Denka Group CSR REPORT 2015

Denka GroupCSR REPORT

2015
Possibility of Chemistry.

Denka Company Limited
www.denka.co.jp/eng

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CONTENTS
Editorial Policy......................................................... 2
To Our Stakeholders.................................................. 4
Special Feature

History of Denka’s Hydroelectric Power Generation.... 6
Business Overview................................................... 8
Denka’s Group Operations and CSR............................ 10

Our Business Strategies
Denka100 New Growth Strategies.......................... 12

Possibility ofChemistry.

Elastomers & Performance Plastics......................... 14
Infrastructure & Inorganic Materials........................ 16
Electronics & Innovative Products........................... 18
Life Science & Environmental Products.................... 20
Promoting Our R&D Activities................................ 22

CSR Activities
Denka Group’s CSR............................................ 24

GovernanceCorporate Governance......................................... 26

SafetyOur Initiatives to Maintain Safe Operations................ 28

Environmental Conservation
Caring for the Global Environment........................... 32
Initiatives to Secure Our Electricity Supply................. 34
Resource Recycling through Cement Production......... 35

Society
Engaging with Our Employees............................... 36
Working with the Supply Chain.............................. 40
Engaging with Local Communities.......................... 41
Engaging with Shareholders.................................. 42
Third-Party Opinion................................................. 43
Editorial Policy
On May 1, 2015, Denka celebrated the centennial of its founding.
In line with our corporate philosophy, “Creating valuable things that
benefit society from resources with advanced technologies,” wehave formulated the corporate slogan “Possibility of Chemistry” while
signaling a new start by changing our company name from DENKI
KAGAKU KOGYO KABUSHIKI KAISHA to Denka Company Limited
on October 1, 2015.
To reinforce our operating foundation in anticipation of the next 100
years, we have been implementing the Denka100 management plan,
which we launched in April 2007. In step with changes in the economic
climate and other factors, we revised the plan and reinforced it with new
growth strategies in April 2013, with the target year set at fiscal 2017.
The Special Feature section of the Denka Group CSR Report 2015
presents a history of our hydroelectric power operations, which haveplayed a crucial role in the creation of our business foundation (pages
6 and 7). Also contained in the report is an introduction to the Denka
Principles, which we formulated in April 2015 as a guide for employee
business conduct, and a discussion of the meaning behind the newcorporate slogan “Possibility of Chemistry” (pages 10 and 11).
In addition, the report goes into considerable depth about the fourbusiness divisions’ strategies, with particular focus on progress under
new growth strategies related to overseas expansion, as well as oneach business’s activities aimed at creating new value (pages 14 to 21).

2

Denka Group CSR Report 2015

Also provided is a look at our efforts in the area of safety,
with reports on the status of countermeasures undertaken toprevent accident recurrence, focusing on the two major accidents
experienced in fiscal 2013, namely, a heat blast from an electrical
furnace at the Omi Plant and a fire from a distillation tower of the
Chiba Plant’s CM-3 styrene monomer production facility. We havereceived third-party verification of our efforts backed by positive
comments from an external specialist. Our Basic Policy for Workplace
Safety, Health, Security and Disaster Prevention, formulated on April 1,
2015, to clarify our uncompromising stance on safety and eliminating
occupational accidents and disasters, is also furnished in thesearticles (pages 28 to 31).
In addition, with a view to stepping up our CSR activities, we
focused on improving the process followed in preparing this report
while incorporating new initiatives. Specifically, we:● Discussed processes for value creation and examined businessmodels with representatives from the four business divisions, thereby
improving the content of the report based on the principle of materiality,and● Worked with a CDP* reporting task force to raise employee awarenessof environmental activities. Although the results of this collaboration
have yet to be reflected in our CSR report, efforts are now under way
to disclose such information as Scope 3 GHG emissions.
* Carbon Disclosure Project (CDP)

Coverage

Website-Only Content

Fiscal 2014 (April 1, 2014, through March 31, 2015)
N.B., this report includes additional information on some initiatives
undertaken subsequently in fiscal 2015 while presenting numerical targets
for and performance statistics from the past several fiscal years.

For CSR reporting, Denka utilizes both printed booklets and online
references that are prepared in PDF format and posted on its website.
While the former present the latest examples of Denka’s initiatives
aimed at achieving sustainable growth, the latter cover information
on its long-standing CSR activities. In addition, the Global Reporting
Initiative (GRI) Content Index is attached to the web-based references
to the Denka Group CSR Report 2015.
Please see also Site Reports (posted on the website in PDF
format) for detailed information on each business site and affiliate.

●

Scope
Unless stated otherwise, the environmental data presented in this reportcovers the business sites of Denka and key affiliates listed below.
●

Business sites: Six production sites (Omi, Omuta, Chiba, Shibukawa,
Ofuna and Isesaki) and four R&D institutes (the Advanced
Technologies Research Institute, the Life Innovation
Research Institute, the Infrastructure & Solutions
Development Research Institute at the Denka Innovation
Center and the Polymer & Processing Technology Institute)●

Key affiliates:

Denal Silane Co., Ltd. and Denak Co., Ltd. at the Omi
Plant as well as TOYO STYRENE Co., Ltd., and Taiyo
Vinyl Corporation at the Chiba Plant

Guidelines●

Inquiries:
CSR & Corporate Communications Dept.
Denka Company Limited
TEL. +81-3-5290-5511
FAX. +81-3-5290-5149
Nihonbashi Mitsui Tower, 1-1, Nihonbashi-Muromachi 2-chome,Chuo‑ku, Tokyo 103-8338, Japan
www.denka.co.jp/eng

The G4 Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI)(This report includes data related to disclosure standards set out in the GRI
Sustainability Reporting Guidelines. However, the report is not fully compliant withthese guidelines.)●

The Environmental Reporting Guidelines 2012 of Japan’s Ministry of
the Environment

Denka Group CSR Report 20153

To Our Stakeholders

Celebrating the Centennial of
Our Founding
Remaining Focused while Flexibly Pursuing Sustainable
Growth in an Evolving Business Environment

President & CEO
Denka Company Limited

Looking Back Over the Last 100 Years
In 2015, we celebrated the centennial of our founding. As we markthis milestone, we would like to take the opportunity to express our
sincere gratitude to all of our stakeholders, without whose
encouragement and support we would not have thrived.
Denka’s inauguration dates back to 1915, when the Hokkai
Carbide Plant launched by Dr. Tsuneichi Fujiyama, Japan’s
pioneering chemist in calcium carbide production, was reorganized
into DENKI KAGAKU KOGYO KABUSHIKI KAISHA (nicknamed
Denka) to manufacture and market calcium carbide and calcium
cyanamide. Through the provision of calcium cyanamide fertilizer,
Denka helped improve farmland soils and increase crop yields, andthe Company took on various technological challenges over theyears in the interest of facilitating the modernization of agriculture
throughout Japan.
Since the Company’s inception, Denka’s management has
been engaged in robust dialogue with customers and wholeheartedly
addressing challenges with an unwavering commitment to helping
resolve issues confronting society through chemistry andmanufacturing. The spirit of our predecessors is encapsulated in ourcurrent corporate philosophy “Creating valuable things that benefit
society from resources with advanced technologies,” and this spirit
has, in turn, led to the creation of businesses that range fromchloroprene rubber, synthetic resins, cement, special cement
additives and electronic materials to pharmaceutical products.
Moreover, this spirit constitutes a crucial part of our uncompromisingand sincere corporate culture dedicated to the pursuit of higher
functionality and quality.
In 2015, we formulated the new corporate slogan “Possibilityof Chemistry” to better convey our corporate philosophy to thegeneral public in a more concise manner. The slogan is intended
to communicate Denka’s founding spirit to future generations.

Denka President Shinsuke Yoshitaka delivering a greeting at a commemorative
centennial event

4

Denka Group CSR Report 2015

Initiatives to Prevent Major Accidents andMaintain Worksite Safety
In 2013, we experienced two major accidents, namely, a heat
blast from an electrical furnace at the Omi Plant and a fire during
facility demolition carried out at the Chiba Plant. Drawing lessons
from these accidents, we have been implementing steps toprevent recurrences while structurally stepping up our safety andsecurity measures by utilizing external certification systems,
including those stipulated by Japan Society for Safety Engineering,as well as advice from outside experts.
In April 2015, we established our Basic Policy for Workplace
Safety, Health, Security and Disaster Prevention to help all Group
members adopt a fundamental approach that puts the utmost
priority on safety. Also, these policies are intended to provide apublic statement on our commitment to becoming a company thatis more trustworthy and capable of eliminating accidents anddisasters. To fulfill our social responsibilities as a chemicalcompany, I myself will spearhead safety activities while chairing the
Safety Measures Headquarters.

Promoting the Denka100 Management Plan
New Growth Strategies
Due to rapid globalization and the advance of information
communication technologies, the business environment is changing
quickly and leaving companies not ready to adapt to evolving market
needs and economic conditions behind. In line with our aim to securesustainable growth over the next 100 years, we have established the
Denka100 management plan, under which we are promoting new
growth strategies and implementing concrete measures.
To create the most optimal production network, weestablished new plants in Vietnam and China to produce VINI-TAPE(vinyl chloride-based adhesive tape) and ALSINK (thermal
conductive plate for electronic circuits), respectively. Moreover, we
decided to acquire the chloroprene rubber business of DuPont, aU.S.-based chemical company that was the first in the world tocommercialize chloroprene rubber. Using this big decision as aspringboard, we will further strengthen our chloroprene rubber
business, solidifying our top global market position for this product.
In addition, we are striving to focus our management resourceson new growth drivers. Thus far we have established regional
headquarters for the special cement additive business in Shanghai
and Singapore to capture burgeoning infrastructure development
demand in China and Southeast Asia while launching production
bases in Tianjin and Malaysia. Moving ahead with next-generation

product development, we have acquired Icon Genetics GmbH, a
Germany-based biopharmaceutical R&D company. This acquisition
should help speed the development of new manufacturing methods
for diagnostic reagents and vaccines and to create such novel
pharmaceutical products as norovirus vaccines.
In April 2014, we completed the Denka Innovation Centermain building to facilitate open innovation aimed at contributing toa better future society. This facility provides a place for robustinteraction between the Company and external organizations andbusiness partners from around the world, and there are a numberof collaborative projects under way at the site intended tomaximize the possibility of chemistry and create R&D results that
embody our new corporate slogan.

essential to help each worker realize his/her full potential, develop afavorable workplace in which they can find their job rewarding andupgrade our personnel system in step with social changes.
With these factors in mind, we are enhancing our overseas
training programs for younger employees while stepping up
initiatives to help senior engineers pass on our technological
heritage to a younger generation. We are also revising our personnel
systems to reward highly motivated employees and offer themgreater career opportunities. Moreover, we are striving to cut
overtime work, systematically assist women with their pursuit ofhigher careers and improve our mental-health countermeasures.

Promoting Environmental Management

Today, a significant number of Denka Group employees areengaged in business operations outside of Japan. Given this, weestablished the Denka Principles in April 1, 2015, with the aim ofclarifying our fundamental stance for business conduct, basic
precepts that should be always referred to by employees, and theway we relate to society.
Specifically, these principles represent our commitment toputting the utmost priority on safety, giving due consideration to
the environment, creating new value through manufacturing andremaining a company worthy of the trust of society. We ask every
employee to take heed of and take action in line with theseprinciples. With a set of values established to serve as acornerstone for corporate activities and to be shared throughout
the Group, we sincerely hope that each employee takes pride in
his or her duties as a Denka Group member and achieves successin his or her career.

Over its 100-year history, Denka has accumulated a wealth ofexperience and know-how in the construction and operation ofhydroelectric power generation facilities and the development ofenvironment-friendly technologies that help reduce the energy
consumption of manufacturing processes. This arsenal ofstrengths will, we believe, constitute a key to promoting
environmental management over our next 100 years.
The prevention of global warming and the utilization of clean
energy have become crucial management issues for us as our
manufacturing facilities are particularly energy-intensive.
Furthermore, improvements in yield ratios and energy efficiency
will further strengthen our operating foundation as we aim to
scrutinize every cost element in line with our growth strategy.
Meanwhile, we are transferring calcium carbide manufacturing
technology to China with the aim of helping create a better
worksite environment and preserving the global environment in away only Denka can do. We will proactively implement these andother initiatives to make greater international contributions.

Strengthening Corporate GovernanceWe believe that for businesses to thrive, they must maintain thetrust of society through responsible conduct as corporate citizens.
No business can thrive outside society. In line with this belief, we
obtained the approval of the annual General Stockholders’Meeting held in June 2015 with regard to revisions in our Board of
Directors’ composition, as part of our initiatives to strengthen
corporate governance. Specifically, we increased the number ofoutside directors to three while decreasing the total number of
directors by two. Also, we appointed a Chief Compliance Officer inJuly 2015. In these ways, we are striving to enhance thetransparency and soundness of management.

Our Policies on Shareholder Returns andStrategic Investment
We established our Policy on Shareholder Returns in line with ourdetermination to return profits yielded by initiatives executed under
the Denka100 management plan to our shareholders.
Simultaneously, we set a budget for M&A and other strategic
investments aimed at further growth. We will strive to ensure ourfinancial soundness while maximizing shareholder returns andresources for forward-looking strategic investments, with the goalof swiftly achieving an ROE of 10% or greater.

