December 18, 2023

Management Briefing
KURARAY CO., LTD.
© Copyright 2023 KURARAY CO., LTD.

U.S. EVAL Plant
Fire Incident
Investigation Results

Hitoshi KawaharaPresident and Representative Director

Satoshi Tanaka
Outside Director

Akira Omura
Managing Executive Officer
Officer Responsible for Technology Division;
Officer Responsible for Plants in Japan;
Officer Responsible for Environment andIndustrial Safety Management Center© Copyright 2023 KURARAY CO., LTD.

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1. Purposes of the Investigation

Purposes of the Investigation
Identify the root causes of the Incident, compile measures to prevent recurrence,and share within the Kuraray Group
Fulfil accountability to stakeholders
Summary of the Incident
On May 19, 2018, a fire incident occurred at the EVAL plant of Kuraray America, a U.S.
subsidiary.
Investigation by U.S. authorities has already been completed.
Settlements have been reached with all of the plaintiffs on the civil lawsuit that had beenbrought against Kuraray America.

We will steadily implement preventive measures and aim to further strengthen
safety and risk management systems throughout the Group.
© Copyright 2023 KURARAY CO., LTD.

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2. Investigation Committee and Method of Investigation
Incident Investigation Committee (established May 2023)
Comprised of five members, primarily of outside officers(independent officers)
Chair

Outside Director

Satoshi Tanaka

MemberOutside Director
Full-time Member of Audit &Supervisory Board
Outside Member of Audit &Supervisory Board
Outside Member of Audit &Supervisory Board

Jun Hamano

MemberMemberMemberKazuhiro Nakayama
Tomomi Yatsu

Board of Directors

Incident
Investigation
Committee

Kenji Komatsu

Investigation Team
Established under the Incident Investigation Committee
Comprised of in-house members who are well-versed in thecompany’s affairs and have expertise in their respective fields
Investigated from the perspectives of technology, governance,and dealing with litigation

Investigation
Team© Copyright 2023 KURARAY CO., LTD.

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3-1. Events of the Incident
Summary of Fire Incident
Time and Date: 10:28am on May 19, 2018
Place:Polymerization process area of the second production line of Kuraray America’s EVAL Plant

Progress:1) As pressure rose in the polymerization reactor due to ethylene, the ethylene condensed
due to refrigerant flow.
2) Temperature inside the reactor abnormally dropped due to ethylene condensation.
3) Operators began to heat the polymerization reactor jacket in response to the drop intemperature.
4) Heating of the polymerization reactor jacket caused the ethylene liquid to vaporize, andpressure in the reactor began to rise.
5) Operators released the pressure control valve (PCV), but the ethylene release limit guidealerted, and they hesitated to release PCV further.
6) Before activating the emergency open valve to reduce pressure in the reactor, pressure
within the reactor reached the setting value for the pressure safety valve (PSV), andethylene was then discharged into the atmosphere from the PSV discharge port.

© Copyright 2023 KURARAY CO., LTD.

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3-2. Technology-related Investigation Results and Recurrence Prevention Measures
Investigation Results
Abnormal rise in pressure in thepolymerization reactor due toerroneous manual operation

Recurrence Prevention Measures• Switched to safety apparatus designed not to rely on human actions• Established standards for operational tasks. Implemented measures toaddress unclear work instructions• Implemented measures to compensate for insufficient understanding among
operators (visualizing condition inside the polymerization reactor on acontrol computer)• Bolster involvement of Corporate HSE (Health, Safety, Environment) at
Kuraray America in safety activities at plants and engage in activities toimprove communication with each plant

Insufficient risk assessment for thepositioning of the discharge port in
the safety valve• Changed the position of the discharge port to a safer one that is unlikely tocause human harm

Lax enforcement of restrictions on
work-related permissions including
for fire-using operations and accessby unrelated personnel during highrisk startup operations• Strengthened the organization by putting personnel with seasoned
knowledge of production technology into the roles of president and businessheads at Kuraray America• Establish and enact the rules such as restrictions on access by personnel
other than those related to startup operations, and standards for evacuation
warnings when problems occur at the plant© Copyright 2023 KURARAY CO., LTD.

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3-3. Governance-related Investigation Results and Recurrence Prevention Measures

Investigation Results••

Recurrence Prevention Measures

Kuraray America’s EVAL plant• Assign dedicated persons in charge of safety management
had an autonomous safety andfor production processes (Process Safety Management)
disaster prevention system inand occupational safety in production processes. Establish
which almost all operationalcommon guidelines and arrange standards that should bedecisions were made by the plant
met for all Kuraray America plants
manager.
• Strengthen the safety governance system of Kurarayhere was a strong element ofAmerica as a wholedecisions being made by the1) Bolster the corporate support structure by reassigning technicalplant manager on a personal
personnel and assigning more of themlevel, resulting in a governancesystem that was easily influenced 2) Improve employee safety awareness and risk prediction
capabilities
by the demands of the local
3) Produce thorough documentation of safety systemsbusiness.
4)

Clarify the hiring requirements for plant executives© Copyright 2023 KURARAY CO., LTD.

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3-4. Investigation Results and Recurrence Prevention Measures related to Dealing with Litigation

Lawsuit• 34 lawsuits from 164 plaintiffs brought against Kuraray America• Sought to make the court proceedings more efficient and quicker through acourt procedure before the trial by a jury, but some of the lawsuits took aroundfive years to settle. The amount needed to pay off the settlements was approx.
¥80 billion (of which approx. ¥10 billion was covered by insurance).

