working on initiatives for the research,
verification and dissemination of smart agricultural machinery thatutilizes advanced farm business technologies and other advanced
technologies and for the development of human resources
capable of offering farm business proposals by strengthening
collaboration with administrative organs, research institutions,
universities, JA, corporations, etc.

ISEKI Global Training Center (IGTC)
Various training programs are provided for not only employees of
ISEKI Group, but also sales and service representatives at suppliers(sales agencies) with the aim of developing human resources.

A wide variety of activities aimed at
research, verification and dissemination
The institution supports customers' farm management
through a wide variety of activities aimed at research,
verification and dissemination.
 esearch and verification concerning cultivationR
technologies in collaboration with administrative organs,research institutions, universities, etc.
Utilization of rice paddies (conversion into soybean,barley or vegetable farming)
Support aimed for obtaining GAP certification
Proposing cultivation technologies to entrants from otherindustries and new entrants
Support for cultivating regions' traditional cropsS upport for restoring deserted farmland and regional
revitalization in collaboration with administrative organs, etc.
Working on a project to support female farmers in Japan(“YUMEARU NOGYOJOSHI OEN” project)<Support aimed at obtaining GAP certification>
Seventy staff members (instructors) support the obtainingof GAP certifications including JGAP and ASIAGAP.

Development of professional human resources
Strengthening of farm business proposal capabilities
Agri-Heroes Support Project Training (farm businessproposals)
Team TJ Training (use of large-sized machinery)Strengthening of technical service capabilities
 arious training programs provided by the ISEKI Global
V
Training Center (technical services)* GAP (Good Agricultural Practice; agricultural production management): A production process management initiative for ensuring the sustainability of food safety, environmental
preservation, industrial safety, etc., in agriculture.

19 ISEKI CSR ReportOperation of branches of the research institution
ISEKI has been working on initiatives for community-based research, development and verification as well as farm business proposal anddissemination activities attuned to customers' farm management based on the knowledge and technologies acquired through various
training programs, in collaboration with administrative organs, research institutions, universities, JA, corporations, producers, etc.

Initiatives concerning data-based wetland rice cultivation and management in collaboration withadministrative organs and private enterprises
ISEKI Co., Ltd and ISEKI Shin-etsu Co., Ltd. are participating in the "Smart Agriculture Inter-business Cooperation Demonstration Project"
at Niigata City that has received designation as a National Strategic Special Zone. Under the project, the participating corporations are
combining their respective innovative technologies and making efforts to achieve further laborsaving, lower costs and higher quality ofrice farming by consolidating and centrally managing information obtained using ISEKI's smart agricultural machinery and participating
corporations' remote sensing systems (drones and artificial satellites) in the farm business management system.

Initiatives aimed at the mechanization of sesame seed cultivation
The mechanization of sesame seed cultivation is difficult, which has made the import percentage of sesame seeds high. In response tothis, ISEKI Co., Ltd and Mie ISEKI Sales Co., Ltd. are working to mechanize sesame seed cultivation in collaboration with the National
Agriculture and Food Research Organization, Mie Prefecture Agricultural Research Institute and sesame seed processors andmanufacturers to support sesame seed production in Japan and field development for production of sesame seeds.
This initiative is undertaken with the support of the "special scheme project on vitalizing management entities of agriculture, forestry
and fisheries" of the Bio-oriented Technology Research Advancement Institution of the National Agriculture and Food Research Organization.

Collaboration among industry, government, and academia on NOGYOJOSHI (female farmers) Project; Initiatives for buckwheat cultivation
ISEKI Co., Ltd and ISEKI Kanto Co., Ltd. have formed a collaborative relationship on the NOGYOJOSHI Project among industry,
government, and academia, for the first time in Japan, with Tokyo University of Agriculture and Ami Town Farming Liaison Council of
Ibaraki Prefecture. This effort has contributed to the mechanization of buckwheat cultivation.

ISEKI CSR Report 20

Business development at ISEKI Group

Overseas business development
We will “expand overseas business” by further accelerating
the development of business on a global scale.
Amid the upsurge of the global population, an increase in food production is a global issue. I
believe that the role that we - agricultural machinery manufacturers - play will become evenmore important in view of producing and providing food more efficiently.
In the Mid-term Management Plan, we position “North America,” “Europe,” “China” and“ASEAN” as the four pillars of its overseas business and sets the overseas sales ratio target for
the group, including equity-method affiliates, of 40% to be achieved by 2020. The environment
surrounding us has, however, recently been changing quite rapidly and significantly in eachregion.
We will push forward with the global strategies, in addition to the existing community
network, so that we can fully-accommodate these changes and establish a firm position as an
agricultural machinery manufacturer in the global market as well.

Yoshiyuki Toyota,
Director & Executive Vice President, General
Division Manager, Overseas Business Division

Social issues

8.1 billion people
Global population in 2025(100 million people)

81.4

0

23.5
20

50

Developing
countries
Developed
countries
2000-2002 2012-2014
*1

*2

2025

Asian region.

28.0

30

62.0

of rice production and consumption is in the

Demand for grain in 2025(100 million tons)

100

71.8

Approximately 80%

2.8 billion tons

For feed use

18.5

10

0

For food use
For use as
bioethanol
raw materials
2000-2002 2012-2014
*1

*2

2025

Consumption has increased following the
population growth.
2012-2014(*2):410 million tons
→ 2025: 470 million tons +15%
An increase in the production volume per
area is indispensable.

⇒ Productivity improvement

A decline in agricultural work force
following industrialization⇒ Laborsaving through mechanization* Excerpt from “World Food Supply and Demand Trends and Projections in the Medium- and Long-Term"
published by the Policy Research Institute, Ministry of Agriculture, Forestry and Fisheries (March 2016)* 1: Average of three years between 2000 and 2002 * 2: Average of three years between 2012 and 2014

Initiatives at ISEKI
Strengthening of collaboration with strategic partners
ISEKI provides products that meet the needs ineach market around the world by thoroughly
implementing market-orientated strategies insuch markets.
ISEKI believes that the supply ofagricultural machinery that can contribute toimproved productivity, laborsaving, etc.,
through the strengthening of collaboration
with strategic partners and the building of a
global production system would open the way
for the resolution of the issues facing theworld such as population growth, an increasein food production, etc.

21 ISEKI CSR Report

Dongfeng Motor(China and the ASEAN countries)

Mitsubishi Corporation(Thailand and neighboring countries)

PT. RUTAN(Indonesia)

AGCO(North America andthroughout the world)

Business in the ASEAN region
In the ASEAN region, where remarkable economic rise has been made in recent years,
an increase in food production and a decline in agricultural population following
industrialization have become social issues.
IST Farm Machinery Co., Ltd., a sales subsidiary and joint venture with Mitsubishi
Corporation has been working on the development and sales of products that meet the
local needs. Going forward, ISEKI will push forward with not only the strengthening of
the business foundation in Thailand by expanding the dealer network, etc., but also
sales expansion into neighboring countries. In addition, ISEKI (THAILAND) Co., Ltd. wasestablished in 2016 as a local subsidiary that is engaged in the development,
procurement and sales of implements that are suitable for the environment where they
are used. A parts center has also been established to build a system for providing swift
after-sales services. Through these and other efforts, ISEKI is striving to proactively
expand the business in the region.
IST Farm Machinery Co., Ltd.

Business in China
China is facing the issues of having a population of more than 1.3 billion and anincrease in food production, and there is an increasing need for large-sized agricultural
machinery, agricultural machinery equipped with advanced technologies andenvironmentally-friendly machinery on the back of increasing the scale of agricultural
management bodies and the consolidation of farmland.
ISEKI established an office for the production and sales of rice transplanters andcombine harvesters in Jiangsu Province in 2003, and a joint venture with the Dongfeng
Motor Group in Hubei Province in 2011, which were consolidated into Dongfeng ISEKI
Agricultural Machinery Co., Ltd. in 2014.
A new factory was established in Xiangyang, Hubei Province in 2017 with an eye
toward further business expansion. The factory is engaged in the manufacture of
products such as rice transplanters and high-horsepower tractors that meet the needsof the market. ISEKI will continue strengthening the collaboration with the strategic
partner, Dongfeng ISEKI and expand the business.

Dongfeng ISEKI Agricultural Machinery Co., Ltd.

TopicIntroduction of environmentally-friendly
side-row fertilizing rice transplanters
In China, there is an increasing need for agricultural machinery that helps reducethe burden on environment.
ISEKI has been providing a lineup of side-row fertilizing rice transplanters thatenable high-performance operations and the reduction of water pollution.

Global production system

PT. ISEKI INDONESIA

Production capacity/year (units)

Strengthening of initiatives for establishing a
2017
10,000 units
system for an increase in production
2019
15,000 units
A production base of tractors for overseas markets
that meet the need for low prices.
2021
20,000 units
Since the commencement of the production of
tractors for the North American market in 2014, thecompany has expanded the lineup of models mainly for North America, ASEAN countries
and Europe. The production volume topped 10,000 units in 2018, which is equivalent tothe current production capacity and is expected to reach 20,000 in 2021. In response tothis, ISEKI intends to enhance the production capacity by establishing a production systemwith the aim of speedily supplying products to markets and improving productivity.

