CSR DIGEST 2014

Message from Top Management

Komatsu’s CSR Activities Contribute toSociety through Core Business■ Overcoming Challenges with Innovation

In the 2011 report, We stated that Komatsu is, Committed toContribute to Society through Core Businesses. Today, when
I look around at the many trends in society, I notice that many
companies, not just Komatsu, are asking themselves, How can
we provide value to society? and acting accordingly.
In Japan, societal issues such as a dwindling birth rate and an
aging population, challenges of women in the workplace, andthe need to stimulate rural economies are being discussed daily.
Meanwhile, when we turn our eyes to global issues, we haveproblems like climate change, the world food supply problem,and natural disaster recovery challenges, as well as many otherissues that are specific to different regions, and in such times, it isexpected of corporations to face these issues as well. Our goal is
to consider these issues and ask ourselves, What are the things
only Komatsu can do? and to actively pursue ways in which we
can contribute to society.
In Komatsu s current mid­term management plan, Together
We Innovate GEMBA Worldwide, we explain how our CSR
activities and core businesses are closely aligned. The first itemon our Basic Strategies is, Growth Strategy through Innovation,
which includes the introduction of new construction methods
that use ICT (Information and Communication Technology), andthe expansion of AHS (Automatic Haulage System) usage. Our
aim is not only to provide products with excellent performance,
but also to make sure that these products are used in a way thatis the most effective and beneficial to our customers at their jobsites. We wish to come up with innovative systems that minimize
environmental impact while improving safety. To this end, we wantto make the best use of Komatsu s internal resources, and workin cooperation with exceptional external partners, to contribute tosolving societal issues through innovation.

■ Safety as Top Priority

Within our company, I constantly tell our employees, The priority
list goes, S (Safety), L (Law), Q (Quality), D (Delivery), C (Cost), inthat order. My point in this is that safety is top priority; it is themost important thing.
Despite this philosophy, on April 25th 2014, a melting furnace
exploded at a plant at Komatsu Castex Ltd. in Toyama. This acci­
dent resulted in the injury of 5 people, one of whom passed away.
For this I am truly saddened and deeply regretful. As soon as theaccident happened, Komatsu reacted by immediately establishingan emergency headquarters, contacting the family and relativesof the injured employees, and worked in full cooperation with theinvestigations of the relevant authorities. In addition, we called on
external academic experts and specialists to set up an Accident
Investigation Committee to put our full effort in to investigating
the cause of the accident. We are once again going back to thedrawing board to work on our health and safety measures moreaggressively than ever, so that a tragic accident like this will never
happen again.
The issue of safety is not limited to Komatsu s plants. It is aconcern in any place with people around, whether it is a partnercompany s plant, a customer s operation site, an office, or
anywhere we operate in. In every place we work, we will respondto changing conditions and continue our work by taking to heart
the idea that, A company with problems in safety, health, orcompliance has no reason to exist.

■ Dantotsu Environment Efficiency at Plants

In May 2014, we built a new assembly factory at the Awazu
plant, which is a key hub. Since the Great East Japan Earthquake
and the consequent nuclear plant disaster, Komatsu has been
putting a lot of our efforts into reducing energy consumption,and using this opportunity to have a fundamental reassessmentof our production process. The first thing we started with isthe construction of this new assembly factory. We took theassembly factories that were in two dilapidated old buildings
and consolidated them into one assembly factory, reducing
the amount of floor space, and set up newest, state­of­the­artenergy­saving machinery. We also started making use of naturalenergy generation, such as biomass power generation and solar
power. Due to these changes, results showed that compared to2010, we had reduced the use of purchased energy by over 90%.
In addition, both environmental performance and area productivity
doubled, compared to 2011. In this fiscal year, we are moving
ahead in instituting these changes in the Oyama plant, Tochigi
plant, and then Osaka plant, to continue to promote our plants
becoming more Dantotsu (Unique and Unrivaled) as we keep oureyes to the future.
Our overseas plants are also achieving great results. At the
Komatsu Shantui Construction Machinery Co., Ltd., the company
that had been awarded with the Deming Prize in 2013, they havea proven track record of engaging in company­wide environ­

External Evaluations
Commendations from Assessment Bodies● Selected for inclusion in the Dow Jones Sustain­

ability World Indices (DJSI), SRI share priceindexes developed by S&P Dow Jones Indices(U.S.) and RobecoSAM (Switzerland)● Selected for inclusion in the listing of SRI issues

developed by Morningstar (Japan, January
2014)● Rated as Prime among 35 machinery com­panies in December 2009 social responsibility
ratings by Oekom, a Germany­based inde­
pendent CSR assessment company.

01● Selected by CDP as Japan s Climatechange information disclosure leading
companies● Selected as one of ESG issues (all 15

companies) published as part of +YOU
activity (Japanese Economy Support
Project) by Tokyo Stock Exchangemental activities. Utilizing the heat exchange function of the air
conditioning equipment to use the geothermal heat with stabletemperature rather than the outside air, the company has beenable to reduce energy use by 55%. In addition, the newly built
waste water treatment facility is being used to recirculate waste
water to be utilized in toilets and greening, as part of working
towards eliminating waste water.
These activities are being expanded to all our plants world­wide, to continue in creating products of exceptional quality
and reliability at work sites that are environmentally conscious,
productive, and safe.

■

Human Resource Development of
Employees and Local Communities

As evident from our company history, Komatsu has emphasized
the importance of developing people for a long time. Our found­er, Meitaro Takeuchi, is the person who, grieved that Japan wasbehind in its development of human resources as compared toEurope and the United States in the early part of the 20th century,
was instrumental in establishing the Science and Engineering
Department at Waseda University at personal expense. We
believe that DNA is still a part of Komatsu today.
In April 2014, we established a new Department for Promotionof Distributor HR Development at our headquarters. In the busi­
ness of construction and mining equipment, the service personnel
at our distributors are the ones who support our customers attheir job sites. Going forward, we hope that this new organization
will be at the center of strengthening the organization and its
human resource development of our service personnel.
Going beyond our core business to social contribution efforts,
we are using the know­how gained from training our service
personnel to support vocational training schools and universities.
Details regarding these efforts can be found in our CSR report, so
we hope you will take a moment to read all about it.
Our corporate value is the total sum of trust given to us bysociety and all stakeholders. We aim to share these values andpractices with all our employees world­wide through instilling inthem the KOMATSU Way. We are also actively participating ininitiatives such as the United Nations Global Compact and the
WBCSD, to take responsibility and do our part in the world as a
global corporation.

Tetsuji Ohashi
President and CEO
July 2014■ Komatsu participates in the UN Global
Compact (UNGC). Regarding for relation­
ship between UNGC’s Ten Principles andKomatsu’s activities, see P.6.

■ Komatsu participates in the World Busi­
ness Council for Sustainable Develop­
ment.

External Evaluations for CSR Activities
January
September
October2013
NovemberJanuary2014

February
March
April

Ranked 19th (out of 438 companies) in Nihon Keizai Shimbun s 16th Environmental Management Survey
Selected in Dow Jones Sustainability Index (DJSI) s World, Asia Pacific category
By CDP evaluation, given an A­rating in the Climate Performance Leadership Index, with 95 points for Corporate Information
Disclosure
Deming Prize awarded to Komatsu Shantui Construction Machinery Co., Ltd.
Awarded the 18th IR Excellence Company Award by the IR Japan Council
Ranked 17th overall, 2nd in Social Aspects, (out of 537 companies) according to the NICES company rating system by Nihon
Keizai Shimbun, Inc.
Selected by CDP as Japan s Climate change performance leading companies and Climate change information disclosure
leading companies
Letter of Appreciation for Contributing to the development of JISHA Occupational Health and Safety Management System
Certification from Industrial Safety and Health Association (JISHA)
Ranked 20th (out of 429 companies) in Manufacturing Sector in Nihon Keizai Shimbun s 17th Environmental Management
SurveyThe Autonomous Haulage System won Nikkei Sangyo Newspaper Launch s 40th Anniversary Special Award at the Nikkei
Superior Products and Services Awards
Awazu Plant and Osaka Plant both awarded the 2013 QC Circle Excellent Company/Business Site
Achieved a No.1 ranking (out of 612 companies) in the comprehensive evaluation in the research by IntegreX
Ranked 15th overall (out of 1,210 companies) in Toyo Keizai s 8th CSR Company Ranking

02

C

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n

t

e

n

t

s

Message from Top Management ………………… 01
Corporate Profile ……………………………………… 03

Our Approach to CSR
CSR Theme and Key Business Activities … 04
Organization to Promote CSR ………………… 05
Incorporating CSR into Management ……… 06
Comparison with Global Principles ………… 06
Major Achievements and Mid-term Plans … 07
CSR Initiatives in Our Value Chain …………… 09
Dialogue with Our Stakeholders …………… 09

Corporate Profile■ Company Name

Komatsu Ltd.

■ Main Businesses

Manufacture and sale of construction and mining
equipment, utilities, forest machines and industrial
machinery■ Head Office2­3­6, Akasaka, Minato­ku, Tokyo, Japan■ Net Sales (Consolidated)

Sales to Outside Customers (by operating departments)
Industrial Machineryand Others
JPY 203.9 billion
10.4％−Providing products required by society−

Special Story 1
The Real Strength of the DANTOTSU Plant

Contribute to Society throughCore Business ………………………………… 13
Increasing Safety by Innovation ……………… 14
Initiatives to Ensure the Health and
Safety of Employees ……………………… 15
Komatsu’s Relationship with
the Environment …………………………… 16
Environmentally-friendly Products andServices ………………………………………… 17
Environmental Conservation in Logistics /Remanufacturing Business……………… 18[CSR Theme 2] Developing People
Special Story 2
Developing “People” Needed by
the Community ……………………………… 19
Creating the Right Working Conditions forEveryone ……………………………………… 21
The KOMATSU Way and Human Resource
Development ………………………………… 22[CSR Theme 3] Growing with Society
Special Story 3
Living with the Local Community−Thinking about CSR using Chile as an Example− …… 23
Community Based Social Contribution around
the World ……………………………………… 25
Disaster Relief ……………………………………… 26
Implementing Risk Management / Compliance … 27
Together with Business Partners …………… 30

Japan
20%

Asia Construction,
Mining and
11% Utility Equipment North
America
China Department
16%
9%
Latin
America15%
CIS 4%
Europe 7%

FY 2013
JPY 1,953.6
billion[CSR Theme 1] Enhancing Quality of Life

−Action to Environment at the Manufacturing
Workplace− ……………………………………… 11

Africa 6%
Middle East 3%
Oceania9%

Construction,
Mining and Utility Equipment
JPY 1,749.7 billion
89.6％

Income and Income Ratio（%）(Billion JPY)

300

JPY
240.4 billion

250

14.0

12.3％

12.0
10.0

JPY
159.5 billion

200
150

8.0
6.0

100

4.0

50

2.0

0

2013
Operation
IncomeNet Income(Net Income Attributable to Komatsu Ltd.)

0.0

(FY)
Operating Income
Ratio■ Number of Employees by Region(Consolidated, End of March, 2014)
Asia・Oceania
14.1％

Middle East・Africa 3％

Number of
Japan
Latin
Employees
America (Consolidated) 41.1％
17.4％
47,208China
10.4％
Europe・CIS 7.2％

North
America
6.8％■ Number of Operations
Number of Komatsu Group Companies (includes Komatsu Ltd.): 180
Number of Construction, Mining and Utility Equipment Department
Production Operations: 39
Number of Construction, Mining and Utility Equipment Department
Sales and After­sales Services Operations: 116

Editorial Policy
is an abridged report of our CSR activities. Komatsu s website will give you comprehensive information on
our CSR activities. We also disclose Komatsu Report as an integrated report and Environmental Report as a report ofour environmental activities.
● These reports principally cover data for the period from April,2013 to the end of March 2014, with some non­periodic
information on continuing efforts.
● Date of most recent previous report is July 10, 2013. We disclose these reports every July and next issue will be publishedin July, 2015.
● These reports contain Standard Disclosures from the GRI Sustainability Reporting Guidelines. You can see a list of theStandard Disclosures and their location in our report from our website.
● The CSR Digest

03

URL http://www.komatsu.com/CompanyInfo/csr/2014/outline/09.html

Our Approach to CSR
As business activities that take advantage of Komatsu’s strengths and contribute to society,
we are working to expand our CSR activities by clarifying and developing the CSR priority areas.

