Corporate Philosophy

INOAC intends to create a beautiful forest, comprised of many treesof varying character, rather than merely growing a single tall tree.
In its efforts to achieve a better life, INOAC has specialized in not only a single business, but has cultivatedfour business “seeds” : polyurethane, rubber, plastics and composite materials. Today it has developed
into a conglomerate, supplying diverse products and services, thereby contributing to society.

Innovation & Globalization
INOAC Corporation is leading the world in polymer chemistry and working to be a more global organization
with energy and individuality through quick decisions and actions. We will determine our behavioral
guidelines and maintain our brand as one that can be trusted by local society, customers and everyone
related to INOAC by implementing and achieving our corporate philosophy with actions consistent between
inside and outside the company.

Action Guideline
Challenge

Think resourcefully and take action without fear of failure

Profits

Act to expand business continuously and realize profit growthCS

Act to enhance customer satisfaction

TeamworkExhibit originality and act trustworthy

Honesty and Trust

Be reliable and avoid falsehood

Responsibility

Carry out each duty with responsibility| Report period | This report is based on the activity results of INOAC Corporation in FY 2018 (January 1 through December 31, 2018).
*The contents of FY 2019, FY 2017 and earlier are partly included.
| Coverage | This report is based on the activity results of INOAC Corporation, partially including domestic and overseas INOAC GROUP activities.
| Issued | September 2019
| Referential guidelines | ◎Environmental Report Guidelines FY 2018
◎ISO26000

Contents
Contents / Corporate philosophy / Action guidelineCompany profile
Company outline
Message from the President
Business overview
INOAC brands
Technological innovation[Feature story] Earth-friendly andhuman-friendly product development
Product development using plant-based raw materials
NCV Project participation
Realizing material recycling

0102
03

08

What INOAC can do for the automotive industry 13
Examples of environmentally compatible products
Harmony with the environment
Environmental management
Reducing the environmental burdenManagement of chemical substance information

15

For improvement in value
Quality improvement efforts

20

Communication with society
Contributing to society and community

21

Producing an employee-friendly workplace
Diversity efforts / Promoting work-life balance
Human resource development
Safety and health / Disaster prevention

23

Supply chain management
Supply chain management

26

GovernanceCorporate governanceCompliance

27

INOAC CSR REPORT 201901

Company outline

Netwo rk
Major domestic locations

Company nameINOAC CORPORATION

Established

1954

Incorporation Capital

720 million yen

Representative

Chairman & CEO Soichi Inoue

Employees

1,917 (as of December 2018)

Sales

182.4 billion yen (as of December 2018)

Main Businesses

Development of functional materials based on polyurethane, rubber, plastics and composites, as wellas the manufacturing of products utilizing these materials contributing to a variety of fields closely
related to daily life such as automotive, two-wheeled vehicles, information technology equipment,
housing and construction materials, and consumer products.

Our affiliated, associated and joint venture companies from Hokkaido to Okinawa, in addition to thenationwide network of INOAC CORPORATION, have established a close production and sales network,
enabling us to provide our customers with the most appropriate solutions.

Constructrelated
facilities

2-13-4 Meieki Minami, Nakamura-ku, Nagoya, Aichi 450-0003

Head Office (Tokyo)

4F Osaki West-city Bldg., 2-9-3 Osaki, Shinagawa-ku, Tokyo 141-0032

Offices and Plants

Anjo, Sakurai, Kira, Shinshiro, Yana, Ishimaki, Nanno, Seino, Hanyu, Hadano, Toyohashi, Taketoyo

Main Sales Offices

Sales branches: Tokyo, Chubu, Osaka, Kyushu

R&D Centers

INOAC Technical Center Co., Ltd.

Overseas Locations

North America, Central America, China, other Asian countries

Services

OthersHUKLA Japan Inc.
INOAC Living Co., Ltd. and others<Affiliated companies>
Tohoku INOAC Co., Ltd.
Higashi Nihon INOAC Co., Ltd.
INOAC Elastomer Co., Ltd.
Nishi Nihon INOAC Co., Ltd.
Kyushu INOAC Co., Ltd.

Jinno R&D Center<Joint ventures>
BASF INOAC Polyurethane Co., Ltd.
ROGERS INOAC Corporation, and others

We have constructed a system of proposing andsupplying research, development, materialprocessing, molding technique and mass
production at 13 countries and regions
worldwide, mainly in North America and Asia.

■ Sales by division as of FY 2018
Fintech & Packaging 4%

2,500

Rubber & Elastomer 3%

1,700500
2017

Others 3%

1,824

1,000

2016

INOAC Housing & Construction Materials Co., Ltd.

R&D

Sales offices: Sapporo, Tohoku, Hamamatsu, Hiroshimahundredmillion yen

0

INOAC International Co., Ltd.

