Bringing 100 years of technology and trust,
now and to the future

CSR Report 2019

Bringing 100 years of technology and trust,
now and to the future

KOEI CHEMICAL CO., LTD.
General Affairs and Personnel Office
1-8, Nihonbashi-Koamicho, Chuo-ku, Tokyo 103-0016, JapanTEL 81(3)6837-9300 FAX 81(3)6837-9307
Sales & Marketing: TEL 81(3)6837-9290 FAX 81(3)6837-9310
https://www.koeichem.com/en.html

CSR Report

2019

Contents

3

Overview of Koei Chemical

3

Top message

5

New mid-term management plan

7

100 years of Koei Chemical

9

Business Segments

10

Financial Highlights

11

Governance13

Approach on Safety, Environment and Quality Assurance

13

Responsible Care

15

Safety and Health Activities

17

Environmental Preservation Activities

21

Quality Assurance Activities

22

Corporate Philosophy
We treat trust and honesty as our mission, and aim to become a│ 1 │ company where vital talent and knowledge congregate.
Contribute to the growth of society by providing useful products that│ 2 │ are the results of creative technologies.

Contribution to a sustainable
society

Koei Chemical’s policy on SDGs*○ CSR Basic Policy

Koei Chemical will contribute to a sustainable society byachieving SDGs through diverse business activities.

Dialogue with Shareholders and Investors

23

Relationship with Local Communities

25

With Employees

29

Third-party Opinion

30

Company Information

Editorial policy
Editorial policy
This report is intended to provide information to help many
stakeholders understand Koei Chemical’s CSR activities.
We strive to make this material clearer and more reader-friendly
by using graphs and pictures.

The Koei Chemical Group will enhance
corporate value by providing new value
through business activities based on thetechnology and trust that it has beendeveloping until today in order to contributeto the improvement of the quality of human
lives globally. We will also actively promote
initiatives for global environmental issues
and the development of local communities.
To this end, we will perform businessactivities in compliance with Japanese andoverseas laws and regulations, as well as thecorporate philosophy of the Koei ChemicalGroup, while striving to perform safety,
environment and quality assurance activities
with the aim of realizing a sustainable
society by taking stakeholder’s concerns into
consideration.

Operating activities
Safety and health activities
Environmental preservation activities
Quality assurance activities
Dialogue with shareholders and investors
Relationship with local communities
With employees* Sustainable Development Goals, which are adopted by the United
Nations, are globally shared issues to be achieved by 2030.

Reporting period
April 2018 to March 2019
(information for April 2019 and later is partially included.)Issuance
October 2019

1 ｜ CSR Report 2019

CSR Report 2019｜2

Top message

Performance for FY2018(Cumulative period)

1Q

2Q(thousands of yen)

4,631,874

Income before income taxes (thousands of yen)
Net incomeNet sales

Net income per share

3Q

Full-year

9,356,602

13,708,826

18,309,034

391,720

908,742

1,404,864

1,271,496(thousands of yen)

268,720622,742

962,864

960,939

(yen)

54.94

127.31

196.84

196.45
Approach on Safety,
Environment
and Quality Assurance

Sales by segment

GovernanceKoei Chemical celebrated its 100th
anniversary in June 2017. Its root is Koei
Pharmaceutical Co., Ltd., which wasestablished in June 1917. Starting the
production of pharmaceutical products as
its mainstay, Koei Chemical has continued
operations for more than 100 years, basedon the philosophy of “contributing to
the growth of society by providing usefulproducts that are the results of creativetechnologies.”

Overview of Koei Chemical

Koei Chemical will actively contribute to a sustainable
society based on the technology and trust that wehave been developing until today.

Sales by region■Chemical products business¥3,928 million
21.5%■Fine chemicals¥14,380 million
78.5%

Other ¥8 million
Japan¥10,284 million

Dialogue with Shareholders
and Investors

North America/Canada¥10 million
North America/U.S.
¥2,559 million

Other 4.2%

President
Pharmaceuticals andagrochemicals
33.4%

Other
11.0%

Efforts for CSR activities

We will continue research & development and the
exploitation of the application of new products, while
reviewing the entire value chain of existing key products
such as amine compounds and pyridines to strengthen ourcompetitive power toward the next 100 years. Focusing
on nitrogen-containing chemicals, we will expand ourbusiness fields from pharmaceuticals and agrochemicals
to energy and electronic materials, and offer creative
products in a multidirectional manner.
We will also strive to enhance operational efficiency
and streamline our operation, with the intent of increasing
productivity and upgrading operational content. As Japanis experiencing the progress of a falling birthrate andan aging population, we are committed to building anorganization that responds to environmental changes
and make active use of diverse employees by increasing
job opportunities. These approaches will enable us toinvigorate our workplaces and secure personnel steadily
for the future, thereby leading to our evolution to become
an organization that creates high-added value.

In order to achieve sustainable development, a corporationmust behave responsibly as a member of society andobtain trust. We are convinced that building good
relationships with our stakeholders, such as business
partners/clients, shareholders, local communities andemployees working in Koei Chemical, as well as satisfying
the needs of society, will lead to the further developmentof business activities, thus resulting in a contribution to asustainable society.
We have formulated the CSR Basic Policy in 2018 basedon this philosophy.
Through this CSR Report, we will report on our various
activities to contribute to society, which embody thephilosophy. We would appreciate your understanding,further support and feedback regarding our CSR activities.

CSR Report 2019

Company Information

Toward the next generation

Third-party Opinion

3 ｜ CSR Report 2019

We have formulated a new mid-term management planthat started in FY2019.
In this plan, we aim to create a new Koei Chemical
under the slogan of “KOEI 2021 -Tradition andChallenge-” with the integration of “tradition withoutchanging” and “challenge for innovation,” which we havefostered through our 100 years of history.
As our performance targets for the final year of
this plan (FY2021), we will aim to achieve net sales of
20 billion yen, operating profit of 2 billion yen and an
operating profit margin of 10%.
For further reference, the basic policy to achieve the
mid-term management plan is summarized on page 5 ofthis report.

Asia¥3,688 million

With Employees

Since its foundation in 1917, Koei Chemical has grown
successively along with the development of the chemicalindustry, and has realized the industrialization of a variety
of synthetic organic chemicals. Throughout this long
history, we have manufactured and sold all kinds ofchemical products including pyridine bases, pyrazines,
amines and ionic liquids, responding to a wide rangeof social needs. We have also endeavored to develop
innovative technology, and have launched high valueadded, high-functional products, which are highly
recognized all over the world.
Going forward as well, as “an expert in nitrogencontaining chemicals,” we will focus on our specifictechnologies for catalysts and organic synthesis - areasin which we excel - to become “a leading company
specializing in specialty chemicals.”

FY2019-2021
Formulation of new mid-term management
plan “Transformation KOEI”

Functional chemicals
34.1%

Relationship with Local
Communities

Europe¥1,758 million

Polyol alcohols
17.3%

Koei Chemical as an expert in nitrogencontaining chemicals

Total¥18,309 million｜4New Mid-term Management Plan

FY2019-2021

KOEI2021

Overview of Koei Chemical

Mid-term management plan “Transformation KOEI”
Expand business and profit-Tradition and Challenge-

Accelerate development of
next-generation products

Net sales ･････････････････ 20billion yen

Operating profit■ New products

15 billion yen
over three years

Renovate business process■ Next-generation products■ Existing products

250

24
計

200

Strengthen competitivenessin existing businessDialogue with Shareholders
and Investors(Unit: hundreds of millions of yen)

Proactive
investment

Approach on Safety,
Environment
and Quality Assurance

Operating profit ･･･････････ 2billion yen

Operating profit margin ･････････ 10%

Governance

Performance targets for FY2021

183
14

18

207
18

計

200
8

22
182

Corporate
basis

20

189
170

170

16

100

12

2019

2020

Construction of new multi-purpose
plant (CMIV)

Accelerate thelaunch of nextgeneration
products

Reconstruction of amine plant (SA)Commercialization of new proprietaryproducts including urethane curingcatalysts (URECKO®)

2021

Basic policy of the mid-term management planand performance targets

Accelerate development of next-generation products

2

Strengthen competitiveness in existing businesses

3

Renovate the business process, shift to high-valueadded activities, and transform work style

4

Ensure full and strict compliance and maintain safe andstable operations

5

Make investments proactively to expand businesses

6

Vitalize human resources for business expansion(Performance targets)
Performance targets for FY2021
Net sales: 20 billion yen
Operating profit: 2 billion yen
Operating profit margin: 10%

purpose plant (CMIV) as an effort to strengthen production
in response to demand increase and next-generation
products. A decision will be made by the end of FY2019
and the construction of the plant will be completed by theend of FY2021.

