2024

Contents
Basic ESG Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・01
Message from President ・・・・・・・・・・・・・・・・・・・・・・・・・・・・02
About the Company・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・02
Basic Principle・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・03
Code of Conduct ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・03
Product Lineup

・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・04・05

Performance (Consolidated) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・06
Sustainability

Basic Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・07
Basic Principle・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・08
Environmental Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・08

Environment

CO2 Emissions Reduction Over the Entire Supply Chain・・・09
Development/Launch of Products Contributing to Carbon Neutrality・・・10
Reduction of Environmental Impact・・・・・・・・・・・・・・・・・・10
Respect for Diversity ・・・・・・・・・・・・・・・・・・・・・・・・・・・・11・12
Fostering Human Resources ・・・・・・・・・・・・・・・・・・・・・・・・13

Society

Contributing to Local Communities ・・・・・・・・・・・・・・14・15
Achieving Employee-Friendly Workplace Environments・・・16
Achieving Safe, Healthy Workplace Environments・・・17・18

Product Liabilities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・19
Strengthening Governance・・・・・・・・・・・・・・・・・・・・・・・20・21
Promoting Dialogue with Stakeholders・・・・・・・・・・・・・・・21
Governance

Relationships with Business Partners・・・・・・・・・・・・・・・・21
Relationships with Shareholders and Investors・・・・・・・22
Compliance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・23
Risk Management・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・23

Basic ESG Policy
SEC CARBON has set ESG management as a way to achieve sustainability management in our 9th Medium-TermBusiness Plan, further expanding the CSR activities we have been working on already. As key issues(materialities), we include reducing CO2 emissions across the entire supply chain, developing and bringing tomarket products that contribute to carbon neutrality, respect for diversity and fostering human resources,
contributing to local communities, strengthening governance, and promoting dialogue with our stakeholders.
Based on the belief that promoting these materialities is a vital part of improving our corporate value, we aremoving forward on initiatives to solve key issues within our Group.

01

Message from President
Since the company's foundation, SEC CARBON has
consistently pursued the ﬁeld of carbon and beencommitted to supplying higher quality products,
contributing to the development of the industry.
Driven by our management principle "Our company
challenges to constant changes, searches for inﬁnite
possibilities, and aspires to the top of the industry".
We have been creating products in response to theneeds of consumers, increasing the happiness of ouremployees and shareholders, and contributing to thedevelopment of welfare within communities throughour corporate activities.
The move towards globalization and carbon neutrality

President and Representative Director

in contemporary society is accelerating even faster.

Nakajima Koh

As a result, economic, environmental and social issues,
including global warming, energy, and water resources,
are becoming increasingly complicated.

environment, and society.

In this situation, in addition to continuing our business

From this point on, we shall deepen our awareness ofactivities, we are increasingly required to contributesocial issues in the economy, the environment, andto society and the environment. We shall move thesociety through dialogue with stakeholders, continue

CSR activities we have carried out to date a further

activities to confront these issues head on, and contributestep forwards and elevate them to ESG activities,

to the development of a sustainable society.

continue solving social issues in the economy, theAbout the Company
Company nameHead Ofﬁce addressPh.

SEC CARBON, LIMITED
6th Floor, JRE Amagasaki Front Bldg., 1-2-6
Shioe, Amagasaki, Hyogo, 661-0976, Japan
06-6491-8600 (general inquiries)

Established

October 23, 1934

Businesses- SK-B, graphitized cathode blocks foraluminium smelting- Graphite electrodes- Carbon & graphite specialties- Fine powder

Domestic ofﬁces

Hyogo, Kyoto, Okayama, Tokyo, Aichi
prefectures
Head Ofﬁce

Kyoto Plant

Okayama Plant

02

Tokyo Ofﬁce

Nagoya Sales Ofﬁce

Basic Principle
We have been a carbon manufacturer since our founding. Throughout that history, we have valued ourrelationships with our business partners, people in our local communities, shareholders, and employees as
we move ahead with initiatives to save energy, save resources, and reduce industrial waste.
Looking back on our past, we formulated the following Management Principle in 1973.

Management Principle
Our company challenges to constant changes, searches for inﬁnite possibilities,
and aspire to the top of the industry.
●We create products that meet consumers' demands.
●We promote happiness of employees and shareholders.
●We contribute to the development of social welfare.
Our Management Principle is now half a century old. But our way of thinking based on this principle still
remains unchanged today, as it foresaw the importance of CSR and ESG in modern corporate management.
We consider it a vital part of our company in order for us to grow sustainably.
Additionally, in 2006 we formulated the following Code of Conduct to give more concrete form to thisPrinciple. This Code is also a sign that we are strongly conscious of CSR and ESG in our management.

Code of Conduct
In putting our Management Principle into practice, we have established a Code of Conduct that must be
followed by both ofﬁcers and employees.
Our ofﬁcers and employees should act in accordance with this Code of Conduct, aiming to make us acompany that can respond to the expectations of all our stakeholders.