Xiangyang Factory, Dongfeng ISEKI
An export and production base for China and ASEAN countries
The factory produces rice transplanters, high-horsepower tractors, general-purpose
combine harvesters for ASEAN countries, etc., as the export and production base for China
and the ASEAN region.

ISEKI CSR Report 22

Business development at ISEKI Group

Business in Europe
In Europe, where especially high environmental awareness is observed in theworld, ISEKI's tractors and ride-on mowers are actively used in the field oflandscaping, such as lawn mowing in parks as well as cleaning and snow removal
on roads.
ISEKI started its business in Europe in the 1960s and established N.V. ISEKI
Europe S.A. in Belgium in 1971, disseminating the ISEKI brand in Europe, mainly
in France and Germany. ISEKI France S.A.S. was established in 2014 as a coresales base to strengthen partnerships with sales agencies in European countries
and provide products that the markets demand. ISEKI intends to further heighten
its presence while maintaining a high market share and service capabilities bytaking advantage of its strengths accumulated through more than 50 years ofhistory in Europe.
ISEKI France S.A.S.

Topic

Introduction of mowers into the market oflandscaping machinery for professional users
ISEKI has been delivering, in response to demand for professional use in thelandscaping market, higher-output and more efficient front mowers withgrass collection features (SF200 series) that enable stable operations even on
slopes.
ISEKI products are widely used by many professional users in Europe who
recognize them as "having excellent adaptability and operating performanceand being capable of realizing highly-efficient operations."

Business in North America
ISEKI provides compact tractors of less than 40 horsepower and utility tractors ofless than 100 horsepower to the agricultural machinery manufacturer AGCO
Corporation which has a broad sales network in the U.S., etc., on an OEM basis.
The products are used by a wide variety of users ranging from general consumers
for hobby use to professional farmers.
Going forward, ISEKI intends to further strengthen the collaboration with
AGCO Corporation and the quality of the ISEKI products that enjoy highrecognition, and further expand the business not only within North America, butalso into Central and South America.

Topic

Received the“3rd Party Supplier of the Year 2017”
award from AGCOISEKI received the "3rd Party Supplier of the Year 2017" award in recognitionof its product quality at a ceremony for commending excellent suppliers held
by AGCO.

23 ISEKI CSR Report

SF200 series

GovernanceCorporate governanceCorporate governance system
The main purpose of our management system is to respond quickly and accurately to changes in our business climate and to maintain fairbusiness operations. Achieving sustainable growth and improvement in corporate value over the medium and long term is our top priority ofmanagement. To maintain favorable relations with our stakeholders including shareholders and customers, we are endeavoring to expand andimprove our corporate governance.

General shareholders' meeting
Appointment/
Dismissal

Appointment/
Dismissal

Board ofDirectors

Appointment/
Dismissal

Board of Auditors
Audit

11 directors(Incl. 2 outside directors)
5 corporate auditors

Corporate Auditors
5 auditors(incl. 4 outside auditors)

Audit

Independent Public
Accounting firm

Appointment/
Dismissal/Monitor

Audit(Cooperation)

Directors

Audit(Business execution system)

President
Directors’ Operation Committee(Directors & appointed
Corporate Officers,
General Managers)

Internal Control & Audit Department

Management Supervisory Committee

Corporate Officers
Internal Audit

Associated companies, divisions & sections

Board of Directors/ Directors’ Operation Committee

Board of Auditors

Meetings are held once or more per month to make decisions on
basic matters in relation to management as well as matters set
forth in laws, regulations and the articles of association. Regarding
the business execution, the corporate officers fulfill their duties
smoothly as the persons responsible for the various operations. In
addition, to manage businesses in a sound manner, Directors'
Operation Committee meetings are held at least twice a month inorder to share the latest information and discuss and report on how
the business should be operated, the existence of risks, and how toprevent and avoid them.

Corporate Auditors attend the Board of Directors and Management
Supervisory Committee meetings. They independently formulate
audit policy and audit the operations and assets of our offices andsubsidiaries in cooperation with the Internal Audit Department andaccounting auditors. Moreover, they strictly check the important
agenda at the Directors' Operation Committee meetings and thestatus of operation execution by Directors to monitor management
status and ensure the effectiveness of our corporate governance.

Management Supervisory Committee

Two Outside Directors are appointed to introduce external
perspectives into management, further strengthen the supervisory
function on business execution and further improve the transparency.
In addition, the Board of Auditors is set up with five Corporate
Auditors including four Outside Auditors to enhance and reinforce
the auditing system and strengthen the monitoring of management.

We hold the Management Supervisory Committee once a monthwith the chairman of the Board of Directors as the head, all the
directors as members and all the auditors as observers to check if
compliance is penetrated thoroughly into the Group, as well as tocheck the measures and their status to establish and maintaininternal control system.

Information disclosure with transparency
With the aim of ensuring information disclosure with transparency,
ISEKI has established a system for disclosing material information
to stakeholders in a timely and appropriate manner in ways such as
ensuring appropriate business operations and sharing information
by creating group-wide management regulations and building areporting system.

Outside Directors and Outside Auditors

Number of Outside Directors:

2

Number of Outside Auditors:

4

ISEKI CSR Report 24

GovernanceCompliance
Promotion of compliance
In order to continue with its compliance-focused management, ISEKI Group works to make the importance of compliance thoroughly understoodand enforced by “each and every one” of the group members with the aim of raising compliance awareness.

System for promoting compliance
The Compliance team established as an intragroup organization promotes compliance under the leadership of the director in charge ofcompliance.
PurposeTo prevent misconduct and scandals fromoccurring by promoting the penetration ofknowledge and the awareness of complianceamong each of the group members
Activities
To carry out compliance-related training andeducational activities systematicallyBusiness Division
Sales Planning &Administrative Department

Business Division
Agri-plant
Department

ComplianceDirector in charge anddeputy director in charge
Internal Control &Audit Department
Secretariat(Personnel Department)

Development &Production Division
Administrative Department

Overseas Business DivisionCorporate BusinessControl Department

Other
Personnel Department andother departments

Activities for penetration and education on compliance istribution of the pamphlet “ISEKI Group Code of EthicalD
Behavior” to all group members
Inclusion of information into group house magazines
Issuance of “Compliance News” on a quarterly basis to introduce
initiatives at each workplace

Compliance trainingIncorporation into company-wide events and educational training
programs
Sales subsidiary president meetings, manager meetings,
executive training, newly-appointed manager training,
newly-hired employee training
Individual training programs
Sales subsidiary employee meetings of sales departments
Facility personnel training of facility departments
Specialized employee training of development departments

Whistle-blower system
ISEKI Group has set up a group-wide whistle-blower system (Ethical
Hotline) in order to establish an open corporate culture. Posters on
the system are posted at each office to make the method of use
widely known by all employees.

Compliance training<Whistle-blower system (overview)>
Scope ofinformants• All employees and retired employees of ISEKI Group

Channelsforreporting• Staff organization channel• All suppliers and their employees• Personnel Department channel• External channel (lawyers)• Violations of laws and regulations

Matters toreport• Matters related to violations of internal regulations

including the “Code of Ethical Behavior,” the Work
Regulations, etc.

Initiatives for fair trade

Initiatives for protecting personal information

ISEKI works to prevent the recurrence of any event that would resultin a cease and desist order, etc., under the Anti-Monopoly Act bysteadily implementing measures therefor which have been formulated
in response to the receipt of such orders, etc., in relation to facility
construction.

The Privacy Policy concerning the handling of personal information isformulated and internal regulations concerning the management of
personal information are created and maintained. ISEKI Group works toappropriately protect personal information by carrying out activities foreven further awareness and education on such protection for employees.

25 ISEKI CSR ReportSocial

Stakeholder communication

Customers

Communication with customers
ISEKI Group works to improve customer satisfaction through various communications, with the principle of “the provision of products andservices that satisfy customers through our customer satisfaction (CS) improvement activities” at the core.

Initiatives for supporting customers' farm management
Activities for the dissemination and support of advanced farm business technologies
ISEKI Group works on the dissemination and support of advanced farm business technologies to support customers' farming full of dreams (i.e.,
profitable agriculture). Efforts by ISEKI Group to resolve issues include direct dialogues between sales and service representatives and customers
and proposals and support through exhibitions, various seminars and farm business information magazines.

Initiatives for dissemination and support
ISEKI Group provides products and information useful for farm management, such as the latest agricultural machinery, throughexhibitions, demonstrations, various seminars, etc. In addition, the "Dream Agricultural Research Institute (Yumesoken)" accepts a
number of inspections by agriculture-related parties such as producers, administrative organs, research institutions, and JA, sending out
various types of information.

Holding of seminars in response to requests from producers

Visitors to "Yumesoken" for inspection:
approximately(in total)

7,000

Activities through use of websites and information magazines
ISEKI Group sends out information on farm business, advanced technologies, etc., to its
customers through the website and the farm business information magazine "FARM ISLAND,"etc., whereby the experience of employees and initiatives undertaken by customers are broadly
introduced in an easy-to-understand manner.
In addition, a system has been adopted that allows sales and service representatives topropose products to customers using, in addition to catalogs, videos on smartphones, tablets
and other devices. Parts catalogs are also available for browsing to realize speedier repairs.

