The Denka Way

The
Denka
Way

Autumn2023
Vol.17
Contents
02 Business Value Creation
Achieving Carbon Neutrality Through the Powerof Business Value-Creating Chemistry

15 A Specialist’s Perspective
16 My Vision
Denkaʼs Future as Envisagedby Each of Us

10 Achieving Non-Financial KPI Goals
Toward Achieving Non-Financial KPI Goals
Denka TOPICS
Activities of the Sustainability Committee 18

Autumn2023 Vol.17

Publisher: Corporate Communications Dept., Denka Co., Ltd.
Nihonbashi Mitsui Tower, 2-1-1 Nihonbashi-muromachi, Chuo-ku, Tokyo 103-8338
Editor-in-chief: Hiroyuki Yamamoto / Published: October 1, 2023
Unauthorized
reproduction prohibited

A sustainable
futuresupported bychemistrySpecial Feature 1

Mission 2030

Business Value Creation

For the future of Earth

Achieving Carbon Neutrality Through the Power of Chemistry.
As per its management plan “Mission 2030,” Denka will make 85 billion yen
in environmental investments over the next eight years.
In view of “Achieving carbon neutrality (zero emissions of greenhouse gas)” in 2050,
the company aims to reduce CO2 emissions by 60% by 2030 (compared to FY2013).
Denka will also realize the energy power output of 150 MW as its maximum.
This Special Feature introduces the current sustainability measures
being pursued by Denka.

Toward carbon neutrality in 2050

Establishing a low-carbon
acetylene chain and reducing
CO2 emissions
While Denka’s main products, such as chloroprene rubber and acetylene black, haveexcellent functions, a significant amount of CO2 is generated during the manufacturing
process. A “low-carbon acetylene chain,” to which technology is being newly introduced, is expected to drastically contribute to CO2 reduction.

ReduceCO2 emissions
2

The Denka Way | 2023 Autumn

Securing the necessary power forplant operations
by expanding clean energy
Denka has utilized hydroelectric power generation to run the Omi
Plant for more than 100 years. In addition, the company plans toactively introduce solar power generation at individual sites.

Clean Energy
The Denka Way | 2023 Autumn

3

With clean energy
for the next 100 years

Taking advantage of rich nature andterrain and turning them into energy
Run-of-river hydroelectric power generation takes advantage of rivers and steep terrain
to lead the waterflow of a river directly to the power plant and returns it to the original
river after generation. It is a mechanism that generates efficient and clean energy andhas less of an environmental burden without CO2 emissions. By utilizing electricity
that is permanently generated while living in harmony with nature, it contributes to therealization of a sustainable society.

Run-of-river hydroelectric power generation at the Omi Plant
The Omi Plant in Itoigawa City, Niigata Prefecture, takes advantage of the steep terrain to build and operate a run-of-riverhydroelectric power plant, utilizing energy in harmony with the environment for manufacturing purposes.

Clean Energy

Denka’s hydroelectric power generationin figures
Total power consumption by
Denka(2020 actual)

Approximately

Number of power plants*Including facilities owned by a joint
venture30

１ Dam

2 Sediment basin

4 TankRiver intake located upstream of the power plant.

Reduces water velocity tosettle pebbles and sand.

A water storage facility was
installed in the upper part ofthe power plant. For when the
power plant suddenly stops,
spill water pipes are installed
to return water, with nowhere
to go, back to the river.

5 Power station
Power is generated through rotation of the water turbine. Generated power is supplied to various parts of the plant using a powerline via a transformer substation.

%

17

Transformer
substation

plantsPower line

When converted to power consumption ofgeneral households
Approximately

180,000

households

Spillwater pipe

3 Conduit

Maximum amount of power generation

140,000

Power output by domestic
manufacturers

Denka Shin-Omigawa Power Plant

2kW

nd position

Though power output fluctuates withthe flow of the river, costs and environmental burdens can be kept to aminimum with the run-of-river system.

Differences in hydroelectric power
generation methods

Inside Shin-Omigawa Power Plant's Aqueduct

4

The Denka Way | 2023 Autumn

Waterway to lead water fromthe dam to tank.
Fishway
A fishway, set up at the side of thedam, is a path for fish swimmingwith the flow of the river. For morethan 100 years, Denka has introduced a system that is consciousof the impact on nature and theorganisms that live there.

6 Waterdischarge
Penstock pipeline

Clean energy is an importantmanagement resource for Denka
Yutaka Saito
Sustainability Promotion Department

Construction/
Maintenancecosts

Amountof power
producedPowergeneration
cost

Stablesupplycapability

Environmental
burdenRun-of-river

Small

Small

Small

Small

Small

Reservoirsystem
(dam)

Large

Large

MediumMediumLarge

From various viewpoints, such as the rationalization of energy use and the reduction of environmental burdens and power costs, clean energy is an important management resource for
Denka. The company will promote improving power generation efficiency with the renewalof existing hydroelectric power plants and the introduction of solar power generation at
individual sites. In addition, in response to the medium- and long-term, initiatives toward the
expansion of renewable energy will be accelerated mainly through the construction of newhydroelectric power plants and feasibility studies of wind and geothermal power generation.

Water reaching the tank flows
down to the power plant via
the penstock pipeline.

Water used for power generation is returned directly to theriver from which it was taken.