●Aim to maximize corporate value●Comply with laws and regulations, and act
in accordance with social norms●Strive to protect the environment and resources●Strive to disclose corporate information
at the appropriate time and manner●Strive to innovate technology and provide
superior products and services●Respect the personalities of our employees andcreate workplaces that are safe and employee-friendly

Interest in CSR and ESG among the stakeholders involved with ourcompany is growing each year.
To ensure our sustainable growth, we carefully protect our Management Principle and Code of Conduct andstrive to achieve them. At the same time, we consider deepening our CSR and ESG activities further to be vital.
Along with all our stakeholders, we hope to work on solving social issues and sustainable growth for ourcompany through our daily corporate activities.

Towards eliminating anti-social forces
We have drawn up a purchasing policy that eliminates anti-social forces, and work with the police and local
corporations, etc. to ensure we have no transactions whatsoever with anti-social forces.

03

Product Lineup
SK-B, Graphitized Cathode Blocks for Aluminium Smelting

Production plant

Our SK-B are cathode blocks used in aluminium smelting.

3.4%

They are laid out along the bottom of the aluminium
electrolysis cells.
While some cathode blocks are merely made by forming
and baking anthracite and graphite, our SK-B are noted

Electricity reduction
222
/year

for being graphitized. This gives them both improved
thermal and electrical conductivity as well as thermalpart of aluminium smelters around the world.

Lowered electricity costs
1.6
BY/yearBy using graphitized cathode blocks, we can cut down
the amount of electricity consumed during smelting,

Saves 1.6 billion yen annuallyat an aluminium smelter
that produces 500,000t/year

thus contributing to carbon neutrality.

Comparison of cathode block quality

Global production of primary aluminium
China

Saves 222 GWh annually at an aluminium
smelter that produces 500,000t/year

GWhshock resistance and bath resistivity, so they are a vital（1,000 t）

Electricity reduction

Effects of switching from non-graphitized
to graphitized cathode blocks

World (other than China)

Bath resistivity

80,000100

42,25480

40,24360,00060

36,382

40

Thermal shock
resistivity

20

Qualitystability

40,00033,98927,242

28,91420,000Electricalconductivity

Thermalconductivity
SK-B

0

2017

2022

2027

Graphitic blocks（year）

Semi-graphitic blocks

Source: CRU

04

Artiﬁcial Graphite Electrodes

Artiﬁcial graphite
electrodes are used
as electrodes in
EAFs to produce
such items as wide
ﬂange beams andrebars used inconstruction sites.

Artiﬁcial graphite electrodes are used in electric arc furnaces. The only material able to pass large amounts of current
and withstand temperatures high enough to melt steel scrap is graphite.
As a vital part of the steel cycle, these electrodes are supplied to EAFs in Japan and around the world.
There is a move to shift from blast furnaces to electric arc furnaces to reduce CO2 emissions in steel manufacturing,which will play an important role in carbon neutrality.

World crude steel production and electrode demand

Ratio of large-diameter electrode sales

EAF production volume
Crude steel production volume（Million MT）

Electrode demand

2,800

2,000

1,000

1,600

800

1,200

600

800

400

400

200
2027

2030 （year）

20%

Electrode demand

Crude steel production volume

1,200

2023

2027

1.400

2,400

0

2023

（Thousand MT）

80%

70%

Large diameter

030%

Small/medium diameter(“Large” is 28 inches or more. Under 28 inches in “Small” or “Medium”)

Source: SEC CARBON estimates

Source: SEC CARBON estimates

Carbon & Graphite Specialties

Fine Powder

Graphite not only offers the functions of high thermal

Fine powder is our unique product, boasting extremely highand electrical conductivity as well as resistance topurity and crystallization levels. There are a range of type,corrosion and good lubricity, but is easy to machine

depending on the raw materials and processing methods,

precisely and is also light.

and these ﬁnd use in a diverse range of ﬁelds that include

We maximize these characteristics as we processcoatings, sliding materials, electrical, and batteries.

graphite into the forms our customers require, using

We not only handle artiﬁcial graphite powder, but carbon

either pure graphite or a blend with resins or metals.

powder and natural graphite powder.

05

Performance (Consolidated)
Sales

Operating income(millions of yen)(millions of yen)

10,00040,00037,30730,00010,2178,000

30,401
6,000

20,0006,490

22,919
4,000

3,222

10,000

2,000

0

0

FY2021

FY2022

FY2023

FY2021

Net income

FY2022

FY2023ROE(millions of yen)（％）

10,000

10.8

10

9.1
8,000

8

7,299

6,000

6

5,402
4,000

2,000

0

5.6

4

3,039

FY2021

2

FY20220

FY202306

FY2021

FY2022

FY2023

Sustainability
Basic Policy
SEC CARBON encourages sustainability management appropriate for our company, whose mission is tocontribute to the development of society by valuing the global environment as a carbon manufacturer thatwill continue to grow, trusted by the world, and engage in sustainability activities that build on our CSR
activities.
ESG

E（Environment）

Themes (details of initiatives)

・CO2 Emissions Reduction Over the Entire Supply Chain
・Development/Launch of Products Contributing to Carbon Neutrality
・Reduction of Environmental Impact

・Respect for diversity and fostering human resources

S（Society）

・Contributing to Local Communities
・Achieving Employee-Friendly Workplace Environments
・Achieving Safe, Healthy Workplace Environments
・Product Liability

G（Governance）

・Strengthening Governance・Promoting Dialogue with Stakeholders
・Compliance・Risk Management

We are moving forward on initiatives based on the belief that promoting reducing CO 2 emissions across theentire supply chain, developing and bringing to market products that contribute to carbon neutrality, respectfor diversity and fostering human resources, contributing to local communities, strengthening governance,and promoting dialogue with our stakeholders as key issues (materialities) for the sustainable growth of the
SEC CARBON Group is a vital part of improving our corporate value.

