INOAC
CORPORATIONCSR REPORT2019
INOAC CORPORATION CSR REPORT 2019

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

Teamwork

Exhibit 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 guideline
Company 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

01
02
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, material
processing, 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%

1,700

500
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,exportand sale

INOAC Technical Center Co., Ltd.

Head Office

2,000

Manufacture,processing
and sale

2018

Year

Foam 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

Japan

R&D

Sales 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. This
is 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 to
reduce 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 40
years ago, the first development work I was
involved 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 the
shape 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 the
beginning 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 to
as many people as possible.
We will greatly appreciate your continuous
guidance 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®

VAFTER

FOLEC®

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 various
materials, 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 the
motto 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 by
fully 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 Technology

Molding
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

JAPAN

CHINA

INOAC Technical Center Co., Ltd.

Shanghai INOAC Polymer Products Co., Ltd.

USATHAILANDINOAC USA, Inc.

INOAC (Thailand) Co., Ltd.

INOAC CSR REPORT 201907

Feature
story

INOAC’s environmentally conscious products that meetthe people’s needs

Earth-friendly andhuman-friendly productdevelopment

The issues of marine pollution caused by microplastics andthe treatment of non-recyclable plastic wastes are now social
issues of a global scale. As such, strong expectations arebeing placed on the plastic industry and each manufacturing
company to confront these problems. Our company isdealing with the environmental problems by promoting a shift
to the use of plant-based resins. Demand for plant-based
products is rising rapidly due to the minimal stress they puton the environment, and this demand is expected toaccelerate even more in the future. In addition, as part of ourefforts to reduce waste, we are reusing thermoplastic resins
by pulverizing and modifying process waste, which could notpreviously be recycled. We are also carrying out productdevelopments that make a shift to using carbon neutralmaterials in the place of plant-based resins to reduce carbon
dioxide emissions.
We are also a member of the Nano Cellulose Vehicle (NCV)
project, which is carried out by various industrial, academic
and government institutions, including Kyoto University and21 other universities, research institutes and companies. The
aim of the project is to research the possibilities of cellulose
nanofiber (CNF) from various different angles. Not only is
CNF a natural material, it is also highly ef fective as areinforcement filler for resins, and we anticipate that it will beof significant value in the future. CNF is ideal for creating lightbut very rigid products and has contributed to making cars
lighter and more fuel-ef ficient. Indirectly, it can also
contribute to reducing energy consumption.
In order to continue meeting the diverse needs of the global
market going forward, we will actively promote the use ofplant-based resins, research recycling methods and develop
foam products that are lightweight and have heat insulating
properties, which contribute to saving energy.

World-leading R&D and human resource development
In order to propose and provide new solutions to society,each of our departments and affiliated companies areengaged in developing environmentally friendly products,
with our company’s R&D efforts centered at the INOAC
Technical Center and the Global Technical Division.
Outside of Japan, such as in North America and China,
we are likewise developing environmentally friendly
products that meet the needs of each region. We share
information among the entire group and are committed to
fur ther advancing and enhancing our technologicalcapabilities. We are also actively engaged in humanresource development by working together with raw
material manufacturers and our customers both in Japanand overseas, while also collaborating with educational
institutes and gathering information at exhibitions. In
addition, we organize research opportunities abroad toalways keep up with the latest information as we move
forward with our R&D.

Continuing to be a manufacturer of earth-friendly andhuman-friendly materials
The social structure as we know it, with mass production,
mass waste and mass energy consumption, will no longer
be possible. To realize a recycling-oriented society, therole of materials is extremely significant and their needs
will likely rise even more. Developing technologies thatlead to decreasing environmental burdens and savingenergy is a field that Japan has been leading in over theyears. Going forward, as a material manufacturer that
supports various industries, we will strive to develop andprovide products that are considerate of the earth and its
people’s lives.

Kentaro Iwanaga
Division Director
Global Technology Development Division
INOAC CSR REPORT 201908

Feature
story

Case.1 Product development using plant-based raw materials 1

Earth-friendly andhuman-friendly product development

The polyolefin sheet that reuses sugarcane pomace
At I-Sheet Industry Co., Ltd. of the INOAC Group, we are doing R&D ofpolyolefin sheets that use sugarcane pomace as part of its raw
materials.

and can be said to be a product that contributes to a recyclingoriented society.

The sheet has the same physical properties and quality as the existing
petroleum-based one, and can be similarly vacuum formed and used.

Sugarcane cultivation does not cause deforestation andenvironmental destruction due to it being grown in areas that areconverted from pastures.

In addition, the sheet does not emit extra CO2 when combusted due
to partially consist raw material (=plant) that absorbed CO 2 in theatmosphere.

The material has another advantage point compared to materials
derived from corn: manufacturing energy costs are lower and has nocompetition with food or feed.

The sheet is compatible with the CO2 life cycle ( “plant absorption” →“manufacturing bioplastic” → “combustion and atmosphericemission” ),We are expanding the sheet sales as an alternative to petroleumderived food and industrial trays.

■ Characteristics of materials using sugarcane pomace● Can be used in the same way as existing

recycling-oriented society
CO2 lifecycle

Development Technology Section
I-SHEET Industry Co., Ltd.

■ Product examples【CO2 lifecycle diagram】*This product is not biodegradable●Trays for food and industrial components(Alternative to petroleum-based products)

petroleum-based products
Same physical properties, quality, formability.
● The material that can contribute to a

Junichiro Kasada

Absorbs
atmospheric CO2

CO2

Combustion

Atmosphere● No negative effects on environmental

protection or food problems
No deforestation required for manufacturing.
Sugarcane pomace is not used for food andfeed.

Manufacturing
bioplastic
Sugarcane pomace

Polyolefin material

INOAC CSR REPORT 201909

Feature
story

Case.2 Product development using plant-based raw materials 2

Earth-friendly andhuman-friendly product development

Development of urethane foam using plant-based raw materials
We believe that in order to contribute to a sustainable society, oneof the important activities for companies is to effectively utilize
limited resources.
Although most of our company’s main material, urethane foam, ispetroleum-based, we are also engaged in developing plant-based
raw materials to prevent the depletion of limited fossil fuel resources
and to be more environmentally friendly.

from plants (e.g.: castor oil, palm oil, soybean oil).
By continuing to carry out product developments that increase thepercentage of plant-based raw materials, we hope to contribute to
the reduction of CO 2 emissions with carbon neutral materials andprevent global warming.