Establishing “Denka Principles”

Taking a New Step as Denka Company Limited
Based on my observations of employees pursuing challenging
targets, I am confident that our corporate culture has become
more ambition-oriented. However, we have yet to accomplish thegoals set forth in the Denka100 management plan and there
remain many issues to be addressed as we work to create a more
flexible and robust enterprise capable of achieving growth
regardless of external factors. We must tackle these challenges by
rallying the strength of all Group employees.
We therefore changed our company name to Denka Co., Ltd.
on October 1, 2015. Undertaken during this milestone year, thismove was intended to announce our renewed commitment topursuing further growth into the future. Since the new appellation
is more easily pronounced, it is expected to help to further
enhance our name recognition among stakeholders. Under the
new company name, we will strive to fulfill our responsibilities as acorporate citizen, thereby living up to the expectations and trust ofsociety.
We sincerely ask for your ongoing support for our Group
operations.

Developing Human Resources and a Favorable
Working Environment for Sustainable Growth
We recognize that human resources are the foundation for achieving
sustainable corporate growth. We therefore consider that it isGroup photo of all Denka Innovation Center staff

Denka Group CSR Report 20155

Special Feature

History of Denka’s Hydroelectric Power
Generation

Hydroelectric Power Plants
Contending with Nature

Denka’s business growth over its 100-year history has gone hand in hand with its development of a robust network of hydroelectric power plants.
In addition to carburization materials and high-quality limestone, the production of calcium carbide requires a steady source of power to run theelectrical furnaces used. Our hydroelectric power generation facilities are therefore a crucial component of our operating foundation centered onelectrochemistry, as indicated by our original company name, DENKI KAGAKU KOGYO (which literally translates as Electrochemical Industry).
Having just celebrated the centennial of our founding, in the following section we explore the history of our hydroelectric power operations from thevery beginning.

Why Hydroelectric Power
Generation Been So Crucial to
Denka’s Development
In 1901, Dr. Tsuneichi Fujiyama, one of
Denka’s founders, became the first inJapan to manufacture calcium carbide.
To do so, he utilized surplus electricity
from the Sankyozawa hydroelectric
power plant* run by Miyagi Boseki Dento
Kabushiki Kaisha in Sankyozawa, Miyagi
Prefecture. Based on this experience,
Dr. Fujiyama then launched the Hokkai
Carbide Plant in Tomakomai, Hokkaido,
in 1912. Fed by surplus electricity fromthe Chitosegawa power plant run by
Oji Paper Co., Ltd., this facility was a
direct precursor of Denka, which wasestablished in 1915.
The electrical furnace production of
calcium carbide requires both a stablesupply of low-cost electricity andhigh-quality raw materials. Given theunderdeveloped public electricity supply
network in Japan back then, Denka
needed to develop its own hydroelectric
power generation facilities in order toaugment its production capacity andexpand business operations.
* Still operating today, the Sankyozawa hydroelectric
power plant is the oldest power plant of its kind andis run by Tohoku Electric Power Co., Inc.

Hydroelectric Power Generation
Facilities of Our Omi Plant
In 1921, the Omi Plant was foundedin the Hokuriku area, where there wasready access to rich limestone reserves
and rivers running through hilly terrainthat ensured abundant water current forhydroelectric power generation.

History of Our HydroelectricPower Plants

1921

1923

1925

Otokorogawa

Umikawa
No. 3

Kotakigawa

6

Denka Group CSR Report 2015

That same year, Denka launched
the manufacture of calcium carbide at
its Omi Plant, having acquired mining
rights to limestone mines along withwater rights through a merger with
Hokuriku Suiden Kabushiki Kaisha andTakasago Suiryoku Denki Kabushiki
Kaisha, the latter of which constructed
the Kotakigawa Power Plant (Photo1). In 1923, Denka established the
Otokorogawa Power Plant (Photo 2) andin 1926 began purchasing electricity from
Kurobegawa Electric Power Company
as well. Thus, from the very beginning,
Denka strove to secure a sufficient andstable power supply to ensure its ability
to accommodate burgeoning demand
for fertilizer made using calcium carbide.
However, in 1927 Japan was hit by
the Showa financial crisis and this was
shortly followed by the Great Depression,
which left the world in economic turmoil.
For five years, Denka struggled amid a
dire business environment, with a drastic
decline in fertilizer demand and a surge
in electricity rates eroding its operatingbase. To cope, Denka executed such
restructuring measures as downsizing
its workforce, reducing its capital andstreamlining production processes.
Simultaneously, the Company sought
to stabilize its electricity supply throughparticipation in the management of
Kurobegawa Electric Power Company.
In 1932, Denka successfully became ajoint manager of this utility by joining its own
electric power generation facilities, alongwith those of its partner Nihonkai Denki
Kabushiki Kaisha (now Hokuriku ElectricPower Company), with Kurobegawa
Electric Power. This move helped Denka

1925

1930

OyodogawaNo.1

Umikawa
No. 4

1930
Umikawa
No. 1

get over the crisis by securing continuous
access to electricity. In 1938 and 1939,
Denka went on to establish, respectively,
the Oami and Omigawa power plants.

1. A photograph of a Francis turbine runner at Kotakigawa
Power Plant (taken shortly after the facility’s launch)

History of Hydroelectric Power
Generation at Our Omuta Plant
Established in 1916, the Omuta
Plant was powered by the local utility
Kumamoto Denki Kabushiki Kaishain addition to surplus electricity from
Mitsui Mining Co., Ltd. However, if theplant were to expand its operations, itwould be essential to secure a morestable and robust energy source.
Denka thus resolved to take advantageof the Oyodogawa River in Miyazaki
Prefecture and in 1925 established the
Oyodogawa Power Plant No. 1, installingtransmission lines from Miyazaki to
Yatsushiro with the cooperation of local
stakeholders. Once the plant was
1938
brought online, its maximum
output totaled 15,000kW.
Oami

1931
1930

Oyodogawa
No. 2

Umikawa
No. 2

2. A transformer being transported to the under-construction
Otokorogawa Power Plant

3. Oyodogawa Power Plant No. 2 under construction (with then Chairman Ginjiro Fujiwara on the left of the front row)

At the time, plans called for establishinga second hydroelectric power generation
facility, with the commencement ofconstruction scheduled for 1927.
However, the aforementioned financial
crisis hit the country right before theconstruction kickoff. Despite the harshbusiness climate, under the leadershipof then Chairman Ginjiro Fujiwara, who
was determined to accomplish the
project even if he had to “offer himself asa collateral for loans,” Denka managed
to establish the Oyodogawa Power
Plant No. 2 (Photo 3) in 1931. Boasting
the maximum output of 30,000kW, thisfacility helped stabilize the Omuta Plant’s
operations.
During the World War II, however,Denka was forced to contribute theoutput of these two power generation
facilities and their transmission lines
to the “National Policy Company” inaccordance with a government order.
After the war, the Omuta Plant was able
to quickly restore its facilities, which
had been damaged by airstrikes, but
the power plants were not returned to
Denka. For 10 years, the consequent

power shortage hindered the Omuta
Plant’s ability to achieve its fullproduction capacity, forcing it to again
downsize its workforce.
After many years of hardship, theOmuta Plant was eventually able tosecure a stable electricity supply thanks
to the post-war development of electric
power generation facilities by public
utilities.
In summary, the 100 years of Denka’shydroelectric power generation attest
to the importance of stable and lowcost electricity to the establishment of arobust operating foundation.

Building a New HydroelectricPower Plant
With operational kickoff scheduled for
2018, Denka has been constructing
the New Omigawa Power Plant while atthe same time conducting preparatory
surveys for the construction of the
New Himekawa Power Plant No. 6 by
Kurobegawa Electric Power Company.
We favor a natural inflow type

1965
1964

Omigawa

1934

1961

Himekawa
No. 6.

Takigami

1941

hydroelectric power generation systemfor both facilities as this minimizes theimpact of hydroelectric power plants on
the environment.
In the face of growing calls for theutilization of renewable energy tohelp curb global warming, Denka will
effectively utilize and expand its networkof hydroelectric power generation plants
while leveraging its diverse know-how
and technologies in the energy field.
In these ways, Denka will continue
to promote the use of clean energy,
thereby fulfilling its social responsibility.

1977

1939
1962
Nagatsuga

Yokokawa
No. 1

Special Feature

Denka’s hydroelectric power generation
facilities employ natural inflow typepower generation systems that utilize
the momentum of water flowing down
steep slopes. The maintenance of thesefacilities sometimes involves dealing withnatural disasters, such as floods andheavy snowfalls.
Our facilities have on occasion
been hit by mudslides in the wake ofrainstorms, with their dams, conduits
and hydraulic steel pipes sufferingdamage. Also, avalanches and heavy
snowfalls have occasionally harmed
power generation facilities as well as
substations and transmission lines. Given
this, we remain vigilant to changes in theweather, looking to proactively mitigate
risk while continuously enhancing our
preparedness to minimize damage in theface of natural disaster.

2022
New Himekawa
No. 6

1982
Kita-otari

2018(scheduled)

New Omigawa(scheduled)

Sasakura
No. 2

Yokokawa
No. 2

Denka’s Oyodogawa power plants
No. 1 and 2 were confiscated to
power “National Policy Company”

The Development of Hydroelectric Power
Generation Technologies
Denka has been operating power generation facilities for a long timeand over that period has successively upgraded aging generatorsand turbine runners so that today it boasts a lineup of high-efficiency,
cutting-edge models.
As the water volume of rivers varies by season and is affected byweather conditions, the momentum of a given water current is inherently
unstable. Moreover, the energy demand of a given production facility
may also fluctuate. Therefore, striking the optimal balance between

Oami Power Plant concurrently
serves as Denka’s power generation
plant management centerelectricity supply and demand has long been a crucial technologicalchallenge for Denka. One way this challenge has been met has been
the development of a centralized system to manage the operation ofmultiple power generation facilities.
To maximize the efficiency of power generation, Denka takes
a flexible approach to the management of its hydroelectric power
generation plants, for example, increasing or decreasing water intake toaccommodate seasonal changes in water volume.

Denka Group CSR Report 20157

Business Overview

Corporate Profile (as of October 1, 2015)
Paid-in Capital
Employees

Denka Co., Ltd.
May 1, 1915

Business Sites¥ 36,998,436,962 (as of March 31, 2015)
Consolidated: 5,309
Of those, domestic: 4,941; overseas: 368
Non-consolidated: 2,934 (As of March 31, 2015)

Head OfficeNihonbashi Mitsui Tower, 1-1, Nihonbashi-Muromachi 2-chome,
Chuo-ku, Tokyo 103-8338, Japan
Tel: +81-3-5290-5055
Branches
Osaka, Nagoya, Fukuoka, Niigata, Hokuriku (Toyama), Sapporo,
Tohoku (Sendai)
Sales Offices
Nagano, Gunma (Takasaki), Akita, Hiroshima, Shikoku (Takamatsu)
Research Institutes
DENKA Innovation Center [Advanced Technologies ResearchInstitute, Life Innovation Research Institute, Infrastructure & Solutions
Development Research Institute] (Machida, Tokyo)
Polymer & Processing Technology Institute (Ichihara, Chiba)

Net Sales(consolidated)

Ordinary Income(consolidated)(Billions of yen)
400

(Billions of yen)
30

PlantsOmi (Itoigawa, Niigata), Omuta, Chiba (Ichihara, Chiba and Bibai,
Hokkaido), Shibukawa, Ofuna (Kamakura, Kanagawa), Isesaki (Isesaki
and Ota, Gunma)
Overseas Subsidiaries & Offices
New York, California, Düsseldorf, Singapore, Vietnam, Shanghai,
Beijing, Guangzhou, Suzhou, Hong Kong, Tianjin, Taiwan, Seoul andDubai
Major Affiliates
Denka Polymer Co., Ltd. (Koto-ku, Tokyo)
Denka Seiken Co., Ltd. (Chuo-ku, Tokyo)
CRK Corporation (Takasaki, Gunma)
Hinode Kagaku Kogyo (Maizuru, Kyoto)
Denka Azumin Co., Ltd. (Hanamaki, Iwate)376.8 384.0
357.9 364.7 341.6

300

24.3

23.1
20

19.0

20.6
17.8

200

(Yen)

500

500

400

431.3
402.0 402.6 415.4

300

377.0
337.4 353.6

100

100

11

12

13

14 (FY)

Denka’s Overseas Expansion

10

11

12

13

●Regional headquarters

Denka Chemicals GmbH
Icon Genetics GmbHGermany200

168.2 172.7 180.7 189.5

210.8

14 (FY)

10

14●Manufacturing bases●Sales bases

0

0

10

300

200

10

0

402.8

445.6
455.9 400

100
0

11

China

12

13

Dubai
Denka Middle East and Africa FZE

Denka Chemicals Shanghai Co., Ltd.
GUANGZHOU BRANCH
Denka Advanced Materials Vietnam Co., Ltd.

Vietnam
Malaysia

Denka Infrastructure Malaysia Sdn Bhd.