07

Environment
Basic Principle
To pass on our limited resources to the next generation in a better shape, we work to harmonize our businessactivities and preserving the global environment, contributing to achieving a sustainable society.

Environmental Policy
Complying with laws and regulations
related to the environment

Environmentally-conscious activities

1

3

We will accurately grasp the environmental impact of
all our business activities, and strive to continuously
improve our environmental protection activities andprevent pollution. When operating our management
system, we set a framework to achieve our targets andwill revise it in consideration of the situation.

2

We comply with the environmental regulations that
apply to our plants and products, as well as otherrequirements our plants have agreed to, working toprotect the environment.

Promoting efﬁcient use of resourcesand energy

Improving environmental awarenessand promoting social contributions

We work to protect the global environment throughcarbon neutral initiatives, saving resources, savingenergy, and reducing or recycling waste.

We work to ensure awareness our Environmental Policy
through education and training for all employees via theirorganizations, participate in local environmental protection
activities, and strive to improve local environment
protection and communication.

4

Environmental protection organization (Kyoto Plant)

PresidentInternal Auditor
Environmental Committee

Environmental Measures
Committee

Energy Measures
Committee

Energy-Saving Promotion
Committee

08CO2 Emissions Reduction Over the Entire Supply Chain
In line with the shift towards carbon neutrality in Japan and overseas, attention is turning to electric arc
furnaces (EAF), which can cut CO 2 emissions by a quarter compared to blast furnaces. Ever since SEC CARBON
succeeded in commercializing large-diameter 24-inch electrodes, then the worldʼs biggest, in 1962, we haveenjoyed unwavering trust and regard from Japan and overseas thanks to our development capacity and quality.
In the same way, the SK-B graphitized cathode blocks we developed achieve a considerable reduction in theamount of electricity used in aluminium smelters. The stable supply of these product groups will continue tocontribute greatly to reducing energy costs, improving productivity, and reducing CO2 emissions.
We have long promoted energy-saving activities from an awareness that we are a corporation that consumes
a lot of power. In particular, we have focused on reducing electricity consumption per unit of production.
After our graphitization furnace is updated in autumn 2025, we expect to see an energy reduction of about
10% by increasing its thermal insulation and heat retention properties. In addition, we are studying thepurchase of electricity from renewable energy sources and bringing in solar power generation facilities. We
are also moving ahead with migrating from heavy oil to city gas for our baking furnaces (30% reduction in
CO 2 emissions), and aim to reduce CO 2 emissions by 46% by 2030 (compared to ﬁscal 2013) on our way toachieving carbon neutrality by 2050.
CO₂ emissions [t-CO₂]

Reduction [t-CO₂]

Carbon credits [t-CO₂]

140,000
120,000
100,000

46% cut

80,00060,00040,00020,000Oﬀset

0-20,000
FY2013

FY2030（Reference year）

FY2050Company-wide Scope 1, 2

Looking to promoting the future use of green hydrogen, we are taking part in a project to introduce and verify
this by, for example, making fuel cell forklifts (FCFL) more common in Kyoto Prefecture. Our Kyoto Plant has taken
part in this since ﬁscal 2022 as a “daughter site” (a corporation bringing in FCFLs for trial) and since ﬁscal 2023
as both a “mother site” (a site that houses a mobile hydrogen station) and a “daughter site.”

Initiatives to reduce CO2 emissions are not limited to just us: we are studying this across the entire supply chain.
We are both working to reduce our energy needs still further and moving ahead with initiatives to reduce CO2 asa way to contribute to the development of society while valuing the global environment as a carbon manufacturer
that continues to grow and be trusted by the world.

09

Development/Launch of Products Contributing to Carbon Neutrality
Developing unique methods for making graphite particles from CO2
Moving ahead with initiatives for reducing CO 2 emissions

R&D to apply carbon materials made from CO2 to non-aqueous secondary batteries
Since the declaration that the world would aim to achievecarbon neutrality by 2050, bring about a decarbonizedsociety, there has been an increasing focus on not just

Molten salt
electrolysis

reducing CO2 emissions, but turning CO2 into resources.

CO2

We have worked with IʼMSEP Co., LTD.* to manufacture

emitted fromour plants

carbon particles using CO2 as a raw material using molten
salt electrolysis technology, and have developed technology
to obtain graphite particles through heat treatment.