Capital investment plan

2. Reconstruction of amine plant (SA)We plan capital investment of 15 billion yen over the next
three years, mainly for two projects: construction of new
multi-purpose plant (CMIV) and reconstruction of amine
plant (SA).

The SA plant, which is nearly 50 years old, is in a stateof severe deterioration. In order to continue the amine
business in the future, now is the time to renew the plantfacilities on a large scale. This reconstruction includes
drastic renewal work of major equipment, leading to
the enhancement of productivity, automation, energy
saving and the strengthening of safety, with the aim ofincreasing the competitiveness of the amine business. The
reconstruction will commence during FY2019, and will becompleted during FY2024.

1. Construction of new multi-purpose plant (CMIV)As demand has been continuously increasing for the
products manufactured at the multi-purpose plants (CMseries: CMI, CMII, CMIII), CM plants are currently at full
capacity. We consider the plan to build a new multi-

CSR Report 2019

Company Information

1

We will steadily implement “safe and stable operations,”“full and strict compliance” and “vitalization of humanresources,” which form the corporate basis, withthe aim of expanding businesses and profits throughthe “development of next-generation products,”“strengthening of competitiveness in existing business”
and “renovation of business process,” which are trinity
policy elements. We will also make proactive investment
for business expansion.
Next-generation products include new proprietaryproducts such as urethane curing catalysts (URECKO®) thatare currently under development. We strive to press ahead
with development toward commercialization during theperiod of this plan.

Third-party Opinion

The basic policy of the mid-term management plan is asfollows:

5 ｜ CSR Report 2019

Major
capitalinvestment

With Employees

8

2018

Vitalize human resources

Full and strict compliance

Proactive investment of 15 billion yen over three years

50

0

Maintain safe andstable operations

Relationship with Local
Communities

150

計

200

計

｜6

100 years of Koei Chemical

1931• Started production of acetone
and butanol by fermentation

1964• Started productionof pyridine bases (Osaka)

1971

2010
2006

• Started operation of new
development plant• Constructed new laboratory
in Chiba Plant to centralize
production and researchfunctions in Chiba Plant

2017• Expanded liquid-phase reaction
plant

Overview of Koei Chemical

We have given our visions shape with the power ofchemistry for the last 100 years.
• Started production of formalin,
trimethylolpropane, sodiumhydrosulfite and amine• Started operation of new plant forintermediates for agrochemicals

1952• Expanded fine chemical facility
for amines

2013• Relocated Tokyo Head Office topresent address
Approach on Safety,
Environment
and Quality Assurance

1966

Governance• Completed construction of
corporate office building

1985• Started production of
cyanopyrazine• Started production ofpentaerythritol

Dialogue with Shareholders
and Investors

2017

100th
anniversary

Relationship with Local
Communities

2004
1997
1917

1959

• Started production oftrimethylolpropane and formit

1917
1926

• Changed company name to Koei
Co., Ltd.

• Started production of formalin

1950

1963

• “Inoue Award” from Toryo Hochi
Shinbunsha Co., Ltd. for productionof pentaerythritol

1967• “Okochi Memorial Production Prize”
from Okochi Memorial Foundation
for production of pyridine bases• Opened Chiba Plant and started
production of pentaerythritol

1980• Started production of chemical body
warmers

1982• Constructed new multi-purpose
plant and expanded fine chemical
facility for amines and pyridine
bases

1986

• Started production of dilazephydrochloride hydrate

1992• “Chemical Technology Award”
from Kinki Chemical Society ofJapan for development of AntiUlcer Drug Intermediate• “Technological Prize” from
Adhesion Society of Japan for
epoxy resin adhesives

1995• Constructed multi-purpose
plant and started production ofintermediates for pharmaceuticals
and agrochemicals• Constructed multi-purpose vaporphase plant

2013

1998

• “Chemical Technology Award”
from Kinki Chemical Society ofJapan for new synthetic methodof intermediate chloro nicotinyl
insecticide

1999• Constructed multi-purpose plantfor production of intermediates forpharmaceuticals and agrochemicals• Transferred to and listed on
2nd Section of Tokyo Securities
Exchange

2016• Closed Osaka Plant and changed
the registered address to Sodegaura
City, Chiba

2017• Celebrated 100th anniversaryCompany Information

1934• Started production of amines• Started production of pyridine basesin Chiba Plant• “Industrial Technology Award”
from Osaka Industrial Research
Association for developmentof “CASCON-RESIN (functional
modified epoxy resins)”• Relocated headquarters operations
to Tokyo Office (Tokyo and Osaka)

Third-party Opinion• Founded as Koei PharmaceuticalCo., Ltd. in Osaka and started
production of acetic acid

1962

1972

2006

• Listed on 2nd Section of Osaka
Exchange

With Employees

Foundation

1990• “Catalysis Society of Japan Award(Industrial Field)” for synthesis ofpyridine using a zeolite catalyst• Started dispatch of employees to
Sumitomo Chemical Europe S.A./N.V.

2003• Relocated Head Office to Joto-ku,
Osaka• Started production of m-aminophenol• Changed company name to Koei
Chemical Co., Ltd.

7 ｜ CSR Report 2019

CSR Report 2019｜8

Financial Highlights

Fine chemical business（2018）

Net sales (Millions of Yen)

For pharmaceuticals and agrochemicals, revenue decreased due to the decreased demand for agrochemicals, although salesof intermediates for pharmaceuticals for Europe were steady. For functional chemicals, revenue increased due to the steadydemand relating to electronic materials.
As a result, net sales of this segment amounted to 14,380 million yen (up 0.6% YoY) and operating profit amounted to 1,203
million yen (down 11.8% YoY).

Operating income (Millions of Yen) /Operating margin (%)
Operating income
Operating margin

18,664

18,27917,278

1,402

Net sales (million yen)

Governance

3.4

703

641

Rate of change

5,576

0.6%

6,253

2014

6,653

6,119

2017

2018

ionic liquids(KOELIQ®)

Pyridines

Rate of change

Amines-11.8%

2017

Pyrazines

2017

2018

2014

Application

Application
Application

Pharmaceuticals, agrochemicals,solvents, adhesives

Net income (Millions of Yen) /Net income per share (%)
Net income
Net income per share

2017

2018

2014

2015

2016

2017

2018

1,112.47

Shareholders’ equity ratio
ROE

20,512

2014

68.7

2016

196.45

2017

2018

2014

2015

2014

2016

2017

2015

2018

2016

8.1

2.6

3.3

2014

2015

2016

2017

4.9
2017

2018

2018

Net sales

(Millions of Yen)

18,664

18,27917,27818,14418,309Operating income(Millions of Yen)

641

1,210

1,402

1,527

1,169

Ordinary profit

(Millions of Yen)

703

1,104

1,390

1,703

1,361

Net income(Millions of Yen)

329

435

1,135

5,441

960

Total asset

(Millions of Yen)

20,512

20,74023,96929,202

29,323

Total shareholders’ equity (Millions of Yen)

13,091

13,37914,487

19,46020,131

Free cash flow

(Millions of Yen)

1,500

577

△440

5,126

△1,730

ROE

(%)

2.6

3.3

8.1

32.1

4.9

Payout ratio

(%)

52.0

45.0

21.5

6.3

30.5

With Employees

756
Rate of change

66.6

20,740

960

1,135

435

2015

5,441

For polyol alcohols, revenue increased as a result of the adjustment of sales prices with the improvement of market conditions.
For other chemical products, although sales prices rose due to the fluctuation of raw material prices, the sales volume
dropped. Profit decreased mainly because of the rise of manufacturing costs.
As a result, net sales of this segment amounted to 3,928 million yen (up 2.2% YoY) and operating loss amounted to 33
million yen (operating profit of 163 million yen for the previous fiscal year).

