Procurement Guidelines
1. Introduction
Hodogaya Chemical Group (the "Group") has adopted ESG (Environment, Social and Governance)
and is promoting CSR (Corporate Social Responsibility) activities in order to gain the trust ofvarious stakeholders including its shareholders, investors, business partners, local communities andemployees. The Group therefore requests its suppliers to comply with the “Procurement Guidelines”
of the Group. The Group also wishes to further deepen its involvement in ESG and promotion ofCSR activities through cooperation with the survey “Survey of Implementation Status ofProcurement Guidelines”.

2. Details of Procurement Guidelines(1) Human Rights and Labor(i) Prohibition of Forced Labor
The Group employs all of its employees of their own free will and does not cause them toengage in forced labor. Forced labor means any labor that is not based on one's own freewill.
(ii) Prohibition of Inhumane Treatment
The Group respects the human rights of its employees and prohibits any harsh or
inhumane treatment such as abuse or various types of harassment (harassing behavior).
Inhumane treatment means abuse, corporal punishment, sexual harassment, “powerharassment” (harassing behavior using offensive language or intimidating behavior), etc.
(iii) Prohibition of Child Labor
The Group does not employ children under the minimum working age or cause any
children to work in a way detrimental to their development. Child labor generally means
employing any person who is under the minimum working age prescribed in theconventions or recommendations of the International Labour Organization or failing toprotect young workers.
(iv) Prohibition of Discrimination
The Group is committed to eliminating discrimination in recruitment and employment
and achieve equality in opportunities and treatment. Discrimination means making
distinctions in opportunities or treatment in recruitment, promotion, remuneration orattendance at training based on factors other than the justifiable factors such as one’sability, aptitude or results. Discriminatory factors include, for example, race, ethnicity,nationality, birthplace, skin color, age, gender, sexual orientation, disability, religion,political opinion, union membership, marital status, etc.

1(v)Proper Wages
The Group pays at least the legal minimum wage to its employees and does not make any
unjustifiable wage reductions. The minimum wage means the minimum level of wages
prescribed in wage-related laws and regulations in the country of location. Wages also
include payment of overtime allowances and other allowances including statutory
benefits. Unjustifiable wage reductions mean wage reductions in violation oflabor-related laws and regulations.

(vi) Working Hours
The Group properly manages working hours, holidays and annual leave of its employees
so as not to exceed the legal limits.

(2) Health and Safety(i) Safety Measures for Mechanical Devises
The Group takes proper safety measures for the mechanical devices etc. used in the Group.
The proper safety measures mean management to prevent accidents and health problems
that occur during employment.
(ii) Workplace Safety
The Group evaluates the risks to workplace safety and ensures safety through proper
design and technical and management measures. The risks to workplace safety meanpotential risks of accidents and health problems that occur during employment including
electricity or other energy, fire, vehicles, slippery or tripping floors or falling objects etc.
(iii) Workplace Hygiene
The Group understands the circumstances in which the workplace is exposed to harmfulorganisms and chemical substances, noise and offensive odors and takes the appropriate
measures. Chemical substances harmful to the human body include soot and smoke,
steam, mist and dust etc. as well as poisonous materials, radiation and substances causing
chronic diseases (lead, asbestos, etc.). Excessive noise or offensive odors are factors inworkplace hygiene as being harmful to the human body.
(iv) Occupational Injury and DiseaseThe Group understands the circumstances of occupational injuries and diseases and takes
appropriate measures. The appropriate measures mean the system or measures thatenable encouragement of reporting by employees, classification and recording injuries
and diseases, provision of medical treatment as needed, investigation of injuries anddiseases, implementation of corrective actions to eliminate the causes thereof andpromotion of employees’ return to work etc. (including taking out workers’ accident
compensation insurance).