Investigation Results
Plaintiffs had little incentive to reach a quick settlement.
• Not being able to individually verify the details of the harm suffered by theplaintiffs when the Incident occurred• Verdicts in Texas injury cases were climbing into high dollar amounts• Court procedures were suspended due to the COVID-19 pandemic, etc.
© Copyright 2023 KURARAY CO., LTD.

83-4. Investigation Results and Recurrence Prevention Measures related to Dealing with Litigation

Recurrence Prevention Measures
Take the following measures to mitigate the risk of future litigation and damages
from the perspectives of insurance strategy, comprehending the damage when an
incident occurs, and dealing with litigation risk particular to the U.S.
1) Increase the maximum limit of the comprehensive general liability insurance
commonly applicable throughout the Group and have Kuraray America introduce
an owner-controlled insurance program (OCIP)
2) Install additional surveillance cameras around the perimeter of plants and at
entrances at Kuraray America, introduce a strict access control system, andimplement processes to get testimony from related personnel at the sites3) Education about litigation risks particular to the US (particularly information
management and communication designed on the assumption of the discoveryprocess)© Copyright 2023 KURARAY CO., LTD.

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4. Further Strengthening the Safety and Risk Management Systems of the Group Overall 1

Technology-related Initiatives standpoint of “three M’s”
1) Man-related Measures• Education and training to improve capabilities at determining causes and identifying risks• Bolster our safety management system through the involvement of occupational safety
management organizations that are independent from the production departments
Newly launchedin 2022

Overseas Chemical Plant Process Safety Risk
Response Team
Executive Officer of Environment and Industrial
Safety Management Center
Environment andIndustrial Safety
Management Center

Technology Division

Companies’ Productionand Technology
Management Divisions

Data sharing and company-wide rollout

Overseas Group Companies
Environment andIndustrial Safety
ManagersTechnologyManagers

Production Sites

Global PSM※ Audit Team
Assess and share process safetyand disaster preventionmanagement issues at each basefrom multiple perspectives
Share and utilize insights fromvarious backgrounds to improve
identified issues※PSM: Process Safety Management© Copyright 2023 KURARAY CO., LTD.

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Further Strengthening the Safety and Risk Management Systems of the Group Overall 2

Technology-related Initiatives standpoint of “three M’s”
2) Machine-related Measures• Check and adjust the position and direction of the discharge ports in safety valves at other plants• Establish plant access management and standards for evacuation warnings when problems
occur• Automate and improve the reliability of highly important emergency operations and safetyapparatus3) Management-related Measures••••

Make organizational and HR-related improvements for proper operation at overseas plants
Improve employee engagement
Introduce KPIs to track safety circumstances
Review appropriate number of employees at overseas plants© Copyright 2023 KURARAY CO., LTD.

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Further Strengthening the Safety and Risk Management Systems of the Group Overall 3

Governance-related Initiatives• (In progress) Build a safety auditing program organization directed by our Environment andIndustrial Safety Management Center to monitor the state of overall safety governance from an
objective perspective.
• Consider further strengthening our auditing program organization by involving Group employeeswith extensive experience and advanced communication skills• Horizontally roll out what we learned through our investigations to improve the safety governanceof the Group overall, while also utilizing these lessons in building the safety system for a new
EVAL plants currently under consideration.

Initiatives for Dealing with Litigation• Build systems to respond to emergencies swiftly and accurately by enlisting the proper law firms,
particularly where plants of our US companies are located.
© Copyright 2023 KURARAY CO., LTD.

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Safety is the Cornerstone of Everything We Do

Safety is the Cornerstone ofEverything We Do

SafetyPromotion
Committee

Chaired by the President and active Company-wide
Formulates safety-related action principles and policies
Formulates targets related to safety priority activities
for process safety and disaster prevention

On-siteverification ofsafety activities

Regular safety activity verification and opinion
exchanges at production sites (the President and safetyexecutives visit all complexes in Japan and majoroverseas bases)

Action Courses on Ensuring Safety (FY2023)
Ensure and Practice “Safety First, Production(Construction, R&D) Second”
Ensure and Practice that Predict Hazards and Make Surethe Safety Before Taking Action, and Confirm If the Action
Results are What You Expected
Each Employee Should Think of Safety as “Their OwnIssue” and Act Accordingly© Copyright 2023 KURARAY CO., LTD.

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All figures are rounded to the nearest hundred million yen.
This presentation contains various forward-looking statements which are based on the current expectations and assumptions of future events. All figures and statementswith respect to the future performance, projections, and business plans of Kuraray and its group companies constitute forward-looking statements. Although Kuraraybelieves that its expectations and assumptions are reasonable, actual results and trends of Kuraray’s performance could differ materially from those expressed orimplied by such figures or statements due to risks and uncertainties in the future business circumstances. The factors which may cause such difference include, without
limitation: (1) general market and economic conditions in Asia including Japan, the U.S., Europe and other regions; (2) fluctuations of currency exchange rates,
especially between the Japanese yen and the U.S. dollar and other foreign currencies; (3) changes in raw material and fuel costs; (4) industrial competition and pricefluctuations in Japan and international markets; (5) advance or delay in the construction of new plants and production lines; (6) successful development of new products
and technologies; and (7) changes in laws and regulations (including tax and environmental) and legal proceedings.
© Copyright 2023 KURARAY CO., LTD.