Environmental and Social Report

2015

Technologies to pass our global environment
down to future generations.

About DKS

Our Company
Credo"Contributing to the nation andsociety through industry"

Our Company
Motto"Quality First" "Cost Reduction""R&D Efforts"

Company Overview
We develop our business as a good chemical partner in life in a wide variety of fields, such as fiber, resin, industrial
materials, life materials, with the environment, in energy-related fields, and all based on the extensive technology
we have cultivated as a pioneer of surfactants.
We continue to contribute to environmental and social activities toward the realization of a sustainable society, withfull consideration of the global environment and energy.

Affiliates

Overview
Company Name:DKS Co. Ltd.

Domestic: 7 companies

Head Office:

5 Ogawara-cho, Kisshoin, Minami-ku, Kyoto, Japan

Overseas: 8 companies
Total: 15 companies

Date Business Started: April 1909
Date Established:

August 1918

Representative:

SAKAMOTO Takashi, Chairman CEO

Capital:

8.8 billion and 95.2 million yen

Sales by Business Segment (Consolidated)

Number of Employees: 944 persons

508 persons

Electronic
Device Materials(as of the end of March 2015)

11.7%

Domestic Branches
Head Office, Laboratory(in Kyoto Central Branch)

20.2%

Kyushu Branch

Main Branch

Yokkaichi Branch(Chitose Plant/Kasumi Plant)

Tokyo Head Office

Ohgata Branch

Osaka Branch

Surfactants

Functional
Materials

FY2014(Unit: million yen)

Polyurethane
Materials

17.0%

Shiga Branch

38.8%

55,597

Amenity
Materials

12.3%

Nagoya BranchManagement Index
Changes in Sales

Changes in Current Profits(million yen)(million yen)

60,00050,00051,24556,24951,84354,61455,5972,500

40,0002,000

30,0001,500

20,0001,000

10,000

500

2,717
2,439

2,374
1,742
1,544

0

0
2010

1

3,000

2011

Environmental and Social Report 2015

2012

2013

2014 (FY)

2010

2011

2012

2013

2014 (FY)About DKS

About Environmental and Social Report 2015
Editorial Policy
DKS published the "Environment & Safety Report" first in 2003, anddelivered the report about Responsible Care activities, mainly focusing
on environmental activities until 2007.
We then decided to report the activities that emphasize our relationshipwith society in addition to "our environmental, safety, and health efforts,"
and renamed the report "Environmental and Social Report."
We are editing the report with the aim of explaining to our stakeholders
our efforts on environmental and social activities, and to promote
communication.
We have reported Stage I of the medium-term management plan
"Change 100 Plan" from April 2009 to March 2012, as well as Stage II of"Change 100 Plan" from April 2012 to March 2015.
We have edited the FY2015 issue by pursuing a report so that thecorporate value that has increased by development of our business andRC activities could be more clearly understood by and transmitted to ourstakeholders, in response to the "REACT1000" plan started in April 2015.
In order to accomplish this goal, we have substantially changed theconfiguration, added the following contents that were not included in theprevious reports, and promoted "visualization of the environmental
management index and environmental impact."- "Efforts on social agenda"- "Establishment of a supply chain (progress of activities)" to show theflow of activity- "Diversity and work-life balance"

INDEX
About US
Company Overview ………………………………………………

1

Social Agenda and Solutions by DKS ...…………………………

3

Our Products Useful in Daily Life ..………………………………

5

Message from the Chairman CEO .………………………………

7

New Five-year Management Plan "REACT1000" …………………

9

Special Topic: Development of Environmentally Friendly Products … 11
Progress of Environmental/Safety (RC) Activities
Basic Philosophy, Basic Policies, and Corporate Principles for Environmental and Safety Practices … 13
Management of Environment / Safety / Quality (RC) /Management System .…………………………………………… 14
Supply Chain Management ……………………………………… 15
Targets and Performance .................………………………… 17
Environmental Accounting ................………………………… 18
Global Warming Prevention (Energy Conservation) .…………… 19
Efforts to Reduce Emissions of Chemical Substances / Chemical Substance Management … 20
Reducing Emissions of Environmental Impact Substances ..…… 21
Efforts to Reduce Industrial Waste ……………………………… 22
Safety Securement and Disaster Prevention .…………………… 23

Organizations Covered by this Report
DKS
Head Office, Laboratory, Tokyo Head office, Osaka Branch, Nagoya Branch,
Kyushu Branch, Yokkaichi Branch, Ohgata Branch, and Shiga Branch
National Affiliates(*: located within the premises of DKS)
Yokkaichi Chemical Company Limited
Gembu Co., Ltd.*DAI-ICHI KENKOU CO., Ltd.*KYOTO ELEX CO., LTD.*
DAI-ICHI CERAMO Co., Ltd.*
Elexcel Corporation

Progress of Social Activities
Relations with Our Customers & Business Partners …………… 25
Relations with Society & Local Communities …………………… 27
Relations with Our Shareholders & Investors …………………… 28
Relations with Our Employees …………………………………… 29

In the description related to our performance, we use the following
definition and distinguish between "DKS" and "DKS Group."
DKS: DKS and national affiliates located within the premises of DKS
DKS Group: DKS and all national affiliates

On-Site Report
Yokkaichi Branch / Ohgata Branch ……………………………… 33
Shiga Branch / Yokkaichi Chemical Company Limited ………… 34
KYOTO ELEX CO., LTD. / DAI-ICHI CERAMO Co., Ltd. /Period Covered by this Report
Essentially, this report contains our activities and data for fiscal year 2014
(from April 01, 2014 to March 31, 2015).
The data on Industrial Accident Severity Rate (ASR) and Industrial Accident
Frequency Rate (AFR) were obtained from January to December 2014.

Elexcel Corporation ……………………………………………… 35
P.T. Dai-ichi Kimia Raya / CHIN YEE CHEMICAL INDUSTRIES, CO., LTD. /SHUANG YI LI (TIANJIN) NEW ENERGY CO., LTD. .………………… 36
Establishment of Management BaseCorporate Governance / Internal Control / Compliance ………… 37
Risk Management ..……………………………………………… 38

Reference Guidelines"Environmental Reporting Guideline 2012" from the Ministry of the Environment"Environmental Reporting Guideline 2005" from the Ministry of the Environment"Environmental Accounting Guideline for Chemical Industries (November
2003)" from the Japan Chemical Industry Association (JCIA)

Posted on the Website
Business of DKS and History of Environmental and Social Activities
The emission amount of notification substances under the PRTR Law in FY2014
Transition of Environmental Impact in Branches and Yokkaichi Chemical Company

Environmental and Social Report 20152

Social Agenda and Solutions by DKS

We provide useful social agenda solutions
in various fields.
We are surrounded by a number of problems in our daily lives, from environmental issues such as global warming, resource depletion,and life's diversity crises, to problems related to food resources with population increases, energy problems, as well as globalization development, and informatization in society, and more.
In order to face up to such a social agenda, protect people's environments and lives, and improve safety and amenity levels, our company
pursues "chemistry to respond to people's needs," and contributes to the establishment of a sustainable society.

Social Agenda

Business Purpose

Population Growth

Resource Depletion

CO2 Emissions Increase

To soundly preserve
the global environment

Environmental Pollution

Repeated Natural Disasters

Information Society

Globalization

Aging Society with Fewer Children

Worries about Food Quality

3

Environmental and Social Report 2015

Our "chemistry to
respond topeople's needs"
To secure security
andreassurance in life

To realize convenienceandaffluence in societySocial Agenda and Solutions
by DKS

Solutions to Provide to Society

Social Value

Surfactants
Surfactants, which have been developed for many years over a century andlaunched into the market, are used in a wide variety of industrial fields, such as
rubbers, plastics, colorants, machines/metals, cosmetics, paper/pulp,
agrochemicals / agricultural materials, civil engineering, and energy-relatedindustries.
We are promoting development of products in those fields while being
environmentally conscious.

Amenity Materials
We provide materials and peripheral technologies to improve the amenities in life.
These are widely used in many fields, including foods, pharmaceuticals andcosmetics, toiletries, fishery/livestock industries, fiber, paper/pulp, ceramics, civilengineering, agrochemicals/agricultural materials, and deodorization.

Energy Saving

Global Warming Prevention

Effective Use of Resources through Weight Saving
and Long Product Life

Environmental Pollution Prevention

Polyurethane Materials
We are promoting environmentally friendly product development, such as withthe low-density technology of soft polyurethane foam, polyurethane polyol withhigher heat insulation, and flame resistance for rigid polyurethane form, as wellas water-blown type polyol and non-CFC foam technologies.
In addition, in the IT field, we respond to VOC reduction through developmentof coating type one-pack electrical insulating materials.

Security, Reassurance, and Amenity in Life

Food Security and Reassurance

Functional Materials
We provide plastic additives and UV-curable monomers/oligomers of plastic
material, which are indispensable for giving high functionality to rubbers andplastics to be used for computers, smartphones, home electronic appliances,and residential materials. We also provide flame retardants, antistats,lubricants, antifog additives, and antioxidants.

Electronic Device Materials

Improvement of Tastes/Preferences

Improvement of Productivity

As symbolized by the popularization of Internet and smartphones,
informatization has seen rapid growth.
Our company has focused attention to the ionic conductive property ofpolymers since the 1980's, and has made efforts on the development ofdye-sensitised solar cells and ionic liquids.
Furthermore, we develop conductive pastes, ceramic materials, and lithium
cells.

Environmental and Social Report 2015

4

Product Introduction

Our Products Useful in Daily Life
Products of the DKS Group will aid us in daily life as useful materials and through the members of various products.
This section introduces some examples from scenes in everyday society and the environment.

Silicon wafer detergent●DK BE-CLEAR CW

1 Surfactant Business

2 Amenity Material Business■Non-ionic surfactant■Cationic surfactant■Sucrose fatty acid ester ■Cellulose type polymer■Vinyl type polymer■Acrylic acid type polymer■Anionic surfactant■Amphoteric surfactant

Conductive paste for solar cells●DD-1200C

Rigid polyurethane foam forinsulator material●DK POLYOL

Bed, cushion (Soft orsemi-rigid polyurethane foam)● HIFLEX● DK FLEX

Optical sheets, Hard coating agent(Radcure resins)●NEW FRONTIER(Waterborne polyurethanes)●ELASTRON

Flame retardants for plastics●PYROGUARD

Semiconductor sealant materials●Allyl glycidyl ethers

Sealing material for electric insulation(Gas water heater control units)●EIMFLEX

Polymerizable emulsifier (Paint)●HITENOL

Materials for cosmetics(Shampoo, rinse, hair gel)●NEO-HITENOL●CATIOGEN ●CREEJUS●Phenoxyethanol●COSMELIKE

Food additives●DK ESTER●DK FOAMER ●CELLOGEN●NEW FRONTIER

Flame retardants for textile●PYROGUARD

Car seatbelts

Binders for lithium-ion batteries●ELASTRON●CELLBINDER

Epidermis material for car interior●SUPERFLEX

Hybrid vehicle electric components●EIMFLEX

Paint resin for cars
●SUPERFLEX

Emulsion polymerization
emulsifier (Tire rubber)●LAVELIN

5

Coating material for building
material, furniture, and home
appliances (Radcure resins)

Environmental and Social Report 2015

Product Introduction

3 Polyurethane Material Business 4 Functional Material Business■Materials used for radcure resin■Flame retardants■Water-borne urethane resin■Amide-type lubricant, plastic additives■Polyether polyol ■Urethane system■Urethane prepolymer

Detergents for linen supply●LINEN FINE

Detergent for cleaning

5 Electronic Device Material Business■Conductive paste for electronic components■Injection molding pellets

Binders for
agrochemicals

Binders for rockconsolidation

Elastic pavement
material

Spillage oiltreatment agent●CELLOGEN●GANBAN●RUBBER STYTER●SEACLE

Heavy corrosionpreventing agent

Feed additives forcultivation●PERMAGUARD●CELLOGEN

Injection waterstop material●FINE SHOT●POLYGROUT

Waterproof roofing
material

Water reducing agent andfluidizer for concretes●POLYFLEX●SELFLOW

Optical fiber connector● Zirconia compound for
ferruleBuildings strengthening
agent (Epoxy diluent)●EPOGOSEY

Environmental and Social Report 20156

Message from the Chairman CEO

We take action to respond to the deepening of governanceand more industrial involvement in chemicals.

The mild upswing of the Japanese economy continues, and this has resulted
in improved company profits and increased business investment.
In the chemical industry, there is a positive factor that the price of the baseingredient naphtha has shifted to a falling tendency due to the low price of
crude oil since autumn of last year.
However, there are also effects from currency movement and geopolitical risks,and uncertainty about the future continues.
The DKS Group has attempted to expand sales of the core product business,

7

Environmental and Social Report 2015and has been devoted to the future of growing fields, such as "environment,""energy," "electronic materials," and "life materials."
We have also promoted development of new materials while cultivating a newmarket, and made new efforts on cost reduction.
As a result, we succeeded in posting record-high profits in all of sales profits,current profits, and current net profits for this year, which was the final year ofStage II of the medium-term management plan "Change 100 Plan."Message from the Chairman CEO"REACT1000" Plan, Act for a Leap.
We strove to realize "Expansion Accompanied by Earnings" for three yearsof "Change 100 Plan" Stage II started in April 2012.
We launched construction of our new Yokkaichi base to be a foundationfor our company growth.
We have fulfilled market development through new products utilizing ourtechnology, such as "base material for electronic materials" and"cellulose single nano-fiber," which has started to contribute to our
performance.
We started a new five-year management plan named "REACT1000" in
April 2015.
One meaning of "REACT" is to undergo a chemical reaction.
It also has the meaning of quickly responding to others, and acting

powerfully.
We put our intention to realize "chemistry to respond to people's needs"
into action through the name of the plan.
In addition, we have newly created our group logo as a symbol of advancing toward globalization.
Our new logo symbolizes action toward a quantum leap, and describes
growing arch-bridges toward "Challenge to 1000."
Our company will ensure the further implementation of corporate
governance that we have addressed until now, and continue to be acompany of importance that responds to more industrial involvement inchemicals as an industrial chemical manufacturer.