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(v) Emergency Response
In order to protect life and limb, the Group prepares emergency response measures andfamiliarizes its members in the workplace with these measures, assuming disasters andaccidents that may occur. The emergency response measures include, for example,
reporting, notification to employees, clarification of evacuation methods, installation ofevacuation facilities, stockpiling of emergency medical supplies, installation of firedetection systems, installation of fire control equipment, securing of external
communication methods and development of restoration plans at the time of emergency.
(vi) Consideration for Physically Demanding Work
The Group identifies physically demanding work and properly manages such work so as
not to result in injuries or diseases.
(vii) Safety and Hygiene of Facilities
The Group ensures the health and hygiene of the facilities provided for the livelihood of
its employees. The facilities provided for the livelihood of its employees mean thefacilities provided to its employees at the workplace or outside the workplace.
(viii) Management of Employees’ Health
The Group provides proper health management for all employees. Proper healthmanagement means performing medical examinations at least at the level prescribed bylaws and regulations and aiming for prevention and early detection of diseases in its
employees. At the same time, it is necessary to give full consideration to prevent healthproblems due to excessive work as well as mental health care.

(3) Environment(i) Management of Chemical Substances Contained in Products
The Group manages chemical substances designated by laws and regulations for allproducts. The management of chemical substances for products means complying with therequired labelling requirements and implementing the required testing in addition toensuring that no chemical substances designated as prohibited substances is contained inthe products.
(ii) Management of Chemical Substances Used in the Manufacturing Process
The Group manages chemical substances designated by laws and regulations in thecountry where its manufacturing process is located. The management of chemical
substances in the manufacturing process means attempting to reduce the emissions
amount of the chemical substances through understanding such emissions amountdischarged into the external environment and reporting such amount to the governmental3

authorities, as well as managing the chemical substances that may not be contained in theproducts.
(iii) Environment Management System
The Group establishes and operates an environment management system. The
environment management system means a general management system for promoting
environmental activities, which include organizational structures, planned activities,
sharing of responsibilities, practices, procedures, processes and management resources.
The environmental activities herein mean preparing environmental policies,
implementing, achieving, reviewing and maintaining measures in accordance with suchpolicies and carrying out continuous improvements for environmental conservation
through the so-called PDCA cycle.
(iv) Minimizing Environmental Impact (Drainage, Sludge, Emission, etc.)
The Group complies with laws and regulations in the country of location regarding
drainage, sludge and emissions and makes further improvements when necessary inaccordance with its voluntary standards. The voluntary standards mean having a goal of
reducing environmental impacts beyond the standards stipulated in laws and regulations.
(v) Environmental Permits and Administrative Approvals
The Group complies with laws and regulations in the country of location, obtain permits
and approvals from government if necessary and submits the required management
reports to the government.
(vi) Effective Utilization of Resources and Energy
The Group sets voluntary targets for conservation of resources and energy and attempts
effective utilization of resources and energy on a continuous basis. The conservation ofresources means attempting the effective use of resources. As a means to this end, theGroup reduces the amount of materials used and waste materials generated for theproducts and promotes the use of recycled resources and parts. The conservation ofenergy means attempting rationalization of the use of heat and electrical energy. Savingenergy enables effective use of fuel resources such as oil, natural gas, coal, coke, etc.
(vii) Reduction of Greenhouse Gas Emissions
The Group sets voluntary targets for reduction of greenhouse gas emissions and attempts
continuous reduction thereof. There are various types of greenhouse gases but they referto the following six types of substances: carbon dioxide, methane, nitrous oxide, HFC,PFC, and SF6, especially stipulated in the Kyoto Protocol.
(viii) Reduction of Waste Materials4

The Group sets voluntary targets for reducing final waste materials and attempts thecontinuous reduction thereof. Final waste materials mean waste materials that require alandfill or incineration.
(ix) Disclosure of Environmental Preservation Status
The Group discloses the results of its environmental activities as necessary. The resultsof environmental activities mean the measures implemented for environmental
conservation, emissions into the atmosphere, drainage and soil, the amount of resources
used, and the amount of waste materials, as well as including environmentally harmful
results caused by its business office.