CSR Theme and Key Business Activities
In 2010, with the support of Business for Social Responsibility (BSR), a nonprofit organization, Komatsu undertook amateriality assessment to accomplish the following objectives:
1. Identify a set of CSR issues and prioritize these CSR issues by their relevance to our business and their importanceto our stakeholders
2. Define a set of global CSR themes and activities

1. Identifying a set of CSR Priorities Relevant to our Core Business
From a list of many CSR issues, we selected those relevant to Komatsu as a construction/mining and industrial
equipment manufacturer.
We then evaluated CSR issues on their importance to our business. To understand the relevance of CSR issues
to our business, we interviewed senior executives across our company, including leaders of regions outside Japan.
These interviews helped us to understand the degree to which CSR issues interact with our business priorities andoperations.
We then evaluated CSR issues on their importance to our stakeholders. To understand the relevance of CSR issues
to our stakeholders, we reviewed external reports, viewpoints, and public statements published by governments andpolicy makers, issue experts and advocates, media, suppliers, and customers. We also took into consideration BSR
s view of stakeholder importance.
◆ Evaluating CSR Issues

We evaluated CSR issues based on the degree of importance to our business shown on the horizontal axis, and thedegree of importance to our stakeholders shown on the vertical axis. The CSR issues important to both businesses
and stakeholders came to the top right quadrant.
Stakeholders⬅ Importance to Our● Issue A● Issue C● Issue D● Issue F● Issue E

CSR Issues of Importanceto both our Business andStakeholders= Our CSR Priorities● Issue B

Importance to Our Business ➡
We narrowed our focus to sixteen material issues across six categories. By focusing on the material issues thatare most important to our business and our stakeholders, we believe we are in a strong position to leverage our corestrengths as an equipment manufacturer and create lasting social impact going forward.
◆ Our CSR Priorities
Products, Services, and Customers
Products that enhance safety
Responsible marketing and customer care
Employees
Human resource development
Safety and healthRespecting employees
Ethics and Governance
Cooperation with stakeholders
Corporate governance and compliance
Compliance with social norms of business partners

Environment
Environmentally-friendly products
Environmental efficiency (facilities, such as plants, andjob sites)
Remanufacturing
Human Rights
Respecting human rights
Equal employment
Local Community
Development of local communities
Disaster relief
Improving local residents quality of life04

2. Defining a set of Global CSR Themes
By developing a set of themes around our most important material issues, we implement CSR and meet the needsof our business and our stakeholders. By going through a process of engaging officers in discussions on What weshould do to pursue CSR Priorities as well as taking in consideration BSR s view as a third party, we establishedthree core CSR themes to guide our strategy and implementation:

Komatsu s CSR Themes■ Enhancing Quality of Life ̶ Providing products required by society ̶■ Developing People■ Growing with Society
To support these core themes, we developed key business activities for each theme that outline specifically how weare pursuing CSR at Komatsu. They are almost universal business activities, and can be altered with the change ofbusiness conditions.
◆ Our CSR Themes and Key Business Activities■ Developing People■ Enhancing Quality of Life

̶ Providing products required by society ̶● C o n t r i b u t i n g t o h u m a n re s o u rc e

● Providing products and services that

contribute to infrastructure development
and improve quality of life
● Improving productivity, safety, ande f ficienc y and enhancing energy
conservation through the use of
Inf or ma tion a nd Communic a tion
Technology (ICT)● Improving environmental efficiency atoperation sites and facilities, such as
plants● Reducing our impact on the environ­ment throughout the product life cycle● Enhancing safety for society, custom­ers, employees, and business partners

development in local communities● Enhancing our employees and suppli­

ers through The KOMATSU Way● Enhancing our employees and distrib­

utors through Brand Management■ Growing with Society●Engaging in dialogue with our

stakeholders● Providing social contributions throughthe use of our core technologies
and resources (e.g., disaster relief oractivities to remove anti­personnel
land mines)● Contributing to local communities
where we do business● Strengthening our corporate gover­nance and compliance● Promoting compliance with envi­
ronmental, labor, and social norms
within our group and among business
partners

Organization to Promote CSR
We h a v e s t r u c t u re d o u r o r g a n i z a t i o n t o e n s u re t h a t C S R i s i n t e g r a l t o h o w w e c o n d u c t o u r d a i l y b u s i n e s sthroughout our entire operations. Our CSR organization reports to the president and CEO of Komatsu. In addition,
our CSR Department, with the support of the CSR Committee that includes senior leaders from across the company,
plans and guides our day­to­day CSR activities.
Organization
Executive Officer
Supervising CSR
President
and CEO

Committee
CSR Dept.

CSR Committee
CSR Steering Committee

Overall CSR・Social Contribution

Environmental Affairs Dept.

Earth Environment Committee

Compliance Dept.

Compliance Committee

Compliance

KOMATSU Way Global InstituteKomatsu Way Committee

Developing Human Resources

Risk Management Committee

Risk Management

Internal Audit Dept.
General Affairs Dept.

Environment

Internal Auditing
Information Security Committee

Legal Dept.

Information Security
Compliance with Laws

Export Control Dept.

Export Control Committee

Export Control

Corporate Communications Dept.

Information Disclosure Committee

Information Disclosure
Personnel System

Human Resources Dept.

Personnel Committee

Quality Assurance DivisionCorporate-level Product Safety Committee

Product Safety

Safety & Health Admin Dept.

Group Health and Safety Committee

Health and Safety

Procurement Div.

05

Area of CSR Oversight

Procurement

Incorporating
CSR Into
Management
Through dialogue
with stake holders both
inside and outside thecompany, we will focus
on our CSR themes
and further developthese themes and key
activities. In this way
we hope to enhance
the trust placed in us bysociety as we pursue
sustainable growth.
Komatsu participatesin activities that con­tribute to society. In
addition to working forsociety through corebusiness, Komatsu
uses origin al met h ods
that utilize Komatsu
technology to work onsocietal issues suchas revitalizing local
communities.

Committed to “Quality and Reliability,” Komatsu strives to maximize its corporate value
by providing products that customers are happy to own.
“Corporate value is the sum of trust given to us by all our stakeholders”

Management
PolicyBy focusing on construction and mining equipment, and industrial machinery, we will
work for sustainable growth that minimizesnegative environmental and social impacts.

Business
DomainEnhancing the trust
placed in us
by society→ Further growthMid-range management plan “Together We Innovate GEMBA Worldwide”(1) Growth strategies based on innovation(2) Growth strategies of existing businesses(3) Structural reforms designed to reinforce the business foundation

Management
Strategy

Implementation ofmanagement policy→ Contributing
to society

Values, basic attitudes and patterns of behavior to be passed on to future generations.
1. To further cultivate the forward-looking corporate climate and the corporate cultureof continuously taking on challenges, we will thoroughly ensure group-wide practiceof five Gen principles,i.e., Gemba (workpace), Genbutsu (actual things), Genjitsu (reality),
Genten (the origin) and Kenzaika (making evident).
2. To anchor The KOMATSU Way, we will strengthen our Gemba capability throughKaizen activities in our routine work.
3. We will focus our efforts on brand management activities designed for us tothoroughly understand customers’ Gemba and become indispensable for customers.
(Supporting customers to achieve their ideal conditions)

The KOMATSU Way

Is management inline with societal
demands?
→ Always monitor

Code of Worldwide Business Conduct● Rules that Komatsu and its management and employees must abide by as a memberof the business society● Statement to society as a “responsible corporate citizen”< Policies, Standards, Principles >● 5 Principles of Compliance● Earth Environmental Charter● Declaration of Biodiversity● Global Policy of Human Resources● Occupational Safety and Health Policies● Standards for Product Safety● Principles Governing Quality Assurance● Basic Principles for Social Contributions● Regional Policies, Standards by Countries, etc

Corporate
Citizenship

Komatsu’s CSR Themes
1. Enhancing Quality of Life - Providing products required by society 2. Developing People
3. Growing with Society< Global Principles >● The UN Global Compact

Demands of Society●

ISO26000

●

GRI

●

Keidanren Charter of Corporate Behavior

Comparison with Global Principles
Items Komatsu has identified as being our own CSR priority issues are in line with the international standards such as ISO26000 core subjects/issues
and United Nations Global Compact.
In order to take concrete action, we have incorporated these standards into our internal guidelines, Komatsu s Code of Worldwide Business Conduct,
and CSR Procurement Guideline, which we submit to our business partners as our requests.
ISO26000
core subjects/ issues

UNGC 10
Principles

・Corporate Governance・Compliance・Compliance with social norms

Organizational
Governance

Human Rights

including business partners[HumanRights]Principle 1
Principle 2

Komatsu s Internal Guidelines(Items with ■ are stated in Komatsu s Worldwide Code ofBusiness Conduct , and ● are in CSR Procurement Guideline )Komatsu s CSR Priorities (See P.4)

・Respecting human rights
・Compliance with social norms

including business partners

・Development of local communities
・Disaster relief
・Improving local residents quality of■

Quality and Reliability of organizational structure, business
operations, employees and the management■ Emphasis on corporate governance■ Compliance with the Rules of the Business Community■ Respect each employee s fundamental human rights■ Promote work life balance● Respect human rights

life

LabourPractices[Labour]
Principle 3
Principle 4
Principle 5
Principle 6・Equal employment
・Safety and health・Human resource development
・Compliance with social norms

including business partners■ Engagement and discussions with employees or their representatives■ Shall not tolerate child labor or forced labor■ Promote equal opportunities for employment and eliminate

discrimination/harassment in the workplace■ Realize a safe and comfortable work environment● Never get involved in any child or forced labor● Create a work environment where there is no discrimination orharassment● Build up an occupational safety and health operational structure● Establish a fair and just personnel system■ Provide products, services and systems that are environment­friendly,

The
Environment

Fair Operating
Practices

ConsumerIssuesCommunity
Involvement
andDevelopment[Environment]
Principle 7
Principle 8
Principle 9[Anti­
Corruption]
Principle 10・Environmental­friendly products
・Environmental efficiency (facilities,

such as plants, and operation sites)

・Remanufacturing

・Corporate governance・Compliance・Compliance with social norms

including business partners

・Products that enhance safety
・Responsible marketing andcustomer care・Environmental­friendly products・Remanufacturing
・Development of local communities
・Disaster relief
・Improving local residents quality oflife
・Human resources development

safe and innovative■ Environment Protection● Reduce environmental impact, manage chemical substances andbuild up environmental management systems­ Komatsu Earth Environmental Charter­ Declaration of Biodiversity by Komatsu■ Fair Competition■ Refrain from following the custom whenever we believe there isconflict■ Appropriate Sociality■ Fair and proper relationship with governmental agencies● Engage in free and fair competition and business transactions● Never accept inappropriate cash, gifts or other favors■ To always think about the needs of customers and to strive to provide

products, services and systems that are safe, environment­conscious
and innovative■ Environment Protection● Reduce environmental impact, manage chemical substances andbuild up environmental management system■ To realize and fulfill CSR as a corporate citizen■ Groupwide social contribution (5 Principles for social contribution)06

Major Achievements and Mid-term Plans
See below about Komatsu’s CSR themes, concrete initiatives of key business activities, and mid-range
issues and targets of each theme.

CSR Themes and Key Business Activities

Examples of Concrete Initiatives-Providing products required by society-

1. Enhancing Quality of Life

■ Working for Society through Core Business (P.13)■ Increasing Product Safety with Innovation (P.14)● Providing products and services that contribute to

infrastructure development and improve quality of life

● Improving productivity, safety, and efficiency andenhancing energy conservation through the use of ICT● Improving environmental efficiency at operation sites
and plants

・Entire perimeter monitoring of dump truck Kom Vision
・ICT-Intensive Construction using the ICT Bulldozer
・Autonomous Haulage System (AHS) 1■ Introducing Environmentally-friendly Products and Services

・Hybrid Hydraulic Excavator HB205-2
・Battery-Powered Forklifts FE25-1 2
・Desktop Grinding Machine■ Reducing the CO 2 Emissions and Effective Utilization of

Resources in Business Units (P.11) 3■ Taking Measures to Maintain Biodiversity at Business Units andFacilities■ Reducing CO2 Emissions in Logistics (P.18)● Reducing environmental impact throughout the productlife cycle● Enhancing safety for customers, society, employees,

and business partners■ Promoting theReman Business■ Raising the Recyclability of Construction Equipment■ Increasing the Safety of Products and Workplace・Occupational health and safety (P.15) 4■ Contribution to Society through Human Resource Development(P.19)

・Offering the equipment service education in collaboration with the

2. Developing People● Contributing to human resource development in local

communities

Myanmar government 5・Offering educational materials and education support for Germanelementary schools

・Offering basic education for young people in South Africa 6・Developing vocational abilities useful to Indonesian industries
・Science education for children in Komatsu-no-Mori 7● Enhancing our employees and suppliers through the

KOMATSU Way● Enhancing our employees and distributors throughBrand Management■ The KOMATSU Way and Human Resource Development (P.22)

・Received the Demming Prize at Komatsu Shantui 8
・Employee training/human development in distributors■ Brand Management Initiatives■ Communication/Dialogue with Our Stakeholders● Engaging in dialogues with our stakeholders

・Dialogue with our stakeholders (P.9)
・Holding the technology convention with the academic-industrial

alliance partners (P.9) 9

・Communication with business partners (P.27)■ Disaster Relief● Providing social contributions through the use of our

3. Growing with Society

core technologies and resources

・Clearing of anti-personnel landmines and provincial reconstruction

project 10・Support in regard to the typhoon disaster that hit the Philippines 11
・Ongoing support in regard to the Great East Japan Earthquake■ Contributing to Our Local Communities● C o n t r i b u t i n g t o l o c a l c o m m u n i t i e s w h e re w e d obusiness・Contributing to our Local Communities in Chile (P.23) 12・Support center for people with disabilities in Great Britain (P.25)
・Desert greening activities in China (P.25)
・Inviting Russian children to a hockey game (P.25)
・Supporting the lives of the minority people in Indonesia (P.25) 13
・Supporting The Flower Association of Japan■ Revitalizing Local Communities

・Supporting agriculture and forestry■ Governance and Legal Compliance● Strengthening corporate governance and compliance・Corporate Governance・Efforts of Compliance (P.29) 14■ Risk Management (P.25)

・Business Continuity Plan (BCP) Training and Information Security

Education in the head office, production base and subsidiaries

・Conducting CR Audits● Promoting compliance with environmental, labor, and07

social norms within our group and among business
partners■ CSR Procurement

・Together with Business Partners (P.27)
・Reducing CO2 emissions in business partners (P.16)

Mid-range Issues and Targets of These CSR Themes■ Growth Strategies Based on Innovation (From Mid-range Management Plan)

・Expansion of construction methods by using ICT Equipment
・Reinforcement of product competitiveness of mining equipment and commercializationof AHS・JV start­up with GE to develop next­generation mining equipment■ Environmental Action Plan (For detailed data, please refer to12

Environmental Reporton the Web.)・Environmental Management (Strengthen environmental management system, educationand training, audits for overseas subsidiaries, reporting)・Research and Development (Compliant to emission standards, improve fuel efficiency
of products, biodiesel fuel, improving recyclability rate, promote reuse and recycling)・Manufacturing (Energy conservation, effective utilization of resources, risk management,
improve greenery rate.)■ Environmental Action Plan (For detailed data, please refer to3

4

Environmental Reporton the Web.)・Procurement and Logistics (Support to business partners for acquiring certification, shift
to means of shipping with low environmental impact, promotion of returnable packing
containers, reduction in shipping distance and improvements in shipping efficiency.)
・Sales and After­sales Services (Encourage distributors and rental companies to reduce
their environmental impact.)■ Increasing Safety in Workplace
・Eliminating accidents accompanied by lost worktime/fatal occupational injuries in theentire the Komatsu Group including the overseas subsidiaries.