Specially-set-up website introducing advanced technologies and advanced farm business technologies

Farm business information magazine

ISEKI CSR Report 26

Social

Stakeholder communication

Customers

Initiatives for the improvement of maintenance services
ISEKI Group engages in various service activities with the aim of allowing customers to use agricultural machinery that they have purchasedsafely and securely. In addition, as systematic operations are of importance in farm management, ISEKI Group works on the human resource
development of service representatives within Japan and overseas with the aim of providing high-quality and prompt services in the maintenanceof agricultural machinery.

Maintenance service activities
Service activities
Presale services

S afety training
Carrying out of safety training at sales
subsidiaries across Japan
Instructions on test operations upondelivery
Provision of instructions on how to
operate the machinery at the time of its
test operations based on a check sheet

After-sales services

Troubleshooting
Prompt repairs of any defects
Inspections and maintenance
Provided for the purpose of allowing
customers to use their machinery safely
Inquiries on the conditions of delivered
products
Proactively performing inquiries on theconditions of new vehicles and vehicles
that have received services that havebeen delivered and in use

The representatives obtain various types of certifications and qualifications to strengthen
their ability to provide services to customers.

Topic

Agricultural machinery mechanics

1,760 (total number of people up to FY2017)(Grade 1: 1,114; Grade 2: 646)

Carrying out of the "OK Campaign" across ISEKI Group

ISEKI Group carries out the "OK Campaign" on a group-wide basis
whereby pointing and calling are performed before and after
operations at sites where maintenance and repair services and thedevelopment and production of agricultural machinery are
implemented to provide safe, secure and reliable products and services
to customers.
The campaign is also promoted from the perspective of preventing
industrial accidents as the performance of appropriate pointing andcalling leads to the improved safety and accuracy of operations.

paign
e OK Cambers!
ies out th
all memfo
ISEKI carrnioparticipatwith the<Holding of Service Skills Contests>
ISEKI Group plans to hold a Service Skills Contest for all service
representatives with less than five years of service with the aim ofdeveloping young employees in a shorter period of time.

Service and support activities overseas
Improvement of service and support
systems
ISEKI Group has built service and support systems for providing
prompt responses to customers through means such as building
the Parts Depot Center
for European countries
and the local
subsidiary ISEKI(THAILAND) Co., Ltd.
for ASEAN countries.

ISEKI (THAILAND) Co., Ltd.

27 ISEKI CSR Report uman resource development for service
H
representatives
ISEKI Group supports the improvement of the ability of
distributors to provide services by holding workshops locally andproviding technicaltraining at the ISEKI
Global Training Centerin Japan for service
representatives of theoverseas distributors.

A technical workshop for the European distributors

Social

Stakeholder communication

Customers

Product quality assurance
ISEKI Group works to provide product quality assurance that responds to the trust of customers in its manufacturing processes, covering
everything from product planning to sales and after-sales services in pursuit of the provision of products that satisfy customers. In addition, thebasic rule of ISEKI Group is to “take all possible measures for quality control and make prompt responses in good faith should any qualityrelated issues arise.”

To improve customer satisfaction
ISEKI Group carries out consistent product quality assurance activities across the group in the processes covering everything from productplanning and development to manufacturing, sales, and services with the aim of providing safety products that respond to the trust of customers.
In quality assurance, ISEKI Group implements the “refinement of quality,” “verification of manufacturing quality” and “evaluation ofmerchantability” based on the opinions of customers. ISEKI Group also provides instructions on test operations upon delivery, performs inquirieson the conditions of delivered products, etc., as part of the “service activities” and takes steps such as feeding back the opinions of customers.
In such ways, ISEKI Group conducts quality assurance examinations.
Feedback of voices of customers (opinions, requests and emerging needs)

Flow of ISEKI's product quality assurance
Development

Manufacturing

Sales and services

Examination of quality assurance at each step

Products

Customers

Product planning

Refinement of quality
Verification of manufacturing quality
Safety andreliability

Evaluation of merchantability
Service activities
Consistent product quality assurance activities

Handling of recall
When an issue occurs in products requiring improvement measures, ISEKI promptly
performs inspections and repairs of the products giving the utmost priority to customers'
safety.
When we launch a recall, we give notice and report to the organizations concerned (*1)
and disclose the information on the website of ISEKI CO., LTD. to draw attention ofcustomers and provide them with information.

Information related to recalls
can be found on our website.

http://www.iseki.co.jp/news<Number of recalls in each fiscal year (*2)>
FY

2013

2014

2015

2016

2017

Number of recalls

3

7

3

5

6

*1 Ministry of Land, Infrastructure, Transport and Tourism,
Ministry of Agriculture, Forestry and Fisheries, Ministry of
Economy, Trade and Industry, etc.
*2 Number of recalls reported to the Ministry of Land,
Infrastructure, Transport and Tourism

Initiatives for customer consulting services and inquiries concerning the products
Inquiries and consultation concerning the products are accepted by phone, email,etc., and the department in charge promptly provides in-depth answers. ISEKI
works to take measures for matters that receive a large number of inquiries by,for example, making the number and variety of items and explanations posted on
the website richer.

<Number of inquiries by email in FY2017>
Subject

Number ofinquiries

Ratio

Tractors

96

22

Tillers and high clearance
multipurpose vehicles

58

13

Rice transplanters

56

13

Combine harvesters

40

9Manuals, etc.

27

6

Other

165

37

Total

442

100

ISEKI CSR Report 28

Social

Stakeholder communication

Employees

Communication with employees
One of the principles set forth in the Company Motto of ISEKI Group is to provide “a stable workplace to the employees,” and one of the basic
rules of ISEKI Group is to “aim for creating a healthy and safe working environment where employees can feel that their work is rewarding.”
ISEKI Group works on the provision of a secure and safe working environment to employees, support for the career development, cultivation andutilization of diverse human resources and other initiatives as its priority issues.

Human resource development at ISEKI Group
ISEKI Group has a wide variety of training programs ranging from the “Agri-Heroes Support Project Training” to strengthen farm businessproposals for customers and the “Team TJ” training specially designed for proposals utilizing large-sized tractors and implements to trainings
divided by their skills and occupation, correspondence or foreign language courses, and opportunities to study abroad. We also introduce the"Meister" system so that accumulated experience and skills can be smoothly passed on.

Initiatives for developing global human resources undertaken at ample and specialized training facilities − three pillars for human resource development −ISEKI Group has put in place a system for developing human resources specialized in either of the following three fields: "development,""production" or "sales and services."
ISEKI Group works to strengthen its human resource development efforts through specialized training programs provided by the "IETC,"
where we nurture young designers who play a role at development sites, the "ITTC" to nurture human resources of production sites in Japanand overseas and the "IGTC" to raise human resources in the fields of sales and services in Japan and overseas, contributing to the realizationof manufacturing that is trusted by customers and the provision of innovative products and services.

Development
Engineering
IETC ISEKI
Training Center

Production
Technical
ITTC ISEKI
Training Center

Sales and services
GlobalIGTC ISEKI
Training Center

Nurturing young designers

Nurturing leaders of
production sites inJapan and overseas

Nurturing sales and service
representatives inJapan and overseas

Number of trainees: 490

Number of trainees: 126

Number of trainees: 813(Number of trainees in FY2017)

Holding of All ISEKI Group Technical Skills Contests
Skills contests covering whole ISEKI Group are held with the aim of
improving the technical skills of workers at manufacturing sites in Japanand overseas and nurturing younger employees. The contests serve as avenue for competition of artisanal skills of worksites in categories of "NClathe," "fineness of machine assembly finishing," "welding," etc.
The level of technical skills possessed by workers of overseas sites isgetting higher year after year: in FY2017, a participant from Indonesia
won the award of excellence in the category of "fineness of machineassembly finishing."

29 ISEKI CSR ReportSocial

Stakeholder communication

Employees

Utilization of diverse human resources
ISEKI Group works on promotion of diversity as one of its management strategies, whereby diverse human resources are utilized. ISEKI Grouphas placed a strong emphasis on mid-career recruitment of people with expertise and valuable experience as well as new college graduate
recruiting, with recruitment decisions made based on personalities and abilities. The career development of employees is supported throughproper treatment of employees who possess a wide variety of abilities and are highly motivated, creating opportunities to play active role so as
to secure outstanding talents.

Initiatives for promotion of active participation by females
ISEKI Group works on promotion of active participation by females as part of utilization of diverse human resources. At present, the ratio of
female employees to employees in general positions is 18% and to employees in technical positions, 4%. ISEKI Group is committed to increase
the number of female employees in technical positions in the future and incorporate new ideas from the female point of view into productdevelopment as well. In addition, ISEKI Group continues its efforts toward increasing the ratio of female employees in the superintendent class,
who are manager candidates.
<Ratio of newly-hired female employees>
40%<Ratio of female employees by level> (as of December 31, 2017)30%

Target: 20% or more

Target: 10% or more 21%

24%
15%

20%
5%
0%

VOICE

Superintendent class employees(manager candidates)

2014

8%

22%

13%

13%

16%
3%

2015

22%

2016

Voice of a female manager

0%

2017

2%

Corporate Managers Superintendent Assistant Senior Intermediate Juniorofficers
class superintendentclass

Rie Kaneda, Head of Secretary's Office, ISEKI & Co., Ltd.