(4) Fair Trading and Ethics(i) Prohibition of Corruption and Bribery
The Group maintains sound and normal relationships with political and administrative
authorities and does not make briberies or illegal political contributions. Bribery means
provision of money, entertainment, gifts or other benefits or conveniences for public
officials and persons equivalent thereto (the "Public Officials") in pursuit of any businessadvantage in return including acquisition and maintenance of permits and approvals andtransactions and acquisition of non-public information.
(ii) Prohibition of Abuse of Superior Bargaining Position
The Group does not carry out any act which gives any disadvantage to its suppliers byabusing its superior bargaining position. The abuse of a superior bargaining positionmeans an act of determining or changing the terms and conditions of the transactions
with its suppliers etc. in a unilateral way, making unreasonable demands or imposing
unreasonable obligations, or using the position of a purchaser or consigner. The Group
carries out procurement transactions in a sincere, fair and equitable manner based onagreements, etc. and does not carry out any act which abuses its superior bargaining
position. The Group complies with laws and regulations concerning abuse of a superiorbargaining position in the country where such laws and regulations exist (for example,
the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors inJapan).
(iii) Prohibition of Offering and Receiving Improper Advantages
The Group does not offer or receive improper advantages to its stakeholders.
(iv) Prohibition of Anticompetitive Conduct
The Group does not carry out any act which interferes with fair, transparent and freecompetition. Anticompetitive conduct means making arrangements with othercompanies in the same industry as to price, volume or sales territory of products or

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services (cartels) or making arrangements with successful bidders or engaging in bidding
price collusion with other bidders (collusive bidding). In addition, acquiring or using
trade secrets of other companies by illegal means or making false representations orrepresentations that may mislead customers in relation to the products of othercompanies is an act of unfair competition.
(v) Provision of Accurate Information on Products and Services
The Group provides accurate information on products and services to consumers andcustomers.
(vi) Respecting Intellectual Property
The Group does not infringe upon the intellectual property rights of others. Intellectualproperty means patent rights, utility model rights, design rights, trademark rights,copyrights, trade secrets, etc. In the development, production, sales and provision ofproducts or services, the Group sufficiently carries out preliminary investigation on
intellectual property of a third party. Except where there are justifiable grounds,
unauthorized use of intellectual property of a third party constitutes an infringement ofintellectual property rights.
(vii) Proper Export Control
The Group performs proper export procedures for the export of technologies and goods
regulated by laws and regulations by providing a clear control system. Technologies andgoods regulated by laws and regulations include parts, products, technologies, equipment,software, etc. regulated by laws and regulations based on international agreements(Wassenaar Arrangements, etc.), concerning exports.
(viii) Information Disclosure
The Group actively provides or discloses information to all stakeholders, whether or
not disclosure is required by laws and regulations. The content of information to beprovided or disclosed to stakeholders means the details of its business activities,
financial condition, business performance, risk information (for example, damage
caused by a large-scale disaster, occurrence of adverse effects on environment andsociety, and detection of serious violation of laws and regulations), etc.
(ix)

Prevention and Early Detection of Misconduct
The Group takes action to prevent misconduct and has developed a system to detectand deal with misconduct at an earlier stage. Acts to prevent misconduct means
educating and enlightening employees and creating workplaces with a comfortable andfriendly atmosphere.

(5) Quality and Safety6(i) Ensuring Product Safety
When designing products in its sole responsibility, the Group ensures that the products
meet the safety standards stipulated in laws and regulations of each country. The Group
designs the products to ensure sufficient product safety and sells them, considering its
responsibility as a manufacturer. The Group also gives consideration to normally expectedsafety compliance as well as legal compliance concerning product safety.
(ii) Quality Management System
The Group establishes and operates a quality management system. A quality management
system is a general framework for promoting quality assurance activities which includes
organizational structure, planned activities, sharing of responsibilities, practices,procedures and management resources. Quality assurance activities herein mean
preparing quality policies and implementing, achieving, reviewing and maintaining
measures in accordance with such policies and carrying out continuous improvements for
quality assurance through the so-called PDCA cycle.