Yasumasa Goto

We are currently working to develop products with a highpercentage of plant-based raw materials by using polyols derived■ Maintaining the same properties as existing (petroleum-based) products
Products made from plant-based raw materials are generally hard andtend to weaken easily, so it is difficult to develop products that canmaintain the same properties as those made from petroleum-based raw
materials. However, with the product we are currently developing we haveachieved a level of maintaining the same properties as existing products.

Urethane Technology Section
Foam Products Department
High Functional Material Division■ Reducing CO2 emissions with carbon neutrality
Using plant-based raw materials contributes to reducing greenhouse gases because
the CO2 emitted when combusting the
product is the same amount of CO2
absorbed by the plants during
Growththeir growth.
Absorption

Photosynthesis

Biomass

Raw materials■ Advantages of using plant-based raw materials●Reduction of CO2 concentration with carbon neutrality

CO2.Prevents global warming

Product manufacturing●Reduction of dependence on fossil resources.Prevents the depletion of limited resources

Generation

Disposal after use
Use as electricity/heat

INOAC CSR REPORT 201910

Feature
story

Case.3 NCV Project participation

Earth-friendly andhuman-friendly product development

Cellulose nanofiber (CNF) to make products lighter
The Nano Cellulose Vehicle (NCV) Project is run jointly by industrial,academic and government institutions, and our company has been
participating in it since its establishment. The project’s goal is tomake vehicles lighter by utilizing CNF.
Led by Kyoto University and the Ministry of the Environment, theNCV Project is aiming to make vehicles over 10% lighter by 2020 by
utilizing next-generation CNF, which is a fifth of the weight of steel
and over five times stronger. For our part in the NCV Project, we will
test the possibilities that CNF has as automotive components byMarch 2020 and aim to apply it commercially by FY 2025.

to develop resin vehicle components with foamed resin molded
articles, which also make the product more lightweight. By adding
10% of CNF to the resin material and applying our foam molding
technologies, we have succeeded in making the molded articles
20% lighter than before.
Through our R&D efforts, we will contribute to making the shift tocarbon neutral materials, reducing the use of petroleum-based
resin and improving fuel efficiency by making vehicles lighter.

Hiroaki Suzuki
Director
Evaluation Technology Sectionof the Development Division
Global Automotive-related
Products Division

We are currently working to further strengthen resins by using CNF■ NCV Project■ Strengthening resins by adding CNF■ Product example

The NCV Project was launched by the Ministryof the Environment to improve automobile fuelconsumption by making vehicles lighter and to
reduce CO2 by applying CNF—a lightweight andhigh-strength next-generation material—to theautomotive field. Kyoto University leads the
project and more than 20 industrial, academic
and governmental institutions participate.

●Characteristics of the technology and product●Foamed resin injection molded article

Adding CNF strengthens the resin to supplement a
decrease in strength caused by foaming.

(Car interior pillar: product with 10% CNF addition)

Strength

Increased strength due to adding CNF

Specific gravity
and strength withregular molding
Decreased weightand strength due tofoam molding

Specific gravity

PillarSingle resin
CNF addition

More lightweight whilestrength maintained

INOAC CSR REPORT 201911

Feature
story

Case.4 Realization of material recycling

Earth-friendly andhuman-friendly product development

Recycling process waste of polyethylene foam
We are planning to start material recycling by turning the process waste of polyethylene—produced during the
manufacturing (vacuum forming) process of automotive components—into material pellets and reusing themfor different products. Our ultimate goal is to reduce the over 4 tons of industrial waste produced on average
every month by 100% and achieve a “ZERO” industrial waste reality.
In our developments, we will focus our efforts on establishing a recycling method that takes into consideration
the volume reduction method, defoaming method and cross-link cutting method for cross-linked foam.
Until now, we have been undertaking thermal recycling, which reuses the energy produced when combusting
industrial waste. However, from now on, we will also be undertaking material recycling, which reuses industrial
waste as a different product.
Going forward, we will proceed with developments with the aim of establishing a technology capable oftransforming all recycling pellet materials back into products.

■ To achieve a zero industrial waste reality
Our aim is to reduce the over 4 tons ofindustrial waste produced on average
every month by 100%.

Goal
Reduce industrial
waste by 100%

① Crush process

waste

Powderization

Process waste of polyethylene foam

CrusherConvert to pellets

Yoshihisa Takamori

Subsection Chief
Resin Product Development Sectionof the Development Department
Global Automotive-related
Products Division

Resin Material Development Section
Material Technology Department
Global Technology Development
Division■ Recycling process

Process waste➡

Shinji Sugie➡

② Produce pellets

with an extruder☆ Defoam and cut
cross-links➡

③ Convert to

INOAC product

Crushed powder +defoaming additive

Pelletization

Extruder(defoams and cuts cross-links)

Special screw design➡
INOAC CSR REPORT 201912

What INOAC can do for the
automotive industry
The history of the automotive industry in Japan stretches back over 100 years, but it has
been facing a major turning point in recent years.
Since the financial crisis following the bankruptcy of the Lehman Brothers, the global
economy has faced multiple crises, and the trade war between the US and China has
intensified this year. All of this has continued to greatly affect Japan’ s automotive industry.
A crucial challenge that automotive-related companies must take on in order to pave theway for the future of Japan’ s economy is to flexibly respond to external factors, such aschanging economic environments, and strive to achieve sustainable growth across theentire automotive industry. Aside from economic issues, the automotive industry must also
contend with environmental issues as represented by CO2 emission regulations.
As a manufacturing company with a division dedicated to automotive products, we at INOAC
believe it is our duty to be aware of how much our activities affect the earth’ s environment,
and at the same time, find a way to progress that is more in harmony with the environment.

Examples of environmentally compatible products 1
Product name
Theme

“Gasoline tank cover” to reduce volatile fuelCompatibility with exhaust gas regulations

Keyword

Thermal insulation

Gasoline-fueled vehicles inevitably leak gasoline vapor, which is raised as one of thecauses of environmental pollution. Therefore, Japan and other countries are carrying out
measures (evaporative emission regulations) to reduce the amount of gasoline vapor thatescapes from the tank. To tackle this issue, we developed a tank cover that prevents
vapor leaking from the gasoline tank.