I have worked in domestic sales & marketing departments sincejoining the company and I have been in the position of the Head of
the Secretary's Office since 2014, conducting operations related toschedule management of officers and their activities at external
parties, etc.
Understanding and cooperation of our family is indispensable for
employees to develop their career. Speaking of my family, I shared
the household chores with my husband just from the beginning of

our marriage, and thanks to this and other efforts, I could strike abalance between family life and my work.
For more females to play a role in society even more actively, I
believe that it would be important to reexamine the ways males
work, too. I am determined to make further advancement in mycareer as one of the female managers so that I can make theorganization an attractive one where everyone can envision theircareer as “playing an active role as a manager,” regardless ofgender, and I will pour all my energy into this goal for the future.

Continuation of recruitment of employees of foreign national

Promote physically-challenged people employment

ISEKI Group works to recruit employees of foreign national on acontinuous basis, which is indispensable for its global business expansion.

ISEKI Group is promoting the recruitment of people withdisabilities by providing accommodation that allows forindividuals with or without disabilities to demonstrate theirabilities.

VOICE

Voice of an employee of foreign national

Feilong Yin, Overseas Business Division,
ISEKI & Co., Ltd.
I studied about automobiles at university in China andadvanced to university in Japan with the hope todeepen my knowledge even further. I joined ISEKI & Co.,
Ltd. because the company has been expanding its
business in China and believed that I could make fulluse of my abilities.
Since joining the company, I have been engaged in operations related to China
in overseas business departments and tackling with various types of operations
including making various arrangements in cooperation with technical departments
and overseas manufacturing subsidiaries, conducting research on local markets
and providing accompaniment service for customers visiting from China.
The Chinese market is growing year after year and my workload is increasing.
However, I am trying to strike a balance between my family life and work byproactively participating in not only work, but also child rearing and achieving
well-organized style of living
I have a passion for contributing to agriculture around the world by deliveringlaborsaving products to overseas countries and achieving automation andefficiency improvement in the future. I am diligently working on my day-to-day
duties toward the achievement of that goal.

<Ratio of employees with disabilities>
2014

2015

2016

2017

1.98%

2.08%

1.92%

2.19%

Prohibition of discriminatory treatment and respect for human rights
It is stipulated in its Code of Ethical Behavior that ISEKI Grouprequires its employees to “respect fundamental human rights
and not engage in any act of discrimination or harassment on
the grounds of nationality, race, creed, gender and disabilities,”
which is distributed to all employees.
In-house training is carried out on a periodic basis where
employees are instructed on respect for human rights at all
times, the prohibition of any act in defiance of the integrity ofother people including harassment and the need for due care ofspeech and conduct on a daily basis in their day-to-day
operations and engagement with society.
ISEKI CSR Report 30

Social

Stakeholder communication

Employees

Promotion of work-life balance
Support for flexible work styles
ISEKI Group supports flexible work styles of employees by setting up various systems accommodating changes in their life stages and the needfor support and nursing care. In addition, ISEKI Group works to improve the rate of taking paid leave and childcare and nursing leave, regardlessof gender, so that each employee can lead a more fulfilling life by maintaining a work-life balance.

Various systems

Targets promoted until 2020

(1) Fixed work location recruitment(2) Flextime system that allows for setting flexible working hours(Not all departments adopted)(3) Implementation of "no overtime" day to reduce overtime work(4) Systems for taking leave and selecting shortened working hours for childrearing(5) Systems for taking leave and selecting shortened working hours for nursing care(1) An increase in the number of days forwhich annual paid leave is taken in aplanned manner

5 days (2017) → 8 days
(2) Rate of taking annual paid leave 70%* For union members<Details of the action plans>

Initiatives for the Next-Generation Act

1. Creation and maintenance of a working environment where work-childcare balance can be readily achieved• Widely communicating the system for supporting work-child care balance
2. Promotion of active participation by female employees caring for children• Participation in seminars and training workshops for career advancement• Introduction of systems to provide support after coming back to work,
including a mentor system• Provision of training targeted at promoting active participation by females as part oftraining for managers and mid-level employees
3. Reexamination of work styles
4. Carrying out of activities to support child rearing in local communities

ISEKI Group has formulated and implemented
action plans based on the Japan’s Law on the
Promotion of Measures to Support theDevelopment of the Next Generation. In July
2015, ISEKI Group was certified under the
special authorization system named “Kurumin”
run by the Ministry of Health, Labour andWelfare as a company that promotes childcare
assistance.

Promotion of health management for employees
ISEKI Group ensures that health checkups and stress checks for employees are implemented.
Educational activities are undertaken in such ways as providing mental health seminars andhealth-promoting walking programs as opportunities to think about health management
and mental healthcare for employees including managers.

Holding of a mental health seminar

Initiatives for thorough management of occupational safety and health
Setting up “a healthy and safe workplace” as the code of conduct, ISEKI Group thoroughlymanages occupational safety and health on a group-wide basis.
ISEKI Group carries out safety and health activities in line with the actual situations ofeach company and office and promotes awareness at sites of manufacturing subsidiaries byimplementing safety checks and thereby works to reduce accident risk completely aiming toachieve “zero industrial accidents.”
Experiencing near-accidents at the safety training hall

<Statistics of industrial accidents: severity rate>
2013

2014

2015

2016

2017

0.028%

0.035%

0.008%

0.000%

1.760%* Severity rate: Number of work days lost per 1,000 working hours* Scope: ISEKI & Co., Ltd. and its three factories in Japan* Period: For 12 months from April to March of the following year for years in or
before 2014 and nine months from April to December for 2015 (due to a change
in the fiscal year-end) and 12 months from January to December since 2016.

In January 2017, an employee at a manufacturing subsidiary lost
his life due to an industrial accident. In response, we carried out
a safety audit at each and every workplace within the group andformulated measures to prevent recurrence. We have been pulling
together in an effort to prevent accidents from happening everagain and maintain occupational safety.
31 ISEKI CSR Report

Policies concerning safety“Safety takes precedence over everything”- promoting initiatives to achieve "zero" industrial accidents -Implementation of risk assessment based on risk-prediction activities
Identifying risks and hazards in operations, taking risk reduction
measures and thereby preventing accidents from occurring
Provision of safety education
Thoroughly entrenching awareness of safety once again
through education provided at the safety training hall so as
to build a framework that prevents any industrial accidents

Social

Stakeholder communication

Shareholders and investors

Communication with shareholders and investors
Enhancement of constructive dialogue
ISEKI Group believes that the understanding of shareholders and investors is indispensable for achieving sustained growth and the improvementof corporate value over the medium to long term. In order to establish a long-term relationship of trust with shareholders and investors, ISEKI
Group engages in IR activities focused on constructive dialogue such as explaining the management policy in an easy-to-understand manner.

Running of shareholder-focused general shareholders' meetings

Aiming to improve dialogue in IR activities

ISEKI Group has built an environment where it is made easier for
shareholders to attend general shareholders' meetings and runs themeetings in a shareholder-focused manner.
Electronic exercise of voting rights over the Internet is madeavailable with the aim of facilitating voting.
In addition, visualized business reports are prepared forshareholders to deepen the understanding of ISEKI more.

A department in charge of IR is established to improve IR activities.
Briefing sessions for analysts and institutional investors byofficers are held on a quarterly basis.
Individual meetings, conference calls, etc., are also provided
mainly by the department. The contents of dialogue are fed back to
the company’s executives and related departments by way ofreporting to meeting bodies, distribution of reports, etc., for the
purpose of information sharing.
ISEKI Group works to enhance information disclosed through IR
seminars for individual investors and websites with the aim of
improving opportunities for dialogue with individual investors.
Tours of the factories and the “Dream Agricultural ResearchInstitute” are provided for deeper understanding of our activities.

Information disclosure in a fair, timely and appropriate manner
ISEKI Group discloses information in a fair, timely and appropriatemanner with the aim of improving constructive dialogue.
Insider information-related regulations are formulated for theproper management of such information. The period from the day
following the last day of a fiscal year to the day on which earnings
reports are made is designated as a quiet period within which
dialogue with investors is restricted.

Communication with suppliers

Stakeholder communication

Suppliers

Fair and equitable trade
The basic rule of ISEKI Group is that “the relationship with suppliers should be fair and equitable and it will not give unfair and disadvantageous
treatment to suppliers, abusing its privileged position in the trade.” ISEKI Group believes that the building of a supply chain and developing
human resources inside and outside the company is indispensable to achieve sustainable growth as a corporation in the rapidly changing
business environment. For these reasons, ISEKI Group cooperates with its suppliers so as to tie the relationship to mutual business development.

Initiatives for developing human resource development

IR efforts for vendors and other initiatives

ISEKI Group provides suppliers with opportunities for training and study
sessions at ISEKI's human resource development facilities with the aim of
improving their skills, knowledge and capabilities of providing sales andtechnology services. Various types of ability development programs areundertaken with suppliers by making effective use of the human assets ofthe group. A training program for nurturing successors of dealerships wasprovided as part of such training and the 34th-year trainees completed their
one-year training in March 2018.
In addition, supplier companies provide ISEKI Group employees involvedin purchasing with training on the characteristics and functionalities of
products with the aim of raising the level of such employees. Through thisand other means, ISEKI Group and suppliers work to educate each other.