■ Contribution to Society through Human Resource Development

・Reinforcement of the cooperation with business partners
・Ongoing offering of education opportunity leading to employment in the fields related toconstruction equipment and manufacturing

5

6■ Ongoing Practice of the KOMATSU Way

・Developing experts who disseminate the KOMATSU Way (Overseas)
・Deploying TQM in the overseas subsidiaries■ Ongoing Practice of Brand Management

・Ongoing activities (to broaden the base) inside/outside Japan■ Reinforcement of Human Resource Development System mainly with the Distributor

Human Resource Development Promotion Division

7

8

・Promoting training according to the distributor needs/functional level
・Preparing the training system for the distributors
・Developing the in­house instructors■ Ongoing Communication/Dialogue with Our Stakeholders■ Disaster Relief

・Rapid support through core business* according to the situation in the disaster area(*: equipment, house, accompanying software, human resource development, etc.)

・Ongoing of clearing of anti­personnel landmines/reconstruction support project in
910

Cambodia and Angola

・Ongoing support in regard to the Great East Japan Earthquake through core business(Maintenance/Enhancement of service system, Suggestion of ICT Construction)■ Contributing to Our Local Communities

・Ongoing efforts to provincial needs (Subsidiary)・Promotion of information sharing in the Group about global activities

1112■ Compliance・Using tools such as e­Learning to ensure that every person in the organization isvery familiar with both Komatsu s Worldwide Code of Business Conduct and the Five
Principles of Compliance.

■ Risk Management

・Enhancing BCP/information security system throughout the Group・Improving the CR Audit Technique/Increasing the operation Level
13

14■ CSR Procurement

・Ongoing CSR Awareness Campaign to our business partners
・Activating Overseas Komatsu Midori­kai Organization

08

CSR Initiatives in Our Value Chain
Komatsu endeavors to fulfill its social responsibility in business, and in all other pursuits, to create value for our customers
and for society. This chart shows what activities we are doing within the value chain for each stakeholder.

Our Activities for Our Stakeholders within the Value Chain
LCA design

Komatsu’sValue Chain

Relationshipwith the EarthEnvironment●●

Green procurement

SG＆A,
Development● CO2 reduction
Energy conservation
Zero emission● Risk management● Elimination of the use of hazardous chemical substances●●

Procurement＜

Local Community●

Compliance with rules●

Supporting human resource
development

Manufacturing

Logistics（law, safety, human rights）＜Business Partners in Supply Chain＞●＞＜Employees＞●

Human Resource Development

Universal Agendas●●

Social Contribution

Global social contribution programs
tailored to the needs of each region

Safety and Health

Cooperation with Stakeholders●●

Right Working Conditions

Corporate GovernanceDialogue with Our Stakeholders
Creating Dialogue Opportunities

Dialoguing with our stakeholders is essential indetermining whether Komatsu s management andbusine s s a r e me e ting s o c ie t a l r e quir e me n t s. E v e r y
department that has direct contact with our stakeholders
is using e v er y oppor tunit y to e xplain our company s
current circumstances, listen to people s opinions, and tohave dialogue.
Stakeholder Venue for Dialogue

Content
At any opportunity, any
Brand Management
Customers
activity of problem­solving for
Activities
customers
President explains businessBusiness Various meetings for
performance, policies, andPartners
Midori­kai *strategies
Distributor meetings
President explains businessSales
in each region (US,performance, policies, andDistributors Europe, China andstrategies
South East Asia)
Employees

Meeting with the
President

Meeting withLocal
representatives ofCommunity local community
near the plant
Komatsu Industry­
Industry­
Academia Science
Academia
and Technology
Collaboration
Collaboration
Partners
Council09

Frequency
Daily
3 times ayear
Annually

President explains businessperformance, and policies
going forward

Semi­
annually

Plant manager explains
initiatives related toenvironment and safety

As needed

Exchange of ideas
and opinions between
representatives such as
Biannually
university professors andChief Technology Officer (CTO)
CEO and Chief Financial
Japan: Daily
IR Meeting in Japan, Officer (CFO) explains
US andInvestors
US and Europe
business performance,
Europe:policies, and strategies
Anuually
CEO and Chief Financial
2­3 times a
Individual Shareholders
Officer (CFO) explains business year, held at
Shareholders Meeting
performance, policies, andmajor cities instrategies
Japan* For more information on communication with our business partners, please refer
to P.30 Together with Business Partners

Technology Collaboration Council
with Industry-Academia Collaboration
Partners

As an example of one ofour dialogue venues, wewould like to introduce thetechnology collaboration
council tha t is held with
universities tha t are ourindustry­academia partners.
On November 22nd, at the in­company training center
in Ishikawa, we held the Komatsu Industry­Academia
Science and Technology Collaboration Council. This was
not limited to the relationship between each university
and Komatsu, but rather an open forum with professors
from each university ( Yokohama National University,
Osaka University, Kanazawa University, The University ofTokyo [In order of date of contract]) and representatives
from the K oma tsu Group, to hold a wider discussion
r egar ding the indus tr y­a ca demia collabor a tion with
K oma tsu. 9 pr o f e ssor s f r om the univ er sitie s and 38
representatives from Komatsu participated in this forum.
We had presentations and panel discussions basedon the central idea of, Research, Development, andMonozukuri (Manufacturing) for Komatsu to Continue asa Global Leader 10 & 20 Years from Now.
Two years had passed since the previous forum, andthe mutual understanding between Komatsu and theuniversity have deepened since, and we were able toexchange ideas on specific topics. We would like to make(< > represents Komatsu s stakeholders, ● represents Komatsu s activities.)

Provision of environmentally-friendly products
Proposal of fuel-efficient operation● Provision of remanufactured components
●

●

●

●

Sales and Services●

Use of Products

Compliance with rules●（law, safety, human rights）●●

Human resource development＜Customers＞

Human Resource
Development of Local Society

Human resource development to meetregional needs through the use of coretechnologies and resources●

Activities for Diversity●

Compliance●

Respecting Human Rights

Disposal

Provision of safe and innovative products
Responsible marketing and care ● Customer solutions＜Sales and Service Distributors＞●

Proper disposal
Recycling●●

Improving Quality of Life●

Disaster Relief

Providing products and services that contribute to
infrastructure development and improve quality of life
Relief activity for natural disaster and demining ／creating safe village project

Equal Employment（Activities for Diversity）

the most of the discussions from this time around, andcontinue to develop and strengthen our relationship into a

Win­Win exchange for all parties.

VOICE
Komatsu s DANTOTSU (Unique andUnrivaled) and Human Resource
Development

Dr. Koetsu Yamazaki
President, Kanazawa University
W e signed the indus tr y­academia collabor a tion agr eementwith Komatsu in November of 2005, and since then have actively
promoted joint researches, training activities, and related humanresource exchanges. For Kanazawa University, Komatsu was thefirst corporation with whom we had a comprehensive industry­
academia collaboration agreement, and as the first, we had some
initial difficulty in getting the collaborative activities up and running.
However, looking back, it was a good experience, as both theuniversity and Komatsu got to see and understand each other sGemba (workplace).
So far, we have conducted joint research in production
technology and construction/ f orging press machiner y design
projects, and we are proud of the part we played in getting resultsfor practical application and commercialization. In particular, as a
joint research project, we believe we have broken new ground forfurther development in the recent research at the Awazu Plant touse groundwater for air conditioning, which not only contributes toreducing energy usage at the plant but also improves the quality of
air conditioning.
Going forward, Kanazawa University not only wants to contributeto joint research projects that result in DANTOTSU (Unique andUnrivaled) development for Komatsu, but to also contribute toindustrial development and technological innovation that relate tosolving global problems, including environmental issues. In the sameway, in order to drive future research and development, I think it
important that Komatsu make global use of external seeds suchas the university, and build up a research and development systemthat brings together internal and external seeds.
Even as we move for ward in research and development,
continually fostering the growth of exceptional human resources
is the most important and pressing issue for both universities andbusinesses. That is why, starting with joint research, training, andhuman resource exchange, we would like to continue to solidify our
cooperative activities with Komatsu and continue to promote ourindustry­academia collaboration. Furthermore, we hope to take thisexperience and apply it to collaborations with other institutions, andcontinue to work toward further development of human resources
and social contribution.

10

CSR
Theme

1

Enhancing Quality of Life

- Providing Products Required by Society Key Activities …………………………………………

●Providing products and services that contribute to infrastructure development

and improve quality of life

●Improving productivity, safety, and efficiency and enhancing energy conservation

through the use of information and communication technology (ICT)●Improving environmental efficiency at operation sites and plants●Reducing environmental impact throughout the product life cycle●Enhancing safety among society, customers, employees, and business partners

Special Story 1

The Real Strength of the DANTOTSU Plant−Action to Environment at the Manufacturing Workplace−

A New Assembly Factory Begins Operation at the Awazu Plant−Leading the project to cut down electric power consumption to half at all plants in Japan−

Productivity: Doubling productivity by area bytaking full advantage of improvement efforts
over the years.

11

There were previously two factories at the Awazu Plant,
but they were built over 40 years ago and equipped withmany, outdated facilities. Their structure also posed someproblems in productivity. As the productivity of assemblingis fundamentally determined by parts logistics (preparationof parts), the pillar and floor structure can also become
obstacle.
The new assembly factory (shop floor area: 28,000m2 )features a great degree of freedom (flexibility) capable ofaccommodating production lines 50 years ahead. The wide
open space of the shop offers an outstanding degree of
freedom when rearranging the floor layout in the future. It is
secured by its innovative pit structure of the entire shop floor
and application of an aircraft hangar structure which hasprovided a great distance between pillars. Power sources,
pipes and auxiliary facilities along the assembly lines are allstored in the pit, which also promotes easy maintenancework and safety of the workers.
For the new assembly line for wheel-type construction
equipment which began operation in May this year, ourassembly experts thoroughly incorporated their improvement
measures in the design stage, reducing the line length from150m to 120m and doubling productivity per floor area.
For the new line for crawler-type models, scheduled tostart operations in July this year, the length has also beenshortened, from 180m to 130m, enhancing per-space
productivity.

32m

Full underground pit structure
We adopted the roof design similar to an aircraft hangar, achieving
the maximum distance of 32m between pillars, about 4 times
longer than the previous assembly factory. In this way, we havesuccessfully eliminated the obstacle of the pillars in designingassembly lines.

An innovative pit for the entire shop floor of a plant which handles
heavy equipment. Flat floor surface along the lines enables relativelye a s y re a r r a n g e m e n t o f t h e l i n e s b y re m o v i n g f l o o r b o a rd s a n dmoving the facilities in the pit.

E n e r g y S a v i n g s : Ta k i n g o n t h e c h a l l e n g e o f
reducing over 90%
In addition to the new assembly factory, we are working
on energy-savings and -generation at the Awazu Plant by
taking full advantage of local nature and our strengths.

Biomass boiler currently inuse. We have also developed an original cutting-type
chipper for thinned wood.
We are also planning tothor oughl y c olle c t w a s t eheat from a biomass power
genera tion system to be
introduced soon.

■ Air Conditioning System with Groundwater

Thermoelectric Modules

To exhaustively use waste heat from heat treatment
and other processes, we have been testing thermoelectricmodules made by KELK Ltd., our subsidiary, for power
generation for the last few years. We are planning to use
KELK s new thermoelectric units at seven furnaces, partly as
their durability test before the end of the current fiscal year.
Thermoelectric generation
system at the Awazu Plant.
which takes advantage oftemper a tur e dif f er enc e swhich occur inside of
selec tive machiner y. The
heat treatment process isa ver y harsh environmentf or thermoelec tric units
because of drastic changesof temperature.

■ Biomass Power Generation

As part of our assistance to the local forestry industry,
we are going to start full-scale biomass power generationby the end of 2014 by using wood from trees thinned fromthe forest, which are usually discarded. This should resultin a significant reduction in purchasing electricity. To ensurea stable supply of this thinned wood, we have entered acontract with the Kaga Forestry Association.

To store and reuse power generated at night by thethermoelectric units and biomass power generation system,
we are also developing a large-scale power storage systemwith sealed batteries for Komatsu forklift trucks.

TOPICS
Wastewater Reuse Initiatives in China
In order to become a model company for environmental
protection, Komatsu Shantui Construction Machinery Co., Ltd(KSC)., is st riving t o re du c e e n v i ron m e n t al bu rde n s thro ug henvironmental improvement efforts to fulfill social responsibilities
and contribute to regional development. KSC introduced
M e m b r a n e B i o r e a c t o r s ( M B R ) , a p u r i f i c a t i o n t e c h n o l o g y,which is being implemented domestidally in China, combines
m i c ro o r g a n i s m s w i t h a f i l t r a t i o n m e m b r a n e . A s a re s u l t , t h equality of waste water was far below the local government
emission standards and also river standards (South to North
Water Division Project Wastewater Standards).
The wastewater purification system purified 58% of thewater used at plants and the water quality was improved to theallowable level of reuse for farm fields. At the time, water was
discarded after treatment and not being reused. As a company
striving for the conservation of water resources and the CEO
policy of becoming the world s No.1 medium-sized hydraulicexcavator plant , a new wastewater reuse system was installed
for the purpose of social accountability and public interest. Water
treated to meet national wastewater reuse standards are further
filtered and chemically treated with chlorine dioxide for the use ofwatering greenery and toilet facilities.
Since operating from October 2013, a total of 12,333 tons
o f w a t e r w a s re u s e d a n d i n A p r i l 2 0 1 4 , t h e re c y c l e r a t e w a s

Growing with Society

Large-scale power storage
system with maintenancef re e b a t t e r ie s f or f or k li f t
trucksDeveloping People

By utilizing a high-efficiency radiator used in ourconstruc tion equipmenta s t h e h e a t e x c h a n g e r,
we use groundwater at
a c ons t ant temper a tureof 17 Celsius for cooling.
In winter, we use heatedwater discharged fromfacilities and equipment in
the plant.