3,928

60.4

Relationship with Local
Communities

329■ Polyol alcohols ■ Other

64.5

32.1

67.28 88.92

Net sales (million yen)

63.8

23,969Surfactants, polymers,
photographic agents,
Pharmaceuticals, agrochemicals,
paintsChemical products business（2018）

Shareholders’ equity ratio (%) /ROE (%)

Total asset (Millions of Yen)

29,202 29,323

232.03817

2016

Pharmaceuticals, agrochemicals

2018

3,844

2015

Dialogue with Shareholders
and Investors

1,203

2016

AminesOperating profit (million yen)
1,363

2015

Approach on Safety,
Environment
and Quality Assurance

79%

3,026

Third-party Opinion

2.2%

Proportionof sales

21%

1,104

1,169

2,007

2,069
Proportionof sales

1,361

1,390

1,527

1,210

14,38014,299

1,703

6.3

6.6

■ Pharmaceuticals and agrochemicals■ Functional chemicals ■ Other

Ordinary profit (Millions of Yen)

8.4

8.1

18,30918,144

Overview of Koei Chemical

Business Segments

3,172
Polyol alcohols

2017

Formalin

2018

Application

Adhesives, synthetic resins, paints,
inks, lubricants, plasticizers, etc.

Polyol alcohols

Application

Paints, inks, lubricants, plasticizers

Operating profit (million yen)
163
Rate of change-120.2%Company Information

Formalin

△ 33
2017
2018

9 ｜ CSR Report 2019

CSR Report 2019｜ 10

Governance
Overview of Koei Chemical

In order to respond to the expectations of stakeholders, we strive to establish and operate aneffective corporate governance system and continuously strengthen and improve the system.

Speak-up system

Familiarization with thecompany newsletter

General Meeting of Shareholders

Board ofDirectors

Nominating
Committee
Remuneration
Committee<Committees>
Internal Control
Committee
Risk Control &Compliance Committee
Responsible Care
Committee

Third-party Opinion(Optional advisorycommittees)

For the purpose of raising the awareness of officers and personnel regarding
compliance, Compliance News is posted in the Company’s newsletter, which is
published twice a year. This reader-friendly article mainly discusses topics thatare closely related to personnel with the use of illustrations and graphics.

With Employees

Accounting Auditor

Audit & Supervisory
Committee

We have established a whistle-blowing hotline that allows officers andpersonnel to report compliance violations or the risk thereof if they detect theoccurrence inside Koei Chemical or an affiliated company (speak-up system).
We use sufficient caution with respect to the privacy of whistle-blowers andconsulters so that they will never be treated disadvantageously on the groundsof having made a report/consultation under this system.

Relationship with Local
Communities

Outline chart of corporate governance system“Earning the trust of society as we pursue
our business activities” has been positioned
as the basis of Koei Chemical management.
In order to obtain the trust of society,observation of laws, regulations and social
ethics (compliance) is essential.
We have prepared the Compliance Manual
to familiarize officers and personnel withcompliance. This manual has been revised
as needed in response to the amendment oflaws and regulations.

Dialogue with Shareholders
and Investors

In accordance with the resolution passed at the 155th Ordinary General
Meeting of Shareholders held on June 24, 2017, Koei Chemical transitioned
from a company with a board of corporate auditors to a company with an audit& supervisory committee. By establishing the Audit & Supervisory Committee,
the majority of which are outside directors, and through the appointment ofseveral outside directors, the supervisory function of the Board of Directors
has been further strengthened, leading to the further enhancement of ourcorporate governance system.
In addition, in order to further strengthen the supervisory function, threeoutside directors are registered as Independent Officers with the Tokyo Stock
Exchange.

ComplianceApproach on Safety,
Environment
and Quality Assurance

Corporate governancesystemIn order to perform fair corporate activities, we strive to operate an effective
corporate governance system and continuously strengthen and improve thesystem. In terms of our business management system, we have establishedthe Board of Directors and the Audit & Supervisory Committee, as well as theInternal Control Committee, the Risk Control & Compliance Committee andother necessary committees, which are intended to supplement and reinforce
the function of the Board of Directors. Our businesses are being operated
under the supervision of these organizations. We also endeavor to enhance
corporate value through efficient management in pursuit of the best possible
corporate governance.

Governance

Basic policy on corporate
governance<Business execution system>

Company Information

Internal Control & Audit Office

11 ｜ CSR Report 2019

Representative Director

Directors

Departments and affiliated companies

CSR Report 2019

｜ 12

Approach on Safety, Environment and Quality Assurance

Responsible Care

Overview of Koei Chemical

The global chemical industry is working voluntarily to protect the environment, health,and safety through every process from the development of chemical substances, their
manufacture, distribution and use to final consumption and disposal, as well as engaging incommunication with the public by openly disclosing performance. These initiatives are known
as “Responsible Care.”Responsible care activities

1

3
4

6
7

This line of action makes public to all workers and the person with whom
it relates, shall be understood, and assumed to be the one to attempt the
improvement of consideration.

ISO Promotion
Council

Product realization
Customerrequirements
and information

Products

Sales and marketing
Design development
Production plan
Procurement of
raw materials
Manufacturing
Outsourcing
Quality management
Storage and shipment

Satisfaction

Board ofDirectors

Responsible Care Audit &ISO Internal Audit

Directors

President

Establishment ofpolicies and target

Feasibility and profitability
EnergyEnvironmental impact
Provision of personnel
Provision of facilities

Measurement, analysis,
improvement

Operational
side
Performance

Complaints

Operational managementof resources

Target management
Management of management system
Management of quality assurance

Input

Third-party Opinion

Responsible Care
Committee

Requirements ofcustomers

Performance
Provision of
resources
Operational
management

With Employees

Responsible Care promotion system and organizational chart

Zero-accident and zero-injury operation/product safety/customer satisfaction/
reduction of environmental impact/expansion of business and profit

Requirements ofstakeholders

Manager’s responsibility

In order to abide by all relevant laws, regulations and social ethics, andmaintain and improve occupational safety, environmental protection, productsafety, quality assurance and other important issues, we have established threecommittees (Responsible Care, Internal Control, Risk Control & Compliance),
chaired by the President, for continuous improvement.

Continuous improvement of management system

Manager’s responsibility

Responsible care promotion
systemCross correlation chart of major processes

Relationship with Local
Communities

8

Dialogue with Shareholders
and Investors

5

Approach on Safety,
Environment
and Quality Assurance2

We will achieve our zero-accident, zero-injury targets to ensure stable
operations.
We will conduct risk management throughout the life cycle of our products,
including development , manufacturing, transport and disposal,and strive to conserve the environment, as well as to ensure the safety andhealth of our employees as well as that of the local community.
We will comply with domestic and international laws and standards relating
to safety and the environment, and strive to meet even stricter targets thanrequired by law.
We will promote the conservation of resources and energy and to minimize
waste emission and strive to conserve the environment.
We will implement the requisite education and training of our employees
relating to safety, the environment and product quality and will promote
effective responsible care activities.
We will promote both risk-reduction and accident-prevention from theperspective of product safety and quality.
We will evaluate the content of our activities and seek to implement
improvements through internal audits pertaining to occupational health andsafety, security and disaster prevention, environmental protection, chemicalsafety, product safety, and quality assurance.
We will keep the external communication among a related government office,the region, and the stake holder, and aim at coexistence with thesociety.

We formulated the basic policy regarding safety, the environment and productquality in 1995 in which the performance of Responsible Care was declared.
Having recognized this policy, officers and personnel are making continuous
efforts to improve the management system in compliance with laws andregulations. In addition, an officer who is in charge of safety, the environment
and product quality oversees all the duties regarding safety and health,environmental protection, security and disaster prevention, quality assurance
and chemical safety.
We have established the Responsible Care Committee, which is chaired by
the President, as the supreme decision-making organization that promotes
Responsible Care activities. The Responsible Care Committee meetings are held
twice a year. The Committee reviews the results of activities performed during
the previous fiscal year and approves plans to be implemented for the current
fiscal year to ensure continuous improvement of the management system. In
addition, we perform internal audits on a regular and as-needed basis to checkthe effectiveness of the activities.
We have acquired ISO certification, which is the international standard
relating to environmental and quality management systems, as one of thetools to promote Responsible Care activities. We also focus on the overall
improvement of system performance.

Efforts for responsible care
activities

GovernanceIn accordance with the Corporate Policy on Safety, Environment and ProductQuality, Koei Chemical will actively strive to promote responsible care activities
in developing our business, and will also do its utmost to achieve sustainable
development and earn the trust of society.