Confirming our role as a member of the society,and connecting to the next generation.
Social expectations for companies are increasing with each passing year.
Our company accepts these expectations as our responsibility to society,and aims at the establishment of a management base with hightransparency and that can gain and keep society’s trust.
In order to conduct company activities rooted in corporate social
responsibility (CSR), we have promoted "further deepening ofgovernance" as one of our management policies.
We established our "Code of Corporate Ethics" in 2004.
In this code, we declare that each of our employees will observe all legal
regulations and international rules and obey the spirit thereof, respect

cultures and customs in overseas countries and regions where we
conduct business activities, and behave in a socially sensible manner.
During the Corporate Ethics Monthly Campaign in October, we conductedvarious events and educational activities with the aim of improving ourawareness of compliance.
We ensure that each employee will continue to conduct fair and healthybusiness activities as members of society.
As such we continue to be a company that gains and keeps the trust of all
our stakeholders.

Transmit from a castle for future creation.
In FY2014, we launched construction of a new plant in the Kasumi
industrial complex in Yokkaichi city, which we have positioned as a castle
for future creation in our company.
In this Kasumi plant, we introduce the latest production facilities andpromote streamlining.
We intend to make it a production base that gives more consideration to
the preservation and improvement of local society and the environment
than ever before.

We believe that operation of a new plant along with the research function
could realize further social contribution.
This report describes the DKS Group's approaches to social activities
including Responsible Care
(RC) activities in FY2014.
We hope this report will help you to deepen your understanding of ourcompany's approaches and policies. We would appreciate your support,
and openly welcome any and all opinions.

SAKAMOTO Takashi
Chairman CEO

Environmental and Social Report 2015

8

New Five-year Management Plan

REACT1000—Act for a Leap—
Introduction
For three years of "Change 100 Plan" Stage II started in April 2012, we revealed
integrated effects after acquisition of the Yokkaichi Chemical Company, purchased
the new plant site, and made public stock offerings.
We could establish the foundation toward a quantum leap by carrying out thecorporate culture conversion plan that valued our company credo.
Let us explain about the overview of the new five-year management plan.
10 years have passed since we drew the corporate image (ideal form of balance
sheet) in 2025.
Japan will have the Tokyo Olympics within the remaining 10 years.
The Linear Chuo Shinkansen bullet train plan has started as well.
We predict that the world economy will grow centering on the United States andemerging Southeast Asia, though the Chinese economy has decelerated, and theEuropean economy has unstable factors.
We call our new plan "REACT1000."
REACT has the meaning of quickly responding to others, and acting powerfully.
We decided on a quantum leap as the keyword to realize this plan through action.
That is why we have set Act for a Leap as a subtitle of the plan.
In our new five-year management plan, we will put "chemistry to respond topeople's needs" into practice, and advance our approach to being a company withsales of 100 billion yen.
The three years for which we increase productivity by giving the principal axis to
the Yokkaichi mother factory to be a complex base of production, research, andsales will become the preceding process to the following two years of the quantum
leap.

Overview of Management Principles and Plans

Business Plan on the Consolidated Base

We continue to be a company of importance that responds to more industrial
involvement in chemicals as an industrial chemical manufacturer.
We define a company of importance as one that should be evaluated by its
accomplishment of material and technological development that is ahead of the times.

We assume the Japan's nominal growth rate is 3% per year, and set our goal for oursales to increase 6% or more per year.
There are five points to realizing this plan.
First, "Act for a Leap" is the declaration of our company’s intention to performaggressive management in a castle that has been created over six years through"Change 100 Plan."
We conduct a personnel change to organize the lineup for implementation of theplan.
We declared our new system simultaneously with the outward presentation of the"REACT1000" plan.
Second, we put our efforts on electronic materials in the new Yokkaichi Kasumi
plant, and the collapse prevention material GANBAN for tunnel construction in order
to expand our performance.
In addition, we enhance the existing leading businesses ("ACTUAL100"), such as
augmentation of sugar derivatives, and development of peripheral fields.
Third, we engage in early commercialization of the new business theme "NEXT100"
mainly for sugar and cellulose that represent our core technology.
We set "new creation fund" as the enhancement plan for research and development.
Fourth, at the moment when the tendency in exchange rates has shifted to a lower
yen, we spur overseas development including exports.
We have recruited and promoted external staff with extensive international
experience.
For the time being we enhance marketing for East Asia, and also find a way todevelop the American market in the near future.
We newly establish the study abroad system to cultivate international personnel.
Fifth, along with implementation of the new core system started from April 2015, westart to review a new evaluation system that allows fair and equitable evaluation tocontribution to performance.
Centering on aggressive sales and research development, we train and develop thenext generation, and those following, to engage in production and management.

Management Policies

Basic policies on which we operate our company for the next years started from
April 2015.
(1) Creating New Corporate Value
We make efforts on maximization of performance generated by holding assets,
and stock market values.
(2) Building Corporate Image Understandable to Everyone
We promote the improved awareness of the corporate image.
(3) Corporate Governance in more Depth
We engage in management efficiency by paying attention to corporate
governance.
(4) Maintaining and Enhancing Appropriate ROE Level
We should be aware of the ROE index with mid- and long term prospects.
(5) Building Advantages by Cooperation
We collaborate with business partners, universities, and organizations, andpromote development of materials and technology.
(6) Promoting and Enriching Mother Factory in JapanWe make efforts on increased productivity for the entire company mainly basedon the Yokkaichi complex base concept.

Group Logo

2015
Start Year

9

Environmental and Social Report 2015

We have newly created our group logo as a symbol of the advancement
toward globalization.
Our new logo symbolizes "Act for a Leap."
It describes growing arch-bridges toward "Challenge to 1000."Ideal StateR E A C T
RETURNNew Five-year Management Plan

2025

Five Top Priority Issues

EXPORTADVANCECREATETRAINManagement Target

The planning term is five years from April 1, 2015 to March 31, 2020.

[Fiscal year ending in March 2020]

2020

Sales

Target Year

Operating Margin on Sales
Net Profit
ROE
Overseas Sales Ratio

75 billion yen
8.0 %3.6 billion yen
10 %
20 %

Business Development Plan

The following diagram shows our major policy to give three business divisions responsibility for five businesses.

Surfactants

Development per
Segment

Healthy
Financial
Balance

Amenity Materials
More sales in Asian emerging countries
Sucrose esters-based global development
CMC & PVP profitability improvement

Business infrastructure reinforcement, new products global sales
More profit in domestic niche market
New product development by technology evolution

Global Activities
New Business

Production Bases
Stable Profit

HR Education
Various Training Programs incl. Safety

Management
Goals

Polyurethane Materials
Yokkaichi area realignment.
Next-generation business
More production & sales overseas
Focus on development in electronics & energy industries
Non-profitable business improvement

Functional Materials

Electronic Device Materials

Yokkaichi area realignment.
Next-generation business
More production & sales overseas
Promoting solution-based development

Technology-driven top supplier in niche market
Development by synergy of group companies
Sales expansion with profit
High-value-added products
Next-generation business

Conclusion
Toward the Tokyo Olympics in 2020, realization of "the economy as a continual cycleof growth" has been questioned as an issue nationally.
Establishment of two codes* related to companies and investors has increased
interests in corporate governance much more than before.
Now the necessary environment for the quantum leap has been organized.
The 2015 management slogan "Challenge to 1000" takes its first step in the new
five-year management plan.
We looked up the animal symbol for the first year, and found the expression of "Iyo
Igyu."

This refers to the turning of a quiet sheep into strong cow or ox.
We have set this term as five years during which we grow to be a stronger company.
To gain strength, we are shifting our steering by putting values on the coretechnology we have developed through our history.
We promote the REACT strategy to take full advantage of management resources thecompany currently possesses, and to raise our comprehensive strength.
We deliver brilliant performance in Japan that has passed through 70 years since theend of World War II, as well as in overseas countries. It is time for DKS to open on a
new stage.

*Corporate governance code, stewardship code

Environmental and Social Report 201510

Special Topic: Development of Environmentally Friendly Products

Using the environmentally friendly material thatcan be sprayed like liquid, in spite of its gel form.
A New Thickener

RHEOCRYSTA®
This is a new material at the center of attention, which has been
made from integration of both the applied technology of cellulose
derivatives built up by the DKS over many years, and the latest
research results produced by Tokyo University.
This has special features in performance, for example, it is madefrom cellulose, which can prevent GHG emissions from increasing,and it can be sprayed in spite of its gel form, and its applicationand commercialization of product are highly expected in various
industrial fields as well.

Can spray in spite ofits gel form

Performance to develop new products & markets
Our company has been involved in cellulose thickener for many years. As an example, we launched manufacturing
and sales of carboxymethylcellulose sodium (CMC) "CELLOGEN" using the solvent method first in Japan, about 60
years ago.
A new thickener, "RHEOCRYSTA," which has been created using this advantage fully, has great potential not only tocontribute to new product development for our partner companies, but also to generate an entirely new market.
We utilized our own cellulose applied technology and the research results of Professor ISOGAI Akira et al. of Tokyo
University, and developed cellulose single nano-fiber (CSNF). We started its manufacturing and sales in December
2013.
RHEOCRYSTA is a product created by making CSNF with a fiber diameter of 10nm or less dispersed by 2% in water,
and it has three major features.
First, it has high viscosity among cellulose thickeners, and it is a distinguishing pseudoplastic fluid as well.
That means that it maintains its solid property in a normal state, but once force is applied, its viscosity decreases
immediately and it turns to liquid.
Next, even if oil or powder is mixed into RHEOCRYSTA, the mixed material will not precipitate or float, but disperse
uniformly.
Finally, RHEOCRYSTA is a thickener naturally derived from cellulose.
Cellulose that can be obtained from wood is renewable in cycle, and because it is an environmentally friendly material
that can prevent GHG emissions from increasing, it has been reevaluated as an alternative material to fossil fuels.

When offered in a bag, it is easily visible
because of its gel form

So many ways of use, so many possibilities
RHEOCRYSTA, a material equipped with more unique characteristics than ever before.
Its application to product development is expected in various industries. Among them, and which we pay the mostattention to, is the cosmetic industry.
In addition to using nature-derived ingredients of plant origin, it can provide a non-sticky and smooth touch. These
factors would satisfy the necessary conditions for sunscreen products and milky lotions preferred by users.
The characteristic of being able to spray like liquid in spite of its gel form with high viscosity will definitely attract muchattention.
If we focus on the point that it does not drip after spraying/painting, it has promise as an easy-to-use paint.
It could be sold in DIY shops where do-it-yourselfers gather.
In addition, we are looking at and suggesting other applications mainly for toiletries, color materials, and medical
agents for agriculture/gardening.
We consider that RHEOCRYSTA, different from traditional products, would not play a position with other products inthe existing market, but create a market itself. For this reason, we expect to gain considerable market share, andcontinuous expansion of the market size is also available.
We already have sales channels in each industrial field, such as paper, cosmetics, agriculture, pottery, civilengineering, fiber, paint, construction material, and electronics, through our long-selling product CELLOGEN, and ourtransaction relationship has been established. This will also become our advantage in building up trustful relationsindispensable for joint development of products using RHEOCRYSTA.

11

Environmental and Social Report 2015

Provides a non-sticky and smooth touchSpecial Topic: Development ofEnvironmentally Friendly Products

RHEOCRYSTA®

PlantsEmitting
in the Environment

For Agriculture/
Gardening

Toiletries

Cosmetics

Pharmaceuticals

Color Materials

Paint

End Products

RHEOCRYSTA is generated from plant-derived cellulose, and recycled through commercialization of product and biodegradation

Toward the goal of a 1 trillion yen industry set upby Ministry of Economy, Trade and Industry
Approaches for promoting the material usage, such as through research development of cellulose
nano-fiber, are encouraged in "Japan Revitalization Strategy (Revised in 2014)," of which the aim is tokeep the positive economic cycle rotating in order to prevent the reform brought by Abenomics' three
arrows from ending up as temporary phenomenon.
METI are aiming for our growth to become a 1 trillion yen industry by increasing the production scale ofcellulose nano-fiber from 30 to 50 tons a year assumed currently to 150,000 to 225,000 tons in 2030.
In addition, RHEOCRYSTA has been adopted as the "Part material development business for advancedenergy conservation in 2012" publicly offered by the Manufacturing Industries Bureau of the Ministry of
Economy, Trade and Industry. Accordingly, DKS completed construction of the experimental manufacturing
facility on premises of the Ohgata Branch in March 2014, and started operation in June 2014.
Cellulose nano-fiber has a potential of rapid market expansion in the future. In particular, we believe the
new thickener RHEOCRYSTA with high function and high added value will reveal our future course as
navigators, and develop a new market by playing a leading role.

"Japan Revitalization Strategy"
Revised 2014
- Japan's challenge for the future -Development VoiceI feel an infinite possibility in its ever-changing properties.
At the present time when industrial technology has
matured, many products are being generated fromneeds. RHEOCRYSTA, however, is a material of seeds
preceding type, which is rare these days.
I would like to think about what we can do with
RHEOCRYSTA, and what we want to do with it, with
our existing or new customers, and commercialize it bymaking full use of our applied evaluation technology.
Because it will change its form freely, sometimes tosolid, and at other times to liquid, I am working on
research development with such excitement, as "there
will be completely unexpected demands from this," "it

could change immensely depending on combinations."
Many lecture requests we have received also prove tothe increased attention to its products.
We hold the lecture in symposiums or conferences ofnanocellulose, industrial experimental station, and atuniversities almost every month, and we are asked toprovide the sample by many participants.
I would like to develop RHEOCRYSTA to be a productso important as to become a support of our business inthe near future, and feel confident that it could
contribute to society.
Please pay much attention to its future development.

Manager
Synthesis R&D Team I
Functional Chemicals R&D Department

JINNO Kazuhito

Environmental and Social Report 201512

Progress of Environmental/Safety (RC) Activities

Executive Officer
General Manager
Production Control Division

MURAKAMI Osamu

The DKS Group is independently promoting Responsible Care activities that implement and improve environmental safety measuresby promoting consideration on the environment, safety, and health in our management policy. This is under the name of providing
quality products to ensure customer satisfaction, based on our Basic Philosophy, Basic Policies, and Corporate Principles forEnvironmental and Safety Practices.
In terms of environmental protection activities, we have set a medium-term goal of reducing greenhouse gas and industrial waste
during the period between FY2013 and FY2015. Since 2015 we have supplied electricity using recycled biomass fuel composed ofmethane gas generated during anaerobic treatment of wastewater. We are also promoting the reduction of chemical substanceemissions and the preparation for Water Pollution Control Act. In terms of our process safety and disaster prevention activities, wehave taken into account serious accidents that occurred in recent years in the chemical industry. We have reorganized and reviewed
our emergency handling manual by evaluating the possibility of similar accidents that could occur in our plants, and extracting focus
inspection items for each location and process that may pose risk. In addition, we created the portable "manual on large earthquake
countermeasures," and distributed it to all employees in order to prepare for a large earthquake, should one occur. In terms of ouroccupational safety and health activities, we put more efforts into improving the level of power in the field through continuous safety
activities (KYT (risk prediction training), patrols, 5S and pointing and calling) for an accident-free workplace with the Safety and HealthCommittee and Risk Assessment Committee. Committed to the self-management spirit of Responsible Care activities, we will continue
to make efforts in our safe and worry-free production activities to gain trust from society.