■ Power Generation by Using KELK-madeEnhancing Quality of Life

We have originally developed an air conditioning system
which uses the rich groundwater of the Hakusan mountain
range and steadily introduced it to buildings at the Awazu
Plant since February 2012, including the new assembly factory. We expect that we should be able to cut down power
consumption used for air conditioning of all buildings of theentire plant to half by using this system. In collaboration with
Kanazawa University, we have also analyzed and ensured
the amenity, energy savings and hygienic safety.

improved to 65.3%.
For the future, the efforts will be made to reduce water
consumption and achieve 100% recycle rates through initiatives
such as improving the summer rooftop fountain system.
Also, KSC will continue to make improvements regarding
the environment and make contributions for the sustainable
development of society.
(10) Rooftop
fountain
4.0 ％
5.5 ％
(8) Drinking

Recycling of items (1) to (5)(9) Water for painting(58.0 ％ )

6.4 ％

Other
(1) Bathrooms

25.6 ％(7) Greening

8.5 ％Toilet facilities

28.4 ％(2) Toilet sewage

25.3 ％

Greening water

63.1 ％

11.4 ％(4) Dining
rooms(6)Fire fighting
water
0.4 ％

7.4 ％
(5) Carwashes
4.6 ％(3) Toilet hand
washes9.1 ％12

Contribute to Society through Core
Business
Komatsu is helping to enhance the quality of people’s lives by providing products that are used on construction sites and mines, as well as forestry sites. In addition, by providing unique products and services inenvironmental, safety, and ICT fields, we are solving the problems faced by our customers and by society.

Contributing to Infrastructure Development
and Improving Quality of Life
Komatsu products, such as construction equipment
and mining equipment, help build nations and develop
c o m f o r t a b l e l i v i n g e n v i ro n m e n t s a ro u n d t h e w o r l d .
Construction equipment helps implement the infrastructure
for people s livelihoods, through the building of roads andcommercial facilities, and the construction of harbors andembankments.
Komatsu products are also prominent in forestry, helping
to produce pulp and lumber, and in mines that produce
resources, such as metal ore and coal.

Initiatives that reflect this mission are given below, as
examples of how we are meeting the needs of our civilengineering and construction customers.
◆ Enhancing Quality of Life through Civil

Engineering and Construction Business

Komatsu s Initiatives
・Provide high-quality

construction equipment
・Provide equipment maintenance

Civil Engineeringand Construction

with out interrupting machine
operation
・Provide eco-friendly equipment
・Provide highly functional
construction solutions

Provide optimum service througha remote vehicle management
system (KOMTRAX)Forestry

Hybrid excavator that have
25% higher efficiency thanconventional vehicles

ICT-intensive construction

Mines

Solutions to Societal Issues
Reduction of Construction TimeBusiness Development Focusing on
Environment, Safety and ICT
Komatsu focuses on Environment, Safety and ICT whenproviding those products and services above, striving tobecome a necessary presence for our customers by fulfilling
their needs. We are committed to our mission of helping
people around the world to enhance their quality of life.

TOPICS

Superior Quality in Completing Construction

Decreasing CO2 emissions by Improving Fuel Efficiency

SafetyContributing to Local Community (Developing Safe and Healthy Urban Environments)

Helping to Enhance Quality of Lives of People Around the World
Komatsu provides products and services that are neededby our customers and by society. The theme Enhancing
Quality of Life, while at the same time taking the environment and safety into account.

Improving the Safety and Productivity at Mining Sites−Joint Venture for Development of Next-Generation Mining Machinery established with GE−
In response to the expanding global resource demand fromsociety and customers requests to improve the safety andproductivity of mining sites, in April 2014, Komatsu, together
with General Electric Company (hereinafter referred to as GE)
established a new company, Komatsu GE Mining Systems, todevelop next-generation mining machinery.
The new company combines the ICT and vehicle technology formining machinery of Komatsu and the electric power, electric drive
systems, and battery technology of GE to develop next-generation
mining machinery and systems.
The first item on the agenda is to further improve the safety
and productivity of underground mining. By using the kind of
DANTOTSU (Unique and Unrivaled) technology and product de-13velopment that Komatsu used
to develop the AHS (Automatic
Haulage System) for open-pit
mining, we will bring innovative
improvements to the safety andproductivity of undergroundmining sites.
F or mor e de tails on AHS,
ple a se r e f er t o the F Y 2010
report.
URL h t t p : / / w w w. k o m a t s u .

GE s Jeffery Immelt, Chairman &CEO (Left) with Komatsu s Tetsuji
Ohashi, President & CEO (Right)
signing the agreement, January
2014

com/CompanyInfo/csr/2010/pdf/16.pdf

Increasing Safety by Innovation
Innovation brings about a variety of valuable ideas such as environmental design and economic efficiencies.
Out of these, our highest priority is “Safety.”
Starting with providing safe products, and including the ultimate safety of automatic operational systems, weare making full use of innovation in terms of safety to find ways of bringing the best value to our customers.

Example of Safety Activities

Providing a very safe product is a manufacturer s mostbasic responsibility. On top of meeting all of the latest
international standards and regulations, we deliver productswith exceptional safety features that are unsurpassed byother competitors to our customers.
At the same time, our goal is to improve safety throughinnovation to such a level that we can help our customers
realize on-site operations as they should be.
Activities to improve on-site operational safety

・R a p i d i m p r o v e m e n t o f

to reduce human error.
Entire perimeter monitoring system, etc.

Innovative
approach（Use of ICT）

products

・Component technology“Dantotsu”*

Improvingproduct safety

product safety. ICT-intensive
construction to labor-savingon site work.

To ensure safety in every direction from the driver s seatof the dump truck, a composite image of the perimeter isshown on the monitor. Contact and collision within blind
spots is prevented by having a bird s eye view of the vehicle
to check the surrounding area.

ICT-Intensive Construction: Construction using
the ICT Bulldozer

Regulations andstandards approach

Developing People

ICT-Intensive
construction“Dantotsu”* solutions

Automatic ・Ultimate safety features. Mine
operational management via autonomous
haulage system（AHS）
systems

Improving Product Safety: Entire perimetermonitoring Kom Vision

Enhancing Quality of Life

On-site Operational Safety（ISO, EU regulations, etc.）

The ICT Bulldozer, which was introduced to North
American markets in 2013, has received great reviews
and has made the ICT-Intensive Construction possible.
Since the machine automatically operates according to a
pre-determined setting, the operator is then able to focus
solely on controlling the vehicle position. Even at sites thatare short-staffed on skilled operators, the construction work
can safely continue.
The ultimate safety feature to be realized is the Automatic
Operational System. At some major mines in Australia
and Chile, the Autonomous Haulage System (AHS) is in
full-scale operation. This is the system where giant dump
trucks automatically drive themselves, carrying over 300
tons of soil and minerals. Customers must pay most carefulattention when they have several construction machineryand vehicles operating 24 hours in the harsh environmentof mines. AHS is there to help with this process. The combination of the cutting edge technologies such as satellite
communication and various radars and sensors createsa system that responds to the customer s diverse safety
needs, and by continuing to work on further evolution ofsuch safety systems, we are contributing to the realizationof making our customers on-site operational safety as itshould be.

When working on sloped surfaces (like dikes and rice
fields that have hardened at an angle), operators do nothave to operate the working function of the machine, andinstead can concentrate on moving the position of thevehicle. Foreseeing slips that occur due to carrying too
much soil, the machine works with the optimal volume ofsoil for efficient construction, to help minimize the burden
on the operator.

Growing with Society＊“Dantotsu”
means unique and unrivaled.

Automatic Operation System: the Autonomous
Haulage System (AHS)

Fully automated transportation is realized by operating
and managing dump trucks with various ICT functions
installed from a centralized control room. The dump truckuses GPS to communicate its position and drives itself
according to the course and speed information transmitted
from the control room.

14

Initiatives to Ensure the Health and
Safety of Employees
Occupational health and safety is one of the most important topics in Komatsu’s business operations.
In addition to internal Group-wide safety, we extend our efforts to include our business partners in putting astrong emphasis on safety in the workplace.

Overall Policy regarding
Occupational Health and Safety
Along with communicating the President s message regarding occupational health and safety, in the April 2011 edition of
the Komatsu s Code of Business Conduct Komatsu pledgedthat it would establish a Occupational Safety and Health
Policies, and that the company would work in cooperation
with its employees to develop these initiatives.
As part of health and safety efforts, we are working on having every employee participate in Zero Accidents small-group
activities and conducting well-established safety training
sessions, and supporting safety activities globally. Our goal isto promote the health of our employees by having the entire
Group have a health and safety management system set up,
and promote mental and physical health management.

◆ Incidence Rate of Occupational Accidents(Frequency Rate of Lost Worktime)(Frequency Rate)
7.0
6.20
6.0
5.0

5.46

4.0
3.0

3.47

2.0

1.75

1.0

1.54

0

3.30

3.06
1.62

3.10
1.61

0.74
2009

2010

2008
All industries(Japan)1.00

Construction andmining equipment
manufacturingindustry (Japan)

1.63
1.59
1.60 1.62 1.34 1.28
1.27
0.86
2011
2012

1.58
0.94
0.91
0.83
2013
(FY)

Komatsumanufacturing
facilities (Global)

Komatsu Group(Global)1. The data for all industries (Japan) and construction and mining equipment
manufacturing industry (Japan) are provided by Ministry of Health, Labourand Welfare.
2. The data for work hours at Komatsu manufacturing facilities production
plants are based on data from 22 domestic and main overseas companies.
3. The scope of Komatsu Group includes Komatsu production plants, Japandomestic dealers, of which for 2010 includes only construction machinery,then extended to include forklifts in 2011.

TOPICS
Japan-USA s Joint Health and
Safety Project
Mr. Michael Hoffman
Manager, Safety & Loss Control
Peoria Manufacturing
Operation (PMO), Komatsu
America Corp. (KAC)
Project members from PMO
and members of Safety & HealthAdministration Dept. and the Ibaraki
Plant. Writer of this article is at the backrow, to the left.

『 Why Safety? 』

When an accident occurred at our plant in August 2012, themember of Safety & Health Administration Dept. from Japan cameto our plant, to be reminded of the importance of life and health. It
was then that we established the following plant policy, to show ouremployees why we have to pay attention to safety, and for whose
sake we emphasize safety.

PMO Safety Policy
Why Safety？ ... For yourself, your family and for PMO
The initiative did not start from zero. Instead we looked at thecurrent overall activities being undertaken, kept the ones that were
working well, incorporated initiatives taken in Japan in place, andclassified the initiatives into initiatives to be continued, new initiatives, and initiatives to reinforce. In order to do so we first reviewed
the system and organizational structure. We set up a safety expert
to support the manager and to make on-site improvements and give
directions, and put a safety supporter in the manufacturing line onsite to be the safety leader. The bottom-up form of SAR (Safety Action
Requests: safety improvement suggestions) has also continued to
improve, and on-site safety has significantly improved by both parties.

Communication and Leading by Example

The next most important thing is the Attitude of the Top. The
employees are always watching their managers. If the managers are
indifferent toward health and safety measures, no one else will follow
these measures. Leading by example, like posting the policy and15

measures and conducting health and safety patrols, is crucial.
One of the surprising outcomes from this initiative was that the managers and supervisors (management above the foreman) voluntarily
began holding Daily Standing Meetings start from 8:00 AM for about
30 minutes to share information such as problems at the plant andnear-miss occurrences, in order to improve communication. Thesemeetings are great for understanding what is happening at the plant.
These meetings continue to be held everyday, even now.

Safety Circle and Human Resource Development

At the moment, these safety initiatives are based on understanding
the US laws and regulations, and working on understanding and incorporating methods used in Japan. However, I can confirm that these
initiatives are helping to reduce the risk of industrial accidents. Out ofthese initiatives, the Safety Circle activities, Safety Action Requests,
and communication have become absolutely essential. The Manager,
Safety and Loss Control from Japan contributed by opening for thepresentation of the Circle s activities, helped heighten motivation, anddirected the dissemination of improvements.
The common challenge in each country is the human resource
development. We are starting by reinforcing the responsibility of the
management, particularly the supervisors and foremen, to work on healthand safety management along with risk prediction, and to help their teamheighten awareness of health and safety by instructing the responsibilityof returning his/her staff come to work healthy to home healthy.
As a result of keeping up these activities for a year, the numberof accidents at the Peoria plant has been reduced to less than half
the number of the previous year. We are planning to disseminate theimplementation of the main principles of these activities to every plantin KAC, as well as all related
manufacturing facilities. In the
future, we hope that the healthand safety levels throughout KAC
will rise through more voluntary
safety initiatives and internal
audits. I believe that this will lead
to better safety and reassurance
for our customers.
The Safety Circle activities
presentation

Komatsu’s Relationship with
the Environment
Komatsu promotes environmentally-friendly activities throughout the entire Group to realize its vision of “What
Komatsu Can Do and What It Must Do” for the environment and sustainable development.