Customer satisfaction

Internal audit

Departments
Company Information

To promote compliance with laws and regulations, company rules andsocial ethics in accordance with Koei Chemical Charter for Business Conduct
Risk Control &Compliance Committee To oversee risk management in all departments to mitigate risks
Held once a year or moreInternal Control
Committee

13 ｜ CSR Report 2019

To deliberate measures in relation to internal control and the internal control reporting system forfinancial reporting
Held four times a year or more

CSR Report 2019

｜ 14

Approach on Safety, Environment and Quality Assurance

Safety and Health Activities
Overview of Koei Chemical

Based on the basic principle of “placing safety above all else,” we are making concerted
efforts with officers, personnel and all persons concerned including cooperating companies
that work with us, to ensure worker safety and health so that personnel can work
comfortably.

*GHS: The Globally Harmonized System of Classification and Labelling of Chemicals
GHS was adopted as a recommendation of the United Nations in July 2003. GHS classifies the dangers and hazards ofchemical products based on specific standards, displays information with visual materials including pictures and graphics,
and reflects the results in labels and SDS. This system is intended to be utilized for disaster prevention and the protectionof human health and the environment.

Chemical safety education
We provide personnel with necessary training regarding the management ofchemical substances. We offer education regarding laws and regulations, etc.,
relating to the safety of chemicals to researchers who are involved in productdesign so that appropriate management of chemical substances is performed.

Risk assessment

Severity Rates of Industrial Injuries
Koei

Chemical industry in Japan(Calendar year)

Chemical industry in Japan(Calendar year)

0.2

Severity rate

Frequency rate

3

2

0.1

1

0

09

Frequency rate

15 ｜ CSR Report 2019

10

11

12

13

14

15

Number of casualties by industrial
Total actual working hours

16

17

18

×1,000,000

Fiscal
year

0

09

10

Severity rate

11

12

13

14

15

16

Total number of working days lost
Total actual working hours

17

18

Fiscalyear

Safe transportation (product labels and yellow cards)
In order to ensure safety and the environment when products are used, we
attach product labels that show information on dangers/hazards and first aid
measures to the product container. We affix GHS-compliant labels on products
containing chemical substances specified in the Industrial Safety and Health Act.
We also ask logistics traders who transport products to carry a card that
contains information on emergency handling and contact (yellow card).

Company Information

Risk reduction of chemicals
at the time of distribution

Third-party Opinion

Koei

With Employees

Chemical simulation training
Disaster training

Risk assessment is a method to identify potential dangers and hazards in theworkplace, and reduce or remove them.
(Step 1) Identification of dangers and hazards(Step 2) Estimation of risk factors caused by dangers and hazards(Step 3) Consideration of contents of risk reduction measures(Step 4) Implementation of risk reduction measures
We identify dangers and hazards of the substances that we handle at thephase of research and experimentation with reference to literature study andtests. For substances produced by trials, data including disaster prevention
properties, toxicity and irritation is added. The data is examined by not only thedepartment in charge of safety, but also in cooperation with the laboratory andthe plant section.
For substances produced officially in a plant, various assessments throughthe evaluation of the magnitude of risks of chemicals and facilities are required.
Reviewing risks and risk mitigation measures are also performed for existingprocesses with the aim of zero-disasters and zero-accidents.
We also perform risk assessment on dangers and hazards of subject
substances in accordance with the amended Industrial Safety and Health Act,
which took effect in June 2016. In particular, in the risk assessment on hazards,
we prevent health problems by comparing the exposure amount estimated foreach work with an exposure limit.

Relationship with Local
Communities

Chemical safety training

With regard to work-related accidents, there were no industrial injuries in
FY2018.
The number of zero-injury days reached 3,688 (as of March 31, 2019),
which is equal to over 10 years. As shown in the following graphs, frequency
rates of industrial injuries and severity rates of industrial injuries remain zero.
Unfortunately, non-lost-time minor injuries occurred. We conduct RCzero-accident audits even on minor injuries to find the cause and implement
additional measures, while making efforts to undertake horizontal deploymenton the prevention of the occurrence of similar injuries to achieve zero-injuries.

Frequency Rates of Industrial Injuries

We have prepared GHS-compliant safety data sheets (SDS) for all products toprovide users with necessary information on dangers and hazards (about 2,000
items as of the end of FY2018).
In Japan, the provision of SDS is mandatory under the Industrial Safety and
Health Act, the Poisonous and Deleterious Substances Control Act, and the Act
on Confirmation, etc., of Release Amounts of Specific Chemical Substances inthe Environment and Promotion of Improvements to the Management Thereof(PRTR Act).

Dialogue with Shareholders
and Investors

Safety workshop

Provision of SDS

Approach on Safety,
Environment
and Quality Assurance

Safety slogan

Risk management ofchemicals

Governance

Based on the basic principle of “placing safety above all else,” we strive toensure worker safety and health with the aim of making safety and stable
operation our strength.
More specifically, we perform activities to periodically discuss and consider
issues regarding safety and health, and determine measures mainly throughthe Safety and Health Committee and the safety and environment promotion
members’ meeting.
In addition, we perform concerted safety activities by organizing various
campaigns with the aim of eliminating both minor and major disasters.
During the campaign period, the identification of dangerous sites and theimprovement thereof, the promotion of Hiyari-Hatto (near-accident situations)prevention activities, the strengthening of risk detection, the promotion of thepointing and coding method and other necessary measures are conductedby safety and environment promotion members, which are representatives
appointed in each workplace.
Moreover, we have established the Safety and Environment Promotion Task
Force for plant reform activities. These activities are being strengthened bypositioning the Task Force as an important pillar of reform activities.
Both the President and Plant Directors, which are the top members of
the plant, inspect the relevant workplace and are actively involved in various
initiatives such as ensuring Japanese 5S methodology, raising safety awareness,and eliminating safety issues. In this manner, ensuring safety is treated first andforemost.

Safety, security and disasterprevention

×1,000CSR Report 2019

｜ 16

Approach on Safety, Environment and Quality Assurance

Environmental Preservation Activities
Overview of Koei Chemical

Because Koei Chemical considers the issue of climate change as one of the most important
challenges facing society, we strive to enhance productivity and implement energy efficientfacilities, leading to the lessening of climate change through business activities.

116.9

120

94.5

30

90

20

60

24.64025.63225.73117.35917.57810

14

Unit energy consumption

15

16

17

18

0

Fiscal year

Energy consumption (crude oil equivalent) kℓ
Production volume (ethylene equivalent) tons

*The above line graph shows the relative value for each fiscal year (FY2014=100)(= Unit energy consumption for the relevant FY / FY2014 unit energy consumption)

107.8

108.2

105.1

120

90

60
60

40

56

56

55

46

46
30

20

0

14

Unit CO2 emission

15

16

17

18

2 Points of environmental accounting(1) Scope of calculations: Koei Chemical(2) Period covered: FY2018 (April 1, 2018 to March 31, 2019)(3) Preconditions of calculation• Calculations are based on the Ministry of the Environment’s Guidelines.
• Costs are calculated based on actual results.
• Economic benefits are only actual benefits. Risk avoidance benefits
and deemed benefits are not included.

0

Fiscal year

CO2 emission tons
Production volume (ethylene equivalent) tons

*The above line graph shows the relative value for each fiscal year (FY2014=100)(= Unit CO2 emission for the relevant FY / FY2014 unit CO2 emission)

Category
1

Business area cost
(Breakdown)
Environmental measure
cost
Global environment
preservation cost
Resource circulation cost

Major items(Unit: Millions of yen)

Investment

Cost

Details of effects

91

1,058

Prevention of air pollution, water pollution, badodor, noise, etc.
Prevention of global warming, ozone depletion, andenergy saving, etc.
Resource-saving, efficient water use, rainwater use,etc. Disposal, reduction and elimination of industrial
waste, recycling, etc.

53

582

16

306

23

170

2

Upstream/downstream cost

Green purchasing, recycling of products, etc.,
recycling of containers and packaging materials, etc.