Maintaining stable operations of
power plants to pass them on to thenext generation
Hisashi Sato
Hydroelectric Power Section, Electric Power Department,
Omi Plant

Power generation, transmission and distribution facilities, in addition to their construction
and operation technologies, have been cultivated over 100 years since the foundation of
Denka. The electric power available from 17 hydroelectric power plants currently accounts
for about 30% of total power consumption by Denka. By continuously protecting andstably operating existing power plants built by senior employees, Denka will continue withbusiness activities based on clean energy. In addition, the company will also study the introduction of the latest maintenance technology that can be applied for the next 100 years.
The Denka Way | 2023 Autumn

5

Toward establishing a low-car bonacetylene chain

Achieving carbon neutrality by converting to a manufacturing method to pr oduce acetylene
and hydrogen from methane

To reduce Denka’s CO2 emissions, it is essential to take measures that suppress CO2 emissions generated during the carbide process, which
account for a large portion of total CO2 emissions. Through joint research and the introduction of facilities with an American venture company,
Transform Materials, which has outstanding technology to realize low carbonization in acetylene production, Denka is addressing the challenge
of a drastic reduction in CO2 emissions and also the commercialization of the technology.

Acetylene production process

By-productHydrogen
New manufacturingmethodTechnology to
produce acetylene
and hydrogen frommethaneIonization
MethaneMicrowaves
Utilize the electricity
generated by thehydroelectric plant(M-to-A technology)

02

Reduce CO2EmissionsM-to-A
Q&A
Q

What is M-to-A technology?

Methane (hydrocarbon such as natural gas, LP gas, etc.) as a raw material isionized by using microwaves to decompose it into acetylene and hydrogen.
Acetylene and hydrogen of a 4:1 weight ratio are produced.

M to A

Decomposition
furnace

Acetylene
blackQ

Why was Transform Materials selected asa partner?

The main reason is that because the company is developing a manufacturingmethod to produce acetylene at a high yield rate using a highly unique technology

Acetyleneof plasma and taking advantage of easy-to-procure methane as a raw material.
In addition, the fact that valuable hydrogen is generated as a by-product isHydroelectric power
generation

Current
manufacturingmethodCarbidemanufacturing
technology

considered a great advantage, as it will offer a wide range of alternatives for

Chloroprenerubberutilization in future carbon-neutral measures.

Q
Calcinedlime
Limestone

CO₂

By how much will implementing M-to-A
technology reduce CO2 emissions?

The amount of CO2 emissions originating from the raw materials in the
CokeElectric furnace

manufacturing process is expected to be reduced by a little more than 300,000

Carbidetons. The extent of the impact is about 10 to 15% of the 2.47 million tons of CO2
emissions produced in 2013. In addition, it is anticipated that, depending on how
the hydrogen by-product is used, it may be possible to further reduce emissions,and there is a plan in place to establish effective measures in R&D in the future.

As Denka targets a 60% reduction of CO2 emissions in 2030 and carbon neutrality inTransform Materials, with which Denka concluded an agreement on joint research

2050, it is inevitable that the company takes measures to reduce CO2 emissions in theand the introduction of demonstration facilities, owns acetylene manufacturing facilities

manufacturing of carbide raw material used to produce acetylene, which is one of theas well as a technology to ionize hydrocarbon using microwaves to produce acetylene

main causes of CO2 emissions.

and hydrogen. The period of joint research will last until the end of 2028. In addition,

The company aims to newly develop a methane-to-acetylene (M to A)
manufacturing technology where methane (hydrocarbon) is ionized using microwaves

with 2026 as a target, Denka will introduce demonstration facilities to explore thepossibilities of actual implementation.

to produce acetylene. All of the raw material used in this process, hydrocarbon, istheoretically converted to acetylene and hydrogen, leading to a drastic reduction in theamount of CO2 emissions. In addition, the utilization of hydrogen as a by-product isalso expected. In the manufacturing process of the acetylene used for Denka’s main
products, such as chloroprene rubber and acetylene black, it is important that thecompany reduces CO2 emissions to meet customer and social needs. It is anticipatedthat this new manufacturing method will reduce CO2 emissions by 300,000 tons(including the conversion to the new method and hydrogen as a by-product).
6

The Denka Way | 2023 Autumn

Signing ceremony between
Denka and Transform
Materials on May 23.
Mr. Takahashi, Senior
Managing Executive Officer,
Denka (left) and Rachelle
Goebel, CEO of Transform
Materials at the time ofsigning (right)

Granted a maximum subsidyof 3.3 billion yen
On August 8, the New Energy and Industrial Technology Development Organization (NEDO)
officially decided to grant a subsidy to Denka’s technological development initiative toestablish a low-carbon acetylene manufacturing technology. This action is in responseto the certification received from the Ministry of Economy, Trade and Industry on June
16 as a “Supply Security Plan for Storage Batteries.” Of the project’s total 6.7 billion yen
cost, 3.3 billion yen will be subsidized. As ultra-high-purity acetylene black has a highconductivity property, its demand is expected to rapidly increase as a key material to support
electrification of mobility and higher performance of storage batteries. The establishment of amanufacturing method to secure acetylene as its raw material with low environmental burden
and stability matches the Japanese government’s strategy to expand the domestic supply
chain of storage batteries.

Q

From where will the methane be supplied?

Though plans are not yet fixed, Denka assumes it will continue to procure naturaland LP gas from the gas company that is currently supplying Denka. However,there is also a plan to diversify the source of raw materials by, for example,
producing methane in-house through methanation (technology that combines CO2
and hydrogen into methane) using the hydrogen produced as a by-product of thistechnology in view of collaborating with other companies.