Heat treatment

Carbonparticles
CO₂ ➡ C＋O₂

Graphite particle
useElectricity supply

Converting CO2 into a valuable resource, this is an innovative

Renewable electricity
storageapproach that contributes to a more sustainable future. We
are moving ahead with research and development for theGraphiteparticles

Uses

Use in non-aqueous
secondary batteries, etc.

manufacture, sale, and mass production of graphite
particles, which are expected to see use in things like
non-aqueous secondary battery materials.
We will continue working towards the manufacture of graphite particles using
CO2 emitted from our Kyoto Plant and Okayama Plant. In future, we shallresearch ways to apply technology to CO2 emissions at plants around Japan.
*I'MSEP is a startup that began at a university with molten salt electrolysis as its core technology,
and has been an SEC CARBON subsidiary since 2020.
Graphite particles

Development of new products to contribute to CO2 emissions reductions
Drawing on the unique characteristics of carbon and graphite, we shall work earnestly to research anddevelop new products and materials in ﬁelds that contribute to carbon neutrality and energy conservation.

Reduction of Environmental Impact
To help our initiatives towards achieving a sustainable recycling society, we are working on ways to majorly
reduce industrial waste through controlling its generation and converting it into valuable resources. We arepromoting the reduction of waste and working to ensure it does not grow.
In addition, we manage the emission of air pollutants and water contaminants under the appropriate conditions
and in compliance with regional environmental conservation agreements.

Changes in industrial waste processing volumes
（t）
3500
3000

3,014.9
2,698.8

Total generated volume of waste

Amount recycled

2500
2000
1500

1,005.1

1000

837.2

500
0

FY2019FY20201,042.0
586.1

408.5

FY2021689.7 624.7

658.4

FY2022

FY2023Covers industrial waste generated from the manufacturing processes.

10Society
Respect for Diversity
The SEC CARBON Group understands that its business activities have the potential for affecting humanrights, either directly or indirectly, and respects the human rights of every person connected with our Group.
To make this stance clear, we have created the SEC CARBON Group Human Rights Policy.

Basic Policy
Our Group carries out business activities in accordance with international norms regarding human rights.
Speciﬁcally, we work to respect basic human rights, prevent discrimination based on race, nationality, sex,
religion, beliefs, etc., prevent harassment, respect diversity, prevent child labor and forced labor, respect the
freedom of association and collective bargaining rights, manage working hours, days off, leave, and wages inaccordance with the laws of each country, ensure health and safety, and protect privacy.

Scope of application
This Policy applies to all ofﬁcers and employees of the SEC CARBON Group. In addition, we strive to have all
stakeholders connected with our Group understand this Policy, and respect human rights together.

Dialogues and discussions with stakeholders
Our Group works to have dialogues and discussions with stakeholders so that we can understand from theperspective of the people affected the effects of our business activities on human rights, and thus deal withor improve them.

Corrective measures
We handle any negative effects on human rights
in our business activities appropriately in orderto eventually correct them.

Education
Ofﬁcers and employees of our Group undertake
continuous education and awareness-raising
activities on human rights so they can deepen
their understanding of international norms
regarding human rights and this Policy, andappropriately handle human rights issues.

11Securing diverse human resources
We aim to secure diverse human resources, regardlessFemale hiring ratioof sex or nationality, in order to foster an organizational
culture that can connect new awareness and discoveries
to value creation while respecting each otherʼs differing

No. hired(people)perspectives and values.
In addition, to encourage the empowerment of women,

35

Ratio of womenamong hires

25

20% or more by March 2026, and are actively working

20

（％）

30

30

we have set a goal to achieve a female representation of
on hiring women.

Women (numbers)

25
25.0
14.3

16.7

15
18

15

20

10

14
10
5
0

Ongoing employment
At SEC CARBON, we have set up a re-employment
system to allow people reaching the mandatory
retirement age to continue working until age 65 as“elder employees.”
To further increase the motivation of elder
employees and continuously utilize their skills andtechniques, we are clarifying the roles expected ofthem after their mandatory retirement age, andproviding evaluations and treatments appropriate
for their positions.
In addition, as of April 2018 we have brought in asecondary re-employment system to hire people
as needed once their ﬁrst re-employment period
has concluded.
This allows us to secure a workforce of experienced
employees.

1282
FY2021

2
FY2022

3
FY20230

Fostering Human Resources
We at SEC CARBON believe that fostering human resources who can respond to the dramatically-changing
business environment will lead to growth of the company as an organization, and by extension to responding
to the expectations and requirements of our stakeholders, including consumers, shareholders, and society.
In addition to learning the skills and knowledge required in actual work through OJT (On the Job Training) at
each workplace, we also focus on employee growth through implementing Off-JT (Off the Job Training) as asystem as appropriate for the qualiﬁcations system set by the human resources system.
In particular, we always provide training at milestones where there are changes in the roles expected of employees,
such as for new hires, promotions for mid-level employees, and promotions to management positions.
In addition, the human resources systems of the goal management system and the evaluation system arepositioned as ways to encourage employee growth. We also focus on training evaluators (superiors) in orderto improve their evaluation and training skills, which is a prerequisite for this system.
Other than these, we have a system for increasing the ambition for growth to suite each employeeʼs desire to
improve by providing employees with a wide-ranging training menu which includes language training for
dispatching overseas in order to foster global next-generation personnel, a system to support obtainingofﬁcial qualiﬁcations, and a system for self-development.
Level training