0

0

3

Administration activity cost

Environmental training, outsourcing of analysis ofenvironmental impacts, ISO14001 maintenance andmanagement

0

110

4

R&D cost

R&D for products that contribute to environmental
preservation

0

50

5

Social activity cost

Greening, beautification, levy on pollution load,
support of environmental activities performed by
local communities

0

3

6

Environmental deterioration
cost

Land pollution, restoration of the naturalenvironment to its original state

Total

Economic effect of environmental(Unit: Millions of yen)preservation measures

0

0

91

1,220

Amount1

Cost reduction and business income due torecycling162

Effects of resource saving

123

Effects of energy saving

35

Total

63

Company Information

In order to protect the ozone layer and lessen global warming, it is necessary
to take appropriate measures to control the emission of specific fluorocarbons
and alternative fluorocarbons.
We conduct proper management including simple/regular inspectionsin accordance with the Act on Rational Use and Proper Management of
Fluorocarbons, which took effect in June 2015.

Environmental accounting (FY2018)
Environmental preservation cost

Third-party Opinion

Efforts to reduce theemission of fluorocarbons

80

100.0

With Employees

0

30

100

(1) To enhance the efficiency of activities by quantifying resources allocatedin environmental preservation(2) To conduct decision-making on environmental measures from mid- andlong-term perspectives(3) To enhance the transparency of companies through information
disclosure

150

135.3

Unit CO2 emission

1 Purpose of the introduction

Unit CO2 emission [%]112.5

CO2 emission [thousand of t / year]

112.7
100.0

Unit energy consumption [%]40

CO2 emission

Koei Chemical introduced environmental accounting in FY2000.

Relationship with Local
Communities

Energy consumption(crude oil equivalent)[thousand of kℓ / year]

Unit energy consumption

Dialogue with Shareholders
and Investors

150

Energy consumption(crude oil equivalent)*SBT (Science Based Targets) are the high-level goals of reducing greenhouse gas emissions that companies establish based on
climate science in order to achieve the “well below 2ºC” target. The “well below 2ºC” target, which was adopted in 2015
in the Paris Agreement, is an initiative to maintain the increase in global average temperature to well below 2ºC above preindustrial levels.

Environmental accounting
reportTrend of unit CO2 emission

Approach on Safety,
Environment
and Quality Assurance

Trend of unit energy consumption

In October 2018, Sumitomo Chemical Company, Limited obtained SBT*
certification regarding the targets to reduce group-wide greenhouse gas (GHG)
emissions by 30% and 57% or higher from the emissions volume in FY2013,
by FY2030 and FY2050, respectively, and expressed the policy to actively
work on significant reductions that contribute to the “well below 2ºC” target
adopted in the Paris Agreement. Koei Chemical, as one of the Sumitomo
Chemical Group members, will take on the challenge of the FY2030 targets
to reduce GHG emissions by 15% from FY2017. It is difficult to achieve thistarget by simply continuing the current efforts, thereby indicating the need to
introduce new solutions and other active measures. We will firstly formulate aplan to reduce the GHG emission volume for the period until FY2030.

Toward the mitigation ofgreenhouse gas

GovernanceIn order to prevent global warming, the world must save energy and control
the emission of CO2 and other greenhouse gases. Koei Chemical started anenergy efficiency project in 2005 with the goal of reducing energy consumption
intensity through the improvement of production processes, the recovery ofheat, fuel conversion and productivity enhancement. We have also introduced
and operated package boilers that enhance heat efficiency, co-generation
systems and photovoltaic generation, and have also shifted to the use of LED
lights.
Actual energy consumption, CO2 emissions and their intensity are shownin the following graphs. Although energy consumption and CO2 emissions
decreased in FY2017 due to the closure of the Anesaki Plant, the intensity
increased due to the decrease in the quantity of product output. In FY2018,
each intensity decreased because of the production of products with highproductivity. We will make continuous efforts to improve the intensity andachieve operational optimization to save energy and reduce CO2 emissions(prevention of global warming).

Energy saving and theprevention of global
warming

Note: Cost amounts are the sum of depreciation costs, repair costs, labor costs, material and service costs and businessconsignment expenses, etc.

17 ｜ CSR Report 2019

CSR Report 2019｜ 18

Approach on Safety, Environment and Quality Assurance

Environmental Preservation Activities
Overview of Koei Chemical

Koei Chemical reconciles business activities with environmental maintenance andimprovement. We reduce the emission of chemical substances handled in the course ofbusiness activities, such as PCB and specific chemical substances, and perform proper waste
management. In this manner, we are performing environmental preservation activities toreduce the environmental impact.
Approach to zero emissions
Regarding waste generated through business activities, we actively promote
the “3Rs” (reduce, reuse and recycle) to reduce the environmental impact.
The volume of waste discharged for FY2018 is shown in the following chart.
The volume of industrial waste generated decreased by 26% compared to theprevious fiscal year, and the recycle rate increased by 6% to 30%.
We will make continuous efforts to reduce environmental impact throughrecycling, such as a method of using incineration residues as cement materials.

140

0.19

0.16

0.2

0.11
0

14

15

16

18

COD loading dose [t / year]

52.10

55.63

52.77

51.38

40

0

50
40
30
20
10

14

15

16

17

18

Fiscal year

0

8.1

14

12.9

15

12.1

16

8.3

6.9

17

18

0

Although the industrial waste amount is decreasing each year,
the landfill disposal amount fluctuates with the change of
production items.
We will make continuous efforts to promote the reduction ofenvironmental impact by cutting not only the industrial waste
amount but also the landfill disposal amount.
We have disclosed information on the maintenance andmanagement of industrial waste facilities (incinerators) on
our website since 2011 in accordance with the Enforcement
Regulations of the Waste Management Law (URL: https://www.
koeichem.com/company/rc.html).

Fiscal year

Actual release amount and transferred
amount for FY2018 (tons/year)

Trend of total release amount
10.00

Air release
2.75(1.08)

7.50

5.00

1.02

0.96

1.08

1.08

14

15

16

17

Water release
0.00(1.08)(0.00)

Release amount andtransferred amount

2.75

2.50

Total release amount
2.75

Figures in parentheses show
FY2017 results.

18 Fiscal

year

Soil release
0.00
Transferred amount*
135.03(0.00)(174.45)

Internal landfill amount
0.00*The transferred amount is the volume entrusted to intermediate waste treatment service operators(little emission to public sewage system)

Company Information

We collect all condensers and lamp stabilizers that contain PCB, and replacethem with PCB-free equipment.
We also store the collected PCB-containing equipment properly so that it
does not have any environmental impact. In February 2019, the disposal of all
the collected equipment was completed through Japan Environmental Storage& Safety Corporation (JESCO).

The PRTR system is prescribed in Article 5 of the Act on Confirmation, etc.,
of Release Amounts of Specific Chemical Substances in the Environment andPromotion of Improvements to the Management Thereof (generally known as
the “PRTR Act”), which took effect in March 2000. PRTR (Pollutant Release andTransfer Register) is a system for identifying, compiling and publicly disclosing
information on what amount of chemical substances specified by government
ordinance have been emitted into the environment or have been transferredoff-site with waste.
The actual results for FY2018 are as follows.

PRTR reports

0.00

19 ｜ CSR Report 2019

Fiscal year

Third-party Opinion

Efforts for PCB waste

17

51.50

20

Total release amount [tons / year]

0.24
10

0.4

0.28

Landfill disposal amount[thousand of t / year]

16.3

60

60

With Employees

Industrial waste amount[thousand of t / year]

0.6
22.1

20

80

Relationship with Local
Communities

0.8

25.7

100

Annualized impact: 65 tons
(addition of agreed values）

70

Dialogue with Shareholders
and Investors········· Zero emissions ·········
Industrial waste amount

26.8

Recycling amount: 4,890 tons, recycling rate: 30%(5,335 tons for the previous fiscal year, recycling rate:
24%)

80

Trend of industrial waste

Landfill disposal amount

28.1

Annualized emissions: 117 tons
(addition of agreed values）

120

Through business activities:• Reduction of industrial• Waste generated through business activities: 16,310
waste amounttons 					(22,086 tons for the previous fiscal year, down by 26%)
• Reduction of landfill
disposal amount• Landfill disposal amount: 192 tons 			(275 tons for the previous fiscal year, down by 30%)

Trend of industrial waste by fiscal year

30

Actual results
NOx emission [t / year]

Targets of initiatives

40

Trend of COD loading dose

Approach on Safety,
Environment
and Quality Assurance

Trend of NOx emission

Actual results for FY2018

Promotion of recycling• Increase of effective
usage rate

The environmental impact on air and water areas is as follows.
For SOx, the volume detected through annual analysis is small and lower
than the emission standards.
For NOx emissions and COD impact volume, we have set agreed values
which are stricter than the requirements under laws with local communities.
Appropriate control is performed based on the agreed values.