Q

How will the hydrogen by-product beutilized?

In the M-to-A manufacturing process, a large amount of hydrogen is generated
as a by-product. Denka will proceed with the study of the low-carbon acetylene
chain as a business while exploring the possibilities of new businesses based onhydrogen.
The Denka Way | 2023 Autumn

7

Toward demonstration tests of
low-carbon acetylene chain
Introduction of facilities to the Omuta Plant

For the environment
in the next 100 years

With 2026 as a target, Denka will introduce M-to-A demonstration facilities to the Omuta Plant,
proceeding with the demonstration of manufacturing technology and technologicalimprovements toward mass producing acetylene.

The methane-to-acetylene (M-to-A) manufacturing

the implementation of a low-carbon acetylene chain.

technology use to ionize methane (hydrocarbon)

First of all, how should Denka, who does not haveand produce acetylene is an innovative technology

know-how about ionization, handle highly reactivethat reduces CO2 emissions and generates a large

acetylene safely and at an industrial scale? The

amount of hydrogen as a by-product. Denka wascompany will implement a comprehensive review ofgranted a subsidy from the Ministry of Economy,

the establishment of in-house safety conditions.
Another important challenge is the reduction ofBatteries” to introduce demonstration facilities. As the

manufacturing costs of acetylene. Based on the facttechnology contributes to the plan’s objective, “Supply

that the implementation requires a huge investment

Security Plan for Storage Batteries,” it was decided toand that it is a technology powered by electricity,

build demonstration facilities with an annual production

whose cost is soaring recently, it is crucial to build aof 1,600 tons at the Omuta Plant, which is also a

cost structure that enables business to continue under

manufacturing base for acetylene black. The facilities

rising power costs and that is strong against external

are scheduled to start operations in 2026.

environmental changes.

There are many challenges to be solved toward

Reduce CO2Emissions
Using Denka’s technology tocontribute to carbon neutrality
in Japan
Soichiro Nakanishi
Sustainability Promotion Department

With the shift to M-to-A technology forwhich has low-carbon acetylene technology, formanufacturing, the amount of CO2 emissions

technological improvements.

can be reduced drastically compared to the8With the early establishment of the M-to-A

conventional method. In addition, depending

technology, I expect that Denka will not only

on how the hydrogen by-product is utilized, it

exert its presence in the acetylene black andmay offer the possibility for Denka to advancechloroprene markets but will also become

into the greening business. On the other hand,a company that plays a part in the carbon

implementation is expected to require a large

neutralization of Japan in cooperation with

October
2019

Susumu Kuwana
Head of the Sustainability
Promotion Department

The Sustainability Promotion Department is in charge of tackling growing global environmental (“E”
in ESG) issues. As a general chemical manufacturer, Denka uses a large amount of energy for its

October
2020

High-efficiency gas turbine generators completed
at the Omi Plant

January
2021

Brought Shin-Omigawa Power Plant (Itoigawa,Niigata Prefecture) online

September Concluded an ESG/SDGs-Linked SyndicatedLoan agreement with Sumitomo Mitsui Banking
2021
Corporation

production activities and assumes a heavy responsibility in the realization of a sustainable society. The
company recognizes that to continue business activities for more than another one hundred years,
the promotion of countermeasures for environmental issues is essential. In order to manufacture andJanuary2022

Decided on the construction of a chemical recycling plant for polystyrene resin

January
2022

Submitted a proposal to NEDO’s “Development ofTechnology for Producing Concrete and Cement
Using CO2” green innovation fund project as aconsortium member, which was duly adopted

March
2022

Concluded Mizuho Positive Impact Finance Agreement with Mizuho Bank, Ltd.

April
2022

Shin-Himekawa No. 6 Power Plant (Itoigawa,Niigata Prefecture) started commercial operations

June
2022

Consortium, whose leading firms are Kajima,Denka, and Takenaka, for a NEDO Green Innovation Fund Project, “Development of Technology
for Producing Concrete and Cement Using CO2,”
kicked into gear

June
2022

High-efficiency gas turbine generators completed
at the Chiba Plant

July
2022

Participated in “WIPOGREEN” a global platform
for environment-related technologies, as a partner

November
2022

Announced sustainability measures for management plan “Mission 2030” in addition to 2030 KPIs

May
2023

Concluded an agreement for joint research andintroduction of demonstrations with Transform
Materials toward the establishment of a low-carbon acetylene chain

supply materials that are valuable to society in an eco-friendly manner, Denka positions the “pursuit ofsustainability” as its most important theme.
Since the time of its foundation, Denka has taken advantage of hydroelectric power generation at
the Omi Plant. As illustrated by the recent introduction of high-efficiency gas turbines at both the Omi
and Chiba Plants and the installation of solar power generation facilities at individual sites, the company
has continuously addressed activities to save energy and reduce environmental burdens and, in doingso, has accumulated various achievements.
However, it is impossible to realize carbon neutrality as an extension of conventional efforts. It isnecessary to review how business management and production activities should be from the groundup and from new perspectives. The first initiative in introducing innovative technologies is the study of
implementing M-to-A conversion. In addition to this, Denka is addressing the expansion of the use ofrenewable energy, non-fossilization of purchased power, reforms of business portfolios that are consistent with “Mission 2030,” etc., and plans to achieve the current target of a 60% reduction of greenhouse gas (GHG) by 2030. In order to promote emissions reductions over the life cycle of products ingeneral and not just those from in-house sites (Scopes 1 and 2), the company pays strict attention to
Scope 3, aiming to develop technologies and products that contribute to reductions in environmental
burdens, in addition to cooperating with companies across the entire supply chain.
Furthermore, toward the realization of carbon neutrality in 2050, Denka will promote the introduction of innovative technologies, such as fuel conversion to clean energy (hydrogen, ammonia, etc.) atthermal power plants, installation of CO2 separation and recovery facilities at individual plants, and thedevelopment of chemical synthesis technology using recovered CO2 as a raw material. To acceleratethese initiatives, the company is also exploring the possibilities of efficient inter-industry cooperation.
It is very much expected that each and every employee thinks about environmental friendliness ininvestment. For this very reason, Denka con-neighboring companies as well as other com-their own fields and participates in these initiatives so that Denka will be able to establish a firm posi-cluded an agreement with Transform Materials,