Topic

ALSINK

Infrastructure & Inorganic Materials

Life Science & Environmental Products
Main products• Food packaging materials• Housing materials• Industrial materials• Pharmaceutical products

Main products• Fertilizers • Calcium carbide• Fire resistant materials • Cement• Special cement additives

Special Cement Additives

Topic

Topic

VINI-TAPE

These materials enhance the functionalities of cement and concretewhen added into them. Denka’s special cement additives are widelyused for construction and civil engineering applications, including bridge
columns, tunnels and groundwork for buildings. In response to today’s
growing demand for infrastructure development in China and Southeast
Asia, Denka established sales and manufacturing bases in both of these
two market areas while stepping up the development of new products
and the proposal of solutions to accommodate local needs.

VINI-TAPE is the first electrically insulating adhesive vinyl chloride
tape to be commercialized in Japan. It is used mainly for bundlingthe wiring and cords of automotive components and ensuring theirelectrical insulation, and is praised for its superior functionality andquality. To better accommodate burgeoning demand in Southeast Asiaand the Middle East, Denka established a VINI-TAPE plant in Vietnam
capable of supplying products of high quality to growing markets.

Domestic BasesUSA●R&D bases
Denka Inorganic Materials(Tianjin) Co., Ltd.
Denka Electronics
Materials Dalian Co., Ltd.
Denka Korea Co., Ltd.

Denka Advanced Materials (Suzhou) Co., Ltd.

Topic

Chloroprene Rubber(FY)

Denka Chemicals Shanghai Co., Ltd. BEIJING BRANCH

Denka China Representative OfficeDenka Chemicals Development Suzhou Co., Ltd.

Main products• Electronic circuit substrates• Fused silica • Fine ceramics• Electronic packaging materials• Functional adhesives

Main products• Chloroprene rubber • Acetylene black• Styrene monomer• Polystyrene resin• ABS resin • Polyvinyl alcohol

Net assets per share(Billions of yen)

Electronics & Innovative Products

A synthetic rubber used for a variety of applications, including hoses and
A composite of aluminum and silicon carbide, ALSINK is used for the
belts for automotive components, adhesives and industrial equipment.
thermal conductive plates of power modules installed in high-speed
As the world’s largest chloroprene rubber producer, Denka exports
rolling stock. Boasting greater reliability and lighter weight comparedapproximately 80% of its domestic chloroprene rubber output, whichwith the conventional thermal conductive plates made of copper,
is produced at its Omi Plant. In addition, now that it has taken over the
ALSINK is the top choice of railcar manufacturers around the world.
chloroprene rubber business of U.S.-based DuPont, Denka is better
Aiming to develop a more robust global supply structure for ALSINK,
positioned to expand further into overseas markets by utilizing its
Denka launched a new plant to manufacture this product in Dalian,production bases in Japan and the United States.
China.

Total Assets/Total Net Assets(consolidated)■ Total assets ■ Total net assets

Elastomers & Performance Plastics

Business Overview

Name
EstablishedDenka’sBusiness
Operations●R&D bases

Japan
Denka Chemicals Shanghai
Co., Ltd.
Denka Infrastructure
Technologies Shanghai Co., Ltd.
Denka Taiwan Corporation
Denka Chemicals Hong Kong
Co., Ltd.

Denka Innovation Center
Polymer & Processing Technology Institute●Plants Omi Plant
Shibukawa Plant

Omuta Plant
Ofuna Plant

Chiba Plant
Isesaki Plant●Major affiliates (manufacturing-related)
CRK Corporation
Hinode Kagaku Kogyo
Denka Azumin Co., Ltd.
Denka Polymer Co., Ltd.
Denka Seiken Co., Ltd.

Denka Corporation
Denka Corporation, California OfficeDenka Performance Elastomer LLC

Singapore
Denka Advantech Pte. Ltd. Tuas Plant
Denka Advantech Pte. Ltd. South Plant
Denka Chemicals Holdings Asia Pacific Pte. Ltd.
Denka Singapore Private Limited Seraya Plant

Denka Singapore Pte. Ltd.
Denka Advantech Pte. Ltd.

Denka Singapore Private Limited Merbau Plant

8

Denka Group CSR Report 2015

Denka Infrastructure Technologies Pte. Ltd.

Denka Group CSR Report 2015

9

Denka’s Group Operations and CSR

Denka100

Denka’s Corporate Philosophy, Principles and Strategies

Toward greater corporate value
for the next 100 years

In addition to our corporate philosophy “Creating
valuable things that benefit society from resources withadvanced technologies,” we formulated the corporate
slogan “Possibility of Chemistry” to better convey our
message to the general public.
Taking a forward-thinking approach, we will act in linewith our goal of helping to create a better society while
maintaining the trust of our stakeholders.

Possibility of Chemistry.

Denka100 New Growth Strategies

Structure of Denka’s Corporate Philosophy, Principles and Strategies

Contributing to the Sustainable Development ofSociety while Enhancing Corporate Value

Corporate Philosophy

Creating valuable things that benefit society
from resources with advanced technologies

Looking toward the next 100 years, the Denka Group is striving to become a manufacturer that deserves
people’s trust. In line with new growth strategies for the Denka100 management plan, we have positioned ourbusinesses aimed at helping to resolve social issues as growth drivers.

We engage in social dialogue to find out exactly what our stakeholders need while developing
our technological strengths to meet their expectations. At the same time, we will effectively
utilize limited natural resources to create valuable things.

Denka Principles(established in 2015)

We:
1. Boldly confront challenges with determination and sincerity.
2. Think and take action today with the future in mind.
3. Deliver new values, and inspire customers through innovative monozukuri.
4. Respect the environment and create a cheerful workplace that prioritizes safety.
5. Contribute to a better society, whilst taking pride in being a trusted corporate
citizen.
Having celebrated the centennial of our founding, we established these principles to determine a
cornerstone for our business conduct and basic precepts that should be always referred to by all
Group members, with the aim of ensuring robust business growth over the next 100 years.

Corporate Slogan(established in 2015)

Possibility of Chemistry.
We will live up to expectations and trust of society through the pursuit of the possibilities
chemistry offers, which will, in turn, lead to the creation of new solutions and new value. We
established this slogan to summarize our corporate philosophy and to convey it to the generalpublic more effectively.

The Denka Group Guidelines (established in 2007)
Based on our corporate philosophy, these ten guidelines represent our “corporate manifesto” aimed at fulfilling our social
responsibilities.

10

Denka Group CSR Report 2015

Denka’s Group Operations and CSR

Since its founding in 1915, Denka has worked to contributeto social development and win the trust of society throughmanufacturing operations centered on chemical engineering.
In 2015, our centennial year, we established the “Denka
Principles” to determine our fundamental stance for businessconduct, basic precepts that should be always referred toby employees, and the way we relate to society. We expect
these principles to help us better act as one team in the
pursuit of further growth over the next 100 years.

New Growth Strategies

Reforms in Corporate Culture andReorganization
Reforming our corporate culture andreorganizing business structures tofacilitate the aggressive, speed-oriented
business approach needed to becomea successful global company

Securing Sustainable Growth
for the Next 100 Years
Working to reduce the impact ofbusiness activities on the environment
while striving to become a company
that garners the lasting trust of
employees and local communities

1. Create the most optimal production system
Accelerating a shift to local production to ensure timely
product supply to growing overseas markets while
dedicating domestic plants to the production of specialty
and high-performance products
2. Scrutinize every cost element
Reviewing every cost element through such steps as thestreamlining of production processes, yield improvement
and the reduction of raw material costs and maintenanceexpenses
3. Focus management resources on new growth drivers
and develop next-generation products• Developing solution businesses in such growth fields as theenvironment, energy, infrastructure and healthcare• Reinforcing open innovation and utilizing the Denka
Innovation Center

Denka is committed to providing solutions for issues confronting society
through our business activities.
Examples of What Denka Can Do to Resolve Social Issues
Environment● ‌Addressing the global
warming issue● ‌Promoting the effective
utilization of resources anddeveloping a recyclingoriented society

Energy● ‌Saving energy● ‌Securing a stable supply ofenergy and promoting the useof clean energy

Infrastructure

Healthcare● ‌Countering the aging of
infrastructures● ‌Preventing infectious andlifestyle-related diseases● ‌Infrastructure developmentin emerging countries● ‌Securing food safety

Denka Group CSR Report 201511

Our Business Strategies

Denka100 New Growth Strategies
Denka100 New Growth Strategies

We Actively Promote Initiatives under New Growth Strategies in Line with the Denka100
Management Plan.
Fiscal 2014 Main Initiatives under the Denka100 New Growth Strategy

Outline of the Denka100 Management Plan

New Growth Strategies❶ Create the most optimal production network❷ Scrutinize every cost element❸ Focus management resources on new growth drivers
and develop next-generation products

Numerical Targets (fiscal 2017)
Consolidated operating income: ¥60 billion or more
Operating income ratio: 10% or greater
Overseas sales to net sales ratio: 50% or greater

Fiscal 2014 began with a celebration of the completion of
the main building of the Denka Innovation Center, which has
been constructed to serve as a key R&D base for promoting
open innovation. Also during the year, we decided to build newplants for the manufacture of ALSINK, a highly-reliable thermal
conductive plate used for power modules of high-speed rollingstock, and of Denka Thermo Film, an electronic packaging
material, in Dalian, China, and Hanoi, Vietnam, respectively. As
a part of our initiatives to strengthen and expand operations
with regard to diagnostic reagents and vaccines, we
decided to augment the network of facilities related to thesebusinesses. In addition, we established a sales subsidiary in
Dubai to penetrate markets in the Middle East and Africa.
Furthermore, in December 2014, we entered into a business
transfer agreement with U.S.-based DuPont, a world-leading
comprehensive chemical company, committing ourselves tothe major task of taking over its chloroprene rubber business.
In April 2015, we completed an ultra-pure acetylene black
production facility at our Chiba Plant that will provide material
for lithium ion secondary batteries. In the same month, we
acquired the majority stake in Posco Venture Sdn. Bhd.
(now changed to Denka Infrastructure Malaysia Sdn. Bhd.), a
Malaysia-based construction material manufacturer. In August
2015, we signed a stock transfer agreement to acquire Icon
Genetics GmbH, a Germany-based biopharmaceuticalR&D company, with the aim of stepping up pharmaceuticaldevelopment utilizing cutting-edge cell culture technologies.
In line with our growth strategy, we are also striving toscrutinize every cost element, with the goal of achieving a totalof ¥10 billion in cost reductions by the end of fiscal 2017. To
this end, we are conducting thorough reviews encompassing
production processes, yield, raw materials, utilities, facility
maintenance and upgrades as well as logistics operations,with an eye to international competitiveness.

Changing Our Company Name and Updating Our
Corporate Identity
In April of this milestone year, we renewed our corporate logo
and introduced a new corporate slogan and, on October 1, wechanged our company name to Denka Co., Ltd., having gained
approval to do so from the 156th ordinary General Meetingof Shareholders held on June 19, 2015. Furthermore, with aneye to the recent globalization of our Group operations weformulated the Denka Principles, which set out our fundamental
stance for business conduct and serve as basic precepts
for the way we relate to society. These principles clarify ourcommitment to prioritizing safety, giving due consideration to
the environment, creating new value through manufacturing andremaining a company worthy of the trust of society. We also
expect these principles to provide a set of values that serve asa cornerstone for our corporate activities and that are shared by
employees throughout the Group.
While pursuing sustainable growth and striving to fulfill its
social responsibilities, Denka will remain true to its founding
spirit. Simultaneously, building on our heritage, we will create aneven stronger company
by rallying the strengthof all Group employees
to achieve goals set
forth in the Denka100
management plan. In theseways, we will make the first
Shinsuke Yoshitaka delivering a greeting
step toward the next 100 President
at a welcoming ceremony held on April 1, 2015
years of our operations.
for new recruits

Growthstrategy

Create the most optimal production network

In 2013, we established the three new growth strategies under
the Denka100 management plan, with the target year set at
fiscal 2017. In line with these strategies, we have taken an
aggressive business approach involving concrete initiatives.

Specific measures taken to achieve our cost reduction goals
included reducing unit fuel consumption and improving yield,with each plant achieving solid improvements in these twoareas. We also reviewed raw materials and packaging materials,
adopting more cost-effective alternatives where possible while
enhancing logistics operations through centralized logistics
information management and improved collaboration withtransporters. Among initiatives in the field of engineering wereincreasing the frequency of facility inspections and undertaking
upgrades with a focus on reducing negative loss attributable tofacility failure. Efforts are now under way to provide preventive
maintenance education to employees and to ensure the early
detection of possible defects. For energy saving, we optimized
utility usage at the Chiba Plant in line with the reorganization of
the styrene-based product manufacturing structure. Moreover,
we upgraded the Kotakigawa Power Plant’s turbine runners
while expanding the power generation capacity of the Oami
Power Plant by increasing its water intake.
On June 19, 2015, we increased the number of outside
directors from two to three while decreasing the total numberof directors by two, with the aim of further enhancing
management transparency and soundness. Along with thischange in the composition of our Board of Directors, we
appointed a Chief Compliance Officer in charge of supervisinglegal compliance of Groupwide organizations on July 13, 2015,
thereby reinforcing our management structure to achieve goals
set forth in the Denka100 management plan.