Trend of SOx and NOx
emissions and COD impact
volumeGovernanceEfforts to reduce industrial
waste(0.00)CSR Report 2019

｜ 20

Approach on Safety, Environment and Quality Assurance

Dialogue with Shareholders and Investors

Quality Assurance Activities

Quality assurance systems

Policy regarding quality assurance

We properly disclose information regarding overall management in accordance withapplicable laws and regulations and convey our management policy and contents in an
accurate and precise way in an effort to obtain social trust.

IR policy

Quality-related flow chart

IR information on financial results, performance
forecasts and general meetings of shareholders, etc., isposted through Tokyo Stock Exchange’s TDnet (Timely
Disclosure Network System) and on the Company’s
website, which was renewed in FY2017.
We will continue to provide information with better
contents in a prompt manner.

Approach on Safety,
Environment
and Quality Assurance

Method of information
disclosure

We disclose IR information swiftly and properly to help shareholders andinvestors accurately understand Koei Chemical. We disclose useful informationin accordance with applicable laws and regulations as well as rules provided by
securities exchanges so that shareholders and investors can accurately understandour business activities.

Governance

We have built the quality management system based on the policy of “supplying
high-quality products and services that satisfy customers’ needs and ensure
safety in their use.” In order to satisfy customers, we find it important to deliverproducts that meet customer demands with quality that provides customer
satisfaction in a timely manner. To this end, quality assurance activities must be
promoted at each stage through the concerted efforts of divisions including
sales, design/development, purchasing, production, quality assurance andlogistics.
The Quality Assurance Division supervises company-wide quality assurance
activities, shares and disseminates the basic policy, and presses ahead withcompany-wide efforts in order to realize the policy.

Overview of Koei Chemical

Koei Chemical strives to supply high-quality products and services that satisfy customers’
needs and ensure safety in their use.

(Information) quality issue and request

https://www.koeichem.com/ir.html

ReportSales division(Communication) customer information

Quality AssuranceGroup
Support andassistance(Direction)• Cause investigation• Examination of
measures(Report and draft)• Investigation result• Recurrence prevention
measure(Deficiency of measures)
Direction for review

Division in charge

When holding Ordinary General Meetings of Shareholders, we avoid peak days
so that many shareholders can attend the meeting. While striving to deliver
notices of convocation as early as possible, we post notices of convocation on
websites (websites of stock exchanges and the Company) prior to the delivery
in order to give shareholders adequate time to consider matters to be resolved.
Moreover, we prepared the notice of convocation of the 158th Ordinary
General Meeting of Shareholders in color in order to make the document morevisual and reader-friendly for shareholders.
Distribution of shareholders

Foreign investors
0.73%
Securities companies
1.02%

Number ofshares held:
4,900,000
sharesJapanese
individuals, etc.
24.85%
Japanese financial
institutions
3.37%
Other Japanese
corporations
70.03%

Approach on the preventionof insider trading

In order to maintain the fairness and soundness of markets, we take thoroughmeasures to prevent insider trading in advance. We have designated the period
from the end of every quarter term until the day of the announcement of financial
results as the “no-purchase period of Koei Chemical’s shares” and notify officers
and personnel about this period. This measure helps prevent doubts about insider
trading from arising.

CSR Report 2019

Company Information

We are making efforts to eliminate complaints based on three pillars: 1) zeromajor complaints on product quality, 2) efforts for continuous enhancement toimprove customer satisfaction, and 3) enhancement of the awareness of quality
management. We collect quality information on complaints and Hiyari (nearaccident situations) relating to product quality, share information on cause
investigations and recurrence prevention measures, and undertake horizontal
deployment of said information to enhance customer satisfaction.
In FY2018, we performed verification of product labeling management
conditions to strengthen quality management in addition to the “quality
improvement month,” which is promoted every November.
In order to strengthen quality management, the Quality Maintenance Task
Force engages in the investigation of the primary cause of quality-related
problems in the plant reform activities by conducting “naze-naze” analysis(causal analysis) and referring to quality hiyari cases, etc., and undertakes thehorizontal deployment of such information.
In addition, in order to enhance the awareness of quality management,
quality management promotion members, who represent each division,
horizontally deploy the prevention of quality problems within their respective
divisions. We also provide persons in charge with education through technicalseminars (gijutsu dojo) and other training opportunities. In addition, sales
division members started participating in quality patrols from FY2018 tocheck on-site conditions, including 3S conditions at manufacturing sites, tothoroughly ensure quality management.

General meeting of
Shareholders

Third-party Opinion

21 ｜ CSR Report 2019

Quality assurance
manager

As our basic policy, we determine dividends of surplus and other related
matters in consideration of the balance between 1) the profits to be secured
for shareholders over the long-term and in a stable manner and 2) the statusof our performance in each fiscal year and the enhancement of shareholders’equity to be reserved for future business development.
Based on the above basic policy, in FY2018, we paid an annual dividend of¥60 per share, including an interim dividend of ¥30.

With Employees

Activities for improving thecorporate culture focusing on
quality• Initial communication (within 24 hours)• Investigation result• Recurrence prevention measure

Basic policy on profit
distribution

Relationship with Local
Communities

Direction forsupportDialogue with Shareholders
and Investors

Please refer to the website for investors.
Customer｜ 22

Relationship with Local Communities
Overview of Koei Chemical

Centering on Sodegaura City, Chiba, which is the location of the head office, we work on therevitalization and environmental development of local areas through communication withlocal residents.

Satoyama volunteers
We dispatch our employees each month to the “Shiinomori” Nature andEnvironmental Preservation Green Center to carry out preservation activities.
Our diverse seasonal activities with local residents include mowing, cleaning,
rice planting and harvesting. The aims of these activities are to protect thesurrounding nature and create an environment in which residents can enjoy
nature.

70

Organization of science experiment volunteer activities
We have offered science experiment volunteer activities at Nagaura Elementary
School in Sodegaura City since 2011.
Company researchers conduct chemistry experiments with children in
Grades 5 and 6. Through these opportunities, we seek to arouse youngsters’
curiosity about chemistry and convey its enjoyment.

Number of participants ････････････
persons

About

Approach on Safety,
Environment
and Quality Assurance

Number of participants per year ････････ About

Fostering the next generation

Governance

Environmental preservation
in local communities

100 persons

Dialogue with Shareholders
and Investors

Boys Baseball Spring Tournament in Sodegaura City		(sponsored by Koei Chemical Baseball Tournament)Collecting volunteers

PET bottle caps･･････････････････ About

47,750 caps

Donation money collected through sales ofsecond-hand books ････････････････････････(donated 30,000 yen including matching giftprovided by the Company)

15 tickets
Used pre-paid cards ･･････････････････････････ 18 tickets
Used Disney Land tickets ･････････････････････

18 teams

Dialogue with local society

Public meeting with local residents
We annually invite mayors of wards located around Sodegaura City to a plant
tour and public meeting. We also organize a debriefing meeting regarding
the plant’s annual activities. Through these opportunities, local residents canunderstand that Koei Chemical pays attention to the environment and safety inthe course of performing production activities. We also use these opportunities
as forums to listen to their requests and opinions and share information.

Third-party Opinion

335

･
books

Number of participating teams ･････

With Employees

We are undertaking an initiative to collect and sell used PET drink bottle caps.
The profits earned are used to provide vaccines for children in developing
countries. This initiative is spreading across Japan.
We sell used PET drink bottle caps and second-hand books to recycling
companies through the Sodegaura City Social Welfare Council to collectmoney. We then donate the money earned to the Japan Committee, Vaccines
for the World's Children.

Relationship with Local
Communities

We have provided support to the Boys Baseball Spring Tournament in
Sodegaura City since 2017 with the aim of building mutual relationships
with local communities, promoting boys baseball and supporting the sounddevelopment of youngsters.

23 ｜ CSR Report 2019

Company Information

Used postal stamps, Bell Marks, etc.