In recognition of the fact that our business activities
affect the environment on a regional and global level, we, at
Komatsu, have placed the focus on the following four key
areas:
1) Climate Change
2) Establishment of a Sound Material-Cycle Society3) Conservation of Air, Water and Other Natural Resources
as well as Management of Chemical Substances
4) Biodiversity

In line with the Komatsu Earth Environment Charter
revised in 2010, the Komatsu Group embarks on global
initiatives across business areas guided by the fundamental
principles of(1) Contributions to Realization of Sustainable Society,(2) Simultaneous Realization of Environmental and Economic Performance, and(3) Observance of Corporate Social Responsibility.

Energy8.4
million GJ

Water Resources

4.7
million m

3

CO 2

438
thousand ton-CO

Waste
Recycling

2

TOPICS

Disposal

9thousand ton

Growing with Society[Coverage of Data] Komatsu Group s 32 manufacturing facilities worldwide. For the details of calculating methods,
please refer to Environmental Report on our Website.

92thousand ton

Developing People

Environmental Impact Indicators (FY2013)

Enhancing Quality of Life

Key Areas and Principles

Pursuing Environmental Management in Whole Value Chain
Komatsu s superior environmental activities underway have now
evolved from Japan to cover overseas plants and subcontractors
plants as well in its bid to build a value chain-wide environmental
management system.
■ Strengthening Environmental Management Systems

in China

In order to strengthen environmental management in China, from
FY2013, environment committees were established in each production
plant in China to facilitate the management of waste water, exhaust,
noise, etc.
Additionally, a Global Environment Committee similar to Japan wasestablished in China from March 2014, to promote environmental
activities (CO2 reduction, power reduction, improve the recycling rateof waste, green coverage improvement, logistics improvement, etc.) ineach of the production plants in China.

■ Promotion of Komatsu Midori-kai s Environmental

Management System Certification

In order to strengthen the environmental
manage ment of business partners in supply chain, Komatsu Midori-kai companies
that account for 76%
of funds raised are requested to obtain certification for their enviThe first Global Environment Committeeronmental management
Meeting in the China Region (March 2014)
system.
In FY2013, 163 companies (all companies requested to obtainenvironmental management system certification) had been certified forISO14001 , ECOSTAGE , etc., promoting environmental management activities.

16

Environmentally-friendly Products
and Services
Offering products and services that aid Komatsu customers in their environmental efforts can lead toabatement of the environmental loads across Komatsu’ value chains.

Medium-Sized Hybrid Hydraulic Excavator
HB205-2
The HB205-2 greatly reduces the emissions of NOx (nitrogenoxide) and PM (particulate matter), newly equipped with a next
generation engine that meets the emission regulations of Japan (Emissions from Non-Road Special Motor Vehicles, 2011
Standards), North America (EPA Tier4 Interim), and the EU (EUStage 3B). Additionally, loss was reduced for the bodys main
valve and hydraulic circuit, a large capacity and high efficiency
hydraulic pump as well as high efficiency hydraulic oil was adopted, along with other measures to reduce fuel consumption
by 5% compared to our previous hybrid models.

allows it to handle various site environments including
outdoors or dusty environments. By quickly expanding thepreviously limited operation environment to outdoor usage,
it will contribute to the reduction of CO2 emissions from the
2.5-ton class, which accounts for approximately 40% of themarket.
Also, the driver s side monitor displays an eco gauge tosupport environmental-friendly and energy-efficient driving.
Comparison with ourdiesel engine models⇒ 1／3
CO 2 emissions
Fuel consumption ⇒ 1／5
Operation timeextended & outdoor
work available

Comparison of fuelconsumption
Previous hybrid model⇒ 5% reduction
Standard model
introduced in 2012
⇒ 20% reduction
Standard model
introduced in 2007
⇒ 30% reduction

Battery-powered Forklifts FE25-1
The new model forklift, FE25-1 , shares the characteristicof previous battery-powered forklifts of having 1/3 the CO2
emissions and 1/5 fuel costs (compared to diesel engine
models) combined with KOMATSU s original rapid supplementary recharging system to realize extended operation
time. Additionally, enhanced water and dust resistance

Desktop Grinding Machine
Komatsu NTC Ltd., reviewed the structure of grinding
machines for tooling small parts and developed anenergy-efficient and compact desktop grinding machine.
This machine drastically reduces the grinding room, greatly
reduces the use of coolants with a proprietary coolant supply method, and achieve both air-less and hydraulics-lessto reduce power consumption by 70%. Also, the installation
space is only 1/10 compared to previous machines.
Comparison withprevious modelPower consumption⇒ 70％ reduction
Installation space⇒ 1／10

TOPICS
Amount of CO2 Emissions by Scope 3−CO2 emissions produced by our products in operation−
From actual data gathered by one of our group companies, KOMTRAX, Komatsu has gained perspective on the amount of CO 2 emissions(Scope 3 Category 11) produced by our products in operation world-wide. For others, including the 14 remaining categories, the general CO2
emissions was calculated. The result is shown in the pie chart below. As evident from the results, emissions during product use makes up
approximately 90% of total emissions. From this, we can see that fuel-efficient products have a significant effect on reducing CO2 emissions.
◆ Pie Chart of Scope3◆ ≪ Reference ≫ Pie Chart of Scope1, 2, 3
Scope3 ⑪
Customer Use

Total CO2
Emission Amount26.3 million
t-CO2/year

Scope 1
Scope 2

Scope1

Scope3 ①
Manufacturing of Purchasable Goods
Scope3 ②
Capitol Goods Construction and others
Scope3 ③Fuel Procurement
Scope3 ④
Upstream Transportation
Scope3 ⑤
Waste Transportation and disposal

Scope2

Total CO2
Emission Amount
26.7 million
t-CO2/year

Scope3⑪
Customer Use
Scope3①
Manufaing of Purchasable Goods
Scope3②
Capitol Goods Construction and others
Scope3③
Fuel Procurement
Scope3④
Upstream Transportation

CO2 emissions during product use (=emissions from products) makes up most part of total emissions.
For this reason, fuel-efficient products have a significant effect on reducing CO2 emissions.
（For the details of calculating methods, please refer to Environmental Report on our Website.）

17

Environmental Conservation in Logistics /Remanufacturing Business
Komatsu works to cut CO2 emissions during transport by gaining a global insight into their status. It has also
developed a remanufacturuing business to offer a broad suite of eco-friendly solutions to its customers.

In 2011, Komatsu began improving its assessment of
CO2 emissions from logistics operations for its 10 majorinternational business locations. Improvements were madeon a consolidated basis globally at all 25 business locations,
including domestic locations. Average transport distanceincreased for domestic and overseas in FY2013. As a measure to address the reduction of increasing CO2, expanding
the modal shift will be central to furthering improvements.

Efforts were made to reduce increasing CO 2 volume
through the promotion of low energy basic unit transport.
Improvements focused on increasing the use of coastal
shipping for construction machinery products shipped from
Awazu/Osaka plants to Tohoku region and using coastal
shipping for forklifts shipped to Kyushu region from Tochigi
plant. In FY2013, the effect of CO2 emission reductions atdomestic plants targeted for modal shift improvements was-1,086 (tCO2/year) and contributed to 4.5% reduction in the
total CO2 emissions from Komatsu transport.
Plant → loading ports
truck transport
Sendai Port
Niigata Port

Awazu Plant

Tochigi Plant
Ariake Port

Nagoya Port

ShinMoji Port

Osaka Plant
Nankou Port

Oversea: Switching Long-Distance Transportof Products to Rail Transport on theAmerican Continent
CO2 was reduced through the promotion of low energy
basic unit transport. The main improvement was to switch
the transport of CMO (Chattanooga, America) plant products
from truck transport to rail transport.
Previously components were transported by containers(rail) but products (finished vehicles) were transported bylong-distance trucks. From FY2012 the transport of products(finished vehicles) were also transitioned to rail transport. The
distance from CMO to the intermediate stockyard Rochester
for supplying West Coast of the United State s and Canada sWest Coast area customers customers is a very long

4,145km

CMO

Promoting the Reman- Remanufacturing Business In our Reman business, the Komatsu Group remanufactures used engines, transmissions, and other key
components (parts) of construction and mining equipment
into remanned components that have the same high quality
as newly manufactured components. We then put thesecomponents back on the market. The Group is promoting theReman business at eleven Reman Centers around the world.
Reman, an abbreviation for remanufacturing, offers thefollowing advantages to customers:● Quality and performance that is the same as newcomponents● Lower cost for remanned components● Reduced idle time for construction equipment becauseof adequate inventory of remanned components● Resource conservation and waste reduction throughreuse and recycling of components.

Growing with Society

Akita Port

Main coastal ship route

RochesterDeveloping People

J a p a n : F o c u s o n S w i t c h i n g To h o k u B o u n d
L o n g - D i s t a n c e Tr u c k Tr a n s p o r t t h a t
Increased Since the Great East Japan
Earthquake to Coastal Shipping

4,145km and the CO2 reduction effect of switching to railis also great. The effect in FY2013 contributed to a 2.6%
reduction in total CO2 emission volume from North American
region transport and a 1.3% reduction in CO2 emissions bytransporting from all targeted plants abroad.

Enhancing Quality of Life

Reducing CO 2 Emissions in Logistics

As the global center, Komatsu established PT Komatsu
Reman Indonesia (KRI), which supplies parts, such asengines and transmissions for large-size construction
machinery, and PT Komatsu Indonesia (KI), which supplies
oil-pressure cylinders. Komatsu also established anotherglobal center, Komatsu Reman Center Chile (KRCC), which
provides components for electric dump trucks. Additionally,
Komatsu established PT KOMATSU REMANUFACTURING
ASIA (KRA) in Indonesia to recycle components of large-sizeconstruction machinery. For countries that are not part ofour global supply chains, such as China, Russia, India andBrazil, we have established individual Reman Centers.

(Left) Used conmponents disassembly(Right) Components are strictly inspected, cleaned, and remanufactured.
Then, remanned components are shipped after performance testing,painting, and performance inspection.

18

CSR
Theme

2

Developing People
Key Activities …………………………………………

● Contributing to human resource development in local communities● Enhancing our employees and suppliers through The KOMATSU

Way● Enhancing our employees and distributors through brandmanagement

Special Story 2

Developing People Needed by the Community

When we asked ourselves, What sort of social contribution activities would meet the needs ofregional communities, and makes the best use of Komatsu s strengths? we arrived at the answer:
developing people. We are working in cooperation with several entities, such as national andlocal governments, as well as schools, to carry out human resource development programs that are
tailored to each region s needs.

Various Areas and Forms of Support
D e v e l o p i n g H u m a n R e s o u r c e s Ta i l o r e d t oRegional Needs World-WideUsing the know-how cultivated through our core business,
Komatsu is working to develop the kind of human resourcesthat are needed, not only internally by our company, but for
local communities.
Expectations for Human Resources can vary greatly from
community to community. At Komatsu, as we do businesson a global scale, we try to understand what kind of support
is needed in each community and work on developing
human resource accordingly, in various areas and in different
forms.
The pyramid graph below shows the different areas inwhich Komatsu is supporting human resource development.
The graph shows that the closer you get to the top of
the pyramid, the more closely linked the program is with
employment. The base of the pyramid shows our active
support of such as science classes in elementary schools,
mainly in different parts of Japan, USA and Europe. The
next level up is providing basic education, which is support
given to people who cannot or were not able to receive thelevel of education necessary to find employment due tocircumstances specific to the country or region. We currently
have such programs running in Chile and in Republic ofSouth Africa. At the next level, we support universities andvocational training schools in many regions by providing
Komatsu s curriculum and equipment, as well as instructors.
At the top of the pyramid, we are working with national andlocal governments and with our customers to develop human resources, particularly in regions where human resource

development is a social challenge.
The actual content of the support given includes Komatsu
providing instructors and trainers; providing teaching materials, equipment, and other facilities; accepting apprentices;and various other ways in which the daily cultivated knowhow can be put to best use.

Examples of Initiatives
In terms of specific activities, we have initiatives organized
by Komatsu s Service Department, as well as those voluntarily started by subsidiaries in different regions. Here are a
few examples of such activities.
◆ Examples of Human Resource Development Programsin Different Regions

Germany (Komatsu Hanomag)
We donate educational materials forlearning technical skills to elementary
schools, train instructors, and conductplant tours for children.
Republic of South Africa(Komatsu Southern Africa)
We collaborate with our customer tooperate a training facility that teaches
young people the skills and knowledge
needed for employment.
Indonesia (Komatsu Indonesia)
We support the skills training required for
employment in local industries.
Japan (Komatsu)
At the Komatsu-no-Mori in Ishikawa
prefecture, we have science classes forpreschool and elementary school children
taught by our retired employees.

◆ Areas and Forms of Human Resource Development Support

Human Resource
Development that
Leads to Employment
Cooperatingwith theCommunity andCustomers

We provide needed support for regions where
human resource development is a social challenge,
in cooperation with customers and national andlocal governments.

Supporting Vocational
Training Schools
Supporting Universities

We support industrial vitalization and employment
promotionby providing instructors, programs and equipment
to vocational training schools.

Providing teachingmaterials and equipment

Providing facilities andsupporting operations

Accepting apprentices

We support specialized courses such as
electronics and mechanical engineering tocontribute to human resource
development.

Providing Basic Education

19

Providing instructors

Supporting Children's Education

We support employment by providing training
in computer operations and basic learning.
Our employees and alumni go toelementary and middle schools as visiting
instructors at science classes and so on.