Departmental training

Common training

Self-development

Language study

Evaluatee training

Distance learning/e-learning

Evaluator training

ComplianceObtaining qualiﬁcations

OJTManagement
training

New employee
training

Follow-up
training

Mid-level
employeetraining

GeneralpositionsNew
leadertraining

Supervisory/
Instructor
positionsOﬀ-JT(specialist per-department training/outside seminars)

Management
trainingNew
department
head training

New
managertraining

Management
positions

Professional qualiﬁcations system
Along with preparing an environment where appropriate people with ability and ambition can be evaluated andplay a part, we are developing various human resources systems to encourage growth and self-expression.
We deﬁne the personnel requirements we need and, based on that, revise the series of qualiﬁcations system,
evaluation system, and treatment system to create a system that is more fair and emphasizes results. We arealso focusing on its operation.
Achievement of organizationaltargets (principle, vision)

Personnel requirements(employee ideal)

Employee growthand self-expression
Treatment system

Desired Personnel requirements
Fostering Human
Resources(Wages Regulations)(Bonuses and One-Time
Payment Regulations)(Severance Pay Regulations)● Leadership● Communication (personal relations)● Observation (analysis skills)

Evaluation system● Managerial mindset (adaptability)(Personnel Evaluation Regulations)● Unwavering core

Qualiﬁcations system(Professional Qualiﬁcations Regulations)13

Contributing to Local Communities
In accordance with one of our management principles, “We will contribute to the development of welfare insociety,” SEC CARBON understands the importance of social contribution activities, including volunteering,and participates in and supports these activities.

Fukuchiyama SEC CARBON Stadium
With the intention of contributing to
the development of local sports andculture as a member of our community,
we obtained the naming rights of the
Fukuchiyama Municipal Baseball Stadium,and named it Fukuchiyama SEC CARBON
Stadium in 2019. We clean it on a regularbasis.

Cleaning around the Okayama Plant

Cleaning around the Kyoto Plant

Presentation of a letter of thanks

Road beautiﬁcation

We were given a letter of thanks from the Minister of

SEC CARBON employees cleaning around the plantLand, Infrastructure, Transport and Tourism forcontributions to road conservation and related efforts.
We signed the Volunteer Support Program Agreement with
the Fukuchiyama Ofﬁce of River and National Highway,
and since 2003, we have been regularly conducting roadbeautiﬁcation activities along National Route 9.

Business emissions reduction planning/reporting/publication system basedon the Kyoto Prefecture Global Warming Countermeasures OrdinanceAccepted award from the governor of Kyoto Prefecture for being a top-quality business operator.

14

Regional disaster/crime prevention

Local social events (Fukuchiyama City)

We hold local social events for local residents in the
grounds of our Kyoto Plant. We organize events like theWe also take part in activities such as regional

Ground Golf Championship, deepening communication.

disaster or crime prevention and activities to raise

Events were postponed during the COVID-19 pandemic

awareness of obeying trafﬁc rules, working to create

in order to prevent the spread of infections, but

a livable community.

following the event in May 2023, which was the ﬁrst in

We were recognized as a “Fukuchiyama Fire Brigade

four years, we also held an event in May 2024. Around

Cooperation Business” in May 2016, which was

60 people from the local government association

renewed in 2022, and we continue to work with them.

were invited and enjoyed the event.

Social welfare

Education and social education

We have been running a blood drive internally twice ayear for more than 30 years. We also try to contributeto social welfare by, for example, moving ahead with
the installation of AED equipment that anyone can use.

Hosting local high school students as interns andIf an AED is needed, please use the reception phone inorganizing plant tours for local residents to see andthe ofﬁce to the left after you enter the main gate, orfeel directly what we manufacture are some of thecall in at the guardhouse 100 m south from this photo.

ways we contribute to social education.

Baseball class

Our baseball team holds baseball classes for local youth baseball groups, using the skills they have cultivated.

15

Achieving Employee-Friendly Workplace Environments
Enhancing support systems for employeesWith the aim of promoting happiness for our employees, one of our management philosophies, SEC
CARBON encourages self-actualization by providing an environment where employees can grow with theambition to take on new challenges and better themselves.
We do not limit ourselves to legal support, but are enhancing support systems to ensure employees canwork with peace of mind and balance both work and private lives.
In addition to a ﬂex-time system, a half-day paid leave system, and an accumulation system for expired
paid leave, we have a leave of absence system that provides generous support to employees from when
they are absent or take leave due to personal injury or illness until they return to work.
In addition, we have also enhanced economic support for our employeesʼ lives, such as providing
company housing and various living allowances.