Basic Philosophy, Basic Policies, and Corporate
Principles for Environmental and Safety Practices

13

Basic
Philosophy

We have adopted the following business philosophy for all our business activities: “By providing quality products toensure customer satisfaction, we not only strive to be a prosperous company while moving forward with our employees
and serving local communities, but also contribute to creating an affluent society.” Based on this philosophy, we adopt
the following statement as our basic philosophy for environmental and safety practices: “Throughout the entire life cycleof our products, from development to disposal, we pay special attention to both human safety and health andenvironmental preservation, as well as contributing to sustainable development and the realization of our goal for anaffluent society.”

Basic
Policies❶ Throughout the entire life of our products, from development to disposal, we evaluate and reduce each product’s
load on the environment and do our best to ensure the protection of the environment.
❷ We maintain no-accident operations to ensure safety for the employees and the residents of the surrounding areas.
❸ We ensure the safety of raw materials and interim and final products, and prevent any health disorders of everyone
concerned, such as employees, carriers, customers, and general consumers.
❹ We not only obey relevant laws and regulations, but also actively and constantly examine and improve theenvironment and safety through self-management.

Corporate
Principles❶ We evaluate the effects of our business activities on the environment and human safety and, further, set andperiodically review our environmental targets/goals and safety targets to ensure continuing improvement of both ourenvironmental protection activities and occupational safety and health activities.
❷ We obey any laws, regulations, and agreements related to both the environment and occupational safety and healthissues to ensure coexistence with our local communities.
❸ To reduce environmental impacts, we are devoted to performing all of our business activities in such a manner as toachieve resource and energy conservation, promotion of waste reduction and recycling, and improvement ofoccupational safety and protection of health.
❹ When developing our products and technologies, we are devoted to providing safe products while paying special
attention to environmental and safety matters, and fully understanding the extent to which the product will impact
the environment.
❺ We make our best efforts to help all of our employees to fully understand the environmental and safety policies andto improve their environmental and safety awareness by implementing environmental and safety training andworkplace communication activities. For this purpose, we ask our affiliate companies for their continued
understanding and support.

Environmental and Social Report 2015

Progress of Environmental/
Safety (RC) Activities

Management of Environment/Safety/Quality (RC)RC Promotion System
We have established an RC Promotion Conference with our president as its
chairman. At the conference, we deliberate on and decide agenda items based on
our Basic Philosophy, Basic Policies, and Corporate Principles for Environmental
and Safety Practices. In order to effectively promote our RC activities, we haveestablished three different conferences – the Environmental Protection
Conference, Safety and Health Conference, and QA (PL) Conference – composedof branch managers and the heads of relevant departments and sections, andchaired by the person in charge of Environment, Safety & QA. At these
conferences, our company-wide targets of environment, safety, and quality

assurance, and implementation plans as well as the review of their results aredeliberated on. We have also established, as a sub-organization of ourconferences, three company-wide committees - the EMS*1 Committee, SHMS*2
Committee, and QMS*3 Committee - as well as three committees in each of ourmanufacturing branches - the Environmental Protection Committee, Safety and
Health Committee, and QA (PL) Committee. These conferences have been held
periodically to formulate implementation plans for RC targets to manage theprogress of these plans, and to summarize obtained results.
*1 EMS : Environmental Management System*2 SHMS : Safety and Health Management System*3 QMS : Quality Management System[RC Promotion System Diagram]Management Committee

Environmental Protection Conference

EMS Committee

RC (Environment, Safety&QA) Promotion Conference

Safety and Health Conference

SHMS Committee

Quality Assurance (PL) Conference

QMS Committee■Environmental Protection Committee■Safety and Health Committee•Kyoto Central Branch •Production Branches•Tokyo Head Office •Offices■Quality Assurance (PL) Committee•Production Branches

Management System
External Initiatives

ACTION[PDCA Cycle]

Reviewing Policies

Promotion and management of our company’ s RC
activities, which are based on the Environmental
Protection and Safety and Health Management
Regulations, have been implemented to achieve
continuing improvement of our RC practices byexecuting a PDCA cycle. In addition, as part of their RC
activities, all plants of our company are ISO 14001 andISO 9001 certified, both of which are international
environment and quality management systemstandards. By utilizing them as a operation
management tool, we are committed to not only
enhancing performance based on environmental
impact but also to improving the safety of our
products.

Review of annual policies

PLAN

Proposals for Improvement
and Corrective andPreventative Actions

CHECK

Establishing Annual Policies & Goals
Establishing Implementation Plans
Deliberated on & decided at
Environmental Protection/Safety
and Health Conferences

DO

Audit & Assessment
Auditing performed by our RC promotion
departments Assessment at Environmental
Protection/Safety and Health Conferences

Understanding the current status& finding latent problems

Implementation
Implementing RC activities
using management systems e.g.
ISO standards on a
department-by-department basis

Recording Results &Preparing Reports

ISO Certification Status in the Group

Overseas
Affiliates

Our Departments

ISO9001

ISO14001
Acquisition of certification

Certification body

Acquisition of certification

June 2002

JCQA

Certification body

Ohgata Branch

July 2002

JCQA

Shiga Branch

March 2002

JCQA

Production Control Headquarters——

January 2000

JCQA

Business Administration Div.

——R&D Departments——

Yokkaichi Chemical Company Limited

March 1999

JCQA

KYOTO ELEX CO., LTD.

August 1998

JCQA

December 2001

JQA

June 2000

JQA

—

—

February 2011

JQA

TIANJIN DAI-ICHI FINE CHEMICALS CO., LTD.

December 2006

ZDHY

August 2001

ZDHY

CHIN YEE CHEMICAL INDUSTRIES, CO., LTD.

December 2006

BSMI

April 1995

BSMI

P.T. DAI-ICHI KIMIA RAYA——

September 2009

BVI

SHUANG YI LI (TIANJIN) NEW ENERGY CO., LTD.

——

March 2007

CQC

Yokkaichi Branch

Affiliates

Domestic Production Branches

Business Offices and Affiliated Companies

DAI-ICHI CERAMO Co., Ltd.

Environmental and Social Report 2015

14

Progress of Environmental/Safety (RC) Activities

Supply Chain Management
CSR Activities for the Purpose of Supplying Solid Products
We contribute to the improvement of people's lives and the establishment of a sustainable society. In order to fulfill our social responsibilities, DKS supplies
various products through the supply chain focused on chemistry, while also promoting the effective use of global resources.

Voice!

R&D

Purchasing Section

MORI Takahiro

Laws and regulations surrounding chemical products are becoming increasingly strict for the purpose of enhancing environmental protection. Our
Purchasing Department observes all laws and regulations, promotes purchase of raw materials to satisfy the environmental/quality standards andsupply stability, and pursues improvement of supply chain management.
15

Raw Material

Code of Corporate Ethics/Declaration of Action for Executives and Employees
Communication with Stakeholders

Promoting Activities Based on Corporate
Principles for Environmental and Safety
Practices*1

Promotion of Activities Based on
Purchase Management Regulations● Product development that contributes to● Request of ISO Certification

further consideration of the environment,● Creation of vendor qualification list

such as reduced hazardous substances, and● Quality system investigation

environmental performance with the final
products.
● Development of production technology● Establishment of the quality management(materials/packages, facilities)● Investigation of environmental protection
activities● Chemical Substance Management Regulations

system, and offering of product services● Green procurement standard

based on the Quality Assurance Management● Safety survey

Regulations● Procurement source audit report● Acceptance standards in each branch● Implementation of environmental activity
investigation in procurement source ofplant-derived materials*1: Our Corporate Principles for Environmental and Safety Practices declare that
"When developing our products and technologies, we are devoted to providing safe
products while paying special attention to environmental and safety matters, and to
fully understanding the extent to which the product will impact the environment."

Environmental and Social Report 2015

Progress of Environmental/
Safety (RC) Activities

Code of Corporate Ethics (summary)Declaration of Action for Executives and Employees

1. Offering of useful products and achievement of customer satisfaction
2. Securing of transparency in management
3. Blocking of relationships with antisocial forces
4. Promotion of harmony in terms of environmental protection andwith local communities
5. Strict management of intellectual properties and information
6. Respect of individual personality

The Declaration of Action for Executives and Employees specifies
the guidelines of basic mental attitude and daily conduct foreach of said executives/employees (including employees on
temporary assignment, contract employees, and temporary staff)
in order to observe the standards set in the Code of Corporate
Ethics. It has been handed out to all of our board members andemployees in card form.
Related article: page 37

Voice!

Manufacturing

Distribution

Client Companies

meetings● Distribution safety measures● Preparation of warming prevention● Offering useful products andtechnology

through transportation● Realization of customer satisfaction(including activities for energy● Promotion of modal shifting● Disclosure of environmental impact

conservation and ecology promotion)● Issue of Yellow Card

● DCR activities● Use of regenerated energy, response
to global warming● Promotion of recycling, waste reduction● Chemical Substance Management
Regulations● Improvement of the production process● DKPM Activities (TPM activities)*2● Safety/security and disaster prevention
measures● Acquisition of S-HACCP*3*2: For more details, refer to page 23.
*3: A hygiene self-management certification system based on theconcept of the hygiene management method HACCP, specific to
Shiga Prefecture● Information transmission using
JAMP (MSDS Plus)

substances inclusion information● Publishing of the SDS website

I am engaged with development of environmentally friendly waterborne urethane products. In order to pay more attention to the environment, I will makemore effort in developing products with reduced impact on the environment, from raw material procurement to manufacturing, and continue tocontribute to the protection of the global environment.

● Implementation of quality/environment

Promotion of Activities Basedon Code of Corporate Ethics

Waterborne Polyurethanes
R&D Team

NISHIMURA Ayao

Promotion of Activities Based on the Environmental Protection and Safety
and Health Management Regulations, Basic Philosophy, Basic Policies,
and Corporate Principles for Environmental and Safety Practices

Environmental and Social Report 201516

Progress of Environmental/Safety (RC) Activities

Targets and Performance (DKS Group)
Targets and Performance in FY2014
Target Items

Management Items

Evaluation ◎: Significant results ◯: Results according to targets △: Targets remain unachieved

Targets in RC Activities

Promoting energy conservation Energy consumption per unit 1 % improved compared to FY2013
CO2 *1

Reducing GHG emissions

3.3 % improved compared to FY2013

28 % reduction compared to FY2005

28.4 % reduction compared to

on average from FY2013 to FY2015

FY2005 in FY2014

Waste generation per unit 1 % improved compared to FY2013

Voice!

Evaluation Reference Page

Performance in FY2014

◎

P19

○

P19

5.8% worse compared to FY2013△

Recycling rate

Promoting recycling

95.7 %, 6.7 points improvement compared to FY2013◎

Final disposal amount

80% reduction compared to FY2000 in FY2015 84.9 % reduction compared to FY2000◎

Final disposal rate*2

1 % or less in FY2015

Reducing industrial waste

P22

SOx emissions
Industrial Materials
Production Section

NAKAGOE Ryoji

In my workplace, we take appropriate measures against locations that any pose risk by conducting the KYT (risk prediction training) and safety patrols
every month, as well as promoting the creation of a safe workplace. We use signs to alert employees to locations that may pose a risk and for which
we cannot take structural measures, and make efforts to ensure occupational safety.
17

NOx emissions

Reducing emissions ofenvironmental impact

Emission/discharge control of environmental
pollutants in the air

Dust

substances

1.2 ％

△

63.5 % reduction compared to FY2013◎

72.6 % reduction compared to FY2013◎

15.6 % increase compared to FY2013△

P21

Water discharge

Emission/discharge control of environmental

18.4 % increase compared to FY2013△

COD

pollutants in water

35.5 % reduction compared to FY2013◎

Proper management of chemical substances PRTR Law-designated substances Emission reduction of PRTR Law-designated substances 23.7 % increase compared to FY2013△

P20

Promoting green procurement△—

Promoting green procurement ratio of office supplies

44.0 %, 10.8 points improvement compared to FY2013

No occupational accidents (days away from work) Two cases occurred△

Eliminating severe accidents associated with production facilities No accidents occurred○

Promoting environmental management system Maintained○

Eliminating disasters/accidents
Environmental management system

P23
P14

*1 Derived from energy in production and management sectors. *2 The rate of Final disposal amount to a waste amount.

Environmental Impacts Based on Business Activities (Material Balance)

Input

OutputBusiness Activities

51,300 t
26.8 t
Air
SOx
0.9 t
Environment
Dust
2.1 t
PRTR Law-designated Substances 44.3 t
CO2EnergyNOx

24,200 kl oil equivalent

Raw Material
Material Procurement
R&D
Water

3,920,000 m3

Environmental and Social Report 2015

3,541,000 m3
15.3 tPRTR Law-designated Substances 0.4 t
Water Discharge

Water
Environment COD

Manufacturing

13,876 t
429 t
Industrial External Recycling Amountt
13,276
Waste
Final Disposal Amount
171 t
PRTR Law-designated Substances 345 t
Generated AmountExternal Waste Reductions

Distribution/Sales
CO2 3,040 t

Products

Progress of Environmental/
Safety (RC) Activities

Targets and Performance in FY2015

Observation of Environmental Laws and Regulations
We continued to maintain the environmental management system inTargets and Performance in FY2015

FY2014. Our domestic production branches have acquired the ISO14001

1 % improved compared to FY2014*1

certifications, and they evaluate observance of the corresponding
28 % reduction compared to FY2005 on average from FY2013 to FY2015*2

environmental laws and regulations in each branch.
Our company has obtained the latest detailed information about laws and

1 % improved compared to FY2014

regulations. According to the results of external review by the certification

Promoting recycling

Voice!

organization, as with previous years we had no cases in FY2014 that80% reduction compared to FY2000 in FY2015

deviated from the laws and regulations.