Major overseas locations■ Sales trend

1,592

Inoue Rubber Co., Ltd.

Hokkaido INOAC Co., Ltd.

Sales

1,500

<Associated companies>

Import,export
and sale

INOAC Technical Center Co., Ltd.

Head Office

2,000

Manufacture,processing
and sale

2018

YearFoam products

Automotive

32%

58%

<North/Central America
18 companies>
USA 10 companies
Canada 3 companies
Mexico 5 companies<China 18 companies>
China 17 companies
Hong Kong 1 company<Asia 35 companies>
Thailand 13 companies
Taiwan 3 companies
Indonesia 6 companies
Vietnam 5 companies
Korea 1 company
Singapore 3 companies
Philippines 1 company
Malaysia 1 company
Sri Lanka 2 companies

Manufacturing

China

Import/export

JapanR&DSales service

North America

Asia

INOAC CSR REPORT 201902

Message from the President
Now is the time when the true value of INNOVATION and ACTION is put to the test
INOAC CORPORATION
President & COO

Toyohiko Okina■ In a rapidly changing world
The state of the societ y we live in has beenchanging at a dizzying speed in recent years. Thisis not only limited to the automotive industry, whichis said to be going through a once in a century
revolution. Many companies are also pursuing
reforms to respond to the constantly changing
needs of the world. Their survival depends on it,and our company is no different.
In FY 2018, we saw an increase in revenue, but
profit grow th was hampered by raw material
manufacturers in Japan and abroad raising theirprices one after another. This was due to rises incrude oil prices, distribution costs and electricity
rates. Never theless, we made steady capital
investments, constructing new plants inYukuhashi, Fukuoka Prefecture, Nishio, Aichi

Prefecture, and Kurihara, Miyagi Prefecture. While
the final result may have been a decrease in profit,raw material costs have started to drop in FY 2019a nd the new pla nts have also comme nce doperations. We hope to catch this tailwind andwork to turn it into a profit increase.

■ Creating factories that are worker-

friendly and rooted in the community

When building new factories, we are particularly
focused on incorporating AI and IoT technologies
to create facilities with even greater efficiency andproductivity. While this is in part a measure to save
manpower in anticipation of a future decrease in
the working population, it is also an initiative toreduce the burdens of the employees working ineach of the locations and to improve safety. While
the pursuit of quality is a top priority for us as amanufacturing company, the main force that
supports this goal is our employees. As such, wewill aim to cre ate e nv ironme nts that are
comfortable to work in by encouraging a work-lifebalance and improving the training system. We arealso working on improving our risk management
structure by implementing a system that allows
even a small issue in the field to be immediately
INOAC CSR REPORT 201903

Message from the President

shared by all the companies, so it can be dealt
with before it grows in a critical incident.
Additionally, factories should be rooted in thecommunity and operated based on a positive
relationship with the local residents. As such,when we construct a new factory, we make sure
to explain what the business is, its significanceand the ef fects the factor y may have on thesurrounding environment. We respond earnestly to
any criticism or demands and only star t
construction when we have reached a full andmutual understanding. We also keep in mind theimpor tance of continued contribution to thecommunity, such as creating jobs and holding
social events on occasion even after operations
begin.

■ The seeds of sustainability that we havesown

In this report, we feature the topic of plant-based
products as part of our efforts to develop productsthat are both earth-friendly and human-friendly.
However, such initiatives are nothing new to ourcompany. When I joined the company over 40years ago, the first development work I wasinvolved in was developing materials using palmoil. Back then, I had simply assumed chemicals
were all derived from fossil fuel, so I was surprisedby the company’s desire to explore the possibilitiesof plant-based materials. At the same time,
research was also being conducted on ways toconvert products back to their raw materials, andthose efforts have likewise come to fruition in theshape of product development using recycledgoods. This topic will also be featured in thereport. Such technologies with an awareness forsustainability have continued to be cultivated overmany years and have built the foundation thatenables us to respond to our customers’ needs
today. I find this high gratifying, not only as amember of executive management but also as aformer engineer who helped sow the seeds.

■ Taking on further challenges as amember of society

we have also been engaged in various CSR
activities, such as providing reconstruction aid topeople living in disaster-stricken areas, support for
cultural activities and education as well as sports
grants. At the core of these activities is our belief
that a company is a member of society, and assuch, it is our dut y to contribute to its
improvement and advancement. After all, theinherent purpose of our business as a company
that develops and provides various materials is tobring about a better society. We must never forgett h a t m i n d s e t a n d c o n t i n u e r e fi n i n g o u rtechnologies so that we can quickly and flexibly
respond to our customers’ expectations.
I believe the changes that I mentioned at thebeginning will only accelerate further from now,
such as the rapid progression of digitalization,
constant changes in international affairs, and thedecrease of birthrates and aging of society inJapan. As a company that has continued to workwith innovation and action, the situation we arefacing now puts our true value to the test. We willcontinue actively taking on challenges to pave thepath to a new era and provide affluent lifestyles toas many people as possible.
We will greatly appreciate your continuousguidance and encouragement.