IR information meetings are held for vendors of the domestic
factories to provide explanations and dialogue with the company’s
executives on matters such as the status of management and the
management policy. ISEKI Group provides company tours for
suppliers through which suppliers observe good practices and thelatest initiatives, and also works on the implementation of supplieraudits and business support to allow ISEKI Group and suppliers to
expand and develop business together.

Initiatives for complying with the Act against Delay in Payment of Subcontract Proceeds, Etc., to Subcontractors
Checks and supervision have been entrenched in each group company,
including checks and balances based on systems and monitoring
through audits.
Continuous education concerning the Act against Delay in Payment
of Subcontract Proceeds, Etc., to Subcontractors is also provided.

Promotion of green procurement
In terms of preserving environment,
we suppose it essential to corporate
with the suppliers, and we request
their understanding and cooperation
to attain the "ISEKI Group Green
Supply Guidelines". Regarding the
suppliers superior in environmental
activities, we ask them to be our"Certified Green Suppliers."

Certified Green Suppliers ratio

Non-certified
24%
Certified76%

ISEKI CSR Report 32

Social

Stakeholder communication

Local communities

Communication with local communities
The basic rule of ISEKI Group is “to actively contribute to local communities as a member responsible for society” and “to contribute to local
society while affording respect for laws and regulations, practices and culture of the country when doing business overseas.” ISEKI Group works
on various initiatives aiming for the development of local communities.

Communication toward the development of the next generation
ISEKI Group is proactively working on initiatives for developing the next generation for local communities.
As an agricultural machinery manufacturer, ISEKI Group provides opportunities for experiencing and learning the joy and excitement ofagriculture and manufacturing by, for example, holding lectures for elementary school students and manufacturing events and displays at foodand agricultural events.
FY2017 results

Summary

Holding of lectures

4 times dietary education project “ISEKI Sanae Seedling Production” for producingA
rice

Displaying at food andagricultural events

6 timesE xhibition of agricultural machinery and holding of workshops experiencing
vegetable seedling planting, rice milling, etc.

Participation in local
events2 times o-sponsoring and booth exhibition in the National Sports Festival &C
National Sports Festival for People with Disabilities in Ehime PrefectureParticipation in the “Fureai Festival” held by the local residents' association

Cooperation withprojects undertaken by
educational institutions,etc.

3 times cceptance of university students in the “Tour for Female Science Students”
AAcceptance of local high-school students and the provision of lectures forthem as part of the “Super Global High School” project promoted by the
Ministry of Education, Culture, Sports, Science and Technology
Acceptance of local junior-high and high-school students for hands-on
learning of employment and occupation

Holding of the Sanae National
Children's Drawing Contest

1,383
items

Holding of the 22nd drawing contest with agriculture-related theme

Holding of orparticipation in
manufacturing-related
events2 times olding of a manufacturing event for elementary school students duringHsummer vacation
Participation in the Ehime Prefecture Children's Exhibit of Invention andDevices and presentation of the ISEKI Award as a judge

National
Best
Award

The work that received the Best Award in the
22nd Sanae National Children's Drawing Contest

Exhibition at the "Farmers and Kids Festa"

Promotion of dietary education
As a promotional partner of "Food Action Nippon," which is anapproach to raise the food self-sufficiency ratio, ISEKI Group passes
down the significance of food production through delivering
agricultural machinery. As part of such efforts, ISEKI Group promotes
local production for local consumption for its employees, theirfamilies and the local community with the aim of promoting “local
production for local consumption,” while undertaking educational
activities such as dietary education through agriculture andagricultural machinery to increase the food self-sufficiency rate.

Activities of FOOD ACTION NIPPON
Nationwide basic message

Wish that the children of the future
will never be badly off for food.
“Delighted by our customers,
we ISEKI carry it over to theunborn generations.”

Communication through factory tours
ISEKI Group sends out information on agriculture and agricultural machinery through factory tours to each of the factories in Matsuyama,
Kumamoto and Niigata and tours to the exhibition hall “ISEKI Dream Gallery (IDG),” while working to improve dialogue with customers, local
community residents and other stakeholders.
Number of visitors in FY2017:

9,455

Major improvements made based on the requests,
opinions, etc., given through visitor questionnaires
are as follows:
Improvement of the contents of exhibition concerning advanced
technologies and vegetable farming-related machineryInstallation and improvement of tour facilities(tour pathways, etc.)

33 ISEKI CSR ReportSocial

Stakeholder communication

Local communities

Communication toward the growth and development of local communities
ISEKI Group undertakes various activities as the “Supporter for the farming industries full of dreams” to solve issues faced by local communities
for sustainable development.

Supporting active participation by female farmers with the "YUMEARU NOGYOJOSHI Project"<Social issues>
Female farmers play animportant role inagriculture and local
activities. Promotion of
their even greater active
participation is called for.

Core farmers (male/female ratio)

Male

59%

Female41%(619,000)(888,000)* Excerpt from the “Statistics concerning
Agricultural Work Force” published by the
Ministry of Agriculture, Forestry and Fisheries

ISEKI Group has been taking part in the “NOGYOJOSHI Project” promoted by the Ministry of Agriculture, Forestry and Fisheries since November
2013. Out of its hope for even greater active participation by female farmers,
ISEKI Group has been holding seminars on how to operate agricultural
machinery for them. In addition, ISEKI Group has commercialized agricultural
machinery that is “easy to use for everyone,” incorporating opinions andrequests from female farmers.

Number of female farmers, etc.,

527(cumulative total since 2013)
Number of agricultural
machinery seminars held across Japan: 24 (cumulative total since 2013)
Number of agricultural machinery models
developed in collaboration with female farmers: 3 (cumulative total since 2015)
who participated in ISEKI's projects:

Environmental preservation activities

Activities to support recovery efforts following the Kumamoto Earthquake

ISEKI Group participates in cleaning activities around each factoryand in local areas as part of its community-based activities as acorporate citizen.
ISEKI Group also undertakes tree-planting activities in supportof the “Promotion Group of Town Development with Forests,”
which is led by Iyo Bank in Ehime Prefecture.

ISEKI Group has been providing support for recovery efforts
following the "2016 Kumamoto Earthquake."
Immediately following the earthquake, ISEKI Group made its
grounds available for use as a disaster volunteer center, provided
donation and supported farmers who were unable to plant rice intheir rice paddies to convert their crops to soybeans. More recently,
ISEKI Group supported activities such as removing rocks and stonesin the fields in the hope of the earliest possible revitalization ofagriculture in Kumamoto prefecture.

Number of activities
undertaken in FY2017:9

ISEKI CSR Report 34

Environment

ISEKI Group environmental management
We strive to contribute to the creation of a sustainable society.
We positions environmental preservation as one of the priority issues that enables the creationof a sustainable society and proactively works on environmental management under theconcept of “Eco vision.”
More specifically, we have introduced an environmental management system (EMS) on agroup-wide basis to set specific targets and establish a system for promoting group-wide
corporate activities under the management system for all processes ranging from the earlystage of product development and production to product distribution and sales and services. It
is specified in the mid- and long-term environmental burden reduction targets to achieve a “26%reduction of CO2 emissions by 2030 (compared with the FY2013 results)” and environmental
activities are promoted to that end. In addition, we utilize an “eco-product certification system”
to promote the reduction of environmental burden through environmentally-friendly design.
we continue to work on the reduction of environmental burden on a group-wide basis fromthe both aspects of business activities and products, based on environmental preservation
activities and environmental management that are in harmony with nature and society, withthe objective of contributing to the creation of a sustainable society.

Seiji Senba,
Managing Corporate Officer, Deputy Chief
Operation Officer, Development &Production Division, Assigned toEnvironmental Control Section

Eco Vision
Under environmental management at ISEKI Group, all members of the group participate in environmental preservation activities by following“Environmental Concept,” “Basic Environmental Policy” and “Environmental Conduct Guidelines” based on “Eco Vision.”management on the Axis of Agriculture and Agricultural machine (3A)

-nature--society--corporate-

Environmental Concept (Green Circle)

Environmental Conduct Guidelines

ISEKI Group is committed to contributing to the creationof a sustainable society under the concept of"management on the Axis of Agriculture and Agricultural
machine (3A)" through activities that aim to achieve
harmony among nature, society and corporations.