panies developing a greening business.

tion as a pioneer in the environmental field and continue to contribute to society in this field in 2050.

The Denka Way | 2023 Autumn

Sustainability Promotion Department established.
Accelerated initiatives toward environmental
issues, such as the support of international frameworks on climate change issues

September Announced Denka’s support of Task Force on
Climate-related Financial Disclosures (TCFD)
2020
proposals

Realizing carbon neutrality with new ideas notextended from conventional methods

Industry and Trade’s “Supply Security Plan for Storage

Major eco-friendly initiatives since
the establishment of the Sustainability
Promotion Department

The Denka Way | 2023 Autumn

9Special Feature 2

Mission 2030

Achieving Non-Financial KPI Goals

Toward Achieving Non-Finan cial KPI Goals*1

Activities of the Sustainability Committee
To meet the objectives of management plan “Mission 2030,” it is important to achieve non-financial*2 KPIs.
In April 2023, Denka established a Sustainability Committee to discuss the progress of non-financial targets and KPIs of the Head
Office administrative departments and five business divisions, responses to risks, and earnings opportunities as well as to makeproposals for achievements. This article describes the purpose of this committee and the goals it is working to achieve.
*KPI: Key Performance Indicator*Non-financial information: ESG management information that is not indicated in financial statements and will be the source of future earnings and success, including corporate
management strategies, challenges, and risks as well as initiatives pertaining to ESG and sustainability.

ESG management promotion structure
General Meeting of Shareholders
Nomination and Remuneration
Advisory Committee

Audit Committee

Board of Directors
Execution of business

What is the Sustainability Committee?

Accelerating effective ESG management

Management Committee

Sustainability Committee

Portfolio Transformation Committee

Directly reporting to the Board of
Directors as an organization
within the executive division

Various committees/Business execution organizations

Upon the receipt of activity status reports on non-fi-

Non-financial KPI goals in management plan “Mission 2030”

nancial targets from the Head Office and individual
business divisions, the Sustainability Committee
deliberates on risks and business opportunities fromthe perspective of ESG and directly reports to theBoard of Directors, which is the highest management

CO2 emissions(compared to FY2013)

60 % reduction

Investment in process
reforms(FY2023–2030)

50 billion yen

Maximum output ofrenewable energy power(FY2021: 133 MW)

150 MW

Number of high-risk
suppliersand operate sustainability management in general

KPIs is not the real objective. It is necessary to pay

tions of opinions by the Board of Directors.

within the executive division, it is expected that aattention to the processes that achieve the targets andculture of effective sustainability management morethink carefully about what values can be offered to all

closely linked to businesses will be cultivated.

stakeholders after satisfying the KPIs.” The content ofThe background of its establishment is therequirement to improve on responses to sustainability

Visualization and ongoing
improvement of engagement
Managerial positions occupied
by women, foreign nationals,
and mid-career hires

issues of public companies in recent years. In theTokyo Stock Exchange’s Corporate Governance
Code, revised in June 2021, as well as the Financial
Services Agency’s Guidelines for Dialogue Between
Investors and Companies, public companies are re-Pay attention to not only the
figures but also
the processes of KPIs
Committee meetings are held five times a year

0

Rate of lost-worktime
injuries (FY2021: 1.1)

Number of serious complianceviolations

0

50 %

a meeting the following month, on August 7.

Toward being a leader ofsustainability management

after the Board of Directors meetings. The admin-

Non-financial targets set forth in management

the Board of Directors or on the side of management.

istrative divisions plan to report twice a year, whileplan “Mission 2030,” are reflected upon those of

The committee is to actively and positively deal withthe business divisions do so once a year. The firstindividual organizations and employees. Denka

challenges pertaining to sustainability while improving

committee meeting was held on July 10. On thisconsiders that when the efforts of each employee

the quality and quantity of information disclosures withmeeting, two groups, namely Compliance/Internalin terms of safety, environment, quality, governance,awareness of the impact from sustainability risks andControl and Human Assets/Processes, presented

etc. are properly evaluated, thereby creating businessearnings opportunities as well as consistency with

reports. During the discussion on human assets, there

opportunities on the basis of sustainability challenges

management strategies and challenges.

was a debate on Denka’s competitiveness in terms ofand improving the control of management risks, it will

In management plan “Mission 2030,” Denka set

mid-career human resource recruitment and compli-

lead to the growth of the entire group.

targets of non-financial KPI’s for the first time. Follow-

ance education. A member of the committee madeing this, by establishing an organization to manage

a point by saying, “Just pursuing figures assigned to

The Denka Way | 2023 Autumn

Number of cases of serious quality
accidents

deliberation was reported to the Board of Directors atquired to establish a committee on sustainability under10