1 % or less in FY2015*3

We will continue to maintain the environmental management system in
FY2015, and respond to new environmental laws and regulations andIn addition, since the ISO14001 certification is to be revised in 2015, we
will take the appropriate actions alongside the implementation of the

Emission/discharge control of environmental pollutants in water

environmental internal audit.

Emission reduction of PRTR Law-designated substances

Environment-related Complaints
During FY2014, we received two complaints related to noise and others. We

No occupational accidents (days away from work)

took emergency measures and recurrence-prevention measures in each

Eliminating severe accidents associated with production facilities

case.

Promoting environmental management system*1 Including the electric power consumption rate for demand leveling evaluation, which wasintroduced by the revised Act on the Rational Use of Energy (enforced on April 1, 2014)*2 Derived from energy in production and management sectors.
*3 The rate of Final disposal amount to a waste amount.

Environmental Accounting (DKS Group)
In FY2014, the DKS Group's investment for environmental-related systems
was spent mainly on pollution control, promotion of energy conservation,
and waste recycling. Environment-related costs increased in the fields ofresource recycling, spent mainly in industrial waste treatment. The

economic benefits herein include profits on the actual sales of valuable
resources and the amount of cost savings, and are not based on estimatedeconomic benefits.

Investment and Costs of Environmental Protection Activities

Upstream/downstream cost

Main Activity
Pollution prevention
Air pollution prevention, water pollution prevention
Global environment protection
Energy conservation
Resource recycling
Resource saving, waste treatment/disposal
Lowering environmental impact in containers/packaging

Management activity cost

ISO acquisition/completing surveillance audit, greening each plant

Investment (yen in millions) Costs (yen in millions)

9.3

184.8

1.7

134.9

0.1

299.3

Environmental damage cost

0.0
0.2
0.0
0.2
0.0

0.9
52.6
439.2
5.3
0.0

Total

11.5

1,117.0

Costs within the plant premises

R&D cost

Environmentally-conscious R&D

Social activity cost

Providing support grants for environmental protection to environmental protection groups or local communities

Economic Effects Generated by Environmental Protection Measures
Items

Activity

Economic Effects (yen in millions)

Profit on sale of valuable resources

Profit on sale of metal scrap, waste oil, and waste alkali, etc.

12.5

Amount of cost savings through energy conservation

Amount of cost savings in electric power and fuels

25.9

Amount of cost savings through resource saving

Amount of cost savings through reduction of water use /waste

4.8

Total

Approaches to energy conservation have been promoted within the Energy Environment Committee. For example, we regularly inspect each type of
stream systems and V-belts. We also educate our workers on Energy Conservation Law and energy conservation methods we can easily practice in daily
life.

Promoting green procurement ratio of office supplies

Category

Maintenance Section

related revisions.

HIDAKA Toru

Emission/discharge control of environmental pollutants in the air

43.2

Environmental and Social Report 201518

Progress of Environmental/Safety (RC) Activities

Promotion to Reduce Environmental Impact
Global Warming Prevention (Energy Conservation)
Targets and Performance in FY2014

Evaluation ◎: Significant results ◯: Results according to targets △: Targets remain unachieved

Target Items
Management Items
Targets in RC Activities
Promoting energy conservation Energy consumption per unit 1 % improved compared to FY2013
Reducing GHG emissions CO2
28 % reduction compared to FY2005 on average from FY2013 to FY2015

The DKS Group makes an approach to energy conservation by setting "a 1%
improvement at the annual rate of the energy consumption per unit" as ouractivity target. In FY2014, we recorded 24,200 kl of energy consumption,
which resulted in a 0.3% reduction compared to the previous year, and3.3% improvement of the energy consumption per unit, which means weachieved our annual target. The major factor lied in reduced energy
consumption despite of increased production volume (3.1% more). We also
recorded 51,300 tons of carbon dioxide emissions in FY2014 (1.4%

reduction compared to the previous year). It became a 28.4% reduction
compared to FY2005, which achieved our target in a single year, concerning
the medium-term target of 28% reduction compared to FY2005 by anaverage of the period from FY2013 to FY2015. We recorded theapproximate results according to our plan, but continue to make further
approaches to improving energy efficiency, and pursue achievement of themedium-term target.

Changes in Energy Consumption

Changes in CO2 Emissions(1,000 kl)

30

30.4

At our Shiga Branch, as activities for environmental impact measures, we have reviewed specifications, and selected instruments with a high energy
efficiency when updating our facilities. Recently more and more energy conserving instruments are being developed, and I always keep myself available

25

Energy Consumption■Yokkaichi ■Ohgata ■Shiga■Management sectors ■Domestic affiliates
Index of energy consumption per unit
24.1

24.4

24.3

24.2

200
175
150

20
15
125

125

130
121

10

117

100

100

75

5
0

05

11

12

13

FY2014■Yokkaichi ■Ohgata ■Shiga■Management sectors■Domestic affiliates■Derived from non-energy(1,000 t)

50* Index of energy consumption per unit [2005=100].
* Domestic affiliates, including Yokkaichi Chemical Company Limited,
KYOTO ELEX CO., LTD. and DAI-ICHI CERAMO Co., Ltd.

70

71.3

60
49.8

50

CO2 Emissions

Maintenance Section

HATAKEYAMA Shinichiro to collect necessary information.
19

Reduce Emissions of Energy Consumption and CO2 Emissions

Index of energy consumption per unit

Voice!

Performance in FY2014
Evaluation
3.3 % improved compared to FY2013◎
28.4 % reduction compared to FY2005 in FY2014
○

51.9

52.0

51.3

12

13

FY2014

40
30
20
10
0

05

11

* Carbon dioxide emissions in management sectors include fuels for company cars.

Efforts to Power Saving
We continued to make efforts on power saving (peak shaving) in FY2014, inorder to take measures against power shortages due to the operation
stoppage of the nuclear power plants. As for approaches for the entire
company in general during the "Cool Biz" campaign period (May to October),we rigorously enforced suppression of the set temperature of
air-conditioning equipment, reduced the use of excessive lighting, andturned off lights during times of day in which they were not needed.
At our Kyoto Central Branch (Head Office/Laboratory), we have installed
external air inhalation switches in some air-conditioner units in the researchbuilding to improve air-conditioning efficiency, and implemented a demand

control system to reduce peak power usage. Furthermore, we made efforts
to encourage nighttime operation of drying machines. At our Shiga Branch,
we took measures to decrease receiving power by generating more
electrical energy with the cogeneration system. At our Ohgata Branch, we
promoted stable power supply by operating and controlling the "biogas
generator" introduced in 2014.
Our future issue is how we can achieve a good balance between further
power saving and stable production as well as safety operation. We intend
to examine energy-conserving facilities when we introduce new facilities
from FY2015.

Efforts in Logistic Sectors
We transport our products by truck, rail, and ship, and have been working to
reduce impacts on the environment as a specified shipper under the Energy
Conservation Law. The freight volume in FY2014 was the same as in
FY2013, but we recorded a 0.9% decrease in energy consumption, 0.7%
reduction of GHG emissions, and 0.8% improvement of the energy
consumption per unit, by promoting modal shifting. We will continue to move
forward with our activities to achieve a 1% improvement in the energy
consumption per unit compared to the previous fiscal year, by considering
further promotion of modal shifting and increased loading rate as issues that
could influence air pollution and waste discharge as well.

Environmental and Social Report 2015

Environmental Impact to be Reported as a Specified Consigner
Comparison to thePrevious Year

Items

FY2014

Freight Volume31,437,000 ton·km±0.0 %

Energy Consumption Amount

44,967 GJ−0.9 %

Energy Consumption per Unit

1.430 GJ/1000 ton·km−0.8 %

CO2 Emissions

3,040 t-CO2−0.7 %* Calculated using the Improved Ton-Kilometer method, excluding the Yokkaichi Chemical Co., Ltd.

Progress of Environmental/
Safety (RC) Activities

Efforts to Reduce Emissions of Chemical Substances
Targets and Performance in FY2014
Target Items
Proper management of chemical substances

Management Items
PRTR Law-designated substances

Evaluation ◎: Significant results ◯: Results according to targets △: Targets remain unachieved

Targets in RC Activities
Emission reduction of PRTR Law-designated substances

Performance in FY 2014
Evaluation
23.7% increase compared to the previous year△

Reduce Emissions of PRTR Law-designated Substances
Changes in Emissions

Law in FY2014. The total amount of emissions was 44.7 tons, which(t)resulted in a 8.5 tons increase compared to the previous year. The

50

amount of waste transfer recorded was 345.2 tons, which ended up being
a 0.3 ton reduction compared to the previous year (0.1% less) due to an

10

40
34.6

8

35.8

35.3

33.5

4

0.26

0

recovery equipment, we will continue making efforts to reduce theemissions/discharge of PRTR substances into the environment.

2

10

techniques, improvement of production processes and the introduction of

10

0.34

11

0.35

12

0.41

13

0.38

FY20140* The numerical values show the total amount for the DKS Group and the Yokkaichi Chemical
Company Limited.
* For the emission amount of notification substances under the PRTR Law in FY2014 (among
all notification coverage substances, those of which the emission or transfer amount was
0.01 tons or more), please visit our webpage.
http://www.dks-web.jp/download/rc.html

Chemical Substance Management
DKS sets forth the "Chemical Substance Management Regulation" with thesubstitute/reduction of harmful chemical substances, improvement of

aim of global environment protection, accident prevention, occupational

ambient environments, and control of chemical substances contained insafety, health assurance, as well as product safety. Based on this regulation,

products (Green procurement). We categorize our chemical substances into

we promote "proper management of chemical substances over the productthree classes based on domestic and international laws, global agreements,

life cycle." We have been making control regulations related to theand requests from customers, and we define the control descriptions forunderstanding of chemical substances in use as well as their amount,each class.

Class and Description Related to Chemical Substances Management
Class

Description

Class A

Substances to be prohibited

Chemical substances prohibited to use on products

Class B

Substances to be reduced

Chemical substances for which complete abolishment would be preferable from an environmental aspect, and those forwhich the formula contained in products needs to be changed.

Class C

Substances to be controlled

Chemical substances for which the amount in emissions or transfer needs to be reduced, those that need to be recycled,
and those for which the above substances in Class A and Class B are excluded.

TOPICS
Our Ohgata Branch was commended by the Niigata Prefecture
Environmental Protection Joint Association in 2014 for being an excellent
branch in regards to environmental protection. Our environmental protection
activities that all our employees have been working on together up to now
have been appropriately appreciated. We continue to work on reduction of

3R is a principle aiming at the formation of a Material-Cycle society. We are engaged in separate collection and sampling for using as regenerated fuel.

20

despite the use of recycled solvents, etc. Through changes in production

We have also implemented all inspections by waste disposal contractors in order to fully enforce proper treatment of industrial waste and recycling.

6

Plant Administration Section

30

ANODA Kanemitsu

increase in production amounts and changes of variety configuration,

Voice!

(t)

44.3

Emissions to Air

breakdown was 44.3 tons to air, 0.38 tons to water, and none to land. The

Emissions to Air: ■DKS ■Yokkaichi Chemical Company Limited
Emissions to Water: ■DKS ■Yokkaichi Chemical Company Limited

Emissions to Water

The DKS Group had a total of 63 notification substances under the PRTR

environmental impact by promoting energy conservation, and the 3R(Reduce, Reuse, Recycle) activities for industrial waste.

Environmental and Social Report 201520

Progress of Environmental/Safety (RC) Activities

Reducing Emissions of Environmental Impact Substances
Targets and Performance in FY2014
Target Items

Management Items
SOx emissions
NOx emissions
Dust
Water discharge
COD

Reducing emissions ofenvironmental impact
substances

Targets in RC Activities

Performance in FY2014
63.5% reduction compared to the previous year
72.6% reduction compared to the previous year
15.6% increase compared to the previous year
18.4% increase compared to the previous year
35.5% reduction compared to the previous year

Emission/discharge control of environmental
pollutants in the air
Emission/discharge control of environmental
pollutants in water

achieved a 63.5% reduction of SOx emissions, and a 72.6% reduction oftopreviousyear

Changes in SOx
EmissionsNOx emissions compared to the previous year through energy conversion toaim of increased energy efficiency, and consideration of operation methods
in the future. Note that the Yokkaichi Chemical Company does not have any■Yokkaichi ■Ohgata ■Shiga8

SOx Emissions

emissions. We will push forward further improvement of facilities with the

6.7

6
4
3.3

2.9

2.5

2

facilities related to SOx, NOx, and dust generation.

0.9

0-72.6 %

Reductiontopreviousyear

Changes in NOx
Emissions

Changes in Dust
Emissions■Yokkaichi ■Ohgata ■Shiga

(t)

13

to
previousyear+

FY201415.6 %■Yokkaichi ■Ohgata ■Shiga

3.0
121.3
114.8

109.2

Dust Emissions

NOx Emissions

12

(t)

140
120

11

Increase

10

97.7

100
80
60
40

26.8

20
10

11

12

13

2.5

2.5
2.0

2.1

2.0

1.8

1.8

1.5
1.0
0.5

0

0

FY2014

10

11

12

13

FY2014

Water Pollution Prevention

Changes in Water
Discharge Amounttopreviousyear

18.4 %

treatment facilities, etc. We will continue to make efforts to reduce the waterand COD discharge amount by optimizing the operation method in our
production processes and effluent treatment facilities, as well as reviewing
the cleaning methods of production facilities.
Changes in COD
Discharge Amount■Yokkaichi ■Ohgata ■Shiga■Yokkaichi Chemical Company Limited
3,541
3,131
2,865

10

Environmental and Social Report 2015

11

3,045

12

2,992

13

FY2014

topreviousyear-35.5 %

■Yokkaichi ■Ohgata ■Shiga■Yokkaichi Chemical Company Limited

(t)

30

COD Discharge Amount(1,000 m3)

4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

+

Increase

In FY2014, the DKS Group recorded 3,541,000 m3 in the amount of water
discharge, which resulted in a 18.4% increase compared to the previous
year. On the other hand, we recorded 15.3 tons of COD emissions, which isa 35.5% reduction compared to the previous year through improved effluent

Water Discharge Amount

Waterborne Polyurethanes In order to diminish load on wastewater treatment, and reduce waste, I am thinking of whether there is any operation in which processes can be
Production Section
improved so as to decrease product loss, even if only slightly. I am pursuing an effective measure that could result in both environmentally friendly

MIYANAGA Hiroyuki activities and cost reduction at the same time.