Fostering a culture that creates a work-life balance
For employees to balance work and home life, and lead lives enriched in both public and private aspects, it is
not enough to just provide systems: we believe it is necessary to have a ﬁrmly-rooted culture that values theindividual and understands the other personʼs situation.
In 2013, we were honored with the "Hyogo Work-Life Balance Company Award" by Hyogo Prefecture for ourefforts to promote a workplace culture where employees can work energetically. This recognition was basedon our activities such as encouraging a higher utilization rate of paid leave and reduced overtime work, aswell as promotion of no overtime days. This is one of the ways we are creating a corporate culture that values
workplaces where employees can work with enthusiasm.
In ﬁscal 2023, the paid leave utilization rate showed a high result of 82.3%, and the monthly over-hours work
showed a low result of 3.3 hours per person. In addition, men taking childcare leave are increasing every year,
reaching a 46.7% acquisition ratio.

Paid leave take-up rate（days）

36

Paid leave

79.0

32

Childcare leave for men

Paid leave take-up rate

79.7

82.3

（％）

70

24

60

20

50

16

40

14.9

15.0

15.2

20

4

10
FY2021

FY2022

FY2023

40
33.3
30
20

30

8
0

17.6
10

0

0

Over-hours work (monthly average)（hours ）

5
4

3.3

3
2

2.5

2.7

1
0

FY2021

FY2022

46.7

80

28

12

Childcare leave for men

（％）

50

90

FY202316

FY2021

FY2022

FY2023

Achieving Safe, Healthy Workplace Environments
Health and Safety Activities Plan for the 105th Fiscal Term (FY2024)
SEC CARBON believes that for a company, employees are assets, and no company can expand without ensuringe
the safety, security, and health of employees. So we carry out a range of health and safety activities under theslogan “Letʼs Build Safety Culture Together” with the aim of achieving a workplace where everyone can work safely
and secured, vibrantly and energetically.

Safety Policy
We will carry out a mindset reform through acting
autonomously, and raise awareness through mutual
warnings.
●Do properly what should be done.
●Call out when you see something dangerous.
We shall make this the standard and build up a safety culture.

Key initiative issues

Strengthen risk assessment(1) Carry out training for inexperienced personnel●Progress of safety measures throughout ourand ensure careful compliance with work

plants will be made able to grasp through risk

proceduresassessment results.

(2) Increase risk awareness●In the investment of management resources,(3) Understand and carry out daily inspections

projects with high risk levels and for which(4) Autonomous promotion of risk assessment

effective equipment measures have been devised(5) Roll out 4S activities that lead to 5S activities

will be prioritized.

Health and safety management system
The Health and Safety Committee is positioned as the highest

Health and Safety Committee

decision-making organ related to health and safety. It deliberates

・Overall Manager of Health and Safety
・Deputy Overall Manager of Health and Safety
・Industrial Physician ・Safety Manager
・Health Manager
・Departmental Health and Safety Manager
・Labor Union-Recommended Member

on and makes decisions regarding matters related to theorganizational promotion of health and safety activities suchas the occurrence of industrial accidents and the progress ofhealth and safety activities. In addition, the Disaster Prevention
Council deliberates on health and safety matters related topartner companies or subcontractors, working to promote
the health of and prevent industrial accidents happening toemployees of our partner companies.

Health and Safety
Sub-committee

Disaster Prevention
Council・Organization Sub-committee
・Recurrence Prevention
Sub-committee

・Partner Company
Representative
・Partner Company Manager

The activities of the Health and Safety Sub-committee expand
initiatives to ensure industrial
accidents never happen again,

Changes in numbers of industrial accidents

such as proposing measures

Accidents that do not lead to time oﬀ work (Okayama Plant)

to prevent recurrence from a

Accidents that do not lead to time oﬀ work (Kyoto Plant)(accidents)

third-party perspective or site

10checks by the Recurrence

8

Prevention Sub-committee
when an industrial accident
happens.

Accidents that do lead to time oﬀ work (Kyoto Plant)

6
4
2
0

FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023* “Accidents that do not lead to time oﬀ work” includes light injuries diagnosed as not requiring ongoing treatment.

17

Strengthening health and safety activities
1 Effective use of risk assessment●We are moving forwards with the construction and implementation of a system to prioritize andimplement equipment measures once the results of risk assessments carried out at each workplace arecollated for each plant overall to understand the risks in that plant.

2 Implementation of skills maintenance training●We carry out planned skills maintenance training at each workplace to ensure that the skills for
specialist work or risky work do not deteriorate.

3 Education and training●New hires and young employees are
given safety education by formulating
OJT training plans for each workplace as
a way to improve their awareness of risk.
●The qualiﬁcations required for carryingout jobs are listed for them, to allow
employees to systematically acquire them.

Promoting health management
In our health activities, in addition to the legally-stipulated health checks, we also have optional tests, provide
subsidies for vaccinations, and have programs to promote health given by outside instructors as a way toboost awareness. When it comes to creating healthy minds and bodies, we are handling mental healthcare in
the workplace, working to prevent mental health issues before they occur by providing opportunities for all
employees to take tests using our stress check system.

1 Health checks●In addition to the legally-stipulated health checks, we recommend optional tests, encourage people
eligible for secondary testing to actively take them, provide speciﬁc health guidance, and offer otherways to promote health.