Identification of human rights risks andestablishment of response processes

0.2or less

Double0decision-making body. It assumes a role to reinforce
the supervision of ESG management and the reflec-

Average training costs(compared to FY2021)

Sustainability Committee members[Chairperson]
President[Assistant Chairperson]
Officer in charge ofcorporate planning[Committee member]
Officer in charge of the Head
Office administrative division[Observers]
Chairperson, Audit Committee Member,
Outside Directors[Secretariat]
Corporate Planning
Dept

Deliberation process
Administrative division andfive business divisions

Sustainability Committee
meetings (five times a year)

Board of Directors

Information disclosure

Reports on progress and status ofactivities toward achieving nonfinancial KPIs

Deliberating reported content andmaking proposals

Results of discussions are reported
in the month following a Sustainable
Committee meeting

Reports on the basis of financial results forthe full year; information disclosure throughintegrated reports and on the Internets

The Denka Way | 2023 Autumn

11Discussion Themes of the S ustainability Committee
The Sustainability Committee divides the themes it deals with into five groups andCompliance & internal control

officers and the heads of individual divisions and departments compile reports.

Individual departments’ strategies
to achieve non-financial KPI goals
In this article, with regard to the actual content of activities and their progress, theheads of six departments discuss strategies toward achieving targets and their enthusiasm about meeting KPI goals.

FivethemesBusiness divisions

Human resource development, DE&I,

Human resources &processes

Safe environments

Targets

The Denka Way | 2023 Autumn

and work style reforms

Number of seri ous compliance violations

Targets0

Average training
costs

DoubleEmployee engagement

Ratio ofmanagers

50%

Mission 2030
policyProcess reforms and productivity
improvements

Targets

Investments in process
reforms

50 billion yen

Legal Dept.

Internal Control Dept.

HR Dept.

Production & Process Technology Dept.

Progress report items

Progress report items

Progress report items

Progress report items•Human resources development (average training costs)•Investment in process reforms and labor productivity•Improvement of the internal control framework
within the GroupStrengthening compliance activities throughout the Denka Group

Promoting education to process
ownersIn this fiscal year, the Legal Dept. is proceeding withinitiatives pertaining to compliance and risk management,
mainly involving the formulation and maintenance of thegroup policy and its dissemination and education, education in labor law observance and harassment prevention,and the strengthening of the compliance system forexport-related laws and regulations. As for complianceeducation for all Group companies, the department plans torevise the Standards of Business Conduct leaflet, conduct
relevant training at main business bases, and check theextent of absorption by conducting e-learning. Regarding
the operation of the whistleblowing system, the department
promotes the enhanced dissemination of the system,
disclosure of processing results, support and follow-up for
those nvolved in whistleblowing, and initiatives to improve
the skills of internal points of contact and investigation staff.

The Internal Control Dept. aims to achieve a target of
implementing the internal control framework (FW) at all
Group companies by 2030. To achieve this goal, it isnecessary for the head of each internal control process(process owner) to understand control requirements
and assume risks more effectively, so explanatory
videos for each process have been prepared and madeavailable for viewing. As such improvements often takeapproximately a year to implement, the Internal Control
Dept. is engaged in shortening the time and promoting
the efficiency of, for example, the FW and current statues
gap analysis stage, which especially takes a lot of time.
In FY2022, improvements were finished at five sites
with plans to complete improvements at five more sites
this year.

•DE&I (ratio of females/foreign nationals/mid-career hires, childcare leave acquisition rate of men)
•Health and productivity management and work stylereforms (employee engagement, overtime, percentage of employees taking paid holidays, telework
rate, heath and productivity management index)

Investments in human resources
and system reforms
This fiscal year, the HR Dept. is considering new development
programs for newly employed human assets in order tobuild an education system that is common for all companies
and cultivate a culture of autonomous learning. As for the ratioof females, foreign nationals, and mid-career hires in managerial
positions, Denka is actively recruiting employees who will make up
the population. In regard to the visualization and ongoing improvements of engagement, the results of the employee awarenesssurvey conducted in April were visualized and disclosed and willcontinue to identify issues to make continuous improvements.
Toward a reduction in the number of smoking employees, various
guidelines, such as a no-smoking day and improving support toquit smoking, have been decided on this fiscal year.

To improve labor productivity
In order to continue production activities with limited
human resources, the Production & Process Technology
Dept. fully utilizes digital and robot technologies, strives
to change the organization by drastically reforming
existing processes, and carries out initiatives to improvelabor productivity. This year has been allocated tounderstanding the current status, selecting business(plants/products) whose processes require reform withpriority, and ranking them according to where Denka’s
limited resources should be focused. In addition, thedepartment will realize the sharing of a corporate-wideawareness of technology by rolling out process innovation technologies (81 themes in six fields), which were
established with a small start in the previous management
plan company-wide. In addition, progress is confirmed
and information is shared through process reform study
meetings held for individual plants.

Michiaki Watanabe

Tetsuya Moriguchi

Akinori Adachi

Kazuyuki Yubune

General Manager

General Manager

General Manager

General Manager

In the Legal Dept., we consider ourselves to be missionaries
of fair play, leading the company in the proper and healthy
direction. All members of the department understand theneed to improve the quality and reliability of legal affairs, work
to solve various issues facing the company, and contributeto strengthening the management base and enhancement of
the non-financial value of the entire Denka Group.