1. Development activities considering environment
Recycling and reduction of noise, vibration, fuel consumption,
emission gas, and environmental stress substances
2. Environment-friendly manufacturing activities
Prevention of (air, water, noise, and vibration) pollution, energysaving,
resource-saving, and purchasing green
3. Office activities considering environment
Energy-saving and resource-saving
4. Distribution and logistics considering environment
Improvement of transportation (packing material, more efficienttransportation), disposal
5. Development of biodiversity
Promotion of tree-planting activities of Iseki Group
6. Environmental education and information disclosure
Environmental education to be offered to employees, participation insocial activities and information disclosure

Basic Environmental Policy
1. Maintain environmental management system and its
functional applications
2. Reducing elements of our business activities andproducts which may be causing stress on theenvironment
3. Compliance with environmental laws, regulations, andstandards
4. Environmental education and information disclosure
35 ISEKI CSR ReportSystem for promoting environmental management
ISEKI Group promotes environmental management on a group-wide basis.
The Directors' Operation Committee chaired by the President deliberates and decides upon action plans and targets based on the Basic
Environmental Policy. ISEKI Group works on environmental management centered around a Plan-Do-Check-Action (PDCA) cycle by establishingan intragroup environmental management system with the Environmental Planning Group Meeting serving as the core.
The Environmental Planning Group Meeting implements the environmental targets and action plans deliberated and decided upon by the
Directors' Operation Committee across the group and manages the progress thereof. The Meeting summarizes the action plans, targets andresults and responses to important environmental issues of each office based on the status of their activities and escalates and reports them tothe Directors' Operation Committee. Upon receipt of the review results from the Directors' Operation Committee, the Meeting horizontally
implements them to the offices. Chief Managers and Environment Control Managers who promote environmental control activities are put inplace in each office to strengthen this system to promote environmental management.
In FY2017, the Environmental Planning Group Meeting held four meetings and made reports/escalations to the Directors' Operation
Committee four times.
Environmental Management System
President

Directors’ Operation Committee

Environmental Control Section

Product Assessment Committee

Environmental Planning Group Meeting

Sales Subsidiaries Tokyo Headquarters Matsuyama (Tobe) OfficeDirector in charge ofGeneral Division Manager of
President ofGeneral Affairs department Development & Production Divisionsubsidiaries
Environment Control Manager Environment Control Manager Environment Control Manager

Matsuyama (Wake) Office
President of ISEKI-Matsuyama MFG.
President of ISEKI-Houei MFG.
Environment Control Manager

Matsuyama (Shigenobu) Office
President of
ISEKI-Shigenobu MFG.
Environment Control Manager

Kumamoto Office
President of
ISEKI-Kumamoto MFG.
Environment Control Manager

Niigata OfficeCEO of
ISEKI-Niigata MFG.
Environment Control Manager

Overseas offices
President ofeach officeEnvironment Control Manager

Environment
Promotion Council

Environmental
Management Committee

Environmental
Management Committee

Environmental
Management Committee

Environmental
Management Committee

Environmental
Management Committee

Environment
Promotion Council

Environmental
Management Committee

Deliberation and decision making
Basic policy and targets (P)Directors'
Operation
Committee← Reporting of results and progress (C)Review and advice (A) →Environmental
Planning Group
Meeting

Implementation plans (P) →Implementation of activities (D)← Evaluation of results (C)Improvement measures (A) →Offices
Domestic sales
subsidiaries
Overseas
officesAcquisition of environment-related certifications at ISEKI Group
ISEKI Group has acquired EMS certification (ISO14001 and EA21) at manufacturing bases in Japan and overseas and non-production bases
including domestic sales subsidiaries, and carries out environmental preservation activities in line with their respective business activities andregional characteristics.

Acquisition of EMS certification atdomestic and overseas
manufacturing bases

Acquisition of EMS certification at non-production bases<4 bases in japan and 3 bases overseas><Sales subsidiaries in Japan: 12>

Number of basesthat acquired certification:
Acquisition rate:

100%

7

Number of companies
that acquired certification:
Acquisition rate:

12

100%

<Others: 9>
Number of basesthat acquired certification:
Acquisition rate:

89%

8* ISO14001: An international standard for environmental control stipulated by the International Organization for Standardization* EA21 (Eco Action 21): A Japan-specific environmental management system (EMS), which is formulated by the Ministry of the Environment
For more details, please refer to the website.

ISEKI CSR Report 36

Environment

Environmental targets and results
ISEKI Group works on environmental management by introducing an environmental management system (EMS) on a group-wide basis and has
set new mid-term environmental burden reduction targets for Japan covering 2016 to 2020. The results of environmentally-friendly businessactivities in FY2017 and the future issues are as indicated below.

Mid-term environmental burden reduction targets by 2020 and activity results in FY2017
Major activity results in FY2017 in promoting the environmental management system
Major activity targets in FY2017

Major activity results in FY2017

Further promotion of the environmental management system

Acquisition of EA21 Certification by Tsukubamirai Office

Improved environmental awareness of employees

Provision of environmental education (twice) and participation in cleaning activities

Prohibition, reduction and restraint of use of toxic substances included in
procured parts

Improved green procurement ratio through the promotion of certification acquisition by
suppliers and information provision

Development of environmentally-friendly products throughimplementation of the product assessment system and life-cycle
assessment (LCA) evaluation

Addition of four "eco-product" certified models through the promotion ofenvironmentally-friendly design

Development and sales of products in consideration of biodiversity

Full-fledged launch of variable fertilizing rice transplanters with soil sensor

Promotion of environmental burden reduction in production

See below

Promotion of environmental burden reduction in production activities
Mid-term environmental burden
reduction targets by 2020

To realize a low-carbon
emission society

Manufacturingresources

FY2017 targets

Reduction of CO2
emission

Reduction of 11% by 2020
Reduction of 1.57% per year

Reduction of at least
6.3%

Reduction of CO2
emissions duringtransportation

Reduction of 10.5% by 2020
Reduction of 1.5% per year

Reduction of at least
6%

Reduction of totalmaterial input

Reduction of 10.5% by 2020
Reduction of 1.5% per year

Reduction of at least
6%

Reduction of volume ofwater used

Reduction of 51% by 2020
Reduction of 7.3% per year

Reduction of at least
29%

Reduction of final
volume of waste

Reduction of 14% by 2020
Reduction of 2% per year

Reduction of at least
8%

Reduction of used volumeof chemical substances
subject to PRTR law

Reduction of 19.6% by 2020
Reduction of 2.8% per year

Reduction of at least11%

To build a recyclingoriented society

Toxic chemical
substances

FY2017 achievement rate

Rating

Per production unit

89%△

Emission volume

97%△

Per transportation unit
(10,000 ton-km)

101%

○

Per production unit

97%

△

Input

105%

○

Per production unit

114%

○

Volume of water used

123%

○

Per production unit

130%

○

Volume of waste

141%

○

Per production unit

144%

○

Volume of chemical
substances used

155%

○

* Targets and results per production unit with FY2013 used as reference* Targets and results per transportation unit (10,000 ton-km) for the reduction of energy-generated CO2 emissions during transportation* Scope: Three factories in Japan (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd. and ISEKI-Niigata MFG. Co., Ltd.)

Priority issues and targets for the future
Raising
the level of environmental burden reduction activities at domestic sales
subsidiaries and overseas officesFurther promotion of green procurement in collaboration with suppliers andinitiatives for CSR procurement
Provision of safe and secure products, product quality assurance and further
promotion of environment-conscious designing

FY2030CO2 emission volume: Reduction of

26%(compared with FY2013)

FY2020
Ratio of eco-products:

30%(sales ratio in Japan)* ISEKI-Houei MFG. Co., Ltd. merged with ISEKI-Matsuyama MFG. Co., Ltd. in January 2018.

37 ISEKI CSR Report

Environment

Initiatives for environmentally-friendly design
Eco-product certification system
ISEKI Group promotes environmentally-friendly design by implementing productassessment including life-cycle assessment with the aim of reducing the environmental
burden in each of the stages of manufacture, use by customers and disposal in theentire product development process.
The “eco-product certification system” is a program under which environmental
labels are granted only to the products that meet the ISEKI-original evaluation criteria.
Information on the certified products is delivered to customers through catalogs andwebsites in an easy-to-understand manner. ISEKI Group is committed to continuing theprovision of environmentally-friendly products.

Number and ratio of certified eco-products(sales ratio in Japan)
28.7%

Target: 30% (FY2020)
Number of models

20.1%
22

12.7%
18

9.4%
4.3%
6

6

2014

2015

3
2013

2016

■Eco-products certified in FY2017 and thereafter
Certified product
System ricecookers

Certificationrank

AR3 series
BIG-T7700 series

Tractors

EcoproductAs of April 2018

Energy-saving
and laborsaving
Reduced time forrinsing rice
Improved fuelefficiency

Key point for certification
Reduction of environment-burdening
substances

Ricetransplanters

NP80 withstraight-travel assist

Combineharvesters

HJ6115, HJ5101

FY ofcertification

Water-saving
Engine compliant with the Act on Regulation,
Etc., of Emissions from Non-road Special
Motor Vehicles of 2014 is mounted

2017

Reduced manufacturing time thanks to
the reduction of the number of parts

RTS series
NP80 withstraight-travel assist

Resource-saving

Engine compliant with the Act on Regulation,
Etc., of Emissions from Non-road Special
Motor Vehicles of 2014 is mounted

TJX series

Variable fertilizing
rice transplanterswith soil sensor

2017

Super-ecoproduct

Laborsaving
Reduced plantlodging

Reduced fertilizer loss

Laborsaving
Ecoproduct2018
Engine compliant with the Act on Regulation,
Etc., of Emissions from Non-road Special
Motor Vehicles of 2014 is mounted

Examples of certified products

OPERESTA NP80D, variable fertilizing rice transplanters with soil sensor
with straight-travel assisting system
This rice transplanter, certified as a super-eco-product, is a “variable fertilizing rice transplanter” that enables laborsaving and lower costby reducing plant lodging and the amount of fertilizer through its optimal application, having the additional “straight-travel assisting
function” that enables easy and straight-line planting for anyone.
The automated straight-travel operations enable the mitigation of operator fatigue and improvement in operational efficiency. In
addition, no adjustment in the amount of water in rice paddies is required even if the markings are not visible due to water at the timeof rice planting, which contributes to water-saving and the preservation of quality for agricultural water.