Focus management resources on new growth drivers anddevelop next-generation products

Fiscal 2014 Overview

Field

Time

Group operations

April 2014

Elastomers & Performance
May 2014
Plastics
Elastomers & Performance
June 2014
Plastics

Denka Group CSR Report 2015

Details

Overall

Established Denka Taiwan Corporation

ABS and specialty resins

Implemented an overhaul of the Chiba Plant’s manufacturing lines to secure greater
competitiveness (successively rebuilding plant facilities until May 2015)

Vinyl acetate monomer

Withdrew from the vinyl acetate monomer businessGroup operations

January 2015

Overall

Established Denka Middle East and Africa FZE in Dubai, the United Arab Emirates

Life Science &Environmental Products

March 2015

Food packaging sheets

Launched a new production facility at Denka Advanced Materials (Suzhou) Co., Ltd.

Life Science &Environmental Products

May 2015

VINI-TAPE

Launched Denka Advanced Materials Vietnam Co., Ltd., a new production base in Greater Hanoi
City, Vietnam Photo 1

Electronics & Innovative
Products

May 2015

Electronic packaging
sheetsElectronics & Innovative
Products

August 2015

ALSINK

Elastomers & Performance
Fiscal 2015
Plastics

Chloroprene rubber

Infrastructure

March 2014

Special cement additives

Infrastructure

April 2014

Special cement additives

Group operations

April 2014

Overall

Healthcare

April 2014

Rapid diagnostic test kits
for infectious diseases

Healthcare

July 2014

Pharmaceutical products

Healthcare

March 2015

Rapid diagnostic test kits
for infectious diseases

EnergyApril 2015

DENKA BLACK Li

Infrastructure

April 2015

Special cement additives

Launched Denka Infrastructure Technologies Shanghai Co., Ltd., and Denka Infrastructure
Technologies Pte. Ltd., which serves as regional headquarters in China and Singapore
Completed the Denka Innovation Center main building while establishing the Advanced
Technologies Research Institute, the Life Innovation Research Institute and the Infrastructure &Solutions Development Research InstituteReleased QuickNaviTM- StrepA, a rapid antigen detection test kit for beta hemolytic streptococcus
Group A
Decided to construct a new manufacturing facility for diagnostic reagents at the Kagamida Plant of
Denka Seiken Co., Ltd. (completion scheduled for March 2016)
Succeeded in developing a prototype Ebola virus antigen rapid diagnostic reagent throughjoint research with Dr. Ayato Takada, a professor at Hokkaido University’s Division of Global
Epidemiology, Research Center for Zoonosis Control
Established an ultra-pure acetylene black production facility at the Chiba Plant
Made POSCO Venture Sdn. Bhd. a subsidiary, renaming it Denka Infrastructure Malaysia Sdn Bhd.
Photo 3

Initiated the development of large-scale production methods for the “G47Δ” oncolytic virus as aproject commissioned by Dr. Tomoki Todo, a professor at the Institute of Medical Science of the
University of Tokyo
Signed an agency contract with Sinopharm Group Beijing Huahong Co., Ltd. in China for marketing
the QuickNaviTM-Flu influenza antigen detection test kit
Received the Japan Prestressed Concrete Institute 2014 Award for Outstanding Engineering
Innovations for the development of SUQCEM ultrahigh-strength fiber-reinforced concrete
Acquired Icon Genetics GmbH, a Germany-based bio-pharmaceutical R&D venture, taking over its
novel plant-based genetic modification technologies for antigen and antibody cell culture
Began leasing land in Tomakomai City, Hokkaido Prefecture, to Mitsui Fudosan Co., Ltd. as a site
for mega-solar power generation businessInitiated the construction of the New Omigawa Power Plant (operational kickoff scheduled for2018)
Kurobegawa Electric Power Company, a joint venture of Hokuriku Electric Power Company and
Denka, began preparatory survey for the construction of the New Himekawa Power Plant No. 6(operational kickoff scheduled for 2022)

May 2015

Healthcare

June 2015

Infrastructure

June 2015

Healthcare

August 2015

Bio-pharmaceuticals

April 2014

Solar power generation

October 2014

Hydroelectric power
generation

December 2014

Hydroelectric power
generation

April 2015

Corporate identity

Renewed corporate logo while formulating new corporate slogan “Possibility of Chemistry”

May 2015

Limestone mining

Completed construction to develop a new working face in the eastern section of the Omi limestonemine of the Omi Plant

October 2015

Corporate identity

Changed company name from DENKI KAGAKU KOGYO KABUSHIKI KAISHA to Denka Co., Ltd.

Initiatives for the next 100 years

Oncolytic virotherapy

Completed a new electronic packaging sheet plant at Denka Advanced Materials Vietnam Co., Ltd.
(mass-production kickoff scheduled for 2016 spring)
Established Denka Electronic Materials Dalian Co., Ltd., a new production base for ALSINK thermal
conductive plate for power modules of high-speed rolling stock in Dalian, China (mass-production
kickoff scheduled for the end of fiscal 2015)
Plan to acquire the chloroprene rubber business of DuPont in tandem with MITSUI & CO., LTD. andestablished Denka Performance Elastomer LLC
Initiated production at Denka Inorganic Materials Tianjin Co., Ltd., a new manufacturing base in
China Photo 2

Healthcare

Photo 1 Completion ceremony of Denka Advanced Materials
Vietnam12

Product or business

Rapid diagnostic test kits
for infectious diseases
Ultrahigh-strength fiberreinforced concrete

Photo 2 Production kickoff at Denka Inorganic Materials
TianjinPhoto 3 Denka Infrastructure Malaysia’s laboratory in Stateof JohorDenka Group CSR Report 201513

Our Business Strategies

Elastomers & Performance Plastics

Business Overview

Specializing in the manufacture of elastomers, special conductive materials andplastics, the Elastomers & Performance Plastics Division produces chloroprenerubber that commands a top global market share in addition to acetylene
black, SBC resin and MS resin, and overseas sales represent more than
60% of its net sales. While accommodating ever-growing demand for theseproducts in markets around the world, the division is striving to improve its
operating structure and efficiency and thereby reinforce the Company’sbusiness foundation. Moreover, the division has developed productswith superior functionalities tailored to customer needs, including an
ultra-pure acetylene black for next-generation LiBs. Going forward, its
manufacturing, R&D and sales sections will work as one to maximize
overall organizational strengths, thereby creating innovative products
capable of helping to resolve issues confronting society.
Executive Officer,

This division handles products in three key categories: acetylene
derivatives, including chloroprene rubber and acetylene black; styrenebased functional resins; and acetyl chemicals. Revenues from theseproducts represent 40% of Denka Group sales. Leveraging a broad rangeof techniques and experience in synthesizing, compounding and molding
polymers, we are bolstering technological innovation in such manufacturing
fields as automobiles, home appliances and food packaging.

Business Models (Value Creation Flows)

Toshio ImaiBusiness

Elastomers & Performance Plastics

1

The Market Environment

・ A shift to overseas production inelectronics, automotive and otherrelated industries on the back ofdemand growth in emerging economies
・ Increasing market presence ofcommodity manufacturers based inemerging economies
・ Burgeoning demand for performanceplastics and the shortening of productlife cycles

Strategies
1. Create the most optimal production system

2・Minimize exposure to risks attributable to changes in the trade environment by scrutinizing every costelement and optimizing all processes from production to sales
・Focus further management resources on growth drivers and promote external collaboration to develop
new businesses for the next generation

3

Challenges

4・Step up initiatives to create new businesses
・Optimize business portfolio to focus more management resourceson growth drivers
・Further reinforce overseas business network

2. Improved business structure
・Downsized the ABS business3. Developed the new business・Reinforced development functions of each department

Acquiring the Chloroprene Rubber Business from DuPont
We acquired DuPont’s chloroprene rubber business jointly with Mitsui & Co., Ltd. undertaken in line with the Denka100 new growth strategy,
the acquisition was intended to help optimize the Group’s production and marketing structure. With two production bases, namely, the Omi
Plant, which employs the acetylene method, and the new North American site, which employs the butadiene method and is favorably located,
Denka is now better positioned to supply high-quality products around the world.

Denka Group CSR Report 2015

DENKA Chloroprene
DENKA ERSpecial Conductive
Materials

DENKA BLACK• Technologies to precisely control the diameterand maintain the high purity and crystalline
properties of particles• Technologies to produce uniformly granulized
particles that boast high bulk density and canbe easily dispersed into such materials as resins• Activation technologies that form pores onparticle surfaces, significantly increasing
specific surface area

• Provide conductive materials for LiBs to increase theirreliability, capacity and output• Provide a conductive material for use in high-voltage
power transmission cables to help extend its useful life andreduce transmission loss

Performance Plastics

DENKA ABS
Transparent resins
Heat resistant resins
CLEAREN• Technologies to control polymer structures
combining various polymerization methods• Sophisticated manufacturing and quality
management technologies capable of curbing theformation of and removing insoluble polymer• Supply products with superior transparency, heat resistanceand hinge performance• Realize superior amenability to molding, printability andshrink property

Acetyl Chemicals

DENKA POVAL• Polymer structure control technologies tailoredto specific applications• Powder control technologies to produce resin
particles• Provide a dispersant for the polymerization of vinyl chloride
and a vinyl acetate emulsifier with stable dispersibility• Provide raw materials for glass interlayer films with thermal
stability and excellent transparency

3. Develop new businesses

・Acquired the chloroprene rubber business from DuPont
・Completed a new ultra-pure acetylene black production facility(Chiba Plant)

14

Value created• Provide products with superior performance, including
high-heat resistance and high durability and longer productlives

2. Improve business structure

1. Created the most optimal production system

Topic

Source of value• Polymer structure design technologies tailoredto specific applications• Polymer composite technologies to achievetargeted functionalities

Elastomers

Product

・Develop a more robust global supply structure for our flagship products to solidify their top global
market shares

Main Achievements in Fiscal 2014

Elastomers & Performance Plastics

Developing New Markets for Our Unique Products while Satisfying
Customer Needs around the World

Creating Shared Value (CSV); Helping to Resolve Social Issues

DENKA IP Styrene Copolymer Resin

Social Issues

The Denka Group’s Technological Solutions

・ A need to reduce substances
hazardous to human health withindwelling and working environments
・ Growing calls for CO2 reduction

A copolymer consisting of styrene,
N-phenylmaleimide and maleic anhydride,
DENKA IP is a special styrene-based resin
made using proprietary Denka polymerization
technologies. Its unique molecular structure
enables it to serve as a superior heat-resistance
improver. When mixed with ABS resin, DENKA IP
makes it easier to produce heat-resistant resin
through compounding extrusion. Moreover, as it
boasts superior thermal stability and generates
only small amount of gas during the molding
process, manufacturers can reduce total VOC(TVOC) content in thermal resins by 60%

Society’s Technological Expectations
・ Reducing the content of the volatileorganic compound (VOC)・ Significantly improving resin’s heat
resistance with a small amount ofadditivescompared with those made using conventional
heat-resistance improvers. This product is also
used as a compatibilizer for polymer alloys (ABS,PA, etc.) due to its highly responsive maleic
anhydride group.

IP pellets

Denka Group CSR Report 201515

Our Business Strategies

Infrastructure & Inorganic Materials

Business Overview

The Infrastructure & Inorganic Materials Division handles cement and special
cement additives, both of which are essential for infrastructure development,
and chemical fertilizers that help improve crop yields in addition to providing
fire resistant materials, desulfurizing agents and other inorganic materials foruse at such facilities as steelworks. Moreover, an array of special cement
additives support the division’s capability to offer optimal solutions,
including novel materials and innovative construction methods. Working
together, the division’s manufacturing, sales and R&D sections serve
markets in China and Southeast Asia, where rapid infrastructuredevelopment is under way, and they are bringing their accumulated
technological know-how to bear in agricultural and inorganic materials
related fields. Paying close attention to the latest customer needs, wewill advance our solution business to promote energy and resource
Director, Managing Executive Officer,
saving and to curb global warming.

In addition to the calcium carbide and calcium cyanamide fertilizers that
Denka has been manufacturing for a century, this division handles cement,
special cement additives and other products made by applying inorganic
chemistry. Leveraging in-house power generation facilities and limestone
mines owned within plant premises, we provide unique products andsolutions that support agricultural development and social infrastructure.

Business Models (Value Creation Flows)

Hideyuki Udagawa

Business

Product

Infrastructure & Inorganic Materials

The Market Environment

1・Demand growth reflecting an increase in construction andinfrastructure maintenance projects associated with therecovery from the Great East Japan Earthquake and an upturnin public-sector investment
・Burgeoning demand for infrastructure development in China
and Southeast Asia
・A shrinking farmer population driving a shift toward automatedand large-scale farming
・Growing need for ecological solutions

Main Achievements in Fiscal 2014

・Release high-value-added products capable of helping save energy andreducing environmental burdens
・Step up overseas expansion with a focus on augmenting local production in Asia
・Maximize profitability by optimizing our production system
・Expand the scope of our solution business to encompass not only construction
but agriculture and other areas
・Facilitate the prudent use of resources and thereby help develop a recyclingoriented society

3・The special cement additive business: Increased our equity
holdings in POSCO Venture Sdn. Bhd. (hereafter “POSCO”; now Denka
Infrastructure Malaysia; see also the following articles for details) tostep up our Southeast Asian operations through business collaboration
・The agri-products business: Developed a humic acid liquid fertilizer
tailored for use in plant cultivation facilities that employ nutriculture
systems to accommodate recent growth in demand・The cement business: Undertook steady resource recycling operations
equivalent to the fiscal 2013 level

Topic

2

Strategies

Challenges

4・The special cement additive business: Achieve annual overseas
sales of ¥15 billion
・The agri-products business: In addition to developing humic acidliquid fertilizers, a weed-preventing soil solidifier and cutting-edge
farming methods, pursue new business to support agricultural
infrastructure, such as the marketing of appliances for horticulture
facilities
・The cement business: Step up resource recycling operations (develop
new recycling technologies)

Expanding into Markets Overseas by Building Robust Local Business Network

Special Cement Additives

Agri-Products

Inorganic Materials

Special cement
additives

Fertilizers

SULFEXFIRELEN* Changed company name to Denka Infrastructure Malaysia Sdn. Bhd.