Example of Activities in Myanmar
Efficiently Spreading the Base of Human
Resource Development◆ Human Resource Development Program Scheme
TPTC
Step 1

Step 2Training
Komatsu'sService
Department
Instructor

Step 3Training

TPTC's Instructors

TPTC Students(Teachers attending
Teachers that completed the specialized
a specialized
training course at TPTC train mechanics
training course)
throughout all of Myanmar‹Step 1›

November 2012: Assessment of situation by conducting
training tests in Myanmar
April 2013: Invited 3 candidates identified as key persons
to Japan and implemented Intensive training for them
M a y 2 0 1 3 : Tr a i n e d 8 i n s t r u c t o r s ( i n c l u d i n g t h e 3 k e ypersons) in Myanmar‹Step 2›

July 2013: Training taught by the 8 trained TPTC instructors
startedMarch 2014: 82 people completed training

The next step, Step 3 will be to have the teachers thatcompleted the training courses and gained expert knowledge at TPTC go to technical high schools and technicaluniversities all over Myanmar to conduct training.

Instructing with Easy-to-Understand Teaching
Materials Cultivated over Many Years

Taking Steps: 82 Teachers Graduated(Left) Instruction with color-coded teaching materials that are easy
to understand. The operation procedures are explained via film clip.
(Right) Models and cut models provided. Increasing the depth ofknowledge in mechanisms and understanding principles.

The know-how cultivated over many years of Komatsus service personnel development is being used for human resource
development in local communities. We hope to continue tomake the best use of Komatsus strengths to promote humanresource development activities that benefit society.

VOICE
Human Resource Training in Myanmar−Support from Komatsu is contributing toenhancing the human capacity developmentof Myanmar−

Dr. Myo Thu
Deputy Director and Course
Coordinator for Construction Machinery
Training of TPTC,
Ministry of Science and Technology
Technical Promotion Training Centre (TPTC) is one of the training
centers under Ministry of Science and Technology (MOST), whichdevelops technical human resources in Myanmar. Its main goal
is to contribute to technical knowledge, not only for the teachers
from several universities, colleges, and technical high schools
under MOST, but also for the technicians from the industrial
sector, by conducting training courses.
The greatest challenge facing TPTC is in upgrading training
courses and equipment to gain long-term access for developing
technical and industrial competence. This is why Komatsu scontribution to the Technical Promotion Training Centre fit well with

our aims, and also a great benefit for human capacity developmentin Myanmar. We really appreciate Komatsu s donation to TPTC
such as technical training programs.
The training materials and equipment provided by Komatsu
are excellent, and Komatsu s donation has played a pivotal roleat TPTC. We have already noticed that this training course is
attracting not only teachers from several universities and institutes
but also technicians from the industrial sector. This will strengthen
technical and industrial competence. We are convinced that
Komatsu s support will make TPTC one of the best technicaltraining programs in Myanmar. We have been overwhelmedby Komatsu s generosity, and the close collaboration that has
emerged. The Technical Promotion Training Centre has worked
ambitiously toward long-term sustainable development. We
believe that we have a partner with whom we can work hand-inhand to achieve our ambitions. We feel that this is the first step incollaborating with Komatsu, and hope that we can build the future
together.
We think corporate social responsibility (CSR) activities conducted by private enterprises like Komatsu Ltd. should go further
than just one-off donations, and instead be extended to providing
sustainable opportunities. We hope that Komatsu will offer great
opportunities to TPTC like advanced training programs, as well
as scholarships and employment opportunities to outstanding
students in Myanmar.
With mutual respect for each other s roles, we want to build
further on these success factors.

Growing with Society

At Komatsu, there is a Department for Promotion ofDistributor HR Development, which plans and promotes
the cultivation of mechanics (equipment maintenance andservice personnel). This provides 51 different courses thatencompass training in basic knowledge of our main products, and basic knowledge of the components that makeup machinery, such as functions and performance, engines,
hydraulics, and power transmissions. Some members of thisoffice went to Myanmar, to assess the learning environment
and the technical levels of potential students. Then aproposal for course content and duration was submitted
to the Myanmar government and its Ministry of Scienceand Technology, and after many rounds of discussion, theprogram was launched.

Developing People

Since there is no opportunity to work with actual construction equipment during training, we make up for it by providing teaching materials that are very easy to understand.

Enhancing Quality of Life

Since its democratization, the economy in Myanmar has
been growing, resulting in a rising demand for construction
and mining equipment. The local government soon voiced
the need to develop human resources as efficiently as
possible to meet the growing need for more mechanics. Accordingly, Komatsu set up a program to develop teachersthat can train mechanics, at a facility in Mandalay, the middle
part of Myanmar, where they train technical high school anduniversity teachers (Technical Promotion Training Center,hereafter referred to as TPTC).

As shown in the figure in the left column, this program
was designed to take place in steps, to efficiently increase
the number of instructors.

20

Creating the Right Working
Conditions for Everyone
Employees of the Komatsu Group companies are an indispensable asset for the Group, which seeks to fostera safe and comfortable working environment, while maximizing opportunities for employees.

Global Personnel Policy
Personnel systems reflect the history and culture of eachparticular region. It is therefore important to recognize andunderstand those differences.
Based on the basic policy outlined below, the membersof the Komatsu Group are creating a personnel system
tailored to the needs and reflecting the circumstances ofeach particular region.
(1) We shall respect each employee s fundamental
human rights, inherent personality, individuality,
and legally protected privacy.
(2) W e s h a l l t r e a t a n d a p p r a i s e e a c h i n d i v i d u a lemployee in a fair and impartial manner. We shallno t dis cr imina t e a ga ins t a n y e mplo y e e on t hebasis of nationality, race, religion, age, gender,
physical or mental disability or other legally
protected attributed that are irrelevant to his or her
performance.
We shall vigorously endeavor to promote equal
oppor tunities for employment and elimina teharassment in the workplace.
(3) W e s ha ll e nde a v o r t o pr o v ide e mplo y e e s w i t hworkplaces where they can seek a good balance
between their private and professional lives, while
effectively accomplishing their respective tasks
with satisfaction and pride.
(4) We shall endeavor to design and administer thesystem of human resource management in amanner that is most reasonable and persuasive tothe employees. We shall make such systems open
and clearly explain them to the employees to the
maximum extent practicable.
(5) K o m a t s u Gr o up c o mp a ni e s s h a ll c o mp l y w i t ha ll a p plic a ble la w s a n d r e gula t io n s g o v e r nin g
employee rights in the jurisdictions in which they
operate, and faithfully accommodate, whereverapplicable, conv er sa tions or discus sions with
employees or their representatives.
(6) We shall not tolerate child labor or forced labor.
(7) Komatsu Group companies shall endeavor to offerto their respective employees those terms andconditions for employment that are sufficiently
competitive in their respective regions.

Enhancing Work-Life Balance
Reducing the Total Number of Working Hours
Reducing the total number of working hours is a key factor in achieving a healthy work-life balance for employees.
In Japan, for example, Komatsu has worked in coordination
with labor unions on this issue to formulate numericaltargets, which are now set at 2,100 or fewer working hours
per year and at least 17 days of paid leave taken per year.
Efforts are continuing to achieve efficient working conditions
through measures such as the formulation of an activity
schedule for each workplace.
21◆ Main Programs and Measures Designed to Enhance

Work-Life Balance

Program/MeasureChildcareleaveprogramChildcare
supportPart-timework

Description
A v a il a b l e f o r a m a x imum o f t hr e e y e a r s f r o m
the birth of the child to the time the child enters
nurser y school. Also available for a maximumof three years for children up to the third year ofelementary school in cases where a spouse istransferred, etc.
Shortening of working hours by a maximum of 3hours per day to allow for care of children up to
the third grade of elementary school

Allowance
towardthe costof usingchildcareservices

Allowance toward the cost of childcare for infants
up to age 2 before entering nursery school (10,000
yen/month)Nursingleave

5 days for nursing care of one child up to the third
grade of elementary school, and 10 days for thesecond child onward (Paid leave)

Familycare leave
programPart-timework

A maximum of 3 years available to employees
taking care of family members

Shortening of working hours by a maximum of 3hours per day
5 days per year for attending to one family
Care leave member in need of nursing care, and 10 days forthe second family member onward (Paid leave)
C a n b e us e d a s sick le a v e, pr e gna nc y le a v e,
childcare leave, or for care of family members. An
employee may add 5 new days of accumulatedLife support leave
per year. A maximum of 40 days of unused
leaveannual lea v e ma y be accumula ted. Childcar e
leave may be used for school events for children
aged up to sixth grade in elementary school
Provided to encourage employees to take 5
Other leave
consecutiv e da y s o f lea v e f or the mental andprograms.
physical rejuvenation
Flexible
Employees receive an additional 5 days of annual
leave
leave and a travel voucher upon completionof their 15th, 25th and 35th year of continued
serviceVolunteerLong-term
paid leave of up to 2 years, or shortincentive
term paid leave of 12 days per year
programCaresupportFurther Enhancing Diversity in the
Workplace
Komatsu has set numeric goals for the number of female
employees to hire, the ratio of the number of female
employees and the ratio of the number of female managers
in its continuing active commitment to expanding female
employment. As of April 2014, Komatsu alone houses 1,101
female employees (accounting for 10.5% of the total number of employees), 57 female managers (3.6% of the total
number of managers), and two female executive officers,
including subsidiaries presidents. Komatsu works to boost
the ratio of the number of female managers to above 5% byApril 2016.
Regarding employing persons with disabilities, as of April
2013, 2.46% of employees at Komatsu were persons withdisabilities. Recognizing the need to enhance its hiring
rate of persons with disabilities, in April 2008 Komatsu
established the Business Creation Center within the Human
Resources Department. The Center is designed exclusively
for increasing the hiring of persons with mental disabilities.
As of April 2014, 88 people with such disabilities were
employed by Komatsu, raising the rate of employment for
persons with disabilities compared to the previous year.

The KOMATSU Way and Human
Resource Development
Developing global human resources is one of Komatsu’s continuing challenges.
While constantly working towards making the “KOMATSU Way” a commonality in all our companies world-wide,
we are also continually developing our training system to help our employees become experts in each division.

Komatsu strives for sustainable growth of both thecompany and employees through human resource
development. Our policy is that each employee should
set high goals and be self-reliant and self-motivated inacquiring knowledge and skills and that the company
should support employee career development throughthe implementation of necessary education for both thecompany and employees in a focused manner.
While fulfilling the education of professionals in a variety
of fields, the company also supports the acquisition ofknowledge and skills at every level at the company. Regularexplanatory sessions and discussions are convened at
Group companies to disseminate the KOMATSU Way andincorporate it into human resource development aroundthe world at each level of the company hierarchy, as wellas to allow this knowledge to be handed down to younger
generations.

Enhancing Quality of Life

Human Resource Development andTraining Structure◆ The Komatsu Education System
Role Image<

Manufacturing
Engineers>

Executive Personnel

Professionals and Specialists from Individual Functions

TechniciansCommon Programs

GM

Superior Master Mechanic

Global Management
Training

KOMATSU Way Leadership Development Program（KLDP）
Middle Management Strategy Training

Managers

Chief Master Mechanic

New Managers’Training

Master Mechanic

Global Technical Institute（GTI）

Functional Basis ／ Division Basis Training

Technical Institute

Practician Training
Third Year Training

New employees

TechnoService School

New Hires’Training
Programs for Selected Employees

Basic Programs

Selective Programs

Philippines Human
Resource
Development Center

Technology
Olympics
Komatsu
Mid-career
Technical
Employee Training
Institute

Programs for Each Functional and Divisional Units

Global Programs for Overseas Employees

VOICE
Using TQM Activities to Grow the
Company and its People
Mr. Liu Fangchang (Right)
President

Mr. Zhu Lei (Left)Manager,
TQM Division
Komatsu Shantui
Construction MachineryCo., Ltd.
At Komatsu Shantui, our TQM (Total Quality Management)
activities have been highly rated, and we received the Demming
Prize in November 2013. At first, we didn t know where to begin
in our TQM activities. However, we decided to start by fully
examining the current status of our Quality Control, thought
about how to start implementing improvement measures, andbegan conducting QC training at different management levels. We
supplied employees that had been with the company for over 2
years with QC manuals, and while Japanese managers conductedtraining sessions, we appointed certain Chinese national staff
members as implementation officers so that they could go back totheir divisions to teach other staff members about the QC story.

As a result of promoting the implementation of TQM activities,some major issues in quality control at the production base weregreatly improved, with fewer cases of faulty welding and assembly,
and the percentage of complaints being significantly reduced
compared to previous years numbers. However, the mostremarkable change was the employees heightened awarenessregarding production issues. Even if you want to start improvement
activities, if you can t pinpoint the problems, the problems cannot
be addressed. Saying, There are no problems, just means you
are not aware of the problems. If you can change the angle fromwhich you are approaching the issue, often you will be able tofind the problems. And then, once the problems are identified, thenext step is to get employees to think independently about ways
to fix the problem. Our staff members began to voluntarily meetwith relevant departments to discuss our issues, and this has also
been beneficial in improving internal communication. As the qualityof managers improved among the national staff, we were able tosignificantly reduce the number of Japanese expatriate staff.
The thought behind TQM directly relates to the aims of the
KOMATSU Way, and I can confirm that these TQM activities are inline with the direction of the KOMATSU Way. Going forward, wewould like to continue to improve the quality of our staff, and to
implement these activities with our partner companies. With help
from our mother plant, we hope to continue to move forward with
our TQM activities and our human resource development.

Growing with Society

Young
executive
education

Foremen Training

Assistant Managers

Assistant Managers’Training

Senior Foremen Training

Cross-industry seminars

Overseas Education

Meister education

New Managers’Training

MiddleManagement

Developing People

Top Management Forum（TMF）
Global Management Seminar（GMS）（ The KOMATSU Way, Safety, Environment, Compliance, ICT, etc.
）
Common Training Programs

Executive
Personnel

Language Skill Support Program

New Executive Officers

TQM Trainings / QC Tournament

Executive Officers

22

CSR
Theme

3

Growing with Society
Key Activities …………………………………………
● Engaging in dialogues with our stakeholders● Providing social contributions through the use of our coretechnologies and resources (e.g., disaster relief or activities toremove antipersonnel land mines)● Contributing to our local communities where we do business● Strengthening our corporate governance and compliance● Promoting compliance with environmental, labor, and social norms
within our group and among business partners

Special Story 3

Living with the Local Community−Thinking about CSR using Chile as an Example−

For Komatsu, Chile in South America is a very important country, both in terms of its market and thenumber of our employees.
And another thing, Chile can be said to be the country that is most advanced and most zealously
engaged in CSR activities.
The report from Karin Eggers at Komatsu Cummins Chile (KCC) makes us think about how we canbetter engage in CSR activities.