CSR Report 2019｜ 24

With Employees
Overview of Koei Chemical

Koei Chemical believes that developing an environment in which each and every personnel
member can fully utilize and demonstrate his or her abilities is an essential issue to enhance
productivity.
We continue to promote diverse programs that enable personnel to work energetically withgood work-life balance.
1. Human resources development policy(2) Support for globalization

Koei Chemical formulates a human resources development plan in accordancewith the basic policy of “development of professional personnel who contributeto the enhancement of corporate performance” to improve personnel
techniques/expertise, knowledge/skills and management ability based on theplan. More specifically, we prepare training programs by objective and job
position and offer technique/expertise transfer education and globalization
support education. With respect to the development of plant personnel, we
focus on the development of manufacturing operators in accordance with theoperational policy to build a plant that realizes personnel development, anddevelop elite personnel with on-site skills who will contribute to the growth ofthe plant.

1 Online English conversation training program

Position gradeYears of
Operational
experiencelevel

Level 2

By job level

Common (mandatory)

3 years(Entry-level
OP)

Level 2

2 years

Level 1New
personnel*Including management
members

Previously, we had controlled overtime work by setting a target to reduce
long work hours. However, we shifted the strategy from target-based control
to a self-management system as we found it important that each personnel
member should independently think about how they work and how they
manage their time.
We also have “No-Overtime Day” every Friday to promote personnel not
to do overtime work unless it is essential and urgent. Notification of thispromotion is made through internal announcements, email messages andother communication tools. In addition, the history of monthly overtime hoursof each personnel member is summarized andsent to management personnel. The work status
Average overtime hours (month, person)
has also been checked using a PC management
Average time (month, person)
system and access control system since FY2017.
30
26.2
In this manner, we strive to ensure proper
24.8
personnel management.
21.7
19.7
When the above initiative began, the
18.3
20
16.5
16.2
15.9
15.9
overtime hours of daytime workers totaled 26.2
15.5
hours/month per person. As a result of ourefforts and those of each personnel member to10enhance work efficiency, this number decreased
to around 15 hours/month per person.
We will continue to discuss and review diverse
0
2012
2017
2014
2015
2016
2013
2010
2011
2018
2009
measures to further reduce overtime work.

Efforts to reduce long work
hours

Company Information

CSR Report 2019

Third-party Opinion

OJT is the basis of human resources development. In particular, we established
the brother training program to support new personnel as well as young
supervisors who give guidance to new employees. OJT progresses in line withthe planned schedule with OJT practice notebooks distributed by the Company.
Follow-up training is also provided one year later.
OFF-JT is intended to provide various training programs in line with thegrowth of each personnel member to increase the level of skill. Based on
the policy of “placing safety above all else,” we provide mandatory training
programs including driving simulation training and safety simulation training to
make every possible effort to ensure safety.
Koei Chemical also focuses on the development of management personnel
engaged in monozukuri. We offer the “monozukuri leader training program”
to the managers of the manufacturing section and candidates thereof, as well
as staff members in the back-office divisions that support the plant. We intend
to increase management skills relating to monozukuri in terms of organizations,human resources, quality management to enhance on-site skills.

25 ｜ CSR Report 2019

In order to develop global human resources, we need to not only improve
English skills, but also strengthen negotiation skills with Chinese companies,
which are our important business partners for purchasing raw materials, etc.
To meet this need, we have established and executed a trainee program in
China to foster personnel who are familiar with Chinese language and culture.
In 2018, we provided one of our employees with a roughly 2.5-month training
program in Japan from April, followed by an approximately six-month training
program at Beijing Language and Culture University, China.

With Employees

Level 32 Training in China

Relationship with Local
Communities

I

SV training

4 years

SS training

Level 1

Safety simulation training

6-8 years

Pre-driving
training

Level 2Mid-level
technician training-12 years

Secondarytechnical training

Level 3

Basic technicalraining(Mid-level
OP)

Brother program

Level 4

Chemical safety simulation training

OJT

II

Workplace leader
training

Level 1

FE training, safety & prevention
disaster theory

Level 2

Various skill seminars, Tohmatsu,
autonomous maintenance operators

Level 3(Team
leader)Technical seminar (gijutsu dojo)

III

Program for acquisition of various public qualifications

Level 1

Optional
Monozukuri leader training

Level 3(FK chief)

OFF-JT
Skill improvement

New OM training

IV

OJT

Dialogue with Shareholders
and Investors[Chart of human resources development for manufacturing operators]

Approach on Safety,
Environment
and Quality Assurance

In order to develop global human resources, we offer language training
programs (English conversation class) and English writing correction services
based on each course plan to improve personnel members’ English skills.
Previously, the language training class was arranged at the Company’s officewith an invited foreign teacher. However, some trainees were not able toattend classes for reasons of everyday work. In order to accommodate thissituation, we introduced an online English conversation course.
This system allows each trainee to book classes based on his or her scheduleand attend the class with a laptop and headphone/mic kit. Compared to group
lessons, this one-to-one lesson has enabled each trainee to learn English at
his or her own pace. In FY2018, 20 personnel members participated in thisprogram and the attendance rate exceeded 85%.
Developing global human resources is essential for the growth of theCompany. We make continuous efforts to develop personnel by continually
improving our training programs.

2. Technique/expertise transfer education

Grade

Governance

Human resources
development｜ 26

With Employees

Koei Chemical introduced a flextime system with core time in the 1990s to
ensure the effective management of time and efficient work operation.
In recent years, society is seeking a balance between work and private life
including childcare, long-term care for the elderly, and medical rehabilitation
for personnel. In order to further promote the improvement of an environment
in which our personnel can manage time effectively, we are currently holding
discussions with the labor union with an eye on the introduction of super
flextime system.

Health promotion activities

Health guidance
For personnel who are required to undergo a second examination as a resultof a general medical check-up, the public health nurse conducts a face-to-faceinterview and gives daily life guidance. Personal records are also prepared andfollow-up is provided for target personnel, with their consent.
For those who are required to meet industrial physicians as a result of thefollow-up or wish to do so, a face-to-face interview is offered by industrial
physicians every month.

Health promotion activities

FY2018Mandatory retirement

5

5

8

Reemployment as shokutaku
fixed-term personne

4

4

6

Reemployment rate

80%

80%

75%

To raise the ratio of female workers among total workers to be employed to
20% or higher.

Employment rate of female workers
FY2017FY2018FY2019

Male

22

16

22

11

Female6241

Employment rate offemale workers

21%

11%

15%

8%

We conduct a stress check, which is performed under the law, and offer amental health seminar every year to help personnel prevent mental illness inadvance.
We have also established Mental Health Improvement Programs. While
general personnel, managerial personnel, public health nurses, industrial
physicians and the human resources division individually play roles in improving
mental health, the Company strives to prevent the manifestation of personnel
mental health problems through smooth communication.
For personnel who suffer from mental illness, we have established a program
to help them obtain follow-up care in collaboration with public health nurses,
industrial physicians and external organizations, with the goal of complete
reinstatement. More specifically, the program includes the arrangement offace-to-face interviews with public health nurses and industrial physicians until
reinstatement, re-working with external organizations and reduced working
hour programs after reinstatement.

Company Information

27 ｜ CSR Report 2019

FY2016

Walking seminar

Third-party Opinion

TargetMental healthWith Employees

Koei Chemical is actively performing recruitment activities with an eye on aplan of large-scale capital investment that will continue until FY2024. Although
our previous focus was hiring new graduates and experienced workers forthe purpose of job creation in local regions, our recruitment targets havebroadened from the local base to nation-wide recruitment.
Although Koei Chemical has always hired new personnel in an equaland fair manner regardless of gender, the ratio of female workers actuallyremains low. We will make active efforts to increase the number of female
personnel in keeping with the Act on Promotion of Women's Participation andAdvancement in the Workplace.

Relationship with Local
Communities

Active recruitment(women empowerment)

FY2017

Dialogue with Shareholders
and Investors

We hold seminars, fitness tests and other health promotion activities to help
personnel monitor their own health condition.
• Walking seminar• Blood flow measurement, measurement of estimated age of blood vessels• In-body measurement (body component analyzer)• Competition on the number of steps• Publication of Health Management Newsletter every month for the
purpose of delivering health information according to the season
In addition, in order to prevent health impairment from smoking, we started
taking measures to fully separate smoking areas in offices in May 2019 to help
personnel quit smoking and prevent exposure to second-hand smoke.
Moreover, we promote personnel aged 40 years and older to undergo acomplete physical examination as a 5-year periodic check-up. This initiative
began in FY2017 as a part of prevention-oriented health promotion programs.
We give the opportunity to personnel to ascertain their health condition
through an examination of lifestyle related diseases and the inclusion of test
items that are not used in normal health check-ups, thereby leading to theenhancement of future self-management.