In addition to the initiatives I have touched upon,

INOAC CSR REPORT 201904Business overview

INOAC materials utilized in a variety of fields

Fields

Housing & Construction

Industrial MachineryTransportation

Distribution & Packaging

Electric Products

IT Equipment

Medical & Welfare

Consumer Products

PORON® WA

CELLDAMPERCELLASTO®

Color foam®

PureCell®

EXROTH®

Moltopren

Kitchen sponge

Seam gasket for houses

Crawler Pad

Track Pad

Rubber Wheels

KsilTM

TransCool

Wheelchair Tires

Latex Sponge Puffs

U-Polypie

Waterflex

Rear Spoiler

P・E-LITE®

VAFTERFOLEC®

MAPS®

Injection Blow Molding Bottle

THERMAX® (lightweight headliner material)

THERMAX®

Lightweight Headliner

Cool System

Rigid Light-Carbon

PureCell®

Rigid Light-Carbon (prosthetics)

INOTACK® (garden tape)

Material

Urethane
RubberPlastic
Composites
INOAC CSR REPORT 201905

INOAC brands
We focus on adding functional value by making the most of the ideas and technologies based on the materials we have created. Our original products utilizing variousmaterials, including complete interior items offering both design and function, support our comfortable lives.

IRC Tire was founded in 1926 as a manufacturer oftires and tubes for bicycles. Since then, we haveproduced daily-use tires for comfortable riding andracing tires for world-class racing, building upon
our experience in manufacturing and business. For
the past 30 years, we have conducted businessoverseas as well. We will continue adding value as
we meet our customers’ needs through IRC brandproducts.

H U K L A is a tota l-inte r ior bra nd fo cuse d o nbeautiful form and comfor table lifest yle. We
produce top-quality furniture with excellent designand high-grade materials to provide our customers
with a pleasant feeling and healing. We believe thatthe HUKL A collection will make your life more
comfortable than ever with natural texture and avariety of colors and patterns.

Smile is an original brand developed by INOAC for
at-home nursing care, including mat tresses,
cushions and bedroom floor mats. We have utilized
a variety of materials and technologies for thebrand’ s lineup, and have pursued a sensation thatis soft to the touch. “Smile” is a play on sumire, theJapanese word for the flower violet. We haveworked to create products that make both those
who provide care and those who receive care smile.
INOAC CSR REPORT 201906

Technological innovation
R&D

R esearch and d ev elo p ment s y s t em

INOAC Corporation is engaged in R&D, full of creativity, in view of the future under themotto of making life affluent. We are always providing new materials to a wide range offields such as the automotive industry, information and communication industry,electronics industry, industrial materials and consumer products. We achieve this byfully using compounding, foaming and molding technologies with various kinds ofurethane, plastic and elastomer that are mainly polymeric and also by using othertechniques for composite materials. Simultaneously, we are advancing our R&D to
reduce environmental burdens, save weight and energy, and provide highly functional
new products and new processes.

We are advancing our original new material development by regarding high-polymer
material technology such as polyurethane, rubber, resin material and more as our coretechnology. These efforts are led by our employees at the INOAC Technical Center,
Jinno R&D Center, and the Global Technical Division. We are also promoting newmaterial development and applied development research with an eye toward the futurewith an arrangement of R&D systems in the US, China, Thailand and other countries,emphasizing the importance of collaborative research and technological developmentwith domestic and overseas universities and public research institutions.
The technical sections of each department develops products that aim to satisfy
customer needs, such as with products that utilize the molding process and material
composition techniques as well as by adding high functionality to urethane foam, suchas heat and shock resistance. The process development sections also created and isactively installing original manufacturing lines that are automated and more compact
than they were before.

Environment
Foaming
Technology

Evaluation TechnologyMolding
Technology

Control Technology(Evaluation, CAE analysis)(Quality control,Production control)

Raw Materials
SafetyClean

Compounding
Technology

Products
Urethane
RubberPlastic
Composites

Design(CAD, CAM, Design)

Urethane

RubberPlastic

Composite materials

JAPANCHINA

INOAC Technical Center Co., Ltd.

Shanghai INOAC Polymer Products Co., Ltd.

USATHAILANDINOAC USA, Inc.

INOAC (Thailand) Co., Ltd.

INOAC CSR REPORT 201907