Characteristics■What is a gasoline tank cover?
I t is a cover that insulates the gasoline tank to prevent the tanktemperature from rising.
■Thermal insulation
Our product uses P·E-LITE (foamed polyethylene), which demonstrates greater thermal
insulation compared to the more commonly used polypropylene foam beads (EPP).
■ Measurement of surface temperature

Surface temperature (

40
38
36
34
32
30
28
26
24
22
20

Measurement method: The assessment
sample (material) was placed on a 60°C
plate and the surface temperature of theassessment sample was measured.
P・E-LITE
EPP

℃

)

0

200

400
600
Time (sec)

800

Thermocouple(stuck onto the surface)
1000

Sample（150×150mm）
Connected to arecording instrument

Heated plate（160×160mm）*Representative values measured by our company

Rear door trim
Air intake hose

■Form superiority
The cover can be vacuum formed or bent to fit the shape of the tank for a better finish.
■Vacuum formed + injection molded product

Vacuum formed
P E-LITE
thermal insulator ・Injection molded
protective cover Polypropylene (PP)

Gasoline tank cover
INOAC CSR REPORT 201913

■ What INOAC can do for the automotive industry

Examples of environmentally compatible products 2
Product name
Theme

“Rear door trim” made lighter with large-scale injection molds

Compatibility with CO2 emission regulations

Keyword

Examples of environmentally compatible products 3
Product name

Lightweight

Improvements to resin foaming technologies have enabled us to produce lighter reardoor trims, which are large-scale injection molded articles. We have succeeded in
making them lighter than the previously used polypropylene-molded articles while
maintaining the same strength and precision.

Theme“Air intake hose” made lighter with Thermoplastic
Olefinic Elastomer

Compatibility with CO2 emission regulations

KeywordLightweight

The intake hose requires a level of flexibility that can withstand the engine’ s vibrations atengine room temperature. Vulcanized rubber (EPDM) has commonly been used, but weare currently making a switch-over to thermoplastic polyolefin elastomer to make theproduct more lightweight.

Characteristics■Achieving both lightness and rigidity with large-scale injection molding technologies

Characteristics

After the foamed resin is injected, the core back process* is applied to the die to expand thegas inside. This causes the foam to line the surface of the die, making it thicker and lighter.

■About the air intake hoseThis makes it possible to create a structure comprised of solid surface layers and afoam layer (in the middle). It furthermore increases the thickness of the plate, thereby
ensuring lightness and rigidity.
Cross-section
Solid layer

An intake hose that carries air from outside to
the engine.

■Effect on weight■Thermoplastic polyolefin elastomer
(TPO)

350
300

Solid layer*Core backA method used during foam injection molding, where the volume of the die cavity is increased to expand the foam
bubbles and create a high magnification foam-molded article.

Foaming agent

Product weight (g)Foam layer

315

250

25% lighter
235

200
150

A material produced by physically
mixing a polymer with plasticity and apolymer with elasticity.
The material can be used for regular
injection molding and is also recyclable.

100
50
0

EPDM

TPO
■ EPDM: vulcanized rubber■ TPO: thermoplastic polyolefin elastomer*Representative values measured by our company■Keeping down manufacturing energy

Producing vulcanized rubber requires a vulcanization reaction to occur within the die,necessitating high temperatures and a lengthy molding cycle. However, thermoplastic
polyolefin elastomer is formed by cooling plasticized material inside the die. The dietemperature during the molding process therefore remains low, which keeps down
manufacturing energy and CO2 emissions during the manufacturing process.
Die expansion causes foam expansion

Initially filled thin

INOAC CSR REPORT 201914

Harmony with theenvironment

Environmental management

Environmental vision
INOAC respects the natural environment of ourirreplaceable earth and contributes to realizing anaffluent society that is comfortable to live in throughtechnology harmonized with our environment andenvironment-friendly corporate activities.

Environmental policy①We comply with environment-related laws and regulations
and other requirements, and implement businessactivities that society can trust.
②We promote reducing CO2 emissions such as by savingenergy to prevent global warming.
③We work on resource conservation, waste reduction andrecycling to contribute to a recycling-oriented society.
④We appropriately manage chemicals that may influence
the environment and reduce the risk to preserve ourenvironment.
⑤We actively develop products with less environmental
impacts, contributing to the conservation of nature
throughout the lifecycles of the products.
⑥We promote environmental management, educate
employees about the environment, implement
environmental audits and continue to improve.
⑦We contribute to establishinga sustainable society throughlocal environmental
preservation work as good
corporate citizens.

Environmental management system
In order to promote environmental activities in an organized fashion, the Person Responsible for Environmental
Management implements the integrated management of the environment under the direct control of top
management. In addition, the whole company also engages in environmental activities under the direction of theCommittee on Environment. We organized specific section committees to handle industrial waste and energy saving
to further improve the two areas and to promote environmental management in cooperation with each committee.
Furthermore, we are managing our objectives so that the activities conforming to ISO 14001:2015 that began in2017 are more closely integrated with our main business and will hopefully take deeper root in the company.
■ Environmental Preservation Promotion System

Environmental
Preservation
Promotion
SystemTopmanagement

ChairmanCommittee on
Waste Reduction

Person Responsible forEnvironmental Management

Committee on
Environment

Committee on Environment

ChairmanCommittee on
Energy Saving

Committee on Energy Saving(Energy Management Supervisor)

Internal environmental audits
We implement internal environmental audits tocheck the operational state of our environmental
management. The audit team consists of two to
three employees who have completed theauditor training prescribed by the company, andchecks if the environmental management system
is appropriately operated, maintained andimproved. Within these activities are also someinteractions with auditors from neighboring sites
and efforts to improve the quality of the audits
themselves that are conducted to reinforce
on-site checks.

(By sections)

Committee on Waste Reduction(Office)(Office)

Environmental
improvement
activities at
each workplace

External environmental examination
We ask the Japan Quality Assurance Organization (JQA),
which is an exter nal certification registration body, toimplement examinations to check if the environmental
management system is appropriately operating in accordancewith ISO 14001:2015.
In FY 2018, the audit expanded to include Higashi Nihon
INOAC Co., Ltd. No areas were found to be in need of
improvement as a result, and the auditors determined that thesystem is being maintained. As a general opinion, theysuggested taking on the challenge of turning risks andopportunities into goals that conform to the work of eachindividual department.
INOAC CSR REPORT 201915

Harmony with theenvironment

Reducing the environmental burden 1［ Ef f o rts］

Reduction of energy consumption

Key efforts to promote energy saving in 2018

To help to prevent global warming, we have been engaged inefforts to reduce CO 2 emissions by promoting energy saving.
Specifically, we have been promoting the following activities:
reducing electricity use by equipping cooling towers with inverters
and placing shade films on windows; reducing the use of heavy oil
for controlling die temperatures by applying a thermal insulation
coating material to the die and preventing heat release; and taking
measures to insulate boiler room tanks and factory roofs. In 2018,
CO 2 emissions resulting from energy use decreased a little—
approximately 9% in terms of intensity—compared to 2017.