(6) Information Security(i) Defense against Threats on Computer Networks
The Group manages to prevent damage to itself or others by taking defensive measuresagainst threats on computer networks. Threats on computer networks include, for example,
computer viruses, computer worms, spyware, etc.
(ii) Prevention of Leakage of Personal Information
The Group properly manages and protects the personal information of customers, thirdparties and its employees. Personal information means information concerning living
individuals, which is capable of identifying a specific individual from name, date of birthand other descriptions contained in such information (including information which iscapable of being easily matched against other information and thereby identifying aspecific individual).
(iii) Prevention of Leakage of Confidential Information of Customers and Third Parties
The Group property manages and protects confidential information received fromcustomers and third parties. Confidential information generally means information
disclosed in the documents (including electro-optically recorded data information) thatare agreed to be confidential and information orally disclosed after confidentiality
thereof has been notified.

(7) Contribution to Society(i) Contribution to Society and Local Community

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The Group voluntarily engages in activities that contribute to the development ofinternational and local communities. Those activities that can contribute to thedevelopment of international and local communities mean support activities forcommunities, utilizing corporate management resources.

(8) Others(i) Preparation of BCP Manual
A BCP (Business Continuity Plan) means a plan not only for the safety of employees but
also for continuing business operations in the event of an emergency. Expected
emergencies are natural disasters such as large-scale earthquakes or floods, accidents atfactories such as large-scale explosions or fires, pandemics, etc.; by setting up a BCP, theGroup can expect to effect smoother responses to emergencies as well as address issues
regarding business management through the inspection of its business being carried out inpreparation for the plan.

（9） Language
The governing language of the Procurement Guidelines shall be Japanese.
If an English or any other translation hereof is made, such a translation shall be for reference
purposes only. If there is any deviation between the Japanese original and the translation
thereof, the Japanese version shall prevail

8Survey of Implementation Status of Procurement Guidelines
DateCompany Name
Department
Contact Person
Phone, FaxE-mailPhone:

Fax:

Please answer the following questions by circling Yes, No or Under Consideration. Please fill in Remarks if you circle Under Consideration.
*Please contact our division in charge for any question you have when filling out this survey.
QuestionsNo.
(1)(i) Prohibit forced labor(ii) Prohibit inhumane treatment(iii) Prohibit child labor(iv) Prohibit discrimination(v) Pay proper wages(vi) Working hours are proper(2)(i) Implement safety measures for machines and equipment(ii) Ensure workplace safety(iii) Implement hygiene control of workplace(iv) Understand circumstances of occupational injury anddisease and take proper measures therefor(v) Prepare emergency response measures and familiarize its
members in the workplace with these measures(vi) Give consideration to physically demanding work(vii) Properly secure safety and hygiene of the facilities forthe livelihood of its employees(viii) Implement health management of its employees

Yes

No

UnderConsideration

Remarks

Questions

No.

(3)(i) Manage chemical substances contained in products(ii) Manage chemical substances used in manufacturing
process(iii) Establish environment management system(iv) Comply with laws and regulations and implement
voluntary management for minimizing environmental
impact (drainage, sludge, emission, etc.)(v) Properly obtain permits and approvals from government(environmental permits, etc.)(vi) Effectively utilize resources and energy(vii) Reduce greenhosue gas emissions(viii) Reduce waste materials(ix) Disclose its environmental preservation status(4)(i) Prohibit corruption and bribery(ii) Prohibit abuse of superior bargaining position(iii) Prohibit offering and receiving of improper advantages(iv) Prohibit anticompetitive conduct(v) Provide accurate information on products and services(vi) Respect intellectual property(vii) Implement proper export control(viii) Actively provide or disclose information to its
stakeholders(ix) Have a system for prevention and early detection ofmisconduct(5)(i) Ensure product safety(ii) Establish quality management system(6)(i) Take defensive measures against the threats oncomputer networks(ii) Prevent leakage of personal information(iii) Prevents leakage of confidential information ofcustomers and third parties(7)(i) Voluntarily engage in activities contributing to society
and community(8)(i) Prepare BCP manualCommentYesNo

Under
Consideration

Remarks