(t)natural gas from heavy oil for the fuel used in some facilities at our Ohgata
Branch. On the other hand, we recorded a 15.6% increase in dust

-63.5 %

Reduction

Air Pollution Prevention
Related to reduction of air-pollutant emissions in FY2014, we significantly

21

Evaluation
◎
◎
△
△
◎

21.9

23.7
21.8

20

19.3
15.3

10

0

Reduction

Voice!

Evaluation ◎: Significant results ◯: Results according to targets △: Targets remain unachieved

10

11

12

13

FY2014

Progress of Environmental/
Safety (RC) Activities

Efforts to Reduce Industrial Waste
Targets and Performance in FY2014
Target Items

Reducing industrial waste

Management Items
Waste generation per unit
Recycling rate
Final disposal amountFinal disposal rate

Evaluation ◎: Significant results ◯: Results according to targets △: Targets remain unachieved

Targets in RC Activities
1 % improved compared to FY2013
Promoting recycling
80% reduction compared to FY2000 in FY2015
1 % or less in FY2015

Performance in FY2014
Evaluation△
5.8% worse compared to the previous year
95.7%, 6.7 points improvement compared to the previous year◎
84.9 % reduction compared to FY2000
◎
1.2 %
△

Reduction in Generated Industrial Waste Amount

14,421

External Recycling Amount

12,00010,67410,000
8,000
6,000
4,000
2,000
0

Compared to
FY2000

12

13

307
171

00

11

12

13

FY2014

96.2

89.9

89.0

(%)
100

95.4

90
80
70

13,276

12,96912,00010,00095.7

78.4

14,00060

11,321

10,500

50

40.1

40

8,000

30

6,000
4,000

4,284

20
10

2,000

0

11

(%)
3.0

12

13

FY2014-1.2 %

topreviousyear

Changes in Final
Disposal Rate

1,131

278

16,00000■Yokkaichi ■Ohgata ■Shiga ■Kyoto■Yokkaichi Chemical Company Limited

369

96.1

18,000FY2014-84.9 %

95.8

0

Final Disposal Rate*

(t)
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0

11

00

Changes in Final
Disposal AmountFinal Disposal Amount

13,876
12,724

Reduction

Generated Industrial Waste Amount(t)
20,000(t)
16,00013,395

6.7 %■Yokkaichi ■Ohgata ■Shiga ■Kyoto■Yokkaichi Chemical Company Limited■ DKS ■ DKS Group■Yokkaichi ■Ohgata ■Shiga ■Kyoto■Yokkaichi Chemical Company Limited

14,000+

Improvetopreviousyear

External Recycling Rate

9.1 %Changes in External
Recycling Amount &External Recycling Rate

Reduction+

Increasetopreviousyear* The rate of Final disposal amount to waste amount.
2.8
2.4

2.5
2.0
1.9

1.5

1.2

1.0
1.0

0.5
0

11

12

13

14

FY2015(Targets)

Since a lot of different products are manufactured in small lots in our workplace, the manufacturing facilities need to be cleaned many times and thisYokkaichi Chemical Co., Ltd.
results in larger amount of wastewater generation. In FY2014, we reviewed the cleaning condition and successfully reduced almost 30% of
wastewater.

Changes in Generated
Industrial Waste Amountdisposal amount resulted in a 84.9% reduction compared to FY2000 due
to the reduction of 136 tons from the previous year (171 tons), which
achieved our medium-term target of a 80% reduction in 2015 comparedto FY2000, one year earlier. In addition, the final disposal rate to thegenerated industrial waste amount was 1.2%. To achieve the target of the
final disposal rate of 1% or less as in FY2015, each branch is making
efforts to improve our production processes and reviewing our treatment
measures. Our group continues to push forward the 3R (Reduce, Recycle,
Reuse) activities, and to promote effective use of resources.

SAEKI Nobuyuki

The amount of waste generation in FY2014 recorded was 13,876 tons forthe DKS Group, which was a 1,153 tons increase compared to theprevious year (9.1% more). The waste generation per unit result was 5.8%
worse than the previous year, though our target is a 1% improvement at
the annual rate, because the waste increase (9.1% more) exceeded the
production volume increase (3.1% more). Our company has all industrial
waste disposed of externally. The external recycling rate resulted in 95.7%,
which is a 6.7 points improvement compared to the previous year, andachieved the annual target of improving the recycling rate. The final

Voice!

Environmental and Social Report 201522

Progress of Environmental/Safety (RC) Activities

Safety Securement and Disaster Prevention
In order to ensure safety and reassurance for the employees and the residents in the surrounding areas, we havemade efforts to continuously enhance safety measures with comfortable working environments and independent
security management systems.

Efforts in Occupational Safety
Continuous Improvement through the Occupational Safety System* DKPM Activities: Abbreviation of DKS Productive Maintenance. They are activities based on the 5S (Seiri, Seiton, Seisou, Seiketsu, and Shitsuke) in order to strengthen the corporate culture and build a foundation for control and improvement.

Industrial Accident Frequency Rate (AFR) & Industrial Accident Severity Rate (ASR) (From January 1 to December 31, 2014)

We have newly introduced emergency generators on the rooftop of the administration building as a disaster prevention measure. If a Nankai Troughearthquake should occur, flooding of up to 1 to 2 meters of water is expected at our Yokkaichi Branch. Since flooding and other damage due to localized

The industrial accident frequency rate (days away from work) of the DKS Group tended to decline from FY2010, but regrettably, it increased in FY2014
because we had two “days away from work” cases. In FY2015, we continue to make renewed efforts to enhance our conventional safety activities in orderto achieve the industrial accident frequency rate of zero.
Changes in Industrial Accident Frequency Rate
(Days Away from Work)

Changes in Industrial Accident Severity Rate

4.0

0.25
DKS Group
DKS
Chemical Industry

3.5
3.0

DKS Group
DKS
Chemical Industry

0.20

2.5
2.0
1.5
1.0

0.15

0.10

0.05

0.5
0.00
0.0
05

06

07

08

09

10

11

12

13

05

14 yr.

* Frequency Rate = (“Days Away from Work” Accident)/(Man Hours) x 1,000,000
This is a numerical value representing the degree of frequency of victim
occurrence per 1 million hours.

06

07

08

09

10

11

12

13

14 yr.

* Severity Rate = (Days of Lost Work)/(Man Hours) x 1,000
This is a numerical value representing the degree of severity of an
occupational accident per 1,000 working hours.

Promotion of the DKPM Activities
Our DKPM Activities started in April 2012, and we have already reachedtheir third year. Our activity area has been expanding, and at present
covers 10 branches including our affiliates. Our major activity places are
documents in cabinets, and personal desks of the offices, laboratory
tables of the research department, and reaction tanks including thesurrounding areas in the fields of the plants.

Patrol in Yokkaichi Branch

23

taking corrective action, we try to laterally disseminate the findings andsolutions throughout all sectors and departments to prevent similar cases
from occurring again.
In addition, we have fulfilled implementation of preventative measures andsafety patrols by the managers concerned in order to pick up unsafe
locations, unsafe working operations, and actions that may exist. We willcontinue to conduct further activities related to hazard prediction training(KYT), pointing and calling, risk assessment, and experience-based safety
education for risks, and aim for the actualization of zero accidents.

Severity Rate

Plant Administration Section

YAMAMOTO Yoshiya torrential rainfall is increasing as well, we have enhanced our disaster prevention system by introducing more generators.

We recognize that ensuring safety and reassurance is the foundation for
effective management and plays a fundamental role in all businessactivities. Specifically, taking safety first and the respect of human life anddignity as our basis, we have been making efforts to eradicate the potential
for and occurrence of accidents. Furthermore, in order to ensure a safe andcomfortable working environment, we have been promoting the DKPM
Activities*.
Regrettably, in FY2014, we had two “days away from work” cases and,
therefore, failed to continue our company's No Accident Record streak. For
accidents that occurred, after analyzing the causes of the accidents andFrequency Rate

Voice!

Environmental and Social Report 2015

As for the results of DKPM Activities, our executives execute a top
diagnosis quarterly and judge whether to accept it or not. Each branchalso posts the activity progress on bulletin boards to help promote ouractivities.
In the future, we will attempt to widely develop our activities to new areas,
as well as to continue to develop places commonly used.

Patrol in Shiga Branch

Top Diagnosis Presentation in Kyoto Branch

Progress of Environmental/
Safety (RC) Activities

Implementation of Experience-based Safety Education
In order to prevent occupational accidents and raise safety awareness, wehave introduced experience-based safety education to give participants
the opportunity to sense the danger of accidents through pseudo
experiences since 2010. In FY2014, we introduced experience-based
safety education in the new employee training and production department
training, and conducted exercises using pseudo experience devices togenerate dust/solvent explosion, the incident of getting caught in rotary
valves, and pipe pressure. Through these exercises, we had everyone
think about various potential risks.

After the training, we received such comments from participants as: "Ifound it very important to always check safety because a small mistake
could cause a large accident in the manufacturing field," and "the training
made me aware of possibilities I had not paid much attention to before,
and it was a good lesson for me." We reconfirmed this education gave us
a very effective experience for preventive measures against accidents. We
plan to continue education on the importance of safety knowledge andstable operation through education and training to raise safety awarenessamong individuals.

Efforts on Distribution Safety

Voice!

* Yellow Card: Common name for the Emergency Response Card on transportation of toxic and hazardous materials.

Efforts on Process Safety and Disaster Prevention
Preparation for Emergency (Implementation of Various Emergency Drills)
In response to large-scale fire/explosion accidents that recently occurredin domestic chemical industries, we have organized not only safety
operation manuals to be used during steady operation, but also
emergency stop manuals to be used at emergency stop and restarts inplants during unsteady operation (such as during an earthquake, fire,
power outage, leakage, or significant load variation) since FY2013, andprepared for an emergency situation. In addition, we have established theprocess safety and disaster prevention system for each branch. We

conduct emergency drills according to the annual program, and alsocollaborate with local communities by organizing joint emergency drills
with the cooperation of local fire departments.
In order to prevent accidents and disasters inherent in chemical
manufacturers from occurring, we intend to take measures based on therisk assessment of hazardous properties, such as the potential hazards,
and continue to make efforts to prevent disasters, such as fire and/or
explosions.

Kyoto Branch

Shiga Branch

Yokkaichi Branch

Ohgata Branch

Funding for Process Safety and Disaster Prevention Measures
The FY2014 funding for our process safety and disaster prevention measures was 142.9 million yen. This funding was mainly allocated to explosion, fire,and leak prevention measures; mitigation measures for aging facilities; and occupational safety and working environment improvement measures.

I am responsible for work related to fire prevention, safety, and health. I am putting more efforts into pointing and calling in my daily work. I think that
Plant Administration Section
pointing and calling is an easy KY (risk prediction) activity for everyone to perform, and it will help suppress generation of occupational accidents as
well.

ourselves, but also provide proper education and instruction for our
logistics partners, based on "ensuring transport safety," "maintenance oftransport order," "traffic accident prevention," and "transport pollution
prevention such as with exhaust gas."
In addition, we have issued the Yellow Card to truck and tanker truck
drivers who transport products in order that they can take appropriate
measures at the time of emergency, and have developed a label-typeContainer Yellow Card system by indicating the Emergency Response
Guidebook (ERG) number and UN number on the product labels.

HATA Kousuke

Currently, we are outsourcing our logistics business related to storage andtransport of our products to external freight companies. Under the spirit of
Responsible Care, the entire Logistics Department is working as one withcooperating outsource companies to secure safety of transport andenvironmental protection as well as guaranteeing quality transport service
to our customers.
As part of such approach, we periodically perform conference activities
with the aim of eliminating transportation accidents. Through these
activities, we not only provide thorough instruction in legal compliance byEnvironmental and Social Report 201524

Progress of Social Activities

Relations with Our Customers & Business Partners
Efforts on Quality Assurance
Basic Concept of Quality Assurance

Voice!

Our company established the Quality Assurance Management Regulations in 1995, and has continued to make efforts to develop and offer high quality
products and to realize our customer satisfaction to the maximum extent according to the basic concept of the quality assurance.
1 We establish the quality-related management standards that cover the whole of the processes, from product planning to customer service throughdesign/development, manufacturing, and sales. Through appropriate operations of such standards, we will strive to provide high quality products with thatare very safe and reliable, maintain and improve product quality, and assure that product quality for customers.
2 In order to effectively function with quality assurance throughout the entire company, we will establish the quality management system, and maintain it.
3 All our employees need to observe this basic concept of quality assurance, and carry out tasks according to the Quality Assurance Management Regulations.

Quality Policy

We promote quality assurance activities through the collaboration of eachdepartment over the whole of the processes, from product planning to customer
service through design/development, manufacturing, and sales, while keeping
the "Customer First," which is one of our management principles, in mind.
Persons in charge of our quality assurance activities raise problems on quality
assurance and develop solutions for these problems, and each department
implements assignments on quality assurance.

Quality Control Section[Quality Assurance (QA) System]
President
Management Committee
Person in Charge of
Quality Assurance

Quality Management System

QA (PL) Conference

We are committed to enhancing quality management activities by utilizing thecertification of ISO9001, a quality management system standard, as a basic
tool for company-wide quality management. In order to realize customer
satisfaction, we periodically implement various activities with this system,
mainly including management review, product quality review meetings,
product quality audit, corrective measures and recurrence prevention againstcomplaints/defects using a database, clarification of the root cause using ouranalyzing method ("Naze-naze analysis"), execution of quality patrols,
modification control, quality education, and awareness activities (collection ofquality slogans/publication of newsletters). We have continuously improved
this quality management system by executing a PDCA cycle.
[Quality Management System]

Management Committee

QMS Committee

Division Manager

Chief of Technology
Development Headquarters

Sales Department Manager
R&D Manager
Manufacturing Department Manager

Chief of R&D Center(R&D Manager)

Chief of Production
Control Headquarters

RC Promotion Committee
QA (PL) Conference
QMS Committee

Business Administration Division
Purchasing Department
Material procurement

Business Headquarters
Sales
Department

R&D

Production Control Division

Production
Department

Functional Chemicals Business Division
Logistics Department

Plastic Materials Business Division

Order receipt & shipping

Electronic Materials Business Division

Product Quality
Review Meeting

At our Shiga Branch, we manufacture food additives as well. In response to recent food contamination issues, a higher level of management on food

MURATSUBAKI Yasutaka safety has been demanded by customers. We are all making a concerted effort to fully respond to our customers' demands.
25

Quality Assurance (QA) System(Head of) Branch

Environment, Safety &Quality Affairs Department

QC Section
BranchCustomer

Product Liability (PL) Policy
In order to prevent reoccurrence of accidents such as those that resulted ininjury and property damage in 1994 due to product deficiency, we haveestablished our Product Liability (PL) Prevention & Management Procedures,and built the PL Accidents Prevention System under our fundamental policy,
which is to secure the maximized product safety over the whole of theEnvironmental and Social Report 2015

processes consisting of R&D, manufacturing, and consumption, as well as
the final disposal, and to develop, manufacture, and sell products withhigher safety and reliability, and to offer customer services for them.
There were no accidents resulting from product liability in FY2014.
We will continue to enhance product safety accident prevention.