Installing a low temperature drying room that uses waste
heat to reduce the amount of energy used for drying

Reducing electricity use by equipping cooling
towers with inverters

Reducing the use of heavy oil for controlling dietemperatures by applying a thermal insulation coating
material to the die and preventing heat release

Reducing the use of air conditioning electricity bylining windows with INOAC’s CELL SHADE

Measures to prevent air leakages by using ultrasonicair leakage detectors

Covering boiler room tanks with a thermal
insulation jacket

Insulating factory roofs using the cover construction
methodManaging LED illuminance with a control switch■ Energy use (CO2 emission (t-CO2))t70,00060,00050,00040,00030,00020,00010,000060,92359,28260,20959,563

2015

2016

2017

2018

year

■ Energy use intensity (CO2 emission (t-CO2)/production sum (million yen))

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0

0.749

2015

0.725

2016

0.710

2017

0.644

2018

Applying CELL SHADE to windows

Tank covered with a thermal insulation jacket

Die thermal insulation coating material

Other work for preventing global warming

year

INOAC is working on preventing global warming from otherperspectives too. During the summer, we hold a summer
eco-style campaign to educate our employees on how to saveenergy, such as by promoting cool biz, our energy saving attire
campaign. We also work on cooperative transportation andsmooth deliveries, a modal shift to railway and maritime

transport, and consolidation of distribution bases. In addition,
we participate in the CO2 Reduction and Lights Off Campaign
propelled by the Ministry of the Environment every year. In FY
2018, we implemented the campaign at 10 facilities, including
those of our group companies, on June 21 (summer solstice)and July 7 (Star Festival).
INOAC CSR REPORT 201917

Harmony with theenvironment

Reducing the environmental burden 2■ Waste treatment amount

Activities to reduce waste
All Committees on Waste Reduction throughout our company
take the lead in promoting waste reduction activities. These
include cutting back on losses by reducing defects andimproving yield; expanding on the use of recycled materials,
such as by separating and recycling used paper; andpromoting the sales of recycle mats produced by usingmaterial remnants (see article on the right for more details).
However, the market criteria for buying valued resources are
becoming stricter every year, which gives us no other choice
but to dispose of resources as industrial waste in many cases.

Activities to reduce the use of environmentallyhazardous substances

t

7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

4,332

2015

* We completed a total switch-over from 1-bromopropane in May 2019.

2016

2017

6,766

2018

Development and sales promotion of therecycle mat “Pellemat”
year■ Waste treatment amount intensity(treated amount (t)/production sum (million yen))
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0.00

0.053

2015

0.061

2016

0.067

0.073

2017

2018

year

■ PRTR substance release and transfer amount (kg)kg

300,000

Pellemat is the name of a product we sell that is made using
the material remnants of rubber sponges produced at ourcompany. They are first crushed into chips and then hardened
into sheets. Since rubber sponges have an airy layer, the mat islightweight and demonstrates excellent thermal insulation in
addition to reasonable cushioning. Furthermore, the surface is
not slippery, which makes it the perfect work mat for factory
floors to alleviate foot fatigue while working. In this way, we arecontributing to waste reduction by utilizing what used to beunneeded material remnants that would have otherwise been
disposed of in landfills as industrial waste.

288,572
231,773

250,000
200,000

INOAC uses PRTR substances, such as tolylene diisocyanate(a raw material for polyurethane foam) as well as xylene andtoluene (used in coating processes). We are making efforts to
cut back on the amount of these substances we use, releaseand transfer, such as by promoting the use of an alternative to
1-bromopropane, which was continued to be used as acleaning agent. However, increases in production and thedemolition of old facilities resulted in having to dispose of waste
substances, raising the amount released and transferred byapproximately 8%. Output intensity remained mostly level.

4,988

5,685

150,000

175,450

188,693

2017

2018

100,000
50,000
0

2015

2016

year

Rubber sponge skins
Chips (after being crushed)(unneeded material remnants)

Product (after being formed)■ PRTR substance release and transfer amount intensity(release and transfer amount (kg))/production sum (million yen))
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0

3.549
2.836
2.068

2.040
Examples of use: work mat(to reduce foot fatigue for standing work)

2015

2016

2017

2018

year

Business places from which environment data are collected on pages 17 and 18 are shown below.
◎INOAC CORPORATION/Anjo Plant, Sakurai Plant, Nanno Plant, Yana Plant, Ishimaki Plant, Ikeda Plant, Ikeda Second Plant, Ono Plant, Jinno Plant, Ukiha Plant, Headquarters (Nagoya/Tokyo), Osaka branch◎IINOAC Housing & Construction Materials Co., Ltd./Ibigawa Plant, Kofu Plant ◎Kyushu INOAC Co., Ltd./Kikuchi Plant, Ukiha Plant, Kita-Kyushu Plant ◎Techno Foam Japan Co., Ltd./Headquarters, Saitama Plant◎Kyushu Color Foam Co., Ltd. ◎Higashi Nihon INOAC Co., Ltd.
INOAC CSR REPORT 201918

Harmony with theenvironment

Management of chemical substance information

Promoting IMDS, chemSHERPA and more

Establishment and execution of green procurement criteria

INOAC registers information on chemicals and reports it to our customers throughIMDS* 1 , especially in the automotive field, which is our main strength. We have amanagement system to obtain the necessary information via our supply chain and toregister the information into IMDS.
■ Information collection through IMDS in INOAC – reporting process and chemical management system
Component
supplier

INOAC

Components

Components list,
drawings, etc.

Communication about chemical substance management

IMDS data
Products
Composition parts
Materials

Material
supplier
Materials

In-house
database

In addition to listing chemical substances regulated by laws and regulations as well as ourcustomers, we also create a list of chemical substances that we should reduce after
understanding their content. We show the lists as green procurement criteria to suppliers
and use them to obtain information on chemical substances contained in raw materials tobe purchased.