Certification as
super-eco-product
Energy-saving and laborsaving▶Laborsaving
Speedy straight-travel operations
Mitigation of operator fatigue▶Improvement in operational efficiency
thanks to reduced plant lodging(*1)
Control and mowing operations
after rice planting are made easy

Resource-saving▶Reduction of fertilizer loss(*1)▶Saving and preservation ofagricultural water

Reduction of environmental burden▶Reduction of water and soil
pollution(*1)* 1: Effect of variable fertilizing using soil sensor

ISEKI CSR Report 38

Environment

Reduction of environmental burden in production
The environmental burden reduction results in FY2017 and the trend in recent years in production at three domestic factories and three overseas
factories are as indicated below.

Creation of a low-carbon society
Reduction of CO2 emissions
In Japan

The target was not achieved as the electricity consumption in processing increased due to an increase in the rate of productionof parts, etc., although the emission volume is slightly lower than the previous year. ISEKI Group continues with improvement
activities at sites toward the achievement of the target.

Overseas

The CO2 emission volume increased following the expansion of the production scale at Dongfeng ISEKI Agricultural MachineryCo., Ltd. (Xiangyang Factory) and PT. ISEKI INDONESIA, while the ratio to the production volume decreased thanks to thefull-fledged operation of the production lines.
Factories in Japan
Volume of energy-generated CO2 emissions and per-production volume

Factories in Japan<Emission volume>
FY2017 target:
27,700 tons
Achievement rate: 97%<Per-production volume>
FY2017 target:
42 t-CO2/100 million yen
Achievement rate: 89%

Emission(ton)(t-CO2/100 million yen)

(ton)

60

6,000

Per-production volume50
40,000

Factories in overseas
Volume of energy-generated CO2 emissions and per-production volume

44
34,50029,60046

45
32,00028,600(t-CO2/100 million yen)

Per-production volume
4,940

47

45
28,800Emission

40

35
4,000

40

28,700

29

3,590
24

20,000

2,530

3,070

2014

2015

21
20

2,000

20

9
745
0

1997

2013

2014

2015

2016

2017 (Year)

0

0

2013

2016

2017(Year)

0

Note: In order to assess the trend of reduction in Japan since before, the electricity emission factor 0.378 kg-CO2/kWh is used for the calculation.

Reduction of CO2 emissions in product distribution
The target in terms of the ratio to cargotransportation volume was achieved. The
modal shift rate of at least 50% wasmaintained for three consecutive years. ISEKI
Group works to reduce CO2 emission volume
and improve the modal shift rate by further
promoting the improvement of loading
efficiency.

2017

2013

2014

2015

2016

Cargo transportation volume(10,000 ton-km)

3,180

2,900

2,800

2,710

－

2,520

－

CO2 emission volume (t-CO2)

4,340

4,150

3,660

3,400

－

3,200

－

Ratio to cargo transportation
volume (t-CO2/10,000 ton-km)

1.37

1.43

1.31

1.25

1.28

1.27

101%

Modal shift rate

47%

38%

52%

54%

－

53%

－

TargetResult Achievement
rate

Modal shift rate = (railway ton-km + sea freight ton-km)/total ton-km

Reduction of manufacturing resources
Factories in Japan
Total volume of material used for production and per-production volume

Reduction of total material input
Although the input target was achieved, thetarget in terms of the per-production volume
was not achieved as the material input
increased due to an increase in the rate ofproduction of parts, etc. Going forward, ISEKI
Group will promote improvement activities, aswell as reduction activities, to achieve thetarget in terms of per-production volume.

Factories in Japan(ton)<Per-production volume>
FY2017 target:
82 t/100 million yen
Achievement rate: 97%

72,100120

Per-production volume

103<Input>
FY2017 target:
54,300 tons
Achievement rate: 105%

(ton/100 million yen)Input

100,000

87
57,80083807950,30050,40059,00050,00084
80
52,000

40

0

2005

2013

2014

2015

2016

2017 (Year)0* The results for years in and after 2013, the reference year, are calculated for the period from January to December due to a change in the fiscal year-end in 2015. Accordingly, they
do not match the data in the reports issued in the past.
* Scope: Factories in Japan (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd. and ISEKI-Niigata MFG. Co., Ltd.), overseas factories (Dongfeng ISEKI Agricultural
Machinery Co., Ltd. (Xiangyang Factory and Changzhou Factory) and PT. ISEKI INDONESIA* ISEKI-Houei MFG. Co., Ltd. merged with ISEKI-Matsuyama MFG. Co., Ltd. in January 2018.

39 ISEKI CSR ReportFor more details, please refer to the website.

Development of recycling-oriented society
Reduction of volume of water used
In Japan

The targets for both the volume of water used and the per-production volume were achieved. ISEKI Group will promote further
reduction activities at sites.

Overseas

The volume of water used increased following increases in the production lines and offices; however, the per-production volume decreased.
ISEKI Group implements initiatives in Japan at overseas factories as well and works to achieve a reduction of the volume of water used.
Factories in Japan
Volume of water used/per-production volume

Factories in Japan(10,000 ton)80

<Volume of water used>
FY2017 target:
210,000 tons
Achievement rate: 123%
<Per-production volume>
FY2017 target:
319 t/100 million yen
Achievement rate: 114%

Volume of water used

844

Factories in overseas
Volume of water used/per-production volume(ton/100 million yen)

(1,000 tons)

900

100

Per-production volume

Volume of water used

600
360
30

0

1997

2013

293

279

26

2014

19

17

2015

2016

0
2017 (Year)

400

34

300

20

392

48

50
325

467
71

450

40

453

600

91

Per-production volume475

58(ton/100 million yen)

200

140
12
0

2013

2014

2015

2016

2017 (Year)

0

Reduction of final volume of waste
In Japan

The target for the volume of waste was achieved as the rate of final volume of waste declined. ISEKI Group will work to reducethe volume further and improve the recycling rate.

Overseas

The rate of final volume of waste declined following the commencement of full-fledged production. ISEKI Group will work topromote recycling and reduce the volume by further implementing management on a continuous basis.

(ton)

Factories in Japan
Reduction of final volume of waste/rate of final volume of waste

4,000
37

Factories in Japan<Volume of waste>
FY2017 target:
378 tons
Achievement rate: 141%

(ton)

(%)

Volume of waste

60.3
53.3

3,350

2
232

1997

2013

2014

22.6
16.7

20

40

14

1,490

0

66.7

60
30

2,000

30

Rate of final volume of waste
25.9

32

(%)

Volume of waste

8050Rate of final volume of waste

4,390

Factories in overseas
Reduction of final volume of waste/ rate of final volume of waste

2015

4

3

442
2016

10

10
20
2.4

269
0

-10
2017 (Year)

3.0

5.5

8.5

2013

2014

2015

2016

0
2017 (Year)

Reduction of volume of toxic chemical substances used
Reduction of volume of chemical substances used
The reduction targets for both the volume of chemical
substances used and the per-production volume wereachieved. ISEKI Group takes measures such as review
on the paint solvents used in all the factories tofurther promote improvement activities.

Factories in Japan<Volume of chemical
substances used>
FY2017 target:
148 tons
Achievement rate: 155%
<Per-production volume>
FY2017 target:
0.222 t/100 million yen
Achievement rate: 144%

(ton)

Factories in Japan
Volume of chemical substances used/per-production volume
Volume of chemical substances used

0.277
0.249
200
158

166

(ton/100 million yen)

0.3

Per-production volume
0.203

0.194

145

0.2
0.156

0.154

98.8

95.1

121
100

0.1

0

2001

2013

2014

2015

2016

0
2017 (Year)* The results for years in and after 2013, the reference year, are calculated for the period from January to December due to a change in the fiscal year-end in 2015. Accordingly, they
do not match the data in the reports issued in the past.
* Scope: Factories in Japan (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd. and ISEKI-Niigata MFG. Co., Ltd.), overseas factories (Dongfeng ISEKI Agricultural
Machinery Co., Ltd. (Xiangyang Factory and Changzhou Factory) and PT. ISEKI INDONESIA* ISEKI-Houei MFG. Co., Ltd. merged with ISEKI-Matsuyama MFG. Co., Ltd. in January 2018.

ISEKI CSR Report 40

Environment

Preservation of biodiversity
Benefited from the blessings of nature that biodiversity produces, ISEKI Group has formulated the Biodiversity Guidelines recognizing its
initiatives for the preservation of biodiversity as a priority issue of its environmental management. In cooperation with various stakeholders, ISEKI
Group will promote biodiversity-friendly business activities, work on the preservation of biodiversity and thereby contribute to the realization ofcoexistence with nature and sustainable society.