12

Mission 2030
Health and productivity management,
policyEnhancement of cor porate governance•Compliance & risk management•Compliance education for all Group companies•Whistleblowing system operations

Compliance &internal control

Supply chain

Mission 2030
policyHuman resources & processes

There are efforts in place to increase the number of staff incharge of promotion at overseas regional holding companies
and our department’s Internal Control Promotion Office toaccelerate introductions and improvements, while focusing
on the education and training of staff in charge as a means
to improve the quality of work. In addition to actively utilizing
digital technology to share and disseminate information andimprove the knowledge management of our members, wewill work systematically and continuously on learning with theaim of becoming a trusted professional group.

Under the policy of “Human Resources Value Creation,”
the HR Dept. is working toward being a company where
each employee can really sense their own growth by setting
up non-financial KPIs for human resource investments
and system reforms. To realize “Mission 2030,” there aremany obstacles that cannot be overcome with conventional
approaches or ideas. I believe that even if I cannot dosomething on my own, things can be achieved when united
and working together.

Due to a declining birthrate and an aging population, theworking age population (15–64 years old) in Japan will
drastically decrease to 68.75 million people (92% compared
to 2022) in 2030. Process reforms (initiatives for improving
labor productivity) are imperative to achieving sustainability.
With all people involved working together, there are efforts
in place to achieve non-financial KPIs with common understanding and a sense of speed.

The Denka Way | 2023 Autumn

13Design of Low-Dielectric Macromonomer (LDM) and its market development

A Specialist’s

Supply chain
Mission 2030
policyNumber of serious quality
accidents

0

Targets

Placing the utmost priority on safety
and environmental conservation & minimization of environmental burden

Rate of occupational injuries

0.2 or under

Quality Assurance Dept.

Environment and Safety Dept.

Progress report items

Progress report items•Integration of quality control systems and enhancement of control standards

Futureaction plan
The results of initiatives for non-financial KPI goals are scheduled
to be disclosed in the financial
results announcement of FY2024.

•Rate of occupational injuries

The status of achievements will be•Occupational safety & security disaster prevention
education

explained in the integrated report•Continue with zero waste emissions

What kind of future do on-site specialists anticipate based on Mission 2030?

Targets

Safety & environment
Mission 2030
policyProduct safety

Perspective

Individual departments’ strategies to achieve non-financial KPI goals

and other formats.
As for operations of the Sustainabil-

Product safety and complianceobservance

Focusing on securing safety andzero waste

In order to deliver reliable products and services andcontribute to the sustainable growth of society and theenvironment, the Quality Assurance Dept. has set a targetof zero serious quality accidents and is improving quality
control processes and enhancing control standards
utilizing its quality control system as a foundation.
The department established quality monitoring guidelines
as a mechanism to improve quality control processes
and raise standards of the entire Group and started
operations. To enhance control standards, the department
has been working on the establishment of complaint
management and chemical substance control systems
utilizing digital technology under a three-year plan.

The current occupational accident frequency rate is around1.0. A key issue is how to prevent the labor accidents
of inexperienced employees and staff from affiliate companies. The Environment and Safety Dept. heralds five key
items, such as essential safety and improved education, in
promoting safety activities. Additionally, the department exchanges opinions with on-site leaders to plan and executeeasy-to-understand and more effective activities.
The department is also focusing on the continuation ofzero emissions, which is an effective global warming
prevention strategy (continuing with 1% or less of final
waste disposal volume). In consideration of the abolition of
cement kilns in 2025, the department is aiming to reducethe volume of generated waste by improving various production processes and the sorting of waste for valuables.

ity Committee, it is being considered
to promote it into a consultative
committee of the Board of Directors and to reflect feedback fromexternal experts, aiming toward a
structure that can be evaluated as
top-class sustainability management.

Exploring the Possibilities of LDM to Prepare for a World of
Next-Generation High-Speed Communication Technology,
including 5G and 6G
Jun Takahashi
General Manager

In response to improper actions, such as a third-person
authentication, that were revealed in May and under the instructions of an external investigation committee, work is conducted on the confirmation of facts, identification of similarcases, and the planning of recurrence prevention measures.
All people involved with quality assurance come together
to seriously reflect upon the improper actions, identify theiressence, and review quality assurance activities, eliminating
serious quality accidents and enhancing compliance.

14

The Denka Way | 2023 Autumn

LDM (Low-Dielectric Macromonomer)
Product name: SNECTON
As a low-dielectric, heat-resistantcurable resin, this product is expected
to be used in 5G and 6G electronic
circuit boards.

Hiroki Yamamoto

It is said that the fifth generation mobile communication

gained during approximately 25 years of fundamental

General Manager

system, 5G, will revolutionize our society. The issue toresearch and with the support of young researchers, Araiaddress in preparation for its growing popularity is theaims to develop LDM with excellent functionality. Speedy

performance improvement of electrical equipment anddevelopment is essential, especially in a world of 5G andterminals that receive radio waves. Denka’s Low-Di-

6G. He strives to promote LDM development by gaining a

Toru Araielectric Macromonomer, LDM, developed using ourbroad and accurate understanding of user needs, improv-

coordination polymerization technologies, are attracting

ing experiment efficiency, and utilizing external resources.