Chemical
substances

Auto manufacturer,etc.

Chemical
substances

We are also prepared to collect information and report to our customers using the
chemSHERPA* 2 format, which is widely used in the industrial world, especially theelectrical machinery industry. (The format was changed from the previously used JAMP
format to the above).

The Global Quality Assurance Division is a company-wide organization and leader
regarding environmental management. It brings together the chemical management
sections in each department once every two months for a meeting. They review the green
procurement criteria, check the management system, establish or change operation rules,
and exchange opinions concerning the latest trends in chemical regulations, such as the
REACH regulation and RoHS Directive. They also periodically audit the management
system in each department to maintain and improve an appropriate and reliable
management system.

*1 IMDS (International Material Data System): A database for transmitting and obtaining information on materials and chemicals
over the internet for the automotive industry, which was originally developed to comply with the EU ELV Directive.
*2 chemSHERPA: A unified format to transmit information on chemicals contained in products in the supply chain,
which the Ministry of Economy, Trade and Industry took the initiative in developing.

Establishment of in-house database
The Automotive Division operates the in-house database through which information on
chemical substances contained in purchased parts and raw materials is managed in an
integrated manner. By updating this database and being able to flexibly adapt to changes
to legal regulations, we strive to improve quality, work efficiency and the reporting
accuracy of information we register in IMDS and when examining the chemical
substances contained in our products.

of regular meetings
Holding
Procurement
sections
Automotive
parts sections
Global Quality
Assurance
Division

Urethane products
sections
Rubber products
sections

Maintenance and improvementof the management system

Fintech & informationequipment sections

tions
Imple
mentation
he secof audits at each of t

INOAC CSR REPORT 201919

For improvement in value

Quality improvement efforts

Transparency of quality is necessary for global competition
The INOAC Group has implemented a comprehensive management system based on ISO 9001 to guarantee quality andprovide products and services that our customers can be satisfied with and use safely with confidence. Furthermore, we areengaged in efforts to improve quality by collaborating with our customers. In recent years, quality fraud has become a largesocial issue and trust in Japanese manufacturing is wavering. Against this backdrop, the global trend is moving toward
enforcing the transparency of product development and the manufacturing process as well as clarifying responsibility.

Basic
policyQuality that can satisfy all customers■ Zero critical quality issues■ Ensure transparency of quality

Efforts
1. Activities to prevent serious issues in advance2. Promotion of automation and IoT①Product component audit for critical quality

We are promoting automation and the use of IoT to evaluate and inspect products. This improves the trustworthiness of our evaluations
and inspections while also making them visual. By doing so, we are building a system that ensures the transparency of quality andenables us to quickly ascertain and respond to any issues that occur during the production process. Furthermore, we are utilizing thedata we collect to prevent any issues in advance. Featured here are examples of how we have brought automation and IoT into theprocesses of measurement and inspection at our production sites.

We conduct audits and guidance at our production
sites in Japan and abroad to improve quality andprevent any serious quality issues in advance that canthreaten our company’ s existence through the loss ofsocial trust.

②Quality audit of new products
We conduct audits on products created using newtechnologies, new materials, new processes or for new
purposes. Our goal is to prevent serious quality issues
in advance.

Audit members
President, Global Technology Development Division, Global
Production Management Division, Legal Affairs Section,
Intellectual Property, Global Quality Assurance Division,
department supervisor, product technology supervisor, quality
assurance supervisor, sales supervisor①Improving the transparency of quality with automation and②Improving the transparency of quality by adding IT to test

During the production process, automated measuring devices
automatically determine whether the measured production
conditions and dimensions data are acceptable or not. The
information is shown in real-time on monitors on the production
floor and in the office and is easy to understand. This allows us tomonitor product quality with a high level of transparency. The
measured data is saved onto the hardware every few seconds andthey are linked with barcodes to enable precise traceability. We areutilizing the accumulated data to manage production conditions
with the aim of improving and stabilizing quality.

We are working to integrate IT into test management with the goal of improving
quality transparency and customer trust. By linking the stock and shipment
systems to build an integrated management system, it now allows us to stop the
shipment of products that have not completed the test evaluation or those that do
not meet the evaluation standards. We can share information with various
departments on each of the product’ s test items, evaluation results, whether they
can be shipped, state of progress and so on. This will prevent the shipment of
products that are defective or have not completed evaluation, which will lead to
improving trust from our customers. Furthermore, since the test evaluation results
are inputted automatically into the computer, we can avoid human error such as
mistakenly putting in wrong data. This improves data trust and work efficiency.

IoT in the production process (measurement and inspection)

management

Audit areas
Material quality, product characteristics, product performance,
structure, exterior, comparison with similar products, productsafety, production safety, quality risks

Automated measuring device for pipes
An automated measuring device measures the outer diameter and thickness andconducts an external inspection in-line so that no irregularities are overlooked.

INOAC CSR REPORT 201920

Communication with society

Contributing to society and community 1

The INOAC Group promotes activities that contribute to society and communities through various opportunities, such as providing technical support, human resource training and support for culture and sports.

Quest Career in HaNoi
Sponsorship of a career event in Vietnam
Quest Career in HaNoi is an international event that aims toconnect Vietnamese students with Japanese companies. We
have been sponsoring and participating in this event since2017. INOAC endorses the purpose of Quest Career in HaNoi
and gives presentations to Vietnamese students about our
corporate philosophy and the history of expanding ourbusiness in Vietnam. As a global organization, we convey thebest of Japanese companies with the hope of becoming abridge that connects local students with Japanese companies.

Support for the Japan Wheelchair Basketball Federation
INOAC is an official supporter of the Japan Wheelchair Basketball
Federation (JWBF). In addition, Inoue Rubber—an INOAC Group
company—is an official supplier and supports the federation by
providing tires and tire exchange support as well as engaging in thedevelopment of wheelchair basketball tires.

photo by X-1

Joint industry-academia research with Jissen Women’s University
From September 2017 to March 2018, INOAC worked on a joint research project with students at Jissen Women’s
University. We worked with 3rd year students in the Product Design Laboratory (Prof. Tadashi Tsukahara) in the
Department of Human Environmental Sciences, Faculty of Human Life Sciences. Their second term seminar topic
was to conduct research on the development of everyday commodities that utilize sponge properties. The objective
was to design a product by thinking out of the box, unconstrained by existing products. INOAC was in charge ofproviding the materials and creating prototypes. The students conducted market research to look up existingproducts and understand market needs. They also learned about the products handled by each department at
INOAC through a presentation and about the characteristics of sponges by visiting the Higashi Nihon INOAC’s
production plant. After creating several
prototypes, giving a mid-term presentation andconducting a design review, they held a final
presentation in June 2018. In this way, we workon joint industry-academia projects to provide
practical opportunities to nurture independentworking members of society.