Reemployment rate
FY2016

Approach on Safety,
Environment
and Quality Assurance

In 2006, we introduced the reemployment program for retired persons aged 60
or older in accordance with the Act on Stabilization of Employment of Elderly
Persons. Today, an elderly person is allowed to work until 65 years of age if
he/she wishes to be employed, in line with the amendment of the Act in April
2013.
Moreover, in order to encourage retired personnel to continuously
demonstrate their experience, skills and other strengths, we have reviewed thewelfare packages for those who assume positions as line managers/supervisorsand manufacturing operators.

Fiscal year

In 2017, we hired public health nurses and established a Health Management
Office (health care room) in order to promote personnel health. In addition,
we are performing health promotion activities including offering medical
check-ups with industrial physicians in cooperation with local hospitals.

Governance

Reemployment program for
retired persons

Flextime system

Overview of Koei Chemical

Flexible work style

CSR Report 2019｜ 28

Third-party Opinion

Company Information(As of March 31, 2019)

Specially Appointed Professor,
College of Business & Graduate School of Business,
Rikkyo University

Corporate data

ProfilePoints to be commended

Points to be improved

URL:

https://www.koeichem.com/en.html

Date of establishment:

June, 1917

Capital:2,343 million Yen

Number of employees:

323

Business description:

Manufacture and sales of raw materials and intermediates
for pharmaceutical/agrochemical products, paints, dyes,
and various synthetic resins, etc.

Fiscal year-end:

March 31

Ordinary general meeting of shareholders: Held in June
Authorized number of shares･･････160,000,00
Issued number of shares････････････4,900,000
Number of shareholders･････････････････ 1,774

Stock Data:

Board of Directors (as of June 25th, 2019)

President

Yoshihiko Okamoto

Senior Managing Director

Yasushi Udono

Ken Takiguchi

Managing Director

Koichiro Sogawa

Hideo Higashi

Managing Director

Ikuo Ishizuka

Managing Director

Shuhei Murakami

Director

Keiko Fukahori

Director(Audit & Supervisory
Committee Member)

Hidetada Kawai
Yasuaki Sasaki

Business locations

Tokyo head office
1-8, Nihonbashi-Koamicho, Chuo-ku, Tokyo 103-0016, JapanTEL 81(3)6837-9300 FAX 81(3)6837-9307
Sales & Marketing: TEL 81(3)6837-9290 FAX 81(3)6837-9310

Group company Koei Techno Company, Limited% of total

2,731

55.84

Shionogi & Co., Ltd.

334

6.83

Takeda Pharmaceutical Company Limited

118

2.42

Japan Trustee Services Bank Ltd. (Trust account)

117

2.41

Koei Chemical Employee Shareholder Plan

52

1.08

Masahiro Iso

43

0.90

Maruishi Chemical Trading Co.,Ltd.

33

0.69

Sumitomo Seika Chemicals Company, Limited

26

0.53

Tomomi Sudo

23

0.49

Koji Yamazaki

21

0.43

Name

Director (in charge of General
Affairs & Personnel Office, Logistics
Managing & Procurement Officeand Internal Control & Audit Office)Koei Chemical Company, Limited

Company Information

Number of shares(Thousands)

Major Shareholders

Third-party Opinion

Koichiro Sogawa

I appreciate Dr. Kazuhiro Bai’s valuable remark.
Koei Chemical had published a Responsible Care Report until last
fiscal year, but in line with the formulation of a CSR Basic Policy, we havedecided to issue a CSR Report with enhanced content from this fiscal year.
As points to be improved, I believe Dr. Bai has recommended us to
examine the relations between the various SDG targets and our businessactivities in order to identify tasks to be addressed within the Company,
and establish an optimal governance framework.
We will embrace this advice and continue to make concerted efforts topromote CSR activities.

With Employees

Chiba plant · Research laboratory
25, Kitasode, Sodegaura-shi, Chiba 299-0266, Japan
TEL: 81(438)63-5511 FAX: 81(438)63-5546

Sumitomo Chemical Co., Ltd.

Response to Third-Party Opinion

Hiroyuki Nakajima

Relationship with Local
Communities

I would like to point out issues to be addressed in the next
step. In recent years, there is an increasing awareness that
initiatives for CSR and ESG are important factors that impact
corporate activities and financial affairs from a mediumto long-term perspective. Sustainable Development Goals(SDGs) adopted at the UN Summit in 2015 present newsocial issues that are vital for today’s corporations. In orderto achieve the various SDG targets, the Company needs tourgently develop an organization that can identify issues tobe addressed at present and take action.
To that end, as the next step toward achieving SDGs forthe next fiscal year onward, I suggest that the Company
work on identifying materiality, which is a process to extract
important issues from the broad range of CSR activities
based on the current management system. I believe thatby adding the above issues to the list of CSR managementtasks, the Company may identify new important challenges
toward the achievement of the Corporate Business Plan
“Transformation KOEI” and focus on those challenges todevelop a system that drives the achievement of SDGs.

Stock Information

1-8, Nihonbashi-Koamicho, Chuo-ku, Tokyo 103-0016,
Japan

Dialogue with Shareholders
and Investors

The greatest distinction of the Company’s CSR Report isthat the Company’s belief that the organization shall exert
concerted efforts to press forward with the development ofa sustainable system and such company-wide initiative shallcontribute to local communities, prevails throughout theReport. Especially, it is worth mentioning that the Company
focuses on Responsible Care activities and has voluntarily
formulated the action policy with regard to environment,
safety and health throughout the entire process ranging
from the development, manufacturing, distribution, use
to final consumption of chemical substances, as well
as developing a system to promote it, and disclosing its
achievements, thereby promoting communication with the
public (pages 13 and 14). The Company’s Responsible Care
activities put the environment, social, governance (ESG)
theory into practice as seen in each part of the Report.
In an aim to strengthen governance, the Company has
extended its CSR and ESG activities to include Safety and
Health Activities (pages 15-16), Environmental Preservation
Activities (pages 17-20), Quality Assurance Activities (pages
21-22) (Governance→Safety and Health, Environmental
Protection, Quality Assurance: G→E), and engages in thedevelopment of Relationship with Local Communities(pages 23-24) at a company-wide level (S). Through these
activities, the Company forms the foundation to promote
CSR management, and it is an excellent structure.

Upon a comprehensive evaluation of the Report, I
believe that the Company’s basic stance on CSR activities,
and the development of its management system topractice CSR management and other systems to promote
CSR, are adequate. Moreover, the Company’s various
stakeholder-relations incorporate the investor’s viewpoint,
and every detail of its unique CSR activities emits its strong
commitment to the cause. The continuity and enthusiasm
with which these activities are carried out deserves ourattention on future development.

Location of head office:Approach on Safety,
Environment
and Quality Assurance

The CSR Report 2019 published by Koei Chemical Company,
Limited (the “Company”) summarizes its achievements
relating to CSR activities in FY2018. Here are my opinionsfrom an independent standpoint specializing in CSR
accounting, which aims to quantify CSR activities, and the
management of going concerns.

KOEI CHEMICAL COMPANY, LIMITED

Governance

Serving at Rikkyo University since 2018. Visiting professor in the Business Administration Program of Bond University (Australia)
in 2008. His works include Outlook of CSR Accounting, Moriyama Shoten; Introducing CSR Accounting, Japanese Standards
Association; First Step to CSR Management for Corporate Employees, co-author, Dai-Ichi Hoki; “Deployment of Financial Reporting
Theory based on Global Governance”; CSR Management Control; Essentials for a Going Concern: Five Principles to Overcome
Environmental Change; and Corporate Ethics and Sustainability of Society, co-author, Reitaku University Press, and many more.

Company name:

Overview of Koei Chemical

Kazuhiro Bai, D.B.A.

NOTE: The Company’s treasury shares (8,505 shares) were excluded in the calculation of the percentage of shares held.

29 ｜ CSR Report 2019

CSR Report 2019｜ 30