CSR Activities ofKomatsu Cummins Chile (KCC)
Ta k i n g r e s p o n s i b i l i t y f o r t h e b u s i n e s s , a n dchanging the culture
At KCC we believe
it is important to understand CSR as a
new way of looking
at the business, andat the same time, asa powerful tool for
creating social value
and transformation
within the company.
CSR has providReporter: Ms. Karin Eggers Gutierrez
ed a way to clarify
CSR Manager, Komatsu Cummins Chile Ltda.
our goals and to promote cultural change. A change that helps us expand our vision and allows us to systemically look at our organization
within its environment. A change that allows us to ask ourselves, how are we doing? and how are the relationships weare building with different stakeholders?
Today companies can no longer be established in isolationfrom the rest of the world; we have to expand our vision andunderstand that companies play an increasingly importantrole in social transformations, and that there are expectations
from various societal parties.

Everyone has an affection to help others
The cultural change that involves integrating CSR into
the business is a long, and not always easy, process. It isa process that requires design, conviction, and leadership,
as well as opportunities for employee participation, withmotivating and effective communication tools.
In this sense, we have seen that for CSR to completely
permeate a company, CSR should be integrated into
the business strategy and be constructed with plenty ofparticipation from employees. It is the participation of ourpeople that has enriched and given strength to this processof change.
Most people want to help others in need, but do not
23know how, or do not have the resources. Most people
want to do things that are transcendent and meaningful.
The CSR Volunteer Programs at KCC are designed to giveour employees the opportunity to help others, and become
involved in CSR programs to the level they want, in the area
they want, which is very much appreciated by our employees. KCC Management sets the general guidelines for the
CSR programs and assigns the budget, but the individual
programs are generated from within the company by theemployees themselves, via a competitive funds system,
which helps to foment interest in the programs and ensures
participation from our employees. We have discovered overthe last few years that this system has not only resulted inhigh levels of involvement and interest in our CSR programsby our employees, but has also had a very positive influenceon the working environment within the company. Our
employees feel proud of the company.
In addition to the internal benefits, CSR has also become
an opportunity to work more closely with our major mining
customers, developing joint community projects and helping
them achieve their social investment goals.

The most important thing is the participation of
top-level leaders
Finally, we believe that the key to implementing a CSR
model is the involvement of the top leadership of theorganization. In this sense, we feel privileged to have CSR
leadership from the highest authority of KCC, and managers
who devote time to engaging with these issues, and who
understand the multiple benefits associated with this new
way of understanding business enterprise.
Above all, CSR allows us to build a better company andcontribute to developing sustainability where we operate.
That should make us feel proud!

From Company-wide Activities to Smaller Group Activities, the Various Initiatives by our Employees
Rehabilitation Program for YouthT h i s n u r s e r y, w h i c h i s s i t u a t e d i n o u rcompany s neighborhood, was initially set
up and funded by donations to support
mo ther s who ha d to w ork due to v arious
circumstances. However, the nursery wasincrea singly unable to pro vide a dequa tec hild c a r e du e t o l a c k o f f undin g w i t h o u t
gover nment s subsidies. Therefore our
e mpl o y e e s h a v e v olun t e e r e d t o pr o v id e
grassroots support by helping to repair thebuilding, and donate used equipment.

Rebuilding a School in Haiti that had
been Destroyed in the Earthquake

A n t o f a g a s t a C i t y , a c i t y in t h e d e s e r t,
is experiencing population growth due tothe incr e a se in mining a c tivitie s. T o help
resettle farmers in this region who are facing
w a ter shor ta ges and pr oblems with landuse, w e ar e suppor ting the mana gement
and commercial transactions for a project
to research hydroponic cultivation ofvegetables.

In 2010, Ha i ti e x p er ienc e d a ma jor
ear thquak e. K CC is w orking with the Chile
government and the NPO organization
América Solidaria Internacional Foundation toreconstruct elementary school buildings thatwere destroyed in the earthquake. In addition toproviding donations, grants, and construction
equipment, se v er al of our emplo y ees ha v ebeen sent to Haiti, which is several thousand
kilometers away, to help out on-site.

Reducing Traffic Jams and CO 2
Emissions through Car ShareLots of Other Initiatives

Traffic jams: a problem all major cities havein common. To help reduce these traffic jams
and CO2 emissions, our employee volunteers
have launched a car share pro ject. They
have set up a system that creates car sharegroups by having people registering theirc ommu ting rou t e s a nd de sire d time s f or
travel. In addition, people who commute bycar pooling get an added bonus of getting to
use the VIP parking spaces that are right near
the office buildings.

Employee volunteers
sp end holida y s w i thv i c t im s o f d o m e s t i cviolence to help heal
emotional scars.

We donate the moneysa ved by switchingfrom paper Christmas
cards to an electronic
version to the local fire
department. Each year
we raise close to $1,000
in donations.

Growing with Society

Mining sites ̶ apart of KCCs business̶ are often locatedin remo t e a re a s. We
make visits to theelementary schools insuch areas to give thechildren a fun day.

Developing People

Supporting the Local Nursery

Hydroponic Cultivation of
Vegetables in the Desert

Enhancing Quality of Life

This is a program that allows youth, whohave been involved in crime and have finishedtheir prison sentence, to be accepted by
the company to gain skills necessar y f or
finding employment, such as basic learningand getting a driver s license. Employees
will become guardians and treat them like aclose family member. A large percentage ofthe youth that complete the training program
goes on to be employed by Komatsu.

VOICE
The way to becoming a company
trusted by the society

Mr. Benito Baranda
Executive President
América Solidaria Internacional
Foundation
Having a relationship with Komatsu Cummins Chile forover three years, and as the president of América Solidaria
Foundation, I ve witnessed the valuable trajectory that hashelped Komatsu Cummins to be socially responsible from acomprehensive perspective. Its efforts are not superficiallyassociated to marketing or occasional actions, nor is it limited
to the outside . On the contrary, your company has sought togive their CSR work the utmost internal and external consistency, staying innovative, having good corporate practices, andcommitting to activities within the community.
I must highlight your interest in certain social challenges
where nobody else is willing to act (e.g., the marginalized
youth), and in the territories of the American continent wheredevelopment opportunities are scarce (e.g., the education in
Haiti). I find it admirable that you always include all the executives and employees in this notable work, which undoubtedly
makes it a serious, honest, and consistent undertaking.
Komatsu Cummins Chile has certainly set the standard
for the authentic way of becoming an organization thatcomprehensively assumes the responsibility for being a Socially
Responsible Corporation, and it is an honor to be a part of thisprocess.

24

Community Based Social
Contribution around the WorldWe are engaged in social contribution activities in every area of the world where we do business.
Based on 6 different categories of activities, we are continually involved in initiatives that make the best use of
Komatsu’s strengths.

Activities in FY2013

The graph below shows the performance of CSR activities
by the Japanese / overseas subsidiaries in FY2013.

The social contribution activities Komatsu is involved incan be divided into 6 main categories.

5％23％(1) Human Resource Development

21％(2) Local Community Support(3) Environment

Environment

JPY2,236
million(4) Disaster Relief(5) Culture & Sports

Disaster Relief

18％(6) Academic and Industry-Academia Collaborations

31％

Human Resource Development
Local Community Support

FY2013

1％

Culture & Sports
Academic andIndustry-Academia
Collaborations

Local Contribution Activities around the World
Introducing a few of our activities.
For more details of on activities other than the ones showcased here, please check out the pages listed below● Social Contribution through Human Resource Development (P.19)● Social Contribution Activities in Chile (P.23)● Disaster Relief (P.26)

United Kingdom (Komatsu UK)
Support to people with disabilities

At Komatsu UK, the unused buildings on our premises arebeing used to support and assist people with disabilities into
employment. We have helped over 1,000 people so far.

The Komatsu plant in Russia is in the city of Yaroslavl.
To promote sports, we invite children from the area to ice
hockey games of the local team.

Indonesia (Komatsu Indonesia)
Activities using company funding

China (Komatsu (China) Ltd.)
Inner Mongolia desert greening activities

We are using the fund designated for local social contribution
activities. After interacting with the Badoui tribe, whose custom
is to not incorporate modern customs into their way of life, wewere able to provide a special pump for supplying clean water.

25

Russia (Komatsu CIS)
Inviting children to a hockey game

From a foundation operating on donations from each of
Komatsu companies in China and from its employees, wehave donated to elementary schools and participated indesert greening activities. Some employees participate in
the actual planting work.

Disaster Relief
Komatsu supports various forms of recovery and reconstruction work in areas affected by disasters.
Using our technology and know-how as a construction equipment manufacturer, Komatsu tries to identify
how to best come along side disaster affected areas to offer our support.

Visiting Lecture

VOICE
Supporting the Transportation ofGoods Immediately after Disaster̶ Support for Victims of the Typhoon by
our Philippines Distributor ̶

Ms. IRMA JOAQUIN SABAS
Rental and Used Car Section
Manager,
MAXIMA Machinery Inc.
Typhoon Haiyan, which caused the worst destruction in
Philippines history, damaging many buildings over a massive
area, destroying a large number of people s homes and taking
many lives. In response to this catastrophic disaster, manychannels of help and support were extended from all over thenation and the world.
At MAXIMA, the president of our company immediately put
together a team and set up a system to transport support

goods. We provided ten
vehicles to transport various
goods from the Philippines
Department of Social
Welfare and Development s
warehouses to the freightliner
terminal in Manila. With our
support, they were able toforklift being taken to the disastertransport enough food items A
area by the air-force plane
to make over 70,000 meals.
Komatsu in Japan also donated JPY10 million, and gave
support by providing machinery. Two forklifts were operating at
the freightliner terminal for two weeks, being used to load andunload goods. Four machines were transported to Taclobanon the Leyte island by the Philippines air force to support the
government s recovery efforts. Our electricity generators werealso used at the air force hubs and at the warehouses of the
Department of Social Welfare and Development.
MAXIMA plans to lend two construction machines to the UN
development program, the Tacloban Project, until the end of
April 2014.
As part of MAXIMA s CSR activities, our employees are volunteering to help with the packing of goods at the Department
of Social Welfare and Development s offices.

Growing with Society

Library at Chror Narb Phes
Elementary School

Komatsu is using its technical expertise and know-how
as a construction equipment manufacturer to support
reconstruction work in areas affected by natural disasters
like earthquakes and typhoons.
Right after the typhoon debris flow disaster in Izu-Oshima
in October 2013, Komatsu proposed the disaster waste
separation process and commenced support work in
response to the needs of the area. Since then, we havecontinued to work towards recovery by increasing theservice of not stopping the operation of machinery, andholding on-site training sessions so that the islanders areable to learn the skills for the demolition, for which there isincreasing demand.
For the typhoon disaster that hit the Philippines in November, Komatsu was involved on a global scale, and partneredwith the local Philippine distributor MAXIMA Machineries
Inc. to move forward with support work (see VOICE).
In regards to the Great East Japan Earthquake, since
the earthquake hit in March 2011, Komatsu has provided
support such as free rental of construction machinery andtemporary shelters, and providing tuition assistance forskills training. Going forward, Komatsu proposes supporting
decontamination work by using the ICT bulldozer, andother ways to make use of Komatsu s unique technology.
In addition, Komatsu is planning to gather support from allover Japan to strengthen our service system as the major
reconstruction work starts in earnest, to continue contributing to the recovery work of the disaster affected area.

Developing People

Since 2008, Komatsu has partnered with the Japan
Mine Action Service (JMAS), a certified NPO, to support
demining activities in areas of Cambodia and Angola that
suffer from damages caused by anti-personnel landmines,
which also includes reconstruction work as part of thiscommunity development project. The demining machinesand construction machinery, that were developed using
our company s technical expertise and manufacturingknowledge, are being put to full use in this endeavour. At
the Mabubas reservation in Angola, which has become asafe area due to demining, the city rebuilding plan is moving
forward. In Cambodia, the four elementary schools thatwere built by this project received bookshelves and books
from Komatsu and JMAS. At these schools, where mostof the children were seeing a book for the first time, these
gifts are being very much enjoyed by both students andteachers. This year, we are in the 6th year of being involvedin this project. We are seeing steady progress in making
villages safe and improving the lives of the people there.
This project by Komatsu and JMAS is being introduced
to children in Japan by Komatsu employees that go toelementary and middle schools to do visiting lectures.

Supporting Natural Disaster Recovery Work

Enhancing Quality of Life

Clearing Anti-personnel Landmines andReconstruction Support

26

Implementing Risk Management /ComplianceKomatsu recognizes as major risks those risk factors that could threaten the company’s sustained growth.
The company has adopted various measures to counter these risks.
Also, following the principle that compliance is a top priority, Komatsu will ensure that it fully understands andcomplies with business rules while promoting structural improvements.

Implementing Risk Management
Basic Principles and Structure for
Risk Management● In addition to the basic policy for risk management toensure the business continuity and stable development,
Komatsu has established Risk Management Rules tocorrectly recognize and manage risks.
● Komatsu has established a Risk Management Committee
to devise relevant policies for the entire Komatsu Group,
to review the risk management system, and evaluate andimprove upon response measures in place for each risk,
and take control of risks when they arise. The Risk Management Committee regularly reports on its deliberations
and activities to the Board of Directors.
● Komatsu will establish an emergency headquarters whenserious risks occur and implement appropriate measures
to minimize damage.