2 Encouragement to get vaccinations●For the inﬂuenza vaccine, we subsidize the entire cost and carry out
mass vaccinations to help prevent the spread of infections.

3 Mental health care

●We actively work on creating mental health by, for example, providing
mental health classes taught by outside instructors and encouraging
self care through our stress check system.

Okayama Labor Bureau Directorʼs Award for Health and Safety

We have received an Encouragement Award as a workplace recognized as a model for others for its safetymeasures and good standards regarding health and safety.

18

Product Liabilities
1 Diversiﬁcation of production in a single plant (Kyoto Plant)
We have obtained the ISO 9001 international standard for
quality management systems, and have been working on
improving our systems through both internal and external
audits over many years. We manufacture multiple products
using shared equipment within a single plant, resulting in
improved efﬁciency thanks to our accumulated skills andtechnologies.
Recently, we are advancing the implementation of new
equipment, and striving to improve quality.
When introducing new equipment we take energy efﬁciency
into consideration.

2 Initiatives to improve product yield
Our ﬁnal products are made by machining materials, but we are moving ahead with initiatives to reduce
the amount of waste created in this process as much as possible. Speciﬁcally, by getting close to theﬁnished shape during the forming process, we can reduce the waste generated in the machining process.
This initiative not only reduces waste but contributes greatly to reducing energy during the whole
manufacturing process.

3 Providing products that are gentle to the environment
We improve and develop products so as to lead to resource conservation and energy saving for ourcustomers through the products we manufacture, helping to contribute to society.
At the same time, we are promoting our own research on the theme of CO 2 resource recovery as way tobring about carbon neutrality.

4 Initiatives for intellectual property
We see intellectual property as a key business asset. To

Technical
strategy

ensure the freedom and superiority of our business, we arepushing ahead with the creation and ﬁnding of discoveries,
and applying for and being granted patents.
In addition, we respect the intellectual property of others,
and carry out ample investigations to ensure that we do
not infringe on the IP of others when developing productsIntellectual
property
utilization

Technical
development

or technologies. We are also constructing a system thatmakes it easy for employees to get patents, and provide themwith incentives. Submitting numerous patent applications
leads to initiatives for new products and new businesses.

19Intellectual
property
protection

Governance
Strengthening Governance
Basic Policy
With the reforms to the Companies Act in May 2015 and the establishment of a Corporate Governance Code by
the Tokyo Stock Exchange in June that same year, the move to require strengthened governance in corporate
management is getting stronger.
As part of this, we work each day to strengthen governance. In December 2015, we formulated our Basic Policy
for Corporate Governance in order to work to practice management that gets close to high transparency andethics in order to earn trust from our stakeholders.
The Basic Policy is the following:
1. Ensure shareholdersʼ rights and substantive fairness.
2. Consider the interests of our diverse stakeholders and strive for appropriate cooperation.
3. Disclose appropriate information related to the company and ensure transparency.
4. Directors and Auditors will recognize their ﬁduciary responsibilities to shareholders, and fulﬁll
their roles and responsibilities.
5. Hold constructive dialogues with shareholders.
We will push ahead with strengthening governance based on this Basic Policy, aiming to improve our corporate value.

Corporate governance system
Our corporate governance is enhancing the effectiveness of supervision through the current auditor system
whereby auditors, including external auditors of a certain distance from management, attend the Board of
Directors meetings, management meetings, and other key meetings, providing comments based on objective
assessments to management. Given our business scale and organizational structure, the current system isbelieved to adequately ensure auditor independence and the effectiveness of corporate governance.

Corporate governance relationship diagram

General Meeting of Shareholders
Appoint/Dismiss

ReportAppoint/Dismiss
Audit

Auditorsʼ Meeting

LiaiseConsult
Instruct
ReportReportSuperviseInternal Audits
Department

ReportReportAccounting
AuditorReportLiaiseAccounting Audit

Executive Committee
Instruct

Appoint/Dismiss
LiaiseReportBoard of Directors

President

ReportInternal Audit

Managing Director

Employees

Internal Report

ReportInternal Report

20

Consultant
LawyerOfﬁcer remuneration, etc.
Total
remuneration, etc.

Oﬃcer category

Total remuneration, etc. by type (millions of yen)

No. of oﬃcers
eligible(millions of yen)Basicremuneration

Performance-linked
remuneration

Non-monetary
remuneration

Directors

151
（15）

108
（13）

43
（2）

ー
（ー）

6
（2）

Auditors

39
（9）

39
（9）

ー
（ー）

ー
（ー）

4
（2）

(of which, Outside Directors)(of which, Outside Auditors)(people)Promoting Dialogue with Stakeholders
Basic Policy
We believe it is important to have constructive dialogues towards improving corporate value in order to deepen
our relationships of mutual trust with all our stakeholders.