16

Denka Group CSR Report 2015

Value created• Unique solution technologies capable of controllingvarious aspects of concrete’s characteristics, suchas hardening, expansion or shrinkage• Robust R&D structure backed by diverse
collaboration involving partnerships between
industry, academia and the government• Assist infrastructure development in emerging nations(roads, railways and concrete buildings)• Provide technologies to repair aged concrete structures
and to facilitate reconstruction following disasters• Fertilizer technologies accumulated over 100
years of experience in providing solutions
tailored to varying climates and soil qualities inregions throughout Japan• Provide fertilizers and farming technologies best suited to
specific regions and types of crop
• Supply safe and ecological products that minimize soil andatmospheric pollution• Contributed to the restoration of farmland damaged bysuch natural disasters as high winds and flooding while
mitigating the impact of climate changes• An array of inorganic material manufacturing
technologies that enable the production of highquality fire resistant materials and desulfurizing
agents with superior functionalities• Contribute to the reduction of environmental burdens
as well as improvements in product quality and costcompetitiveness by supplying inorganic materials to
Japan’s steelworks, already the world leader in terms of
quality and production efficiency

Denka Cement and Recycling Business in Cement Production

Social Issues

The Denka Group’s Technological Solutions

・ Need to reduce CO2 emissions andenergy consumption
・ Growing calls for the effective utilizationof limited natural resources
・ Waste recycling

Denka’s cement products are made using
limestone from mines located near the Omi Plant
in addition to fly ash, waste soil from construction
sites, waterworks sludge and other waste, suchas byproducts from in-house facilities, as raw
materials. Moreover, we utilize sewage sludge,
used tires and waste plastics as fuel for cement
production. At the same time, we are striving
to reduce the impact of our operations on theenvironment by fully harnessing energy-saving
technologies and by using clean energy from ourhydroelectric power plants, biomass boilers, andwaste heat recovery power systems that utilize
heat from cement production.

2 China: Denka Infrastructure Technologies Shanghai Co., Ltd. (DITS; Shanghai)
In Southeast Asia, in April 2015 we acquired a majority stake in POSCO,* a leading construction material manufacturer in Malaysia,
making it subsidiary and thereby strengthening our local special cement additive production structure. We intend to leverage POSCO’s
marketing network throughout the region.

Source of value

Creating Shared Value (CSV); Helping to Resolve Social Issues

Toward the goal of achieving annual overseas sales of special cement additives amounting to ¥15 billion, we are striving to develop a
more robust local business network. Our current lineup of overseas bases is as follows:
1 Europe: Denka Chemicals G.m.b.H (DCG; Düsseldorf, Germany)
3 Southeast Asia: Denka Infrastructure Technologies Pte. Ltd. (DIPL; Singapore)

Infrastructure & Inorganic Materials

Pursuing a Needs-Oriented Approach and Developing a Local
Network to Provide Optimal Solutions

Society’s Technological Expectations
・ Realizing manufacturing technologies
that use less energy
・ Utilizing recycled raw materials andfuels

Cement production facility

Denka Group CSR Report 201517

Our Business Strategies

Electronics & Innovative Products

Supporting progress in electronics and technologies, the Electronics & Innovative
Products Division provides functional fine particles and thermally conductive
substrates, which achieve key thermal control for realizing miniaturizationand greater reliability and performance. At the same time, our functional films
and adhesives play essential roles in realizing labor-saving, cost-efficient andenvironment-friendly manufacturing processes. Providing a variety of products tomeet customer needs, we will strive to help resolve social issues.

The Electronics & Innovative Products Division boasts an array of productsthat are essential to the field of electronics. Its offerings include electronicparts materials, packaging materials for transporting electronic components,
solutions for improving production process, thermal solutions, and structural
adhesives. In line with the Denka100 management plan, the division has
implemented the “VALUE 50” business strategy, achieving stable businessgrowth. In the face of today’s diversifying customer needs, it is important
to move swiftly to adapt to drastically changing market conditions. We
will pursue forward-looking product development to maximize the“Possibility of Chemistry” while fully leveraging our creativity in orderto provide markets with cutting-edge products and technologies.

Business Models (Value Creation Flows)Business

Sanshiro Matsushita

1・Quantitative shrinkage in market
demand for electronic materials dueto the miniaturization of devices
・Growing requirements for costcompetitive products due to rapid
commoditization
・Burgeoning demand for infrastructuredevelopment in emerging countries

Strategies
1. Build an optimal production system and improve productivity

Product
Fused silica
Spherical fused silica
Spherical alumina

Managing Executive Officer,
Electronics & Innovative Products

The Market Environment

2

・Leverage our domestic and overseas production networks more efficiently (fused silica, spherical fusedsilica and electronic packaging materials)
・Develop overseas production sites (HITTPLATE, ALSINK, adhesives and electronic packaging materials)

Functional Fine
Particles
Boron nitrate
Silicon nitride
Aluminum nitride
PhosphorHeat Dissipating
Products

Highly heat-conducting
substrates (DENKA AN PLATEand HITTPLATE)
Thermally conductive sheets
and thermal grease-type
dissipation materials

Functional Films

Electronic packaging
materials (Denka
Thermosheet and Denka
Thermo Film)

Adhesives

HARDLOCELEGRIP

2. Shift our focus toward future core business・Step up operations related to functional fine particles (phosphor, spherical alumina and ceramics-based materials)
・Develop solutions in the adhesive business3. Develop new businesses
・Push forward the commercialization of new products through collaboration with partner companies andother external organizations (the NIMS-DENKA Center of Excellence for Next Generation Materials, etc.)

Main Achievements in Fiscal 2014

3

・Established a new ALSINK production base in Dalian, China
・Established a new production base for Denka Thermo Film electronic
packaging material in Greater Hanoi City, Vietnam
・Denka’s phosphor was chosen for 4K televisions
・Expanded applications for spherical alumina and ceramics-basedmaterials while penetrating overseas markets

Topic

18

Challenges

Denka Group CSR Report 2015

4

・Initiate production at two new plants (Dalian and Hanoi) as planned
・Promote the local production of adhesives to better serve local markets(e.g., China)
・Develop new products based on our functional fine particle
technologies and realize early commercialization

1. Establishing Denka Electronic Materials Dalian Co., Ltd.
ALSINK is widely used to make heat dissipation plates for the power modules used in rolling stock, automobiles and industrial
instruments. It is expected that demand for power modules for rolling stock will grow in markets worldwide, especially in China. We
therefore established a local subsidiary in Dalian, China, to manufacture and market ALSINK, with mass-production kickoff scheduled forthe end of fiscal 2015.
2. Setting up a new production facility at Denka Advanced Materials Vietnam
Denka Thermo Film is widely used as a cover tape in the process of transporting electronic components. We established a new
manufacturing facility for this product within the premises of our existing plant in Greater Hanoi City, Vietnam. With the mass-production
kickoff scheduled for spring 2016, we will take advantage of business opportunities resulting from burgeoning demand while maintaining
the cost competitiveness of our products.

Electronics & Innovative Products

Business Overview

Developing New Businesses with an Emphasis on Adding andCreating New Value

Source of value

Value createdTechnologies that employ the flame spraypyrolysis method to shape spherical oxide
ceramic particles and technologies to precisely
control particle diameters

Enable extremely close packing into semiconductor sealants,
realized greater stability in sizes thanks to a reduced thermal
expansion property and improved safety due to a cut in fire
retardant content→Contribute to the miniaturization of semiconductors andelectronic devices as well as the reliability of these products

High-temperature calcining technologies in anitrogen atmosphere

Create ceramics with unique characteristics, including superior
heat conductivity, strength, lubricity and color-rendering→Contribute to the realization of smaller, thinner and moreenergy-saving electronic devices as well as improved highresolution displays

Technologies for calcining highly heat-conducting
fillers and those for designing electrical insulationand thermal dissipation materials

Create a variety of heat-dissipation and other solution
technologies→Contribute to the miniaturization of rolling stock andautomotive components, industrial instruments and home
appliances as well as mobile devices while improving theirenergy efficiency

Technologies to produce resin compounds withsuch functionalities as electrical conductivity inaddition to multilayered film technologies

Provide carrier tapes, cover tapes and other packaging
materials with superior functionalities for transporting electronic
components and thereby help accelerate production process
and miniaturization→Contribute to the creation of better-performing, more costcompetitive electronic components

Adhesive compounding technologies and awealth of data with regard to various adhesive
and adherent materials

Realize products with greater reliability in adhering to various
materials, thereby contributing to labor-saving semiconductor
production processes→Help enhance product design and quality while reducing
production processes and costs

Creating Shared Value (CSV); Helping to Resolve Social Issues

ALSINK Highly-Reliable Thermal Conductive Plates for the Power
Modules Used in High-Speed Rolling Stock

Social Issues

The Denka Group’s Technological Solutions

・ Need to reduce the energy consumption of rollingstock and automobiles in driving
・ Demand for Insulated Gate Bipolar Transistor(IGBT) drive control modules with greater
durability and longer useful lives

A composite of aluminum and siliconcarbide, ALSINK boasts extremely highheat conductivity and is used in theelectronic circuit substrates of the IGBT
drive control modules installed in rollingstock, demand for which is surging on
the back of growing calls for energysaving railcars. Since ALSINK’s thermal
expansion ratio can be precisely adjusted
to match that of ceramics-based electronic
circuit substrates, the product enables aSociety’s Technological Expectations
・ Improving the heat-cycle performance of IGBT
modulessignificant improvement in such modules’
heat-cycle performance compared withconventional thermal conductive plates.

ALSINK

Denka Group CSR Report 201519

Our Business Strategies

Life Science & Environmental Products

The division is engaged in wide-ranging businesses that directly affect people’s lifestyles and living
environments. For example, it handles materials for construction and civil engineering use, such as rain
gutters and corrugated pipes, as well as industrial tapes, food packaging materials and pharmaceuticals.
Overseas, the division is producing TOYOKALON, a synthetic fiber for wigs and hairpieces that is
expected to become popular globally, VINI-TAPE for wire harness in automobile, and highly-functional
food packaging sheets. In addition, Denka Seiken Co., Ltd., a Group company serving as a key
business driver in the healthcare field, boasts the QuickNaviTM series rapid diagnostic test kits. Commanding a considerable share of the domestic
market for diagnostic reagents for influenza, norovirus and other infectious diseases, these test kits can provide diagnoses without using any special
equipment or electric devices. Going forward, we will expand into Asian and African markets while developing a rapid diagnostic test kit for Ebola virus.

Helping Enhance the Quality of People’s Lives while Tailoring
Solutions in Step with Changing Lifestyles
The Life Science & Environmental Products Division is in charge of products
closely related to people’s lifestyles and living environments and serves suchindustries as healthcare, foodstuffs and housing. In recent years, maturingmarkets and a concomitant rise in demand for higher product quality
have driven worldwide recognition of the technological strengths ofJapanese manufacturers. Accordingly, we will strive to improve quality
and productivity even further while developing our overseas businessnetwork. It is expected that changes in people’s lifestyle needs will
fuel the constant creation of new demand. Staying vigilant to market
trends, we will continue to work to enhance the quality of people’s
lives through the provision of environment-friendly and safe
products.
Executive Officer,

Business Models (Value Creation Flows)Business

Junichi Kimura

Housing
Materials

Life Science & Environmental Products

The Market Environment

1・The maturation of the domestic market, intensifying competition
and rapidly aging society
・Burgeoning purchasing power of emerging economies andgrowing interest in food safety
・Proliferation of multilateral trade agreements
・Diversification of people’s lifestyles and values and growinginterest in environmental protection

Main Achievements in Fiscal 2014
・Reinforced our overseas production network

2

Strategies

・Enhance cost competitiveness through such steps as the creation of an optimal
production system
・Promote a shift to local production for products targeting overseas markets(TOYOKALON, VINI-TAPE and food packaging materials)
・Explore promising domestic and overseas markets while nurturing nextgeneration products and technologies

3

Challenges

TOYOKALON (Singapore; initiated production in June 2013), Food packaging materials(China; March 2015) and VINI-TAPE (Vietnam; May 2015)

・Positioned us to further penetrate Middle Eastern and African markets
Established a local sales subsidiary in Dubai (January 2015)

・Developed and released new products

Released a highly oil resistant sheet for use in food containers, TEFKA weather- andheat-resistant fluorine-based film and a novel synthetic fiber for use in hairpieces whiledeveloping marketing channels for influenza rapid diagnostic test kits in China as well as aprototype rapid diagnostic reagent for Ebola virus