Progress of Social Activities

Product Safety (chemical substance management based on design development)
In our product development, we not only develop products with the aim ofrealizing the quality demanded by customers, but also evaluate chemical
substances from various aspects, such as by obtaining material information
at the design/development stage, confirming safety, estimating impact onenvironment, and making conformity assessment of the laws andregulations to be applied.
At the preproduction/mass production stage, we clarify information aboutchemical substances, and implement appropriate management in response
to laws and regulations, environmental conservation, process safety anddisaster prevention, and occupational safety.

[Product Safety Mechanism]

Customers & Local Communities, Society
Investigation &Search Stage

Design &Development Stage

Demanded Quality

Mass Production Stage(Product Sales)

Product Design

Process Safety and Disaster Prevention

Mass Production Review

Stable Supply· Production technology review· Product evaluation (safety/packaging)· Response to laws and regulations
to be applied· Estimation of impact on environment· Securing of materials· Creation of SDS and technical documents· Quality management· Response to improvement requests· Provision of product information· Response to legal regulations· Environmental conservation· Securing of distribution safety

Provision of Product Information
We provide product information as an opportunity for customers to better
understand our products, and make efforts to increase customer satisfaction.
We always respond to requests and inquiries from our customers quickly andadequately in good faith. For the purpose of introducing our existing products
and/or new products, we strive to promote close communication with customers
and business partners through our everyday business negotiations, and send out
our product information using brochures and technical documents.
In addition, we use the safety data sheets (SDS) to provide such information as on
the corresponding product properties, laws and regulations to be applied,transportation, handling methods and emergency measures, and disposal
methods. We sequentially update our SDS and label indications according to therevisions of the Act on the Evaluation of Chemical Substances and Regulation of
Their Manufacture, etc., the Industrial Safety and Health Law, the Law concerning
Pollutant Release and Transfer Register / PRTR Law, the Poisonous andDeleterious Substances Control Act, and the Japanese Industrial Standards (JIS).

Product
BrochuresPd tBhResponse to Complaints and Quality Defects
Since we position non-conformity related to quality (complaints/defects) as
an important issue for the securing of quality, we confirm any description of
non-conformity, determine the cause, and verify corrective action as well as
its effectiveness, based on our quality manual. In addition, we attempt tohandle product complaints we have received quickly and in good faith, andto laterally disseminate them through unified management and sharing of
information in order to prevent any recurrence, and therefore prevent theneed for any further complaints.
We share quality complaints and defect information through the network,and conduct progress management while setting the goals necessary to
reduce the number of said complaints and defects. In FY2014, we worked
on eradication of human errors by setting up a product quality review
meeting and achieved positive results. We will move to further improve
product quality.

Partnership with Our Dealers
We are conducting sales activities with the cooperation of distributors by searching
the needs and seeds based on the trustful relations built between our company
and business partners.
We are also strengthening the sales of solutions by expanding our pipes with
Zenkoku Ichi-Ko Kai (DKS National Dealers Meeting) agencies composed of main
sales agents and distributors, which has resulted in our sales expansion in Japanand overseas.
We conducted communication activities for information exchange, including the
Zenkoku Ichi-Ko Kai meeting in FY2014, as in the past. In FY2015, we will continue
to promote mutual prosperity based on our trusting relationship with distributors.

Quality Control Section

Technology Service

I always keep in mind to respond to complaints in consideration of customers' points of view. For example, if a customer finds that defective packaging
has resulted in leakage when her or she receives our product, a customer's plant might have to stop operation. I focus on “Quality First” as our company
credo and strive to prevent the need for any complaints by customers.

Occupational Safety / Process
Safety and Disaster Prevention

NAITO Noriaki· Realization of quality· Safety confirmation· Estimation of impact on environment· Conformity assessment of laws
and regulations to be applied· Investigation of materials

Voice!

Securing of Product Safety

Process Review

Planning· Investigation of technology
information· Investigation of laws andregulations

Research &Preproduction Stage

Zenkoku Ichi-Ko Kai (DKS National Dealers Meeting)

Environmental and Social Report 2015

26

Progress of Social Activities

Relations with Society & Local Communities
DKS aims to be a trusted company by promoting fair and free competition,
conducting healthy business activities without ties to antisocial groups, andthrough attempts to coexist with local communities.
As part of information disclosure and communication with local people in
the neighborhood, we create opportunities to explain our activities to thosein the neighborhood community association concerning environmental

RC Yokkaichi District Local Communication Meeting (at Yokkaichi University)
Voice!

Plant Administration Section We have started delivering lectures at our Ohgata Branch. When I saw students in Ohgata-cho elementary school enjoy trying to make various

FUJIWARA Atsushi interesting experiments and create hand soap, I reconfirmed I would like to keep working on this activity.
27

protection and safety measures at our branches, our business activity
descriptions, and our approaches to administration. We also make use ofthis opportunity to listen to their opinions and proposals about risks
associated with the chemical plant, as well as engaging in informationexchange. In addition, we implement joint activities with local committees.

Acceptance of "Real scope in Gokasho"

In February, 2015, the Fifth RC Yokkaichi District Local Communication
Meeting was held, and we had 221 participants from the 11 member
companies, community associations, related administrative agencies,
industrial organizations, and neighborhood companies. On behalf of member
companies, our company explained the aggregate data concerning air, water
quality, and waste that we have reported to the Japan Chemical Industry
Association, and our approaches to reduction of any environmental impact.

We accepted the offer of "Real scope in Gokasho" from the Higashiomi
commerce and industry association and Higashiomi tourism association,
which was an overall inspection tour of 14 facilities in our Shiga Branch, andheld the plant inspection tour in November, 2014. We had participants
inspect our manufacturing sites after introduction of our branch, andreceived satisfactory evaluations from them.

RC Yokkaichi District Local Communication Meeting

Plant Inspection Tour (Shiga Branch)

Implementation of Lecture Delivery for Local Communities/Elementary and Junior High School Students
Using our strength as a chemical company, we have made efforts througheducational support activities and a desire to contribute to youth
development, as it is these youths that will take on important responsibilities
in future society, and due to the circumstances that young people havebecome less and less interested in science and chemistry. We give lectures
for elementary and junior high school students with the intention of making
opportunities for them to take interest in the fun that chemistry has to offer,and environmental issues as well. With the theme of our familiar chemical
products, we encouraged each student to make an interesting experimentusing detergent, and to understand why detergent can remove dirt while

Lecture Delivery (Joetsu City)

experiencing the fundamental effects of surfactants, allowing them at thesame time to think of the importance of water.
In FY2014, we gave lectures in four schools in Kyoto city, Yokkaichi city, andJoetsu city, and participated in an event titled "Jikkan Science (Realize thepower of science)" at the Yokkaichi children’s scientific workshops(organized by the city’s Board of Education), as well. We practice the class inan easy to understand way for people to enjoy studying their familiar
chemical products, using our know-how and experience accumulated
through our business. We will gear lecture contents according to theknowledge level of each grade for further fulfillment.

Lecture Delivery (Yokkaichi City)

Yokkaichi Children’s Scientific Workshops

Implementation of Internship & Learning through Work
We have accepted students for internships over the years for the purpose ofoffering them work experience, with the participants being mainly technicalcollege students. We have students actually experience working at our
research laboratory and branches for a week during their summer holidays.
We keep it in mind to create programs for interns to not only just understandour business operations and services, but also to realize "the meaning ofwork" during this short period.
We believe that accepting students for internships will help them to expand
their occupational awareness and improve development of their future
attitude to work, and it will help us promote collaboration with their schools

Environmental and Social Report 2015

as well. We actively promoted
the acceptance of students in
FY2014, and had five
participants (one participant in
FY2013). We will continue to
use the internship system tohelp promote our company
among students and theirschools.
Workplace Experience (Shiga Branch)Progress of Social Activities

Social Contribution and Continuous Participation in Community Events
As for our contribution in local communities and society in general, we promote cleanup activities around our branches as well as promoting blood donation.
Also, at our Kyoto Branch, we promote production of local ingredients for local consumption with the cooperation of a staff restaurant operating company. We
also actively participate in community events. Our Yokkaichi Branch joins the Yokkaichi city cutter race tournament every year.

Voice!
Cleanup of the Surrounding Roads(Kyoto Branch)

Cooperation in Blood Donation(Yokkaichi Branch)Participation in the Yokkaichi City Cutter
Race Tournament (Yokkaichi Branch)

Enhancement of Shareholder Meeting

Implementation of Questionnaires to our Shareholders
Shareholder Meeting

From June to July, 2014, we first gave questionnaires to our shareholders inorder to provide an opportunity to hear various opinions from them. As areason for purchasing our stocks, we found "growth" to be among thehighest of their answers in terms of ratio, and received a lot of comments on
expectations for our new business, such as using cellulose nano-fiber, as
well as for our new Yokkaichi Kasumi Plant.
As for future investment policy, we found "continued shareholding" to be in
the highest ratio. We will continue to move forward with the growth during
mid- and long terms in respond to expectations from our shareholders.

Timely and Appropriate Information Disclosure and Tools
Shareholder Letters

Based on fair and timely disclosure to our investors, we disclose information
using the Timely Disclosure Network (TDnet) provided by the Tokyo Stock
Exchange and mass media (such as Japan National Press Club).
Our website provides IR information such as earnings summaries,
shareholder letters, securities report as well as notice of calling ofshareholder meetings, corporate information and press releases.
Our Company's Website
http://www.dks-web.jp/

Implementation of Public Stock Offerings
In November, 2014, which was the final fiscal year of "Change 100 Plan"
Stage II, we passed the resolution to issue and offer new stocks. Our publicstock offerings this time were made for the purpose of improvement andenhancement of our finance character in addition to funding for constructionof our new Yokkaichi Kasumi Plant along with the research function as amother plant, and for growth of strategic investment.
We will continue to bring the facility investment necessary for our businessexpansion into view, and to aim at a further leap by securing long-term
stable funds and attempting to strengthen our capital stock.

I am engaged with the operation of the shareholder meeting. I would like to effectively utilize the precious opinions from shareholder on thequestionnaires to improve the shareholder meeting operation, and to enhance stock measures. I will continue to devote myself to my tasks so that ourshareholders would like to continue holding our company stocks and to participate in the next shareholder meeting as well.

We regard the shareholder meeting as an important opportunity to foster
communications between shareholders and management. 88 shareholders
attended the annual shareholder meeting in June, 2014. After the meeting,
Chairman, Mr. Sakamoto, had the briefing session titled "Heaven, earth, andman at the beginning of a new era -- from Kyoto to the world, and to the
future --," followed by a shareholders get-together with top management.
We had meaningful exchanges of opinions with our shareholders in arelaxed and friendly atmosphere.

Legal Department

IPPONGI Yusaku

Relations with Our Shareholders & Investors

Environmental and Social Report 2015

28

Progress of Social Activities

Relations with Our Employees
Human Resource Philosophy/Human Resource Development Policies
DKS recognizes that our employees are our greatest asset and that the growth of each individual employee will support the growth of our company. To assist
each of them in becoming a full-fledged employee/corporate member of society and gaining a sense of accomplishment and satisfaction from their work, wehave been devoted to protecting the human rights of our employees and improving various human resource systems, human resource development andeducation, and working environment development.

Our Company’s Human Resource Philosophy

Voice!

Our fundamental human resource philosophy is rooted in the idea that our people are our greatest asset and must be nurtured
and treasured. We believe that by putting our belief into practice the growth of each individual employee will support thegrowth of our company and will allow our employees to be active, to grow, and to realize their potential in each workplace.
This will help them in not only achieving their self-actualization but also serving as a driving force for further developing of
our company, as well as making the company’s presence permanent.

MORI Yoshiyuki

Personnel Section

before. I push myself every day in order to bring each corresponding measure into shape one by one.

Various human resource measures consistent with needs of a diversified society, and company's growth and development are needed much more than

Human Resource Development Policies
In order to foster people who can fully understand our company’s management philosophy and the management policies
based thereon and can contribute to the realization of such philosophy and policies, we require that our employees have thefollowing basic skills and attitudes:
1. Profound expertise, technique, and broad vision

2. Energetic attitude and behavior

4. Fruitful in terms of creativity

Respect for Human Rights and Inclusion
Efforts to Prevent Harassment
As for activities to prevent sexual, power, and moral harassment, etc., wehave conducted related educational programs in hierarchical training
courses. In addition, we post a notice of the consultation contact twice ayear, and commit ourselves to creating a system for ease of contact by all.

Retiree Reemployment System
We have introduced a reemployment system for our company’s retirees
since FY2006. By drawing on their many years of skills, techniques, andexperience, they still remain active as “senior challenge staff.”
Our system has been changed according to the law revision since FY2013,
and is still being maintained.

In-house Achievement Award System
Through our employee incentive programs, we have been running not only aperformance incentive system such as patent and personal achievement awards(twice per year), but also Division Manager’s and length of service awards.