INOAC CSR REPORT 201921

Communication with society

Contributing to society and community 2

The entire INOAC Group works together to provide recovery and reconstruction aid in support of areas damaged by natural disasters in Japanand abroad.

Mattress donation to disaster-stricken
Sulawesi, Indonesia following the earthquake
On September 28, 2018, Sulawesi, Indonesia was struck
by an earthquake and tsunami. INOAC provided aid bysending mattresses that were produced and donated byour employees, who worked on the entire process
themselves with the desire to help their fellow citizens.

Mattress and goods donation to evacuation shelters following the Hokkaido
Eastern Iburi earthquake
In the wake of the Hokkaido Eastern Iburi earthquake, which struck on September 6, 2018, INOAC donatedcompany-made mattresses to evacuation shelters and provided essential commodities to residents living near the
Sapporo Office. In addition, on the day the earthquake struck, Tohoku INOAC Co., Ltd. immediately established a
support system and delivered goods to the affected areas through Hokkaido INOAC Co., Ltd. In this way, the entire
INOAC Group engages in contribution activities by cooperating with various locations and offices.

Support to areas affected by flooding in western JapanIn July 2018, Japan experienced recording-breaking rainfalls across the country, but which were particularly
concentrated in western Japan. Nishi Nihon INOAC Co., Ltd. provided supplies to evacuation shelters as well as cut
polyurethane foam, used for cleaning, to prevent mud water caused by the rain from flowing into buildings. By
understanding what was really needed in the disaster-stricken area, we were able to utilize our products in ways thatdiffer from how they are usually used.
INOAC CSR REPORT 201922

Producing an
employee-friendly workplace

Diversity efforts / Promoting work-life balance

Promoting female employees

Welcoming international employees

INOAC positively uses female employees and creates an environment where female employees
can contribute to the company, fully demonstrating their skills and knowledge for their work
after we bring out their potential. Every year, we hold a seminar on promoting women's
success at work, aimed at female candidates for management positions to encourage them tobroaden their perspectives and advance their careers. We also hold a seminar every year
aimed at male managers on the subject of promoting women's success at work. In this way,
we are creating a system that supports female employee success.

Work related to the enforcement of the Act on the Promotion of
Female Participation and Career Advancement in the Workplace
Following the enforcement of the Act on the Promotion of Female Participation and Career
Advancement in the Workplace in April 2016, we have been engaged in promoting women's
success at work with the three goals below. They are designed to encourage female
employees to demonstrate their potential and develop their careers in many departments overa period of five years from April 1, 2016 to March 31, 2021.

Goals❶ To raise the proportion of female subsection chiefs to that of male subsection chiefs, we will aim
to promote 10% of female candidates to the position of subsection chief this term.

❷ To find more female candidates for management positions, we will increase the proportion of
female participants in training courses for mid-grade employees and subsection chiefs to 10%.

❸ We will make the usage rate of managers' annual paid vacation equal to that of generalemployees'.

Employment of challenged persons

Users of the continuous employment system

In order to realize a society where
everyone's possibility is broadened, we
actively hire challenged persons. By
doing so, we found that employees
become more considerate toward others
and that it creates heightenedawareness.

Since January 2015, we have been actively
engaged in creating an environment in which
senior citizens can effectively put their careers
to use. We are increasing wages for employees
w h o c o n t i n u e t o w o r k w i t h u s , t h e re b y
introducing a system that makes it worthwhile
to rise to positions of responsibility.

We invite international employees working at overseas local subsidiaries to the motherplant in Japan and welcome them as trainees to improve their techniques and skills forhuman resource development. By bringing back and utilizing their knowledge andexperiences learned in Japan, localization is facilitated and globalized know-how ishanded down. We also welcome technical interns from overseas local subsidiaries.
Working at a specific production site for a certain period of time in Japan allows them toreturn home and contribute to work site improvements.

System to support balancing work and childcare
We are working to support creating abalance between work and family to havean employee-friendly workplace andp ro m o t e w o m e n ' s re m a r k a b l e w o r k .
According to the regulations regardingchildcare leave, employees are able to takeleave until the child is two years old. Special(paid) leave is also available to attend tosick or injured children: five days areprovided to employees with one child andten days to employees with two or morechildren. In addition, we offer a system of
reduced working hours, which can be used
for up to three years (available until the childfinishes third grade in elementary school).
We also institute five days of special paid
leave when a spouse gives birth to a baby.

List of systems to support balancing workand childcare (enforcement year)
Maternity leave for spouse (before 1980)
Implementation of flextime system (1990)
Regulations regarding family care leave (1990)
Happy holiday leave (1991)
Regulations regarding childcare leave (1992)
Regulations regarding measures for maternity
health management (1998)
System for paid half days off (2000)
Family support holiday leave (2005)
Sick/injured childcare leave (2005)
Regulations regarding childcare leave amended(leave period extension) (2005)
System of reduced work hours for childcare (2008)
Family care leave (2010)

INOAC CSR REPORT 201923

Producing an
employee-friendly workplace

Human resource development

Employee Education

Global HR Development

Employee Education is of fered by the Global HR Division as
opportunities for INOAC Group employees to grow and enhancetheir abilities. As part of Employee Education, 50 types of programs
are available that offer a wide range of training, from introductory
training for new employees to those for employees in management
positions. The training programs are available throughout the year. In
addition, we also offer an OJT system and support for acquiring
qualifications.

Stratified Education
The company offers Stratified Education for employees to understandthe roles they are expected to fulfill at different levels of employment
as new employees, young employees, mid-grade employees andmanagers. The programs help employees acquire the knowledge andskills necessary to fulfill such roles. Stratified Education combines abalance of awareness education, knowledge education, skills
education and management education to improve the abilities of ouremployees. Some programs include lodging training and networking
within the company.