Business Promoting Dept.
Electronics & Innovative Products

I hope to achieve the target occupational accident frequency
rate ahead of schedule, before 2030. Our department aims
to maintain zero waste emissions at a high-quality level. For
both safety and the environment, a system will be createdfrom a holistic perspective, clarify what needs to be done asa corporation, and plan and promote more effective activities.
In line with this, good, successful external practices andcutting-edge digital technologies will be incorporated.

attention as a possible solution.
Arai of Electronics & Innovative Products is involved

Arai is confident that no matter the new field, Denka
will be a world-leading company in four years if devel-in the design of LDM, including next-generation LDM,

opment is efficient. Everything Denka does is to realize a

its market development, and the education of humanbetter society. “My future dream is that LDM will be theresources. Leveraging the abundance of knowledge hestandard material for 5G and 6G.”

Specialist

Joined Denka in 1989. Worked in fundamental research
for many years and is now the leading expert on Denka’scoordination polymerization technology. Is involved in thedevelopment of LDM, next-generation products, and themarket, exploring new themes.

The Denka Way | 2023 Autumn

15Vol. 03
New Visions

All Denka
Employees

My Vision“

Denka’s Future as Envisaged by Each of Us

We will ask employees from various positions, generations, and workplaces about
the future they envision for Denka, changing the theme in each issue.

Someonewho always
takes on new
challenges

Continuous
value creation

Rio Miyoshi

Aluminum Production Sect., Production Dept. 4
Omuta Plant

Electronic Products Dept., Electronics & Innovative
Products
Shibukawa Plant

Createinnovation

Connect Denka’s
technology with

2 :What kind of specialist do you aspire to be?

”Connect
people andproducts

A determined
person withan inquisitive
spiritJunya Nitta

P a r tBe caring
and autonomous

Ayaka Okawara
Polymer Processing Research Dept.
Isesaki Plant“Motivator of
Responsible
Practices”

Yuji Saito
Chief, Gosen Site

Mika Takagi

Hinano Inaba

Environmental Material Sect.
Fukuoka Branch

Environmental Material Sect.
Sapporo Branch

Actively improve,
strive to advanceWork with care
and always
be willing to
improvethe world

To always
care aboutothers

Improve myworth, and thenimprove it more

Hiroaki Fujisawa

Seiya Tomizawa

Tohoku Sales OfficeDenka Chemicals G.m.b.H

Romy Töpfer
Site Manager
Icon Genetics G.m.b.H

Make persistent,
positive effort

A person who
continues to takeon challenges,
grow, and improvevalue!

“Technology
innovations
for a better
society”

Lanzhu Zhao

Xiling Tang

Jiannan Li

Denka Inorganic Materials (Tianjin) Co., Ltd.

Denka Electronics Materials (Dalian) Co., ltd.

Denka Advanced Materials (Suzhou) Co., Ltd.

Realize new
possibilities“Leader ofthe way in theconstructionindustry”

Bairu Qian

Huan Yao

Jiajun Li

Kim Sewha

Denka Chemicals Development Suzhou Co., Ltd.

Denka Chemicals Shanghai Co., Ltd.

Denka Taiwan Corporation

Denka Korea Co., Ltd.

16

The Denka Way | 2023 Autumn“An inspiring
person to
motivate others”

Lenice Png Yi Zhen
QC
Denka Singapore Pte. Ltd. (DSPL)Mark Yves Own Lauresta
Technical Dept.
Denka Construction Solutions Malaysia
Sdn. Bhd.

The Denka Way | 2023 Autumn

17Introducing Denka Group news topics from June to August 2023.

TOPICS

Pick Up
Jun.

June

6- 8
June

Denka joined COMNEXT(Next Generation Communication Technology &Solutions Expo)Aug.
From theperson inchargeYuya Matsui
Advanced
Specialty Materials Dept.

At this year’s COMNEXT, over 500 people visited Denka’s booth. Denka is happy to have had
the chance to socialize with customers at this event, which acted like a venue for proposing
next-generation materials. Additionally, the customers showed an interest in Denka’s products
and made requests of the company, which Denka will use in future activities.

The 164th ordinary general meeting ofshareholders held

Signed as an official sponsor of
the Fukuoka Softbank Hawks

On June 22, the 164th ordinary
general meeting of shareholders washeld at Nihonbashi Mitsui Hall. It was
attended by 82 shareholders andbroadcasted live on the internet. As
President Imai, chairman, expressed
his condolences for the accident at
the Omi Plant and his determination
to prevent the reoccurrence of a similar accident, he also shared the business
report and issues that should be addressed. After explaining Management Plan
“Mission 2030,” which was implemented this fiscal year, President Imai voiced
his apologies for the quality issue of resin products and the Omi Plant accident,
as well as his resolve to do all he can to prevent its reoccurrence. Following
this, all proposals on the agenda were approved and passed as drafted.

Denka concluded a contract tobecome an official sponsor of the
Fukuoka Softbank Hawks. From
July 2023, signboards featuring thecompany name were posted at the
FUKUOKA PayPay Dome home stadium (Fukuoka City, Fukuoka) andthe home stadium of the Hawks’ second team, Tama Home Stadium Chikugo(Chikugo City, Fukuoka). Denka’s long, deep connection with this local region,in which Denka’s Omuta Plant (Omuta City, Fukuoka) is manufacturing products
for ICT & Energy, one of the core fields of “Mission 2030,” and the Fukuoka
Branch resides, is what ultimately led to the conclusion of this contract.