Employment System
In response to the declining birthrate and aging society, and in order topromote a healthy work-life balance, we have developed the following
personnel systems, each of which takes into account employees’
child-rearing and nursing care. We discussed an extension period forshortened work hours for those who are child-rearing in theunion-management consultation, and it has been implemented since
FY2013. We have many employees who have actually obtained the period
extension and continued working.
- Childcare Leave System- Childcare Part-time Work System- Nursing Care Leave System
Number of Employees Who Have Used the Personnel
Systems During the Last Five Years(persons)

Childcare Leave System ■Male ■Female■Childcare Part-time Work System

12
10
8
6
4
2
0

FY2014 First Half Achievement Award Winners

29

3. Flexibility in thinking

Environmental and Social Report 2015

10

11

12

13

14

(FY)

Progress of Social Activities

Human Resource Development & Education

Corporate Manager Development Training

New Employee Training: Experience of Dust Explosion

Voice!

Since FY2011, we have reviewed our past training programs and contents
to improve managerial skills and human resource development. Then we
established the new education training system. In order to enrich ourprograms, we have especially added programs for the training course byposition and department training for external education.

Department Training

Director

Training Course by Position

Production

Management

Self-development
Support Program

CommonWorkshop Practice*1

Support System for Obtaining Qualifications

Correspondence Education Courses/e-learning

Support for the TOEIC Examination

English Conversation Class for Beginner/Advanced Levels

Compliance Education

Human Rights Education

Staff Dispatching to Outside Conferences or Seminars

Domestic Study Program

Mental Health Care Education

Accounting Training (advanced)

Experience-based Safety Training

ForemanTraining

Follow-up
Training

Skills Improvement
Training

Sales Development Workshop

Practice and Application of Sales Business

New Sales Staff Training

Accounting Training (basics)

Follow-up Training

Brother and
Sister System

New Employee

Third-year Training

Experiment Planning
Method Training

Professional Training

Presentation
Training

Advanced Professional Training

Logical Thinking
Training

New Manager Training

Safety and Health Education

Accounting Training
Coaching Practice Training

Development Training for Research Management Post

Third-year Management Post Training

Engineer Training

Fifth-year Management Post Training

The Management

Sales

Management Workshop

Corporate Manager Development Training

General Staff

Research*2

New Employee Training*1: LT (Logical Thinking)*2: Brother and Sister System: a system that pairs young senior colleagues who have already completed the training with new employees, and that provides senior colleagues
with the responsibility of instructing new employees on a one-to-one basis about working procedures as well as on the manners appropriate for members of society.

Environmental and Social Report 2015

I am mainly in charge of recruitment and education. We recruited new graduates in FY2015 in consideration of globalization. As for education for thisfiscal year, we intend to shift emphasis from the training rooted in classroom lecture, to the one with experience-based awareness in order to help

Education Training System

Personnel Section

We make use of the former Head Office in Shichijo Sembon, where thecompany was founded, as our education facility. We have enhanced thesystem to support capacity building of our employees through personal
development by organizing internal seminars and briefings, and by
introducing an incentive system for correspondence education courses, aswell as a qualification acquisition support system.

MATSUYOSHI Kenichi participants grow.

Based on the human resource philosophy according to the essential
recognition that the growth of employees leads to the advancement of ourcompany, we are promoting human resource development and educational
programs.
In programs for our employees, we focus on three pillars of in-house
education (OJT) through work, external education (OFF-JT) of skills andabilities necessary for performing tasks, and personal development support.

30

Progress of Social Activities

Relations with Our Employees
Creation of a Comfortable Workplace
Work-Life Balance Management (Reduction of Overtime Work Hours, Promotion of Taking Annual Paid Leave)
As our approach to responding to the aging society with fewer children, as well as to promoting work/life balance, we have formulated the General Business
Owner Action Plans to support employees in achieving a good balance between work and child-rearing, and disclosed this within and outside the company.
The results in FY2014 are as follows:

Voice!

YOSHIKAWA Yuko

Public Health Nurse

know about their health condition. I will continue to work on cultivation that could lead to disease prevention, and related approaches.

Companies are required by law to conduct regular medical checkups once a year. I think it’s a good system to give employees a chance each year to

31

General Business Owner Action Plans (summary)

General Overview of the Plan

(From April 2010 to March 2015)(From April 2010 to March 2015)

Target 1

Familiarizing our employees with our child-rearing
support system and enlightening them

Using the internal dedicated database, we made our support systemwidely known, and cultivate employees via said system. Employees
who work using the childcare leave system and/or childcare
part-time work system are on the increase. (refer to page 29)

Target 2

Implementing measures to reduce overtime work

In order to reduce overtime work hours, management and laborcheck the agreements made at each branch, and cooperate witheach other.

Target 3

Implementing measures to promote taking annual
paid leave

The rate of leave taken is at the 60% level, which is a little higher
than the national average, but it is decreasing year by year. We willencourage employees to take more annual paid leave in addition totheir planned use.

Target 4

Performing community contribution activities
related to children and child-rearing practices

We have actively participated in delivering lectures and scienceseminars, and have conveyed the interesting nature of chemistry topeople in local communities. (refer to page 27)

Target 5

Expanding opportunities to obtain working
experience including internshipWe have willingly accepted technical college students in ourinternship programs. (refer to page 27)
The next action plans from April 2015 to March 2020 have been already formulated.

Promotion of Medical Checkups
As a result of our activities to improve the regular medical checkups rate in
FY2014, the checkup-participation rate was 100%, which was our goal. The rateof people who received abnormal results has decreased in all inspection items
since FY2013. To achieve early detection of cancer and ensure the promotion ofgood health for our employees, we conducted medical checkups including X-ray
examination of the stomach, abdominal echocardiography (ultrasound), PSA
examinations, lung cancer tumor marker examinations, echo mammography, andcervical cancer screenings at all our branches.
Since FY2010 we have recommended reexamination and second
checkup-participation for employees who received results with abnormal

findings in order to ensure that they do not fail to attend reexamination, and help
them understand the clinical results. Consequently, the rate of reexaminationand second checkup-participation was 76% in FY2013, and 57% in FY2014.
We have continuously set our goal for the checkup-participation rate to be
100% in FY2015. We will continue to encourage employees who received
abnormal results to be reexamined and get a second check-up in order toprevent any current symptoms from leading to serious illness and/or keep any
illness or other problems from increasing in severity. At the same time, we will
move our activities to improve the participation rate for reexamination forward bydetermining the cause of its decreased rate.

Awareness of Disease Prevention■ Seminars
We had seminars on how to judge the medical checkup results (24participants), about heat stroke (40 participants), mental health (25participants), and on burn injury (30 participants) at our Yokkaichi Branchand Ohgata Branch (OFF-JT).

Implementation of Mental Health Care
■ Mental Health CareIn regards to mental healthcare activities in FY2014, we conductedoccupational and stress coping tests, and as follow-up instruction we
introduced a consultation service by clinical psychotherapists, industrial
counselors, and industrial health staff. In addition, we have instructed theheads of departments on how to analyze the occupational and stress coping
test results, and conducted line care training for them.

Environmental and Social Report 2015

Workplace Care Training for the Management
Based on the Occupational and Stress Coping Tests

Progress of Social Activities

Communication with Employees
Implementation of Meetings for Research Presentation
We hold meeting for research presentation twice every year (July andJanuary), which provides company-wide technical forums for our
researchers to present and discuss their latest findings in R&D andproduction technology developments. In the meeting in July, in addition to

the annual seminar by a visiting lecturer, oral presentation, and poster
presentation, we held a panel discussion about our approaches to open
innovation. At a convivial meeting following the meeting, participants vote on
the best meeting for research presentation and a winner is awarded.

Voice!

Implementation of In-house Seminars and Briefings
Seminars (by a visiting lecturer)- Key to success of collaboration with industries and universities -- Nano
particle material development and practical realization based on theaerosol fundamental research -- Basic and applied research on living cationic polymerization
Briefings- Basic knowledge and precautions related to subcontract transaction- Overview of new chemical substances regulations in Korea and Taiwan,
and our approaches to them

Seminar by a Visiting Lecturer

Information Transmission inside the Company
Our Public Department publishes the in-house magazine “DKSCOM” every
other month, and attempts to instill the management policies and visions, aswell as fostering communication in the company. We plan the magazine byreferring to monitors’ opinions in order to deliver clearly and in a timely
fashion information that should be shared. We started introducing theconstruction process of the Kasumi Plant since the October 2014 issue,
which has helped all employees closely follow the construction of ourmother plant.

In-house Magazine「DKSCOM」

In the new employee training for engineering work organized by the research management department, we make a questionnaire about the training
procedure and the contents for participants to fill out after the training. We keep it in mind to make use of the questionnaire results in the training
curriculum for the next year in order to improve the training quality.

Panel Discussion

R&D Administration
Department

MATSUMOTO Satoko

Oral Presentation

Environmental and Social Report 2015

32

On-Site Report

Yokkaichi Branch
Our Yokkaichi Branch has promoted communication with local communities
through active participation in environmental conservation activities. In recent
years, we have made efforts to reduce carbon dioxide emissions through fuelconversion, introduction of electric vehicles, and the activity of turning off
unnecessary lighting. As for local activities, we joined a cleanup work fordriftage on the coast at the Toshi Island in Mie Prefecture, which was organized

Voice!

by the Mie Prefecture industrial waste disposal promotion association.
Also in February 2015, in the Fifth Responsible Care Yokkaichi District Local
Communication Meeting held by 11 companies in the Yokkaichi district, which

RC Promoting Member

are the members of the Japan Chemical Industry Association RC committee, we
made a presentation titled, "Coexistence with the earth, reduction of impact on
We purify wastewater discharged from the plant in wastewater treatment facilities, and discharge treated water with the reference value met. In order
Plant Administration Section
to deal with wastewater, of which the quality changes all the time, we have maintained proper treatment without neglecting daily inspection or
management.

MISAKI Shinya

33

environment, aiming to be the environmental city Yokkaichi."Environmental Impacts in FY2014
7 Chitose-cho, Yokkaichi City, Mie Pref.
Address:
Area of the Site: 17,647 m2
Main Products: Polyurethane polyol, urethane prepolymer,
UV-curable monomers/oligomers, anionic surfactant
cationic surfactant, oiling/finishing agent

Energy Consumption (Crude oil equivalent)

（kl）

2,130

（t-CO2）

4,310

Generated Waste Amount

（t）

6,678

Final Disposal Amount

（t）

6.1

PRTR Emissions

（t）

43.30

（1,000m3）

462.2

（t）

0.6

CO2 Emissions

Water Discharge Amount
COD Emissions

Ohgata Branch
Our Ohgata Branch, as a manufacturer of chemical products with highfunctionality, such as water-soluble polymer and waterborne urethane, sets its
environmental goals based on the environmental management system, andmakes continuous efforts on reduction of the impact on environment. In
FY2014, as one of the 3R (Reduce, Recycle, Reuse) activity promotion forindustrial waste, we partially updated the anaerobic treatment facilities in thewastewater treatment plant, and started electrical power supply throughinstalled generators that use generated methane gas as recycled biomass fuel.
This results in the promotion of recycling, as well as generation of certain

RC Promoting Member

earnings, which in turn contributes to company performance.
We will strive to stabilize methane gas generation through more stable
operation of anaerobic treatment facilities, and to lead to a reduction in theimpact on the environment.

Environmental Impacts in FY2014
Energy Consumption (Crude oil equivalent)
CO2 Emissions

230 Saigata, Ohgata-ku, Joetsu City, Niigata Pref.
Address:
Area of the Site: 86,963 m2
Main Products: CMC, waterborne polyurethanes, industrial detergents,
polyvinyl pyrrolidone

Environmental and Social Report 2015

（kl）

8,126

（t-CO2）

17,437

Generated Waste Amount

（t）

869

Final Disposal Amount

（t）

62.1

PRTR Emissions
Water Discharge Amount
COD Emissions

（t）

0.33

（1,000m3）

510.4

（t）

10.2

On-Site Report

Shiga Branch
Our Shiga Branch is located in an area with a view of Mt. Kinugasa and Lake
Biwa, in the Higashi-Omi area known to be one of the birthplaces of the Omi
merchants. We have been paying close attention to the environmental aspects ofall our business activities and implementing environmental protection practices
through our continual improvement structure, and focusing on coexistence withlocal communities.
Up to and including now, we have been making efforts to reduce carbon dioxide
emissions through introduction of a cogeneration system and fuel conversion, andVoice!

to upgrade water quality through improvement of wastewater treatment facilities.
In addition, we have continued activities rooted in the local communities, for

RC Promoting Member

example, by conducting environment/safety patrols with executives of thecommunity association, and by joining cleanup activities in Shiga Prefecture. We
will aim to be a company that further gains and keeps the trust of the local

6,321
12,183Generated Waste Amount

（t）

2,995

Final Disposal Amount

（t）

1.7

PRTR Emissions

（t）

0.39

（1,000m3）

2,023.0（t）

3.4

Water Discharge Amount
COD Emissions

Yokkaichi Chemical Company Limited
We commit ourselves daily to making various activities of our company
understood by the people around our plant, through various periodical events. In
FY2014, for the first time in three years, we organized a plant inspection tour
for local people around the Rokuromi Plant. Despite of rain, we had many
participants in the tour, and explained our activities to them in answer to theirlively questions. Next time we will invite local people around the Yokkaichi Plant
for an inspection tour. Based on the requests and other comments we received
this time, we would like to continue the tour as an event to gain better
understanding of our company.

RC Promoting Member

In addition, we intend to improve on creation of more opportunities for female
employees to work actively from FY2015, according to the medium-term
management plan.
Environmental Impacts in FY2014
Energy Consumption (Crude oil equivalent)

Address:

Headquarters / Yokkaichi Plant:
2-1, Miyahigashi-cho, Yokkaichi City, Mie Pref.
Rokuromi Plant:
710, Rokuromi, Oaza, Yokkaichi City, Mie Pref.
http://www.yg-chem.co.jp/
URL:
Area of the Site: approx. 30,000 m2 (Headquarters/Yokkaichi Plant),
approx. 26,000 m2 (Rokuromi Plant)
Manufacturing, processing and sales of various
Operations:chemical products made from Ethylene oxide andother petrochemical industry products

（kl）

6,581

（t-CO2）

14,867

Generated Waste Amount

（t）

3,261

Final Disposal Amount

（t）

100.7

PRTR Emissions

（t）

0.71

（1,000m3）

545.9

（t）

1.1

CO2 Emissions

Water Discharge Amount
COD Emissions

We have achieved a significant reduction of power consumption by reviewing operation of industrial water pumps in this term. In terms of safety, we havemetal surface treatment agents, surfactants,
water-soluble polyester polyol,solvent-substitute waterborne/non-waterborne detergents（kl）（t-CO2）CO2 Emissions

identified hazards and estimated risk through risk assessment activities, and made efforts to prevent risk from arising according to the priority level.