Professional Training
Professional Training aims to provide employees with basic knowledge,
specialized knowledge and skills required for their fields of work.
Sales sections: Trainings that aim to enhance the sales skills of employees atthe beginner and medium levels.
Engineering sections: Trainings to learn about the basics of engineering (frommaterial design to formation to post-processing) and about intellectual property(such as drafting applications andconducting patent searches), etc.
Manufacturing sections: Trainings
on the basics of manufacturing,handling machinery and electricity,etc.

The INOAC Group deploys its factories and offices globally in more than 50 locations. In order to develop the human capital that isready for progress in globalization, INOAC stresses its Global HR Development activities. One such program is the Pre-Overseas
Work Training, which is held over the course of a year. Units are prepared for employees who are candidates for overseas posts on
topics such as risk management, mindset, communication and specialized education, all of which facilitate a reformed global
awareness. The training system is systematic and also includes an opportunity for candidates to listen to the experiences of senior
employees posted abroad. Furthermore, starting this year, we rolled out the new Trainee System, which allows young employees
to experience practical training abroad. With this program, we are aiming to develop global leaders at an early stage, who will go
on to fulfill central roles, whether in Japan or abroad, as intermediaries to the world.

Harassment prevention
INOAC implements the following measures against
harassment in the company.
Declaration and publication of company policy
INOAC declares the company policy concer ningharassment including sexual and power harassment.
Establishment of consultation desks
Consultation desks to address harassment in theworkplace are established in the Global HR Division ineach area on a nationwide scale. Consultation desks for
women and labor union consultation desks are alsoestablished.

Personal development
The Distance Learning Program and Qualification Acquisition
Suppor t Program are available for employees who arelooking for motivation to learn. The Distance Learning
Program offers 100 courses every year and participants geta refund of half the cost upon completion of the course. With
the Qualification Acquisition Support Program, the company
sponsors employees to take qualification exams that havebeen recognized by the regulations. Through these sorts ofcontinuous ef for ts, the entire company is engaged insupporting personal development.

In-house research on actual conditions
The Power Harassment Questionnaire is administeredannually to all employees to gain an understanding of theactual conditions.
Harassment education
All managers at INOAC are required to attend theHarassment Lecture.

INOAC CSR REPORT 201924

Producing an
employee-friendly workplace

Safety and health / Disaster prevention

Principles and basic policy for safety
Safety is the basis of the very existence of the company.
All accidents and hazards are preventable.
Safety is achieved through the awareness and responsible
action of each employee.
Based on the safety policy above, safety is prioritized above all,and this is demonstrated through action. The practice to stop,call and wait when a risk is predicted is also being followed.
Our yearly activity plans include activities organized by the
Ministry of Health, Labour and Welfare and monthly activities
that past disasters have taught us to be of critical importance.
We strive to improve the safety, health and disaster prevention
levels at all of our locations by repeating training and improving
any weaknesses we find in our safety, health and disasterprevention assessments.

Safety Practitioners Conference
1. Summary from the FY 2018 Conference①Reports on safety, health and disaster prevention activities②Statistics and analysis of disasters in the INOAC Group③Notices and changes in the Industrial Safety and
Health Act
2. Education and awareness raising to prevent
occupational accidents①Efforts to prevent occupational accidents• Kyushu and Tohoku (via TV conference)
3. Policy for FY 2019①Explanation on safety,
health and disasterprevention activities in
FY 2019②Proposals from theWork Union
Safety Conference

All INOAC safety and health committee meetings

Activities to enhance employee health

The following safety activities are led by the top
management and attended by all members of the company.

Managers are improving to enhance their skills andknowledge so that they can lead by example.
◎Establishing mental health and harassment consultation desks◎Establishing an outdoor smoking
space to separate smoking◎Reducing road surface temperature
as an environmental measure◎Organizing education and trainings
by industrial physicians and thehealth insurance association
Heat insulating pavement◎Taking preventive measures (reducing road surface temperatureby reflecting infrared rays)
against heatstroke◎Central Safety and Health Committee meeting: Heldfour times a year
◎Field inspection by officers: Held twice per year
◎Safety Practitioners Conference: Held six times per year
◎Safety and Health Committee meeting at eachlocation: Held monthly
Through these activities, INOAC enhances the company-wideawareness of safety,
health, disasterprevention and building
organizational culture. We
hold these meetings on
safety to prevent thereoccurrence of disasters. Field safety inspection by top management

Developing safety-conscious workers with
the Safety Dojo
The Safety Dojo lets employees experience work hazards
in safe settings using 15 simulators that enable theemployees to see, hear and feel the hazards. The
experience helps build a workplace capable of achieving
the zero-disaster standard by enabling the employees tobecome more sensitive
to potential hazards,
able to predict themand ensure safe work
practices.
Safety dojo (1,000 people have participated)

Disaster prevention activities
Acting under the Crisis Management Regulations helps minimize
damage by natural and other disasters and ensures early restoration.
1. Large earthquakes◎Measures to alleviate earthquake damage to buildings and facilities◎Safety and disaster prevention equipment and stockpiles
for earthquakes◎Post-earthquake response◎Stockpile of mattresses to contribute to the community
2. Measures against fires, storms, and floods◎Prevention of fires and explosions in manufacturing facilities◎Preparation and establishment of structures against storm
and flood damage◎Establishment of a weather
information distribution system
3. Disaster prevention education◎Establishment of a disasterprevention training center
Disaster prevention training center
INOAC CSR REPORT 201925

Supply chain management

Supply chain management

Procurement basic policy❶ Promotion of global procurement activities
We aim to enhance global procurement and therelationships we share with our valuable suppliers by
utilizing our domestic and overseas bases.

❷ Compliance with laws, social codes andinternal regulations
We comply with laws, social codes and internal regulations,and promote healthy and open procurement activities.

❸ Promotion of fair, just and sincere procurement
activities
We provide our valuable suppliers with fair and justcompetitive opportunities to promote sincere procurement
activities.

❹ Procurement considering the environment andhuman rights
We conduct procurement with consideration for the earth’s
environment in accordance with INOAC’s environmental
policies. In addition, we give due consideration when
dealing with the procurement of raw materials that may
cause human rights issues or social problems, such as theuse of conflict minerals.