TopicLife Science & Environmental Products

Business Overview

4・Establish a more flexible production systemcapable of accommodating diversifying needs(synthetic fiber and food packaging materials)
・Build a supply structure to accommodate demandin emerging economies (synthetic fiber, VINI-TAPE
and food packaging materials)
・Reduce waste through the development oflightweight materials (food packaging materials,
VINI-TAPE and fluorine-based films)

Adhesive Tapes

Food Packaging
Materials

Product

Value createdRain gutters for housing• Polymer design and resin compounding and processing
technologies• A robust sales and service network encompassing
regions across Japan backed by two manufacturing
and supply bases in the Kanto and Kyushu regions

VINI-TAPE (electricallyinsulating adhesivetape)• The first PVC electrical insulating tape to be industrializedin Japan• Technological capabilities that enabled the creationof hand-cuttable, highly elastic tape boasting highly
functionality and quality and a backing boasting stablerelease property• A robust global sales and service network encompassing
more than 60 countries around the world supported by
two production bases in Japan and Vietnam

Heat-resistant biaxiallyoriented polystyrene
sheet (BOPS)• An integrated production structure encompassing
polymer synthesis and sheet processing as well as
container molding, all backed by a comprehensive R&D
structure

Creating Shared Value (CSV); Helping to Resolve Social Issues

Functionalities• Superior water discharge capacity (to handle heavy rainfalls)• Lightweight and easy to install (labor saving, minimal burden
on structure and cost reduction)• High durability (reducing the frequency of replacement)
Designs• A range of color variations and shape (sophisticated designs
and improved appearance)
Service capabilities• A robust service system capable of satisfying customer needs• Provide a highly reliable tape that makes it easy to bind wires  (for wire harnesses in automobile and electrical appliances)• Provide a range of color and design variations (forhouseholds)

Functionalities• Superior heat resistance that minimizes package deformation
when contents are microwaved (growing need for quick andeasy cooking)• Highly transparent food containers that allow consumers toview content without breaking the seal (diversification of foodingredients)• An even thinner and lighter container material boastingsuperior resilience (easy to handle during transportation andstorage, helping reduce waste)
Spillover Effects• Popularization of hygienic food packaging materials (growing
concern for food safety in emerging economies)

TOYOKALON Synthetic Fiber for Wigs and Hairpieces

Social Issues

The Denka Group’s Technological Solutions

・ Demand for products that help
improve the quality of life in Africancountries and other emerging
markets driven by burgeoning
economic and population growth

In 1952, we became the first in the world to commercialize polyvinyl chloride synthetic fiber. Employing
polymer processing technologies that led to this accomplishment, we are producing TOYOKALON, a synthetic
fiber boasting superior functionality and a variety of design options, with our Ofuna Plant (Kamakura,
Kanagawa) and newly built Tuas South Plant (Singapore) serving as its production bases.

Launching a VINI-TAPE Production Facility (Denka Advanced Materials Vietnam)
We established a new production facility for VINI-TAPE, an electrical insulating tape, in Greater Hanoi City, Hung Yen
Province, Vietnam, initiating production in May 2015. VINI-TAPE is used for binding cables for electrical appliances
as well as wire harnesses installed in automobiles. It is expected that demand for this product will grow due to thegrowth of emerging economies and the popularization of hybrid and electric vehicles.

Source of value

The Denka Group’s Strategies to Resolve Social Issues
To stay apprised of diversifying local needs, we engage in marketing through our base in New York as well as a
Middle Eastern subsidiary that we have just established in Dubai to secure a gateway to African markets. Moreover,
our technical services include the proposal of various styles, helping us promote new product variations.

Society’s Technological Expectations
・ Development and supply of synthetic
fiber products that accommodate avariety of fashion needs

Customer Response

Wigs and hairpieces made of TOYOKALON boast a soft lifelike feel andare tangle resistant even after long wearing periods. Moreover, the fiber
boasts a unique glossiness that none of our competitors can match.
Because of this, TOYOKALON has long enjoyed a loyal following in Africa
and the United States.

An example ofproducts madeof TOYOKALONVINI-TAPE shipment ceremony

20

Denka Group CSR Report 2015

Denka Group CSR Report 201521

Our Business Strategies

Promoting Our R&D Activities

Fiscal 2014 R&D Achievements

Integrating the Group’s Technological Strengths to Pursue Next-Generation
Product Development Centered on Four Growth Fields
Working toward the goals of the Denka100 management plan, we are promoting
innovation by focusing the Denka Group’s R&D resources on the four growthfields of the environment, energy, infrastructure and healthcare. In concert withthe completion of the Denka Innovation Center main building in April 2014, weestablished three research institutes to operate within it. At these cutting-edge
R&D facilities, we are striving to create and nurture new businesses for the
next generation.
The Advanced Technologies Research Institute is in charge ofdeveloping environmental and energy solutions, such as secondary
batteries and next-generation energy technologies. The Life Innovation
Research Institute, an epoch-making organization that focuses on thedevelopment of new medicines, next-generation diagnostic reagentsand test kits as well as vaccines, was established through the
integration of Denka Seiken’s reagent and vaccine development
section and Denka’s life science development section, with theaim of facilitating innovation. The Infrastructure & Solutions
Development Research Institute drives Denka’s solution
business through the worldwide provision of materials forinfrastructure development while creating innovative, laborNorihiro Shimizu
saving construction methods.

Managing Executive Officer, Research and Development,
Innovation Center, New Business Planning Dept.,
R&D Promoting Dept., Intellectual Property Dept.

● The NIMS-DENKA Center of Excellence for Next Generation
Materials
In tandem with National Institute for Materials Science(NIMS), in June 2013 we established the NIMS-DENKA
Center of Excellence for Next Generation Materials as oneof our initiatives aimed at facilitating inter-organizational
joint research with external institutes and universities.
Bringing together the variety of technologies and ideasthat NIMS and Denka have accumulated, this facility will
help us undertake effective and efficient R&D aimed atcreating innovative products and solution models andthereby enable us to meet diversifying needs outside ourconventional business domains.
Since the successful collaboration of the two entitiesin creating an innovative LED phosphor, this center has
been providing an R&D platform for a variety of ongoingprojects, including the creation of novel inorganic materials
with superior thermal properties for use in electronic circuit
substrates and power devices as well as organic polymers
and biomaterials. This collaborative approach, which goesbeyond the scope of conventional joint research conducted
on an individual project basis, is drawing attention as abest practice model for comprehensive R&D partnerships.

research with strategic partners and other exter nal
organizations while also engaging in in-house R&D. These
initiatives aimed at facilitating open innovation are expected tohelp us create new value into the future.
In particular, the Denka Innovation Center serves as our core
R&D base by providing a platform for strategic cooperation
between industry, academia and the government as well as
for the introduction of external input, thereby speeding thedevelopment of new businesses and products.

22

Denka Group CSR Report 2015

● Other Joint R&D Initiatives
We are stepping up collaboration with overseas researchorganizations and universities to apply a global perspective
to developing new products and businesses. We areengaged in ongoing joint research with Shanghai Jiao
Tong University in China in the field of elastomers while
promoting an R&D project centered on performanceplastics with Singapore’s Institute of Materials Researchand Engineering, a research organization supervisedby that country’s Agency for Science, Technology andResearch. We also actively seek collaboration with otherprivate companies as potential strategic partners.

Initiatives for Fiscal 2015 and Beyond
A lecture at NIMS

Panel exhibition at the 2nd “Denka Day at NIMS”

Completion ceremony at the Denka Innovation Center main building

property evaluation, molding and processing of polymers,
this collaboration has led to the development of nextgeneration synthetic resins, elastomers and polymer
processing products. Some ongoing joint R&D projects
have already yielded samples for potential customers.
Looking ahead, we will accelerate the creation of newmaterials in a bid to accommodate diverse market needs.

A presentation meeting to discuss the progress of collaborative research

Our R&D Policy and Structure
In line with the Denka100 management plan’s growth strategy,
we are striving to focus our management resources on new
growth drivers and to develop next-generation products
through R&D. Targeting the environment, energy, infrastructureand healthcare as these growth drivers, we aim to develop
products that are closely tailored to market needs. Thisapproach requires going beyond supplying generic materials;
rather, we are developing a broad lineup of finished products
and solutions. Accordingly, we are pursuing collaborative

Promoting Our R&D Activities

Under the Slogan “Open Innovation and Challenge,” We Will Step up R&D Aimed at the Creation of New
Products, Businesses and Value.

President Shinsuke Yoshitaka delivering a greeting at the center’s opening celebration● Comprehensive Research Partnership with Yamagata University
In October 2013, we signed an agreement with the
Graduate School of Science and Engineering at Yamagata
University that will ensure a closer collaborative research
partnership. Backed by the university’s excellent basic
research accomplishments in the synthesis, physicalWe will work to promote both internal and external
collaboration, enhancing our core technologies while
integrating information and technological input from outside
institutions. We will utilize the Denka Innovation Center asa core R&D base, thereby accelerating the developmentof next-generation products in the four fields that we havepositioned as growth drivers.
In particular, we consider open innovation to be essential
to the execution of our growth strategies. We will therefore
ask even more research organizations and universities
to engage in comprehensive inter-organizational joint
research along with NIMS and Yamagata University. We will
also promote business-to-business collaboration with ourstrategic partners. Overseas, we will initiate collaborative
research with Indian Institute of Technology to study
elastomers. Plans also call for launching new joint R&D
projects in such promising fields as secondary batteries
and life science.

Denka Group CSR Report 201523

CSR Activities

Denka Group’s CSR
CSR Promotion Challenges, Targets and Performance

Customers

Contributing to Social Development by Helping to Resolve Issues Confronting
Society through Chemistry and Manufacturing
Corporate
GovernanceIn line with its commitment to CSR, Denka has focused on responsible care (RC) activities,
an initiative promoted across the entire chemical industry, while prioritizing safety inall aspects of its business activities. Simultaneously, we have worked to preserve theenvironment, secure product safety and facilitate communication with society.
As a manufacturer, we believe that our mission is to help our customers conserve
the environment and save energy through our products and technologies. In line withthis belief, we have formulated the new corporate slogan “Possibility of Chemistry.”
Furthermore, as we aim to live up to the trust of our shareholders and investors,
we are continuously strengthening our corporate governance. We are alsoenhancing human resource development programs while creating a workplaceenvironment and a personnel system that encourage every employee to realize
their full potential. Having established the Denka Principles as a guide for thebusiness conduct of Group members all around the world, we will strive tocontribute to the creation of a better society, with every employee being fully
aware of their social responsibilities.
Director, Managing Executive Officer,

Challenges
・ Stable supply of highquality products andthe development of
economical products

Major CSR Initiatives Undertaken in Fiscal 2014

Employees

SupplyChainsStakeholders

CSR Promotion Structure
As of August 2015

President

Investor Relations Dept.

Internal Auditing Dept.

CSR Procurement Committee

Legal & IP Strategy Committee

Risk Management Committee

Security Export Control Committee

CSR & Corporate
Communications Dept.

Ethics Committee

To promote its CSR activities, Denka established a CSR
promotion structure spearheaded by the president andconsisting of the CSR & Corporate Communications
Department and other specialized bodies. When major
issues arise, specialized committees under the directcontrol of the president decide on actions to be taken. The
CSR & Corporate Communications Department has beensystematically developing an in-house structure to promote
CSR, facilitating the understanding of all Group employees toensure their wholehearted engagement in CSR activities andpublishing these activities’ results in the CSR report.

・Inclusive and rewarding
workplaces

Aggregated Groupwide environmental information
To ensure the more accurate reporting of environmental data fromGroup members around the world, we reconfirmed such factors as
computational conditions. In addition, we launched a task force aimed
at addressing the problem of climate change and began calculating
certain Scope 3 greenhouse gas emissions.

Product Liability (PL) Committee

CSR Promotion Structure

4.

Streamlined information disclosure items based on materiality
and our value creation process
In the process of compiling the CSR Report 2015, we reviewed
information disclosure items in four categories, namely, 1) corporate
governance; 2) labor management and employee education; 3)
environmental, facility security and worksite safety activities; and 4)
business operations, streamlining said items based on their materiality.
In the category of business operations, we examined each businessmodel in order to reconfirm value creation processes.

Safety Measures Headquarters

Strengthened corporate governanceWe increased the number of outside directors by one while decreasing
the total number of directors by two pursuant to a resolution passed at
the ordinary General Meeting of Shareholders held on June 19, 2015.
We also appointed a Chief Compliance Officer on July 13, 2015.

Responsible Care (RC) Committee

2.

Pages

P14-23・Raising CSR awareness ・Nurture a CSR mindset ・Increased the number of outside directors (from two to three) and decreased
the number of in-house directors (from seven to five) to strengthen corporate
and promoting CSR・Provide training on legal
governancematters
activities
P26-27
・Conducted training sessions related to legal matters at each business site・Strengthening corporate
governance structure and・Provided new recruits and other Group employees with a CSR activitythemed educational program
promoting complianceeducation

Environmental
Activities

3.