Jul.
Inside Denka’s booth

OMNEXT (formerly the 5G & 6G Expo),
an exhibition of next-generation communication technology where companies exhibit 5G/6G materials, next-generation
communication solutions, optical communication
technology, video transmission/8K technology,C

A close look at the secret story behind the development of
LDM: a revolutionary material
gathering attention from thenext-generation communicationand semi-conductor fields
LDM (SNECTON) is a thermosetting resin
developed using Denka’s proprietary coordination
polymerization technology. It is expected to be
used in antenna materials, insulation materials inpackages (material that insulates electricity andprevents it from flowing into circuits other thanthe ones necessary), and circuit boards that areused for 5G and 6G and require excellent low-dielectric properties (a characteristic necessary
for high-frequency electrical signals to transmit
accurately and without attenuation) due to it
being composed only of carbon and hydrogen.
There were various issues on the path to developing LDM. From 1996, coordination polymerization technology, the basis of LDM synthesis,
was originally being developed for thermoplastic elastomers use in medical tubes, interior
automotive materials, etc. However, development

18

The Denka Way | 2023 Autumn

and other related products and technology, washeld at Tokyo Big Sight from June 28 to 30.
Over the duration of this year’s 3-day event,there were 13,625 attendees.
This year, Denka introduced the functions ofdielectric control fillers, SNECTON (low-dielectricmacromonomer (LDM)), and SNECTON & Silica
Slurry from the Advanced Specialty Materials
Department and LCP Film from the Business
Promoting Department. At the booth, Denka
proactively asked customers about their needs andgathered details on what new products they want.

We asked two people about the secret story behind the development of
next-generation LDM and its market.
Business Promoting
Department
Electronics & Innovative
Products

Toru Arai

stopped in 2015 due to cost balance issues. The
exploration of its use as a resin additive, solar
battery materials, and more was occurring in parallel with its development, but no cost advantage
over competing products could be found.
Everything turned around in 2018. During
this time in which communication technology is
expanding and the need for high-performance
circuit boards for high-speed communications is
growing, we at Denka believed we could meetmarket needs by utilizing Denka’s coordination
polymerization technology and restarted development in 2018. Conventionally, LDM was athermoplastic resin that got soft when exposed toheat, but Denka morphed it into a thermosetting
resin so that it could be used in the circuit boardsof advanced communications. The company also
further promoted its low dielectric properties. The

Group Leader
Advanced Polymer
Research Department
Denka Innovation Center
New Business Department

An announcement concerning the signingof the United Nation’s Global Compact

Jul.

Sponsorship of the 21st Japan Science &Engineering Challenge (JSEC2023):
Establishment of the Denka Award

Denka signed the United
Nations Global Compact(UNGC) and was registeredas a participating company
on June 8, 2023. Denka
also joined the UNGC’s
local Japanese network,
Global Compact Network
Japan. By signing the UNGC, Denka will demonstrate its determination to realize
a sustainable society; its support of the ten principles related to human rights,
labor, environment, and anti-corruption advocated by the UNGC; and put theminto practice through Denka’s business activities.

Yuhei Ishigaki

resulting LDM is a soft resin, possessing topclass low-dielectric, heat-resistant properties, and
it is also easy to compound and mold due to its
good compatibility with other low-dielectric materials, gathering lots of attention as a match for thecircuit boards of next-generation, high-frequency,
high-speed communications.
In addition to the production of LDM toward
launch on the market, Denka’s coordination
polymerization technology can also provide
high-frequency communication materials withvarious features. Going forward, Denka will create
original, higher-performance, new products bycoordinating with various fields and combining
coordination polymerization technology with
Denka’s other technologies.

Jul.

Aug.

Grant awarded based on the Ministry of
Economy, Trade and Industry’s“Supply Security Plan for Storage Batteries”
Denka reinforced its Japanesesupply system of acetylene black, aconductive auxiliary for lithium-ion
batteries. After being approved by
the Ministry of Economy, Trade andIndustry (METI), Denka received
a grant from the New Energy andIndustrial Technology Development
Organization (NEDO). Denka is promoting the reduction of CO2 emissions in linewith Management Plan “Mission 2030,” which was implemented this fiscal year.
Foreseeing the growth in demand for materials for electric mobility and storage
batteries, Denka is preparing by introducing technology of an American venture,developing low-carbon acetylene production technology, and more.

Denka decided to sponsor the JSEC2023,
hosted by The Asahi Shimbun Company
and TV Asahi. JSEC2023 is an independent science technology research contest
aimed at all Japanese high school andtechnical college students, in which students are encouraged to explore issues concerning math and science on theirown, following their interests. The contest aims to raise the standard of science
technology. Denka decided to sponsor the contest as the social contribution
policies of JSEC matched the Denka Group Social Contribution Policy “...proactively providing assistance to forward-looking academic pursuits and research
activities. Simultaneously, the Group will contribute to cultural development.” Inline with Denka’s sponsorship, the Denka Award was newly established.

Aug.

Financial results briefing held forfirst quarter of FY2023
A financial results briefing for the firstquarter of FY2023 was held online on
August 7, 2023. The briefing was attended by a total of 77 people, including
institutional investors, analysts, people
from financial institutions, and President
Imai and 4 executives from Denka. The
operating income for the first quarter was
2.8 billion yen, 2.1 billion less than the same period last fiscal year. Forecasts
for the first half of the fiscal year were revised downward due to the decrease indemand for chloroprene rubber and other products, and the full-year operating
results forecast will be put under close examination. He also explained that,
due to the uncertainty of the economic environment, the forecast will remainunchanged until there is more certainty of the earnings forecast.

The Denka Way | 2023 Autumn

19