Main dialogue opportunities with stakeholders
Consumers

Sales representatives, technical representatives, SEC CARBON information, product catalogues

Employees

Labor-management councils, hotlines, company newsletters, training

Local communities

Community contribution activities (cleaning, etc.), community exchange events, baseball classes, plant tours

Administration

Submission of forms, exchanges of opinions

Shareholders, investors

Reports (Securities reports, ESG reports), IR interviews, website

Relationships with Business Partners
Pursuit of customer satisfaction
We supply products that take advantage of the various strengths of carbon such as oxidation resistance andelectrical conductivity, responding to our customersʼ needs and gaining high regard from them.
To that end, we have obtained the international quality standard ISO 9001 and established our own strict
standards, carrying out advanced quality management for all products so that we can deliver to our consumers
only highly reliable products that pass our careful three-stage inspections of 1. acceptance inspection for raw
materials, 2. in-line inspection at each process, and 3. product inspection of ﬁnished products.

SEC CARBON supply chain diagram

Suppliers

Trading company
manufacturers

Coke, pitch

SEC CARBON, LIMITED

Labor provision

Heavy oil, gas, electricity

Partner companies

Supplier companies

21

Products

Customer

Trading company
users

Relationships with Shareholders and Investors
Basic Policy
We recognize the importance of shareholder rights, and strive to ensure all shareholders can exercise their rights
equally in proportion to their holdings.
In addition, we strive to ensure minority shareholders are able to smoothly exercise their rights recognized under
the Companies Act by setting a method for the exercise of such rights in our Stock Handling Regulations.

Dialogues with shareholders and investors
We not only strive to disclose information in a timely and appropriate manner, but carry out constructive
dialogue with our main stakeholders, our shareholders and investors, with the aim of improving our corporate
value in the medium to long term and sustainable growing.
To further encourage these IR activities, we carried out the following organizational change on April 16, 2024.

（Before change）（After change）

IR Response Team

General Aﬀairs andPublic Relations Department（Taskforce team made up of people
responsible in related departments）（Responsible department to which PR and
IR functions to the General Aﬀairs Department.
IR personnel strengthened, specialized）

To ensure that our corporate value can be appropriately reﬂected in the market, in addition to statutory andtimely disclosure items we also disclose voluntary disclosure items, information necessary for shareholders andinvestors, in a timely and appropriate manner. Furthermore, we regularly feed back opinions and requests fromour shareholders and investors internally, and use them in management.

Dividends policy
We believe the most important issue for management is a continuous and stable proﬁt return to ourshareholders. Dividends from surplus are provided in a continuous and stable manner while we also pay
attention to increasing our proﬁtability and our ﬁnancial soundness. Our guideline is a consolidated dividend
payout ratio of 30%.

General Meeting of Shareholders
To allow the agenda items to be carefully considered, materials for the General Meeting of Shareholders,
including the convening notice, are posted on our website and on the Tokyo Stock Exchangeʼs Timely Disclosure
Network (TDnet), and convening notices are then sent out at least three weeks prior to the General Meeting of
Shareholders.

IR activities status
The status of our IR activities in ﬁscal 2023 was as follows.
Activity

Times

Content

IR interviews

35

Company overviews, business overviews,
product overviews, ﬁnancial results

IR study sessions

10

IR information gathering, shares, ESG-related22

Compliance
Based on our belief that compliance (compliance with laws, company rules, and corporate ethics) is the basis ofmanagement, we work to ensure this principle is thoroughly implemented and further disseminated internally.

Code of Conduct
To not only comply with laws and company regulations but also to fully recognize corporate ethics and adhere
to societal norms.

Compliance questionnaire
A questionnaire is held regularly for employees. Its purpose is to allow employees to both discover organizational
issues and reconﬁrm the work and activities they themselves do on a daily basis.
The results are analyzed and utilized in activities for the following ﬁscal year.

Internal reporting system (whistleblower system)
Along with preparing internal reporting regulations and creating a system to protect whistleblowers, we have set
up both an internal hotline and an external one via our consultant lawyers to accept reports and consultations.

Awareness-raising and education
We provide ongoing compliance training to all employees by both internal and external instructors.

Risk Management
We have drawn up Risk Management Regulations and Crisis Management Regulations, and are moving ahead
with a risk management system from the twin aspects of preventing latent risks from happening (riskmanagement) and dealing with risks that have manifested (crisis management).
For risk management, the Ofﬁcer in Charge of Risk Management is in overall charge of risk management, andalso regularly monitors the risk management status of key risks identiﬁed by the Board of Directors.
In addition, we have formulated a Business Continuity Plan (BCP) to ensure that when a major disaster does
occur or there is a systems failure, we can resume business activities in as short a time as possible. We also
conduct drills of this BCP.

Examples of risks for the company● Natural disasters● Epidemics● Changes in the materials
procurement environment● Changes in the competitive environment for our products● Changes to laws and regulations in the countries and regions
where we do business● Accidents

Information security
We position information such as conﬁdential information, personal information, and company technicalinformation as key assets of the company, and as such, take measures to prevent external leaks or systems
failures due to virus infections or cyber attacks. In addition, based on the relevant laws and regulations, we havedrawn up internal standards such as our Information Security Policy and Management Regulations. Along withpreparing an information security system based on standards and rules, we are also working on revising oursystems and strengthening measures in response to evolving IT and changes in information security risks.

23