Initiatives for the preservation of biodiversity
Proposing biodiversity-friendly agriculture (solar powered plant factories)
In 1987, ISEKI was quick to introduce Dutch “solar powered plant factories (Venlo
glass greenhouses)” in Japan and it has built many plant factories ever since.
ISEKI proposes biodiversity-friendly agriculture including the complex
environmental control system “MINORI +,” a “plant growth diagnosis device” thatallows for measurement of the photonic synthesis capacity of plants without
destruction/contact, a nutrient solution circulation system that would enable thereduction of environmental burden and pollination by native species “black
bumblebees.”
In addition, the ISEKI High-tech Greenhouse utilizing advanced technologies
exhibits major agricultural models for customers who are examining possibilities ofresearch and development and human resource development concerning plantfactories and entrance into agriculture as a corporation.

Support for revitalization of deserted farmland
An increase in deserted farmland may lead to not only a decline in several
functionalities of agriculture including land conservation and water source recharge,
but also the onset of insect pests and bird or animal damage and interference withthe use and consolidation of farmland. Local communities and corporations areworking to prevent the occurrence and elimination of such deserted farmland.
ISEKI Group is working together with local communities and corporations to
restore deserted farmland and support cultivation after restoration as the “Supporterof dreamful agriculture.”
The photo on the right shows deserted farmland in Kyushu (Fukuoka) where
weeding and other work was performed and which is currently used as an openfield for vegetables. ISEKI and ISEKI Kyushu Co., Ltd. provide support from both
hard and soft aspects including the utilization of agricultural machinery andcultivation expertise.

Degraded deserted
farmlandWeeding work →Used as an open-fieldfor vegetables

Evaluation by third parties
DBJ Environmental Rating – highest rating 12 times in a row –In March 2018, ISEKI received the highest rating as one of the “Companies doing environment-friendly
business activities progressively,” 12 times in a row, by the Development Bank of Japan Inc., in receiving
loans under the DBJ Environmentally Rated Loan Program.

<Points that are highly evaluated in the rating for this year>
1) That ISEKI positions CSR initiatives in its core operations
2) That ISEKI contributes to laborsaving and improved productivity in agriculture3) That ISEKI proactively develops and markets biodiversity-friendly products, etc.
41 ISEKI CSR ReportThird-party comments

Third-party comments
ISEKI humbly received comments on its initiatives from experts.

Professor Tetsuo Morimoto,
Community Collaboration Center Saijo, Social
Cooperation Promotion Mechanism, Ehime University

The environmental report for this fiscal year is quiteorganized and rich in content, covering almost allenvironmental activities that should be addressedby an agricultural machinery manufacturer.
Specifically, ISEKI announced a concept ofenvironmental management that proactively
incorporates environmental issues into the
management strategies and promotes
environmental preservation activities participatedin by all members of the group, under which
agriculture and the production of agricultural
machinery are in harmony with nature and society,clearly demonstrating ISEKI's commitment to tying
such activities to the sustainable growth of thecompany.

In its environmental policy, ISEKI positions environmental issues as one of the
management issues of the highest priority and will work to build a recyclingoriented manufacturing system under which the environmental burden is reduced,
harmonious coexistence with nature and society is achieved and the company
develops sustainably toward the future. Setting such a policy is critically important
for a manufacturer in terms of corporate ethics.
ISEKI's environmental control system is comprised of the President placed at
the top, the Directors' Operation Committee, the Environmental Planning Group
Meeting under the Committee and the Environment Promotion Council of each
office. ISEKI makes the commitment that these bodies will work together inworking on environmental issues in a united fashion. The Directors' Operation
Committee at the highest level deliberates and decides upon environmental targets
and action plans, while the Environmental Planning Group Meeting promotes theattainment of targets by each office based on these targets and plans, evaluates
the activity results of various locations, considers responsive measures to be taken
and returns the results back to the Directors' Operation Committee. ISEKI clearlystates this system for environmental control initiatives with the PDCA cycle,
allowing us to learn about the proactive stance taken by the company.
The company sets environmental burden reduction targets to be achieved by
2020, and partly by 2030, with 2013 used as reference. Although it is desirable toattain 100% or more achievement rates in all items in the future, the achievement
rates for each item other than CO2 emission volume are excellent and therefore I
believe that the company's initiatives for reducing the environmental burden are
generally sufficient. In addition, ISEKI develops biodiversity-friendly plant factories
and human resources for those factories, while proactively participating in
educational and various other activities related to biodiversity.

This CSR Report 2018 is composed with anemphasis on not only contribution to "the creationof a prosperous and sustainable society" that ISEKI
has been pursuing for some time, but also thesimultaneous achievement of the resolution ofsocial issues through business and theimprovement of corporate value.
Firstly, in the Message from the President
section at the top of this report, the "activities tomeet the demands of society" that echo the
management philosophy of "contributing to
Masato Tahara,
agriculture both in Japan and throughout theGeneral Manager of the Sustainability Planning &world" that has been passed down since theSupport Department, Development Bank of Japan Inc.
founding of the company are discussed in relation
to the current Mid-term Management Plan. We canalso see that ISEKI has launched an approach to promote CSR activities together
with its core business under the leadership of the company’s executives as
exemplified by the participation of the Directors' Operation Committee members in
the "Corporate Social Responsibility Committee." In addition, a holistic view of thevalue that ISEKI desires to achieve by utilizing the "strengths that support ISEKI" ispresented in the early part of this report, with the needs and issues of society as
the starting point. By doing so, this report provides an easy-to-understandintroduction to understand the value creation story that ISEKI is pursuing.
Furthermore, social issues that need to be resolved are presented at the top ofeach of the parts "Development and production," "Domestic business" and"Overseas business" in the Business development sections, together with the latest
topics related to ISEKI's business strategies and specific initiatives. This structure
makes the activity reports supporting the stories presented in the early part
persuasive for readers. In each part of Governance, Society and the Environment,
while we are generally prompted to refer to the website for detailed data, therepresentative key performance indicator (KPI) targets and results are included in
the report. Such a prioritized editorial structure based in part on the recent trend
for environmental, social and governance (ESG) information disclosure gives us theimpression that this report is improved compared with the previous ones.
I believe that most of the social issues in the agricultural field that ISEKI isfacing require a long time to resolve. Going forward, I hope that reports will bemade in a way that more specific explanations will be provided on the progress ofthe processes wherein the resolution of social issues and the improvement ofcorporate value are simultaneously achieved, while utilizing ISEKI's characteristics
and strengths including the setting of KPIs that are linked with product and service
development over the long term and other outcomes to be attained.

Although the initiatives, etc., described herein may seem a little low profileand less attention grabbing, this environmental report conveys ISEKI's ardent
ambitions to resolve environmental issues and the steady progress the company ismaking. Items in this report are properly assessed based on data and simply
described. Accordingly, I find this report very fine in general.

<Reply to third-party comments>
I would like to express my deepest appreciation toProfessor Tetsuo Morimoto for making the valuablecomments on our environmental management fromthe previous year. Ehime University has been
providing us with exceptional cooperation in termsof joint research and development. I appreciate that
Professor Morimoto regarded our environmental
preservation activities as being undertaken steadily
and diligently. In recent years, awareness has taken
Seiji Senba,
root in us in which people realize environmental
Managing Corporate Officer, Deputy Chiefpreservation activities and activities tied to the
Operation Officer, Development &development and growth of agriculture throughProduction Division,
agricultural machinery are related to the protection
Assigned to Environmental Control Sectionof the security and safety of food and ultimately leadto the creation of the sustainable growth of society. We are committed tocontinuing with steady and diligent efforts using the PDCA cycle aiming to achieve
the environmental burden reduction targets. I sincerely hope for and look forward
to the continued guidance and support of Professor Morimoto.

This is the third "CSR Report" that we issue on a
yearly basis. Following the previous year, we asked
Mr. Masato Tahara of the Development Bank ofJapan Inc. to provide us with comments on sections
other than the Environment from the perspective of athird party. I wish to extend my sincere gratitude forthe valuable comments Mr. Tahara gave us once
again on the CSR activities that ISEKI Group has juststarted.
Shirou Tomiyasu,
I believe that the passion of the founder who
Director & Executive Vice
said “I want to free farmers from exhausting labor”
President
is precisely the origin of ISEKI Group’s CSR. Taking
the comments into our heart but without overreaching ourselves, we intend to
firmly entrench the CSR activities that draw on our characteristics originated fromthe passion of the founder in the group, one step at a time. We will strive toachieve the resolution of social issues and the improvement of corporate value
simultaneously.

ISEKI CSR Report 42

Achieving Harmony between Human Beings and the EarthContact about this report

ISEKI Group supports the nationwide action“COOL CHOICE” for global warming
countermeasures.

IR and Public Relations Office, ISEKI & CO., LTD.
5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPANTEL: +81(0)3 5604-7602 FAX: +81(0)3 5604-7701
E-mail: kankyo@iseki.co.jp
Issued in July 2018

As a promotional partner, ISEKI
Group passes down the significanceof food production throughdelivering agricultural machinery.

Let’s keep up with Green Purchasing.