❺ Construction of partnerships on the basis ofmutual trust with our valuable suppliers.
We construct firm relationships of mutual trust andcooperate with our valuable suppliers to maintain andimprove mutual technological capability and quality.

Optimal procurement at our bases across the globe
We contribute to the countries where our bases are located by procuring local raw materials and components. At
the same time, we also aim to build good relations with our valuable suppliers by thinking of optimal quality and cost
as well as long-term trade. Furthermore, we promote higher strategic procurement capable of responding to global
production.

Enhancement of partnerships with our valuable suppliers
Together with approximately 80 valuable suppliers, we formed the
INOAC Cooperative Assembly, where we engage in various activities.
For example, we invite representative speakers from our valuablesuppliers to the whole group presentation conference and ask them togive us presentations about the work they do to promote complianceand risk management or to share with us the work that goes on in theirsubcommittees. In this way, we aim to enhance the level of allparticipating companies, both our own and those of our partners’.

Promotion of green procurement
In order to keep up with environmental regulations that
become stricter every year, we revise the INOAC Green
Procurement Criteria on a yearly basis and promote
procurement activities that are considerate of theenvironment. In addition, we are also working to
reduce the burdens we place on the environment,such as by looking for ways to enhance loading
efficiency as a means to improve procurement
logistics.

Measures regarding conflict minerals
The Democratic Republic of Congo has one of theworld’s richest mineral resources, however, it is also a
region—along with neighboring countries—embroiled
in ceaseless warfare. Minerals produced in this region
become a source of funding for organizations involvedin human rights violations, environmental destruction,
corruption and illegal activities. Our policy is to not use
such conflict minerals, and we are working with eachof our business partners to disclose this information.

INOAC CSR REPORT 201926

Corporate governance

Governance［ Corporate governance structure］

Board of Directors

Our basic view on corporate governance
INOAC considers the improvement of corporate governance as an importantmanagement task to raise the group’s performance, value and social credibility.

Comprised of 10 members, the Board of Directors decides important issues in INOAC’s business. Eachboard member reports the execution, financial and performance statuses of his/her division, based on
which the Board supervises and controls the business executions of the company.

Executive Officer System
In order to separate supervisory and executional responsibilities, INOAC has introduced its Executive
Officer System. Each Executive Officer, endowed with his/her own authority from the Board, acts as thehead of the department, group company or major functional organization to speed up decision-making,
optimize business operations and handle critical business executions.

■ Corporate governance structure (management structure)

Board of Auditors (including outside company auditors)

The Board of Auditors is composed of three company auditors including two outside company auditors.
The company auditors attend important meetings, such as board meetings, and audit the execution ofduties by the directors by inquiring about the status of their operations on the business.

Internal audit

Audit

Compliance OfficeandCompliance Officers

Executive
Management
Committee

Associated/affiliated groupcompanies［ Internal Control System］
Cooperation

Supervision
CCO

President

Board of Directors

Appointment and dismissal

Election and dismissal

Shareholders’meeting

Business
Auditors’ Office

Board of Auditors

Control

Cooperation

Various measures are implemented to ensure that business executions comply with applicable laws as wellas the company’s articles of incorporation.

Compliance
System promoting compliance, and employee
education on the Corporate Code of Conduct.

Election and dismissal

Businessunits

Crisis Management
Committee

Information management
Management of documents with the Document
Control Procedure that defines the responsible
unit and storage period for each document.

Control structure as a corporate group
Establishment of the Associated Company Document Control Procedure for associated and affiliatedcompanies. Clarification of the execution rules and auditing by the company auditors when necessary.
Accounting audit

Accounting auditor

Risk management
The Executive Management Committee manages each risk and Crisis Management Committee meetings
are held when necessary. The Negative Information Hotline is always ready to obtain risk information
quickly and establish a response structure.
INOAC CSR REPORT 201927

GovernanceCompliance

Basic views on compliance
INOAC believes that the compliance requirement
goes beyond simply following the applicable laws
and requires each employee to act with a highlevel of ethics. In order for INOAC to satisfy its
corporate responsibilities and expectations from
customers, only following the applicable laws is
insufficient; employees must also recognize theirsocial responsibilities as part of the corporation.

Compliance and Ethics Program and Policy
The Compliance and Ethics Program and Policy
has been implemented with the Compliance Officeestablished within the Tokyo Headquarters. A
Chief Compliance Officer (CCO) to lead theCompliance Office and Compliance Officers foreach business location in Japan and overseas andeach unit have been appointed. A structure toenhance employee consciousness toward
compliance is being established with necessaryinternal regulations being developed.

Compliance education

Internal reporting system

In addition to the development of the internal regulations, an
educational program aimed to raise awareness of the compliancerequirements is provided to sales representatives, staff in charge ofprocurement, new employees and mid-career hires at all INOAC
business locations. The educational program looks at examples ofcompliance issues that occurred in other companies and conducts
case studies of how such issues could occur in one’ s own
workplace. The program also spends time discussing anyquestions that arise during day-to-day work operations. Throughthese efforts, we are working to raise each individual’ s awarenessof compliance.

Internal audits
Internal audits are conducted at each unit
and domestic group company to inspectcompliance, risk management and law
observance. Areas that are deemed inneed of improvement are tracked regularly
to raise the governance standards of thewhole INOAC Group.

In order to thoroughly enforce compliance, thecompany must act immediately if a violation occurs byany chance. To this end, INOAC has established theHelp Line through which anybody may consult withboth the legal department and the external law firm
about his/her concer n. Inter nal Reporting andWhistleblower Protection Regulations are also in placeso that whistleblowers are protected from any further
retaliation.

Negative Information Hotline
The Negative Information Hotline (consultation line) has been established so that
employees can report not just compliance issues, but also any issues regarding
product quality, safety and environment, sales, procurement and more. When such
issues arise, the company will be able to respond immediately and take measures
to prevent damages fromspreading.
Quality issues
Global Quality Assurance Division

Negative
Information
HotlineSafety and environmental issues
Safety and Health Hazard Management Section

Information on compliance
Legal Department

Information on sales, procurement and more
Corporate Planning Div.
INOAC CSR REPORT 201928

【 Inquiries 】

INOAC CORPORATION

Corporate Planning Officehttps://www.inoac.co.jp/

4F Osaki West-city Bldg., 2-9-3 Osaki, Shinagawa-ku, Tokyo 141-0032
Phone: 03-6680-8168
E-Mail: pr@inoac.co.jp