Implementing a Business Continuity Plan
for Komatsu
In order to quickly confirm the safety of employees andtheir families in the event of an accident or disaster, and to
be able to continue or quickly restart important business
operations, Komatsu has formulated a Business Continuity
Plan (BCP). In addition, at our head office buildings and at
all production plants, we assume the possible occurrenceof earthquakes and conduct regular training so that in theevent of an actual disaster everyone one will be able to act
quickly and appropriately. Furthermore, at our production
plants, we are working on seismic strengthening forbuildings and equipment, as well as reinforcement against
damage from torrential rains, according to the production
plant s plans. Also, in case of an outbreak or epidemic of a
new type of influenza, we will establish a special committee
and take appropriate measures. For our employees we willcompile a manual with information regarding preventative
measures and what action to take in case of infection,
and also have training sessions to promote thoroughunderstanding.

Group, Komatsu is establishing a route for risk reporting,creating a risk management manual, as well as refining thelevel of risk management at each Group company throughexplanatory meetings and study sessions on risk management and BCPs. Additionally, Komatsu is strengthening
its Group-wide system for emergency contact function
by introducing safety confirmation systems, broad-area
wireless devices, and conducting regular training for safety
reporting and communication.

Conducting CR Audits
As a part of our risk management activities, Komatsu has
been conducting compliance and risk audits (CR audits)since FY2008. This is to cover areas that are not included in
the SOX Act (Sarbanes-Oxley Act. Internal control rules toprevent accounting fraud) audits, with the goal to visualize
compliance risk potentials within the company. Internal
audits are conducted by our internal specialist team at our
main sites, including those overseas. The list of items to beaudited are 1. Safety, 2. Environment, 3. Labor, 4. Financeand Treasury, 5. Quality Assurance and Recall, 6. Vehicle
inspections and specific voluntary inspections (inspections
done on construction equipment, similar to vehicle
inspections), 7. Export Control, 8. Information Security, and
9. Anti-monopoly Act.
Through these activities, we aim to better our levels ofcontrol and compliance awareness at each company,
in every department. Going forward, we would like toimprove our case-by-case audit method, and increase theoperational level of CR audits as a part of risk management
functions◆ Actual Achievements of Conducting CR Audits(Number of Operations)

2008

2009

2010

2011

2012

SafetyEnvironment

Labor

Finance and Treasury

Vehicle Inspections, etc.

Export Control

Information Security

Anti-monopoly Act

2013
Quality Assurance, etc.

Strengthening Information Security
BCP Initial Response Training at
the Head Office

BCP Training at the Awazu Plant(Ishikawa Prefecture)

Promoting Risk Management throughout
the Group
To reinforce the risk management structure across the27

Komatsu is developing an information security structure
for the entire Group, placing the Information Security
Committee at its center. As one sphere of this structure, theCompany distributes an Information Security Guidebook
to all employees. In conjunction with this, it provides
education and awareness-raising activities based on thePerception of Risk for Human-Rights Issue

2008. In an effort to tackle one of its main principles, theissue of human rights, in 2014, with the help of external
experts, Komatsu conducted a human rights risk assessment for all our construction/mining equipment and forestry
machinery businesses world-wide. The results showed thatthe degree of urgency for problems occurring is low, while
the degree of effect if a problem does occur is moderate.
Komatsu understand that it is important to not only
focus our efforts on Komatsu alone, but to consider the
implications for our partner companies, such as our parts
suppliers, as well as our network of distributors that provide
products and services to our customers. Going forward,
we would like to work towards having full awareness for our
entire supply chain.

Compliance
Promoting ComplianceFollowing the principle that compliance is a top priority,
Komatsu will ensure that it fully understands and complies
with business rules while promoting structural improvements.
To make certain that the entire Komatsu Group complies
with the rules of the business community, Komatsu has
appointed at the Head Office an executive officer in chargeof compliance and established the Compliance Department
to handle this issue exclusively. The Compliance Committee, chaired by the President and CEO, deliberates theGroup s action policies and important issues, while regularly
reporting the state of compliance related activities to theBoard of Directors.

Komatsu s Worldwide Code of Business Conduct
The company has formulated Komatsu s Worldwide Codeof Business Conduct (established in 1998 and revisedeight times to date) as a compilation of best businesspractices to be observed by officers and employees ofKomatsu Group companies all around the globe. The code
addresses items such as free and fair business practices,
appropriate relationships between the company and its
employees, endeavors for the global environment, thehandling of information, and the establishment of an internal
control structure. The text of the code has been released tothe public in its entirety.
Komatsu considers CSR as a key responsibility and
Komatsu s Worldwide Code of Business Conduct clearly
conveys its policy of giving full weight to CSR. The pillar of
Komatsu s CSR activities is based on constant repetitionof the following process, outlined in the Code of Worldwide
Business Conduct: (1) Establish the Code of BusinessConduct, (2) Implement the Code of Business Conduct,(3) Determine the Code s current status and (4) Address
inadequacies.

(1) Establish the Code of Business Conduct:

Formulate Komatsu s Worldwide Code of Business Conduct
as a foundation for compliance activities and revise this code
(currently in its 9th edition) as required to reflect social change.

(2) Implement the Code of Business Conduct:

Implement the Code of Conduct through education that
corresponds to employee rank and the types of operations inwhich they are involved, and by communicating informationin accordance with Komatsu s Worldwide Code of BusinessConduct.

(3) Determine the Code s current status:

Determine the level at which Komatsu s Worldwide Code ofBusiness Conduct is being applied by having all business units
regularly report on their use of the code and by conducting
audits and enhancing the Internal Reporting System.

(4) Address inadequacies:

Any issues identified during the above activities will be
addressed in accordance with Komatsu s Worldwide Codeof Business Conduct and preventive measures will be
implemented.

Growing with Society

Frameworks for Promoting Compliance

Process for Compliance Activities

Developing People

Komatsu signed the United Nations Global Compact inEnhancing Quality of Life

Guidebook, with the belief that it isessential to raise individual employee
consciousness of information security.
In addition, the company is developinga structure to protect informationfrom being falsified, leaked, or lost,even against cases of negligence oroutside intrusion. The company is also
conducting information security audits,
to ensure that these measures areworking effectively, and to detect andaddress any problems.

Upholding Thorough Compliance
In order to achieve continual awareness among employees about compliance, the Group is working to raise theirconsciousness of best business practices by displaying inevery Komatsu Group business unit posters listing The Five
Principles of Compliance, a condensed version of Komatsus Code of Worldwide Business Conduct. The Group fully
engages in awareness- raising initiatives through a permanent web page dedicated to compliance on its intranet
along with well-developed compliance-related educationand training tailored to employees ranks and the typesof operations for which they are responsible. The Grouppursues early detection of risks and reforms at Komatsu
business units and Group companies through monitoring
during the course of financial audits and compliance andrisk audits. This monitoring covers compliance in important
areas such as safety and environmental practices.
28

Implementing Risk Management /ComplianceInternal Reporting System

The State of Compliance in FY2013

Komatsu has established consultation offices bothinternally at Komatsu Group companies and externally at
law firms, collectively known as the Compliance Hotlines, torespond to consultations or reporting from Group company
employees pertaining to best business practices or questionable actions. The Group fosters active consultations andreporting by clearly stating in Komatsu s Worldwide Codeof Business Conduct, the Five Principles of Compliance andGroup companies workplace rules that employees who
use the system for appropriate reporting will not be treatedunfairly in any way as a result of that action.

We revised Komatsu s Worldwide
Code of Business Conduct (onApril 1st, 2014). In this (9th edition)
revision, the anti-corruption rules
have been made stricter, particularly in regards to bribery of foreign
public officials. The Five Principles
of Compliance have also beenrevised in conjunction with Komatsus Worldwide Code of BusinessConduct. For both the Five Principles
of Compliance and Komatsu s Worldwide Code of BusinessConduct, we plan to use tools such as e-Learning to ensurethat every person in the organization is very familiar with
both.
Komatsu s Worldwide Code of Business Conduct
URL h t t p : / / w w w. k o m a t s u . c o m / C o m p a n y I n f o / p r o f i l e /conduct/

VOICE
Expectations for Your Response
to Global Change

Ms. One Akiyama
President and Chief Executive
Officer, Integrex Inc.
Komatsu s compliance and risk management initiatives aresupported by the values, attitudes, and behaviors passed
down and embodied in the KOMATSU Way, by Komatsus Worldwide Code of Business Conduct which delineates
the rules of the business world, and by firmly having in placerisk management procedures that detail proper responses tovarious situations that put sustainable development of businessat risk.
The most notable characteristic of Komatsu is that, because29

its many activities are backed by the firmly instilled corporate
value of, We are the summation of the amount of trust placedin us by all our stakeholders, it is difficult to be formalized or to
become a mere facade.
For example, from conducting compliance-related educationand training that includes group discussions and corresponds
to employee rank so that the KOMATSU Way is thoroughly
understood by all employees worldwide, to revising the Komatsu s Code of Business Conduct established in 1998 eighttimes in order to be in line with social changes, to complianceactivities being seamlessly carried out while going through thecycle based on the Code of Conduct of activity development,
situation assessment, and deficiency correction, and in the
CSR guidelines-based approach toward partner companies
and the way issues such as conflict minerals is handled by theentire supply chain as a whole, it seems that all compliance andrisk management activities are very functional and practical.
However, as globalization and the resulting localization
continue to develop and changes happen faster and at agreater scale in countries all over the world and in every region,
the need for strong group discipline will grow. It is absolutely
imperative that Komatsu continues to be ever more innovativein every area, including compliance and risk management.

Together with Business Partners
̶ CSR Procurement ̶

Our business partners, who are the suppliers of materials, parts, and components, are important partners that
support Komatsu’s manufacturing. Komatsu believes that engaging in CSR procurement will contribute to ourbusiness partners’ expansion, and therefore endeavours to do so in cooperation with our partners.

Business Partners Organization,
Komatsu Midori-kai

Komatsu s Policy on Conflict Minerals
Komatsu has adopted a policy of not using conflict minerals produced by the Democratic Republic of Congo (DRC)or its neighbors (Angola, Central African Republic, Republicof the Congo, Rwanda, Southern Sudan, Tanzania, Uganda
and Zambia) from our corporate social responsibility
perspective.
During the regular meetings we hold with our suppliers at
each Komatsu plant in Japan, we explain this policy as well
as Komatsu s response to the conflict minerals issue andrelated requests to our suppliers. With the cooperation of
suppliers, we are now conducting a country-of-origin survey
to determine the location of origin of the conflict minerals
we use.
Looking ahead, we will conduct a more detailed surveythat includes refineries in its scope and continue taking
steps to prevent the use of conflict minerals from the DRC
and its neighbors and thereby restrict funding for militarygroups.

Growing with Society

Komatsu Midori-kai is an organization made up of ourbusiness partners, with 164 member companies in Japan,
out of which the procurement amount is approximately
over 75% of domestic purchasing goods. At the regularmeetings where the management members of each company are present, such as the general assembly, general
meetings, and New Years special meetings, Komatsu s top
executives explain our policies, emphasize the importanceof CSR management, and ask for raising of awarenessregarding CSR management.
Even overseas, in North America, Europe, and China,
there are Midori-kai organizations made up of their main
business partners. At the moment, the number of membersin the North America chapter are 38 companies (procurement amount approximately 50%), in Europe 54 companies(approximately 35%), and in China 62 companies (approximately 90%). We hope that these Midori-kai chapters willtake advantage of the characteristics of each region tofurther expand their business activities.

Aside from our ongoing awareness campaign to all ourbusiness partners to comply with the CSR Procurement
Guidelines (see below) established in August 2011, we aresupporting individual initiatives.
With Japan s Komatsu Midori-kai member companies,
we are making certain certifications, like ISO14001 and Eco
Stage, mandatory, and directing and supporting efforts to
get these certifications. In addition, as a part of the effort toreinforce occupational health and safety initiatives, we have
implemented the Japan Industrial Safety and Health Association s Small and Medium-sized Enterprises Occupational
Health and Safety Assessment for 97 companies, with
Komatsu bearing the cost of the assessment fees, to ask
each company to increase the level of safety on their sites.

Developing People

Komatsu s basic policy is to produce products in the area
where the said product is in demand. Out of the 41 plantsthat manufacture construction and mining machinery, 30
plants are located outside of Japan. In following with the
manufacturing of machinery at an overseas plant, we are
actively working on procuring parts and materials from thesame area. Aside from engines and main components thatare shipped everywhere in the world from Japan, and a few
specific parts that are only supplied by specialized manufacturers, the overseas plants are on their own in terms ofprocurement, to promote local and optimal procurement forparts like sheet metal.

CSR Procurement Guidelines andActivities Support

Enhancing Quality of Life

Komatsu s Procurement Policy

TOPICS
Risk Management for Procurement
Komatsu is strengthening its risk management system forprocurement. Since FY2012, we have started conducting
assessments in Japan, so that we would be able to quickly
know the status of partner companies in the event of a disastersuch as an earthquake or tsunami, and be able to continue
procurement activities without delay, to minimize the effecton production. We input the location and production content
for each of the over 20,000 sites of all our partner companies
to create a database for visualization, and assessed thedegree of risk. In addition to considering prevention measuresfor each partner company that have higher levels of risk, theprocurement staff will be able to consider risks from this aspectwhen considering new agreements, so that we can heighten
the accuracy of the information.
In the event of an emergency, we will ̶ as we did when the
Great East Japan Earthquake happened ̶ dispatch security
personnel from our plant to our partner company to help
support speedy production recovery.

30

Komatsu Ltd.

CSR Department
2-3-6, Akasaka, Minato-ku, Tokyo
107-8414, Japan
http://www.komatsu.com/
Tel : 03-5561-2799
Fax: 03-3505-9662