・Supply reliable and safe ・Introduced a system to handle customer complaints and requests
products
・Promoted product development aimed at facilitating energy saving andenvironmental load reduction
・Develop and market
products that benefit the ・Developed overseas business network for special cement additives (China
and Southeast Asia)
environment and society
・Launched a new ultra-pure acetylene black production facility

・Prevention of global
・Implement thewarming (CO2 emissions
Fifth Medium-Term
Environmental Plan
reduction), curbing(systematically reduce
chemical substanceCO2 emissions, PRTR
emissions, waste
reduction, technologicalsubstances and other
innovation for energy
environmental loadconservation
substances)
・Promote RC activities

General Manager of Corporate Planning Dept.,
CSR & Corporate Communications Dept.

Our safety activities evaluated by external specialists
Drawing lessons from two major accidents in 2013 (a heat blast froman electric furnace at the Omi Plant and a fire in a non-operational
facility at the Chiba Plant), we formulated countermeasures aimed
at preventing the recurrence of such accidents. We then invited
external safety specialists to examine our safety activities and theaforementioned countermeasures.

Results

RatingB

B

Major Challenges and Goals in
Fiscal 2015 and Beyond
・ Step up R&D through the Denka
Innovation Center to pursue in-housecollaboration as well as joint initiatives
with external organizations
・ Establish a structure for developing
products and businesses that benefit
the environment and society
・Develop a more robust in-house CSR
promotion structure and nurture a CSR
mindset (CDP task force)・Conducted exhaustive on-site inspections centered on facilities handling・Ensuring facility security ・Secure occupational
・Establish the Basic Policy for Workplacehigh-temperature substances and the successive execution of facility
safety and healthand disaster prevention
Safety, Health, Security and Disaster
improvements to prevent the recurrence of major accidents in 2013.
(eliminate occupational
while building andPrevention, which declares “We put
These measures were subject to third-party verification by Dr. Masayoshi
accidents)
maintaining relationships
the utmost priority on worksite safety
Nakamura, a visiting professor at the Graduate School of Tokyo Institute ofof trust with local
and health, facility security and disaster
・Ensure adherence toCTechnology, and were evaluated as appropriate.
basic safety rules by oncommunity members
prevention in all aspects of our business
Failed tosite workers, facilitate
activities.”
・Failed to decrease the number of occupational accidents. Recognizing
・Maintaining occupational
decrease theP28-31that many accidents were attributable to a lack of managerial involvement
worksite communication,
safety and health while
Safety Activities
Bring the number of major accidents
number of ・create a vibrant and lively and poor worksite communications, we will institute a top-down effort
creating a vibrant andand disasters to zero
occupational
encompassing safety basics and the review of case studies to enhance each
workplace and enhance
comfortable working
Continuously improve the number of・
accidents
employee’s safety-related skill level
employee education
environment
occupational accidents
・Introduced a security capability evaluation system to objectively verify safety
・Apply a security
at CM4 styrene monomer production facility at the Chiba Plant. Plans call forevaluation system
introducing this system at other production sites, thereby facilitating safetyoriented corporate culture

Manabu Yamamoto1.

Fiscal 2014
Targets

Denka Group’s CSR

Disclosure
items

・Initiated the construction of the New Omigawa Power Plant and preparatory
survey for the construction of the New Himekawa Power Plant No. 6(Kurobegawa Electric Power Company)
・Implemented the Fifth Medium-Term Environmental Plan
1) Achieved the target for energy consumption intensity:
0.95 compared with fiscal 2012 level (target: 0.97)
Thanks to the improved operational efficiency of chloroprene production
facilities, the successful overhaul of styrene monomer production
facilities aimed at saving energy, the increased capacity of in-househydroelectric power generation facilities and other factors2) Missed the target for CO2 emissions intensity:
P32-341.00 compared with fiscal 2012 level (target: 0.98)
The CO2 emissions intensity of purchased electric power deteriorated
3) Achieved the target for emissions of PRTR substances:
76t (target: 92t)
Made progress in the switchover to aqueous solvents for industrial tapeadhesives at the Chiba Plant
4) Achieved the target for the volume of final waste disposal:
156t (target: 178t)
Thanks to a decrease in overall waste generation and effective utilization
through recycling

・Step up health promotion ・Promoted revisions to the personnel system
Made it possible to change job category from general staff or engineer toinitiatives, including a
specialist
program to address
Introduced the “Engineers’ Promotion Plan” to promote outstanding engineers tomental health problems
advanced positions
・Implement initiatives
Launched the in-house “Meister Certification System” for outstanding employees
under the Action Plan
P36-39Allowed employees to opt for shorter working hours until their child finishes thefor General Businessthird grade of elementary school
Operators (ensure that
Made it possible for employees to apply to change work locations when spouses
each employee takes at
are transferred
least 12 days of annual
Implemented the “Career Returner Plan” allowing the reinstatement of employees
paid leave, streamline
who have resigned due to family duties, including nursing care and child rearing
operations and reduce
overtime work)
・Implemented the Mental Health Promotion Plan

・Sent out questionnaires to the key suppliers who represent 70% of Denka’s・Promote CSR in tandem ・Communicate such
raw material supply chain and obtained responses from the half of recipients,
with supply chains
information as the CSR
with all respondents approving Denka’s CSR Procurement Policies
Procurement Policies
and Guidelines to supply
chains・Promote interaction with ・Provided plant tours and host exchange gatherings at business sites
・Initiatives as a good
throughout the Group
community members
corporate citizen, suchas robust communication and social contribution ・Hosted experimental chemical classes in each region and participated in theactivities at business sites Summer Holiday Chemical Experiment Show for Children
with local communities
throughout the Groupand social contribution
・Helped revitalize local communities through events at DENKA BIG SWAN
STADIUM (to which Denka holds the naming rights) and support for the NIIGATA
activities
・Continue volunteer
GeneralAlbirex BB Rabbits
activities to support
Publicdisaster-stricken areas ・Proactively accepted and recycled for use in cement production waterworks
and Local
sludge and industrial waste from Niigata City and other municipal bodies
Communities
・Dispatched employee volunteers to Minami Sanriku-cho through the DisasterArea Volunteer Support Program・Assisted students who grew up in the vicinity of Denka business sites with theirpursuit of higher education through a scholarship program
・Contributed to youth education and social welfare by sponsoring and assisting
the Fureai Trio concerts
Governmental/
External
Institutions

・Proactive engagementin public policies andactivities aimed at
resolving social issues

・Utilize subsidy schemes to ・Drew on the public subsidy schemes to execute production facility upgrades
aimed at reducing environmental burdens and energy consumption andpursue R&D projects andconstructed manufacturing plants for new energy-saving products
advance energy-saving
and other environmentfriendly technologies

P40

P35
P41

P12-13
P22-23・Implemented new growth strategies toward achieving the goals set forth in the・Ensure timely and・Enhancing corporate
Denka100 management plan (consolidated operating income of ¥60 billion orappropriate information
information disclosure
more in fiscal 2017)
and ensuring its reliability disclosure to strengthen
the relationships of trust ・Executed shareholder returns through the payment of dividends and purchase
Shareholders
P42-43of treasury stocks
and Investors
・Execute the businessplan and return profits to ・Enhanced CSR-related information disclosure while seeking a third-party
opinion to secure its reliability
shareholders

・Implement the Fifth Medium-Term
Environmental Plan (priority items:
the prevention of global warming andcontinuous reduction of industrial waste)・Promote RC activities and reinforce
Groupwide environmental management
encompassing affiliates and overseas
subsidiaries
C
Targets
partially
unmet

B

A

A

・Reduce total working hours andfacilitate the use of annual paid leave
・Encourage employees to take necessary
childcare leave and nursing care leave
・Strengthen countermeasures against
mental health problems while pursuing
the implementation of the Mental Health
Promotion Plan
・Secure more foreign student recruits
and step up long-term training
programs in JapanEngage in a more robust dialogue toward
the promotion of CSR procurement mainlywith suppliers who failed to respond thequestionnaires
・Maintain robust communications with
communities around business sites
while contributing to the revitalization of
local society
・Undertake comprehensive reviewsof the status of local community andsocial contribution activities being
implemented across the Group andprovide feedback to individual businesssites
・Continuously implement volunteer
activities to support disaster-stricken
areas

A

・Continue utilizing subsidy schemes
to pursue R&D and the improvementof energy-saving and other green
technologies and apply suchtechnologies

A・Enhance CSR-related information
disclosure and ensure its reliability
・Promote new growth strategies towardachieving the goals set forth in the businessplan (final year set at fiscal 2017)
・Disclose information on environmental
management including initiatives toprevent global warming

A: Achieved significant results B: Observed some results C: No results were observed D: The level of activity deteriorated

24

Denka Group CSR Report 2015

Denka Group CSR Report 201525

Corporate Governance

Governance

We Will Remain a Company Worthy of Society’s Trust by Maintaining a Fair and Transparent
Corporate Structure.

▼

We have adopted an Audit & Supervisory Board System
as the basis of our Corporate Governance System. Saidboard includes two outside members to assess operations
and management, thereby ensuring that our businessproperly serves stakeholders.
Similarly, the Board of Directors has two (three from
June 19, 2015 onward, details explained in the following)
independent outside members. Moreover, there are no
hierarchical relationships between directors, so each is
free to oversee and supervise business execution.
Moreover, we have in place a Management Committee,
composed of directors, members of the Audit &Supervisory Board and selected executive officers, tostreamline and accelerate deliberation on importantmanagerial matters. For individual items entailing budget
planning and capital investment, we set up special
committees or deliberative councils by function.

With the aim of enhancing its corporate governance, Denka
has clarified the separation of executive officers’ businessexecution and the Board of Directors’ supervisory functions.
To further enhance management transparency andsoundness, we increased the number of outside directors(from two to three) while reducing the total number of Board
members (from 12 to 10) based on a resolution passed atGeneral Meeting of Shareholders held on June 19, 2015.
The three outside directors and two outside Audit& Supervisory Board members are all registered as
independent directors/auditors under the rules ofTokyo Stock Exchange Inc. They maintain sufficient
independence while retaining extensive knowledge in theirareas of specialty, ensuring the stringent supervision of theCompany’s management.
Looking ahead, we will strengthen our management
structure through aggressive expansion while introducing
preventive initiatives as we aim to better adapt to theglobalization of our operating environment and theadvance of information communication technologies.

Corporate Governance System
General Meeting of Shareholders
Appointment/Dismissal
Appointment/Dismissal

Directors (Board of Directors)
Supervision

Election/Dismissal

Operation

ReportRepresentative Directors
Executive Directors
Executive Officers
Business Units

ReportAudit

Affiliates

Appointment/
Dismissal

Audit & Supervisory
Board Members(Audit & Supervisory
Board)

ReportAppointment/
Dismissal

AssistInternal Audits

Audit & Supervisory
Board Members Dept.

Internal Auditing Dept.
Audits within Business Units

Conduct Audit/Auditing Staff

Internal Control Reporting System

Compliance Hotline System

Denka strives to secure the reliability of its financial
statements and, to this end, has set up an internal control
reporting system that complies with Japan’s Financial
Instruments and Exchange Act while conducting audits
in line with the “Standards for Management Assessment
and Audit concerning Internal Control Over Financial
Reporting” formulated by the Business Accounting Councilof the Financial Services Agency. In these ways, we areswiftly addressing any problems that are discovered.
Based on the results of fiscal 2014 assessments
and audits, our internal control report declared that the
Denka Group’s internal control was effective. Moreover,
the attached certificate prepared by the independentaccounting firm that audited the report (ERNST & YOUNG
SHINNIHON LLC) concluded that all significant aspects ofdisclosure were proper.

We have set up and operate the Compliance Hotline in
keeping with the Denka Group Ethics Policy. This systemcovers any shortfalls in our internal control and compliancesystems by enabling us to address any organizational
problems that may arise.
The hotline accepts calls on actions that may or
do violate that policy. The Ethics Committee quickly
addresses reports.
The hotline’s mandate is to be fair and swift anddedicated contacts are in place at the Audit & Supervisory
Board Members Department and the labor union,
which maintain neutral stances, as well as at the Ethics
Committee Administrative Office and general affairs
sections within all offices. People can also send reports
to an external law firm acting as a totally independent
reporting channel. In addition to domestic contacts via
phone or email, overseas subsidiaries have set up theirown hotlines, reflecting our policy of providing various
reporting channels. During fiscal 2014, we registered
four reports internally while receiving one report from anexternal source. These reports were handled appropriately.
The hotline is made known to employees as
it is explained within education programs on the
aforementioned Ethics Policy. In addition, that policy
specifically safeguards whistleblowers from discriminationand mistreatment.

Compliance
Compliance is essential for sustainable growth. We
accordingly adhere to internal rules and government
legislation and refrain from acts that violate moral andethical norms. The Denka Group Ethics Policy wasestablished in 2002 to codify Groupwide standards ofconduct, while the Ethics Committee, chaired by thepresident, oversees the overall compliance structure andreports to management, thereby ensuring adherence
to this policy. Moreover, the Legal, Environment and
Safety, Intellectual Property and other departments
ensure thorough compliance pertaining to their respective
specialties. Employees are provided with complianceeducation under the initiative of the Human Resource
Development Center.

(Including Administrative Dept., Legal Dept., Environment and Safety Dept., and Quality Management Dept.)

Compliance Hotline

Financial Auditor (Auditing Firm)

Audit

Risk Management Overview
President

Comments from Outside Directors

My creed is to make a wholehearted
commitment. By offering reviews from a fresh
perspective, I would like to help enhance
Denka's corporate value.