Energy Consumption (Crude oil equivalent)

427 Gokasho Hiyoshi-cho, Higashi-Omi City, Shiga Pref.
Address:
Area of the Site: 105,753 m2
Main Products: Sucrose fatty acid esters, food additives,

Yokkaichi Chemical Co., Ltd.

Environmental Impacts in FY2014

NAKAMURA Takahito

community, and that emphasizes compliance as well.

Environmental and Social Report 201534

Domestic and Overseas Affiliates Involved in Manufacturing

KYOTO ELEX CO., LTD.

Voice!

Our company develops the application for the dispersion technologies of DKS and metal powder
technologies of DOWA Electronics, and offers various pastes used in electronic devices andcomponents. In FY2014, we promoted a reduction of the silver content as the main raw material,and development of a low-resistance conductive paste that can fulfill a function even with only asmall amount, under the theme of resource conservation and low cost. As a result, we could
contribute on the improvement of functionality and quality, especially in the fields of solar
batteries, and office automation/communication devices. We also put our focus on productdevelopment that contributes to the environmental field. We will continue to advance ourdevelopment in order to improve the performance and popularization of the lead-free silver paste
for solar batteries, in which we lead the world in terms of practical usage.

Address:
1 Ogawara-cho, Kisshoin, Minami-ku, Kyoto, Japan
URL:
http://www.kyoto-elex.co.jp/
Operations: Manufacturing and sales of silver paste, silver- palladium paste, silver- white
KYOTO ELEX CO., LTD.

SAWADA Yohei

As a member of the environment ISO committee, I have more opportunities to be involved in accident prevention and safety activities. In order to prepare
for the event of an accident or disaster, again this year I have reviewed how to perform cardiopulmonary resuscitation, operate an AED, and first aid
procedures on how to stop bleeding. I am prepared mentally for an emergency in order to take the proper action immediately and without hesitation.
35

RC Promoting Member

gold paste, copper paste, resin-type copper paste, resin-type silver paste,aluminum paste and glass paste as well as commissioned manufacturing ofvarious conductive materials

DAI-ICHI CERAMO Co., Ltd.
Our company develops PIM (Powder Injection Molding) compounds, which are raw materials usedfor various components of machines, vehicles, communication devices, etc. We make efforts tocontribute to being a resource and energy conserving society using this technology. PIM is anenvironmentally friendly molding method as well, because the number of part items can be
decreased by integral molding and it does not generate processed waste. We would like tocontribute to the growth of our customers and the industrial world, as well as to the environment,by carrying forward technological reform based on our accumulated knowledge. In addition, we
have made efforts on environmental conservation by conducting thorough waste separation, andin summer, by joining in on weed cutting in the neighborhood, with cooperation of the adjacent
Shiga Branch.

Address:
432 Gokasho Hiyoshi-cho, Higashi Ohmi City, Shiga Pref.
URL:
http://www.dai-ichi-ceramo.co.jp/
Operations: Manufacturing and sales of power injection molding (PIM) compounds

RC Promoting Member

Elexcel Corporation
We have promoted development of high-capacity lithium-ion second batteries of high safety,
aiming at contribution to the establishment of a sustainable society through the effective use oflimited energy resources, and use of energy in consideration of the global environment. In
particular we focus on the research of flame-resistant electrolytic solution, and development ofiron phosphate positive-electrode material without using rare metals, and develop a large
rechargeable battery for industrial application by taking advantage of its characteristics of highinput and output, as well as long product life. As an example, we have started verification testsof batteries to be applied to the motorized system of harbor loading and unloading cranes. We
will continue to approach the matters of reduction of environmental impact and energy
conservation, and aim at further contribution to society.

Address:
13th Floor, Laboratory, Keihanna Plaza, 1-7 Hikaridai, Soraku-gun Seikacho, Kyoto
URL:
http://www.elexcel.co.jp/
Operations: Commissioned evaluation of battery materials, small-lot production oflithium-ion batteries, research and development

Environmental and Social Report 2015

RC Promoting MemberDomestic and Overseas
Affiliates Involved in Manufacturing

P.T. Dai-ichi Kimia Raya
Our company (DKR) has overcome several obstacles, including the monetary crisis and riot in
Jakarta immediately after our foundation in 1996. At present, we are carrying forward businessthat fits the diversifying needs of the Indonesian market through manufacturing and sales of resin
additives, synthetic water retention agents for paper making, and food additives besides fiber
processing agents. The Festival of the Sacrifice is one of the important Muslim events, and the
day of the festival is a national holiday in Indonesia. As one of our social activities, DKR donates
goats and cows to five villages in the neighborhood during the festival through the community
association of the industrial complex. In addition, we conduct monthly patrols in villages, andprovide baby foods at the ceremony held for babies living nearby.

Voice!
Headquarters/Plant: Kawasan, Java, Indonesia
Address:
Operations: Production & sales of textile agents, plastic additives, paper processing agents,

RC Promoting Member

and food additives

RC Promoting Member

Address:
Headquarters in Taipei City, Plant in Taoyuan County, Taiwan
Operations: Manufacturing and sales of fiber and chemical surfactants, lubricants forplastics, flame retardants and chemical products for electronic materials;
import, manufacturing and sales of civil engineering chemical agents; importand sales of DKS products

SHUANG YI LI (TIANJIN) NEW ENERGY CO., LTD.
Our company was established in 2005 as a manufacturer manufacturing and selling lithium-ion
batteries in the Tianjin Economic-Technological Development Area of Tianjin City, China. We
have made efforts to put forward creation and proposal of plans combined according to thevarious application fields of customers. In FY2014, we promoted improvement of awareness onenvironmental protection among employees, as well as with social activities by calling on
employees to cooperate with donations, and by donating clothing to disabled persons who havedifficulty in life through the federation for disabled persons. As for our safety and accident
prevention activities, we conducted training exercises for fire prevention and self-protection
during a disaster, as well as a fire drill. In addition, we advanced the standardization system ofsafety production, and were certified as a safety production standardized company by the State
Administration of Work Safety in October 2014. Through these activities, we had no fire or otherserious occupational accidents occur.
RC Promoting Member

Address:
Headquarters and Plant in Tianjin City, China
Operations: Manufacturing and sales of lithium-ion batteries used in electric bicycles,
electric tools, UPS, EV, HEV, etc.

Our company conducts a fire drill annually as one of our accident prevention training exercises. Needless to say, we promote safety management toprevent fires from occurring at the manufacturing site, and for preparation in an emergency we conduct a fire drill under the guidance of the fire
department in order that we can extinguish fires immediately.

Our company has launched the manufacturing and selling of fiber and chemical surfactants
mainly for the Taiwanese market. Since then, we have contributed to the field of the electronics
industry through the manufacturing and sales of plastics lubricants (EBA), phosphorous flame
retardants for printed circuit boards, and heat-resistant hardeners. Recently, we provide
high-frequency materials for printed wiring boards and heat-resistant resin that demand hightransmission performance. We have been promoting environmental activities based on
ISO14001, and making efforts to reduce and reuse wastes by improving manufacturing
processes. As for our safety and accident prevention activities, by acquiring the OHSAS18000
certification in December 2014, we have striven for employees' health and safety management.
We have created the in-house manual for preparation in the event of an accident, natural
disaster, and/or the breakout of war, and conducted the training exercises at the plant.

P.T. Dai-ichi Kimia Raya

Nuryadin

CHIN YEE CHEMICAL INDUSTRIES, CO., LTD.

Environmental and Social Report 201536

Establishment of Management BaseCorporate Governance

Voice!

We fully believe that we are obligated to conduct transparent and faircorporate activities rooted in corporate social responsibility in order tocontinuously enhance corporate value.
As the corporate management system to support these activities, we,first of all, make all management decisions within the Board of
Directors, which includes outside directors. We discuss all matters to
be brought to the Board of Directors at the management committee inadvance, and ensure that all decisions are made legally and rationally.
We have also established the Executive Officers System for Executive
Officers to determine matters in need of decision by the Board of
Directors as well as executing other business matters. The Board of
Directors is responsible for the appointment and dismissal of

Legal Department

I am planning activities to instill and improve compliance awareness. These activities are essential as a company, but I am devising fresh angles andmethods of approach for a concept of compliance that covers a wide range. I will continue to carry out activities honestly and step by step according to

TAMATANI Naoko the themes of our annual activities.

Internal Control
We acknowledge that any enterprise must comply with laws andregulations, fulfill its obligations as a member of society throughproper business activities to ensure stakeholders’ interests areserved, and make a positive contribution to society while gaining theconfidence of said society.
In May 2006, the Board of Directors passed a resolution on “Systems
for Ensuring the Proper Operation of the DKS Group.” We have been

engaged not only in internal control in compliance with JapaneseCorporate Law, but also in performing periodic reviews of our internal
control systems, in order to ensure the credibility of financial reports
in accordance with the Financial Instruments and Exchange Law. We
have taken these approaches mainly through the Financial Reporting
Control Committee, IT System Control Committee, and Internal Audit
Department.

Compliance
Since the Compliance Control Committee was established in 2004, our company has been engaged in construction and maintenance of ourcompliance system, and in activities to instill compliance practices in our employees. We will continue to promote these activities.

Declaration of Action for Executives and Employees

Activities to Implement and Instill Compliance Practices

The Declaration of Action for Executives and Employees specifies theguidelines of basic mental attitude and daily conduct for each of said
executives/employees (including employees on temporary assignment,
contract employees, and temporar y staff) in order to obser ve thestandards set in the Code of Corporate Ethics. It has been handed out toall of our board members and employees in card form. In 2006, we set up
the Whistleblower Hotline as a contact point for any employee who has
information about (alleged) violations of law and/or wants to report anactual violation of the law, and provide consultation to them or respond totheir reports by telephone, e-mail, and postal mail.

We have undertaken compliance assessment on a sectoral basis, and havemade active efforts to verify whether there are any problems or not. In
FY2014, we undertook an assessment for the production sectors. We also
provide information such as explanations about various laws via company
intranet, and promote activities to establish compliance awareness andknowledge through e-learning programs in quiz form. Furthermore, since
FY2010 we have designated every October as our Corporate Ethics Monthly
Campaign, and in FY2014 we conducted educational activities under thetheme of "Insider Trading Prevention."
In order to fully understand what is achieved in these activities, and how it
has been instilled in our employees, we conduct a “Research on
Compliance Awareness” for all employees once a year to pick up issues fornext year, and continue to improving these activities by executing the PDCA
cycle.

We make sure to
pay attention to
insider trading.

Declaration of Action for Executives and Employees
Leaflet37

Executive Officers, as well as for their supervision.
Auditors organize the Audit and Supervisory Board including outside
auditors. Auditors ask Directors and employees to submit reports
necessary for audits, and Audit & Supervisory Board Members
conduct auditing on a daily basis by attending important meetings.
They also have periodical meetings with the Representative Director
for mutual opinion exchange. Auditing of accounts is conducted by
KPMG AZSA LLC as our accounting auditor, jointly attended byAuditors as needed. We have also established the Internal Audit
Department as a system to verify the internal control system
concerning financial reports, and collaborate with our auditors andaccounting auditor.

Environmental and Social Report 2015

What kinds of actions
are recognized
as insider trading?

Ichi-ko Taro-kun and his father, both of whom played active roles in the"Insider Trading Prevention Education"

Establishment of Management Base

Risk Management
Corporate risk surrounding our company may result in increased adverse impacts on the company itself, as well as on employees, shareholders,clients, and local communities. We place countermeasures against corporate risk as important issues for our management.

Risk Management
In order to prevent potential and/or evident risks from occurring or growing,
we have established our Risk Management Procedures, Risk Management
Manual, Product Liability (PL) Prevention & Management Procedures, andInformation Security Rules.
In order to decrease the risk of damage to our company as well as any harmcaused by us, we have set up the Risk Management Control Committee
consisting of representatives from each branch and department. In thecommittee, we devote our efforts to operation and maintenance of the risk
management system every day, in order to fully understand situations andtake appropriate measures by instantaneously obtaining risk information
both domestically and from overseas.

and the entire company.
Our company created the portable "manual on large earthquake
countermeasures" that summarizes emergency countermeasures when an
earthquake occurs, and distributed it to all employees in order tothoroughly familiarize them with the behavior standards and the safety
confirmation method in an emergency.
In FY2015, we will continue to conduct well-planned safety confirmation
training exercises in each branch/department and the entire company.

Manual on Large Earthquake Countermeasures

Information Security
As for enhancement of information security, in FY2014, we relocated thedata center for the mission-critical system server as one of the BCP
measures, updated URL filtering and anti-spam devices, and updated
information security countermeasure software, according to our plans, andachieved the expected effects.

We will continue to attempt relocation of peripheral servers to the data
center, and cultivation of each employee on awareness of information
security by checking to what extent it has been instilled into them with theintroduced information security countermeasure software.

I am appointed as an office member of the Risk Management Control Committee, and I have distributed the portable manual on large earthquake
countermeasures to all the employees. I have mixed feelings about the fact that I wish there be no opportunity in which they will need to use the manual,
hoping that it will still be useful and they may be able to implement it in some small way.

At the Risk Management Control Committee, every year we conductwell-planned safety confirmation training exercises in the event of anearthquake. We repeatedly conduct safety confirmation training in all
branches and departments in order to cultivate and raise our risk
consciousness for preparation in the event that a natural disaster occurs.
In FY2014 as with past years, we occasionally conducted safety
confirmation training exercises using mobile phones, training exercises forsituations in which the management were not present, and training
exercises for contacting from distant branches, in each branch/department

Environment, Safety andQuality Affairs Department

BCP (Business Continuity Plan) and Earthquake Countermeasures

Voice!

ICHII Jyunsei

Our major activities in FY2014 are as follows:• Extraction of individual risks in each branch/department, and approaches
to continuous improvement and the progress management of thesebranches/departments.
• Occasional review and improvement of BCP (Business Continuity Plan) forearthquake countermeasures.
• Review of car management procedures, and implementation of calling theentire company’s attention to it.
Concerning risk management, we will put forward enhancement of the BCP
measures, further knowledge promotion to raise risk managementawareness, and approaches to risk management for employees who are on
overseas assignment or on business trips.

Environmental and Social Report 201538

www.dks-web.co.jp
Published in June 2015