A

My watchwords are rationality and fairness.
Based on my experience at a global enterprise,
I would like to contribute to Denka's sustainablegrowth and enhancement of corporate value.

A

It is my earnest desire to do everything I can
to further the Company's sound development
and raise its corporate value from a medium-to
long-term global perspective.

Report on emergencies

Q What are your policies and goals as Denka’s outside director?
A

ReportReportOrder
set upRisk-specificcommittees

Other risks

Major crises

Board ofDirectors

CrisisMeasures
Headquarters

設置指示

Risk Management Committee
Proxy organizations according to case
Ethics Committee
ReportSafety Measures Headquarters
Responsible Care (RC) Committee
Product Liability (PL) Committee
Security Export Control Committee
ReportInstruct/monitor

ReportCorporate Governance

Board of Directors and Executive Officers

Corporate Governance Structure

Risk Management
An essential part of corporate governance isunderstanding the diverse and numerous risks inherent
in corporate activities and exerting proper risk control. In
general, each business unit is responsible for identifying
and managing its specific risks. For environmental, safety,
product liability and export control issues that affect theentire Company, we have in place special sections andpermanent committees to handle matters. We havealso appointed a team of specialists to audit our Groupsubsidiaries for their risk management.
We formulated our Risk Management Guidelines
to comprehensively tackle incidents that may have
major impact on corporate activities. In addition to thepermanent Risk Management Committee, we set up
the Crisis Measures Headquarters to act whenevercontingencies arise.

Instruct/monitor

Prime oversight

Yasuo Sato

Tadashi Hashimoto

26

Denka Group CSR Report 2015

(appointed on June 19, 2015)

Akio Yamamoto(appointed on June 19, 2015)• Businesses (including Sales and Manufacturing divisions)• Administration (including Internal Auditing, Environment and Safety, Legaland Accounting & Finance departments)

Denka Group CSR Report 201527

Safety

Our Initiatives to Maintain Safe Operations
To Create a Lively and Sound Workplace, We Are Facilitating Worksite Communication
While Involving All Workers in Safety Activities.
Our Initiatives to Maintain Safe Operations

Fiscal 2014 Accident Records and Safety Assurance Activities
1. Initiatives to Prevent Major Accidents

Putting the utmost priority on safety, we will strive to
become a company deserving the trust of society, withevery employee working together to create a vibrantworkplace where no accidents or disasters occur.
In April 2015, we established our Basic Policy for Workplace Safety,
Health, Security and Disaster Prevention, declaring that we put theutmost priority on safety as a foundation for all business activities.
Setting a new course for the next 100 years, we have reconfirmed
our basic stance of maintaining safety, thus renewing ourcommitment to relentlessly striving to foster a safety-oriented
corporate culture.

We have stepped up initiatives to prevent major accidents
and disasters from occurring, drawing lessons from two
accidents in fiscal 2013, namely, a heat blast from the
Omi Plant’s electrical furnace and a fire during the removalof a non-operational facility at the Chiba Plant.
As for the former accident, we took heed of
instructions from authorities while clearly prioritizing
steps to be implemented to prevent recurrences.
Moreover, we have exhaustively inspected otherfacilities handling high-temperature substances,leveraging insights we gained by studying theaccident. As for the latter accident, we shared suchinformation as the results of fire experiments, which
we conducted to test materials packed inside thedistillation tower, with related departments andcontractors in charge of facility construction.
Moreover, we stepped up mutual inspections
between business sites as well as internal diagnoses
performed by the Head Office departments in chargeof managing facility security. We have also received
objective evaluations from the Japan Society for Safety
Engineering (JSSE), identifying issues that would haveotherwise gone unnoticed. These evaluations have led
us to implement practicaltraining aimed at enhancing
our responsiveness toemergencies and othernew initiatives. (Please also
see page 31 for ongoing
initiatives related to the two
major accidents in fiscal
Mr. Higashi Ito, Chairman of JSSE, giving
2013)
a lecture at the Chiba Plant

Mitsukuni Ayabe
Representative Director,
Senior Managing Executive Officer,
Assistant to CEO, RC Committee Leader

Basic Policy for Workplace Safety, Health,Security and Disaster Prevention

Safety Management Structure
Safety Management Overview（Safety Measures Headquarters, etc.）

We put the utmost priority on worksite safety andhealth, facility security and disaster prevention in
all aspects of our business activities.
To fulfill our social responsibilities as a chemical company,
we put the utmost priority on safety as our basic stance for
operations, thereby working together to create a lively and soundworkplace and becoming a company capable of eliminating
accidents and disasters and worthy of society’s trust.
April 1, 2015
Chair of the Safety Measures Headquarters(President & CEO)President Shinsuke Yoshitaka speaking about safety assurance operations at theShibukawa Plant<General Manager-level>

President(Chair of Safety Measures
Headquarters)

Plant Managers

Assistant to CEO

Relevant head office
departments(RC Committee Chair)

Safety Measures
Headquarters
RC Committee

Environment and Safety
Dept. (secretariat)

HR and Administrative
departments
Business Promoting
departments at eachBusiness Division

Major Safety Activities in Place❶ Annual safety review meetings and on-site inspections
are held at each R&D and manufacturing base in Japanand overseas to assess the implementation status ofoccupational safety management plans and RC policies.
❷ Each chemical plant holds safety
management conferences toreview technological standards
for security and disasterprevention and to inspect thestatus of facility maintenance,
processes for managing facility A meeting on styrene monomerchanges and countermeasures production (Chiba Plant)
against facility accidents and failures.
❸ Our manufacturing frontline leaders spearhead initiatives
to share safety best practices between business sites andwith our affiliates* by hosting safety networking meetingsand other gatherings themed on areas of their specialties.
* Denka Head Office’s Environment and Safety Dept. supervises the safety records
and environmental data of our five major affiliates (Denka Polymer Co., Ltd., Denka
Seiken Co., Ltd., CRK Corporation, Hinode Kagaku Kogyo and Denka Azumin Co.,
Ltd.), thereby assisting them with their safety assurance activities.

2. Initiatives to Eliminate Occupational Accidents to ZeroIn fiscal 2014, the number of occupational accidents
we recorded totaled 22, a minor improvement from
23 in fiscal 2013. We were also able to decrease
accidents involving absence from work. This was
attributable to the success of safety assurance
activities in which everyone working at Denka plantparticipates—whether he/she is from Denka or
subcontractors—and the resulting improvement inworksite communication, especially between thoseengaged in facility construction.
However, we also saw multiple incidents ofaccidents similar to others we have seen in the past.
Among them, the aforementioned Chiba and Omi
plants again experienced accidents in the first halfof fiscal 2014. We reconfirmed that in order to breakthe cycles leading to such accidents, our plants’ top
management and frontline leaders must engage inface-to-face dialogue to overhaul our safety assurance
activities. We will therefore put further emphasis on such
communication with the aim of ensuring that every plant
worker thinks and acts with a sense of ownership.
The number of accidents at our affiliates totaled
seven, representing a year-on-year decrease inoccurrence at both theirdomestic and overseas
business sites. Looking
ahead, we will implement
G ro u p w i d e i n i t i a t i v e s
including networking
meetings between
workplaces and mutual
Checking daily worksite communication
worksite patrols.
before the construction begins

The Number of Occupational Accidents*1
Denka
Directly managed sites

Affiliates

Subcontractors

Absence No absence Absence No absence Absence No absence
Fiscal 2013
Fiscal 2014

1
2

11
12

6
1

5
7

Japan

Total

7
3

16
19

Overseas

Absence No absence

Total

23
22

3
4

Total

7
2

10
6
*1

The Number of Occupational Accidents at Subcontractors
No absence

Absence

Manufacturing

20

20

15

15

10

10

6
0

13

5

7
1
14

0
(FY)

Accident Frequency Rates

2
0

Total

4
1

6
1

Number is calculated on the fiscal year basis.

*2

Denka
Subcontractors
Industry average (JCIA*3 members excluding their subcontractors)

1.4
1.2
1.0
0.8

5

5
5

Loading/unloading
Construction

Absence No absence

0.6

2

7

0.4

4

1
0

0.0

13

14

0.2
(FY)

08

09

10

11

12

13

14

(CY)

*2

Rates are calculated in accordance with the instruction of the labor standards
inspection office and JCIA guidelines.
*3
Japan Chemical Industry Association

28

Denka Group CSR Report 2015

Denka Group CSR Report 201529

Safety

Our Initiatives to Maintain Safe Operations

Comprehensive emergency drill (Omi Plant)

Worksite patrol (Omuta Plant)

Our Initiatives to Maintain Safe Operations

Examples of Our Initiatives to Eliminate Accidents to Zero

Report on Ongoing Initiatives Related to the Two Major Accidents in Fiscal 2013

Kickoff meeting for a zero-accident and disaster activity(Chiba Plant)

In fiscal 2013, we experienced two major accidents,
namely, a fatal accident at the Omi Plant as a result ofheat blast from electrical furnace in June and a fire at the
Chiba Plant in an obsolete distillation tower in the styrene
monomer production facility as it was being taken downin July. Once again, we would like to sincerely express ourcondolences to the bereaved family of the victim. We also
extend our deepest apologies to those living in the areas

near the plants and businesses operating there as well as
relevant authorities for any trouble and anxiety caused bythese accidents.
To prevent such accidents from recurring, we havereconfirmed our basic stance of putting the utmost priority
on safety while implementing countermeasures based on
advice from external specialists. Simultaneously, we arefacilitating a safety-oriented corporate culture.

The status of countermeasures aimed at preventing
the recurrence of the heat blast accident at the Omi
Plant is presented in the diagram below. In October
2014, we received the objective evaluation of thesecountermeasures by Dr. Masayoshi Nakamura, a visiting
professor at the Tokyo Institute of Technology.

Meanwhile, we have safely completed the removal of
the non-operational facility at the Chiba Plant. Drawing
lessons from this accident, we are proactively utilizing
case studies on incidents at Denka and other companies
to enhance our hazard prediction activities.

Countermeasures to Prevent the Recurrence of the Heat Blast from the Electrical Furnace (Omi Plant)
The Mechanics behind theAccident
Safety training incorporating danger simulations(Isesaki Plant)

Safety review meeting (Ofuna Plant)

3. Facility-Related Incidents
Facility-related incidents in fiscal 2014 are as follows:
Fire or explosion: Two incidents (a fire fromexhaust gas combustion treatment equipment at
the Shibukawa Plant and a fire resulting from oilleakage from a punch machine at the Omi Plant)
Facility damage: One incident (a dust collector at
the Omuta Plant burst)
Fortunately, the fires were quickly put out on thefirst attempt. Also, the burst collector caused only
some minor property damage. We have formulated
and implemented countermeasures to prevent therecurrence of such incidents while enforcing the strict
management of the safety system. We are also rollingout these measures to other facilities that have similarrisks.
4. Fiscal 2015 Action Plans
We will ensure that our basic policy of putting theutmost priority on safety is adopted by every worker.
We will also raise their sense of ownership regarding
Companywide safety assurance activities, developinga more robust foundation for safety assurance
operations and facilitating a safety-oriented corporate
culture.

30

Denka Group CSR Report 2015

Lecture on the use of an Automatic External Defibrillator(Shibukawa Plant)

Fiscal 2015 Occupational Safety Management
Plan

1 To prevent the generation of abnormal
air pockets

2 To ensure that excessive pressure is releasedsafely1. Maintain the liquidity of material within the furnace

1. Reinforce the strength of sealants plugging the sectionof furnace wall from which the heat blast blew out
2. Ensure that pressure-relieving safety valves function
properly❶Material adhered to the inside
2. Break up air pockets before they grow too large
Sectional View of Electrical Furnace
walls around the feed chuteand lost liquidity, leading to
Molten ingredients
Electrodes
the creation of a superheated
To safety valves
air pocket in the furnace
Ingredients❷The air pocket was suddenly
filled by a massive fall ofmaterial; the resulting heat
blast vented through a weak
Product
point in the furnace wall

Companywide targets❶ Reduce the number of major accidents anddisasters to zero
❷ Continually improve the occupational safety record

Priority initiatives❶ Create a lively and sound workplace● Facilitate worksite communication to ensure
the ongoing reduction of potential dangers andeliminate accidents attributable to operator action● Promote safety assurance activities in which eachworker is able to grasp the worth of their efforts❷ Step up hazard prediction systems aimed atpreventing major accidents and facility-related
incidents● Leverage case studies of accidents at Denka andother companies● Utilize systems developed by industrial associations
to assist with safety assurance operations

Protection barriers
Danger
zone

Safe
zone

3 To safeguard workers
1. Clearly mark off danger zones with protection barriers
2. Restrict entry into danger zones

Third-Party Opinions on Countermeasures Installed at the Omi Plant
Having performed a two-day on-site inspection and indepth interviews with regard to the accident and thesubsequent countermeasures put in place afterward, I
concluded that the Omi Plant has thoroughly investigatedthe causes of the accident and implemented steps toprevent recurrences based on the following concepts.
Address root causes of accidents to mitigate intrinsic
１．
danger from the process in question
2. Ensure that the safety system is fully functional andready to deal with emergencies
3. Safeguard on-site workers so that they are notharmed even when an extraordinary incident happens
4. Share information on the accident, countermeasuresand residual risk with related persons within andoutside the organization
In addition, I recommend the Company perform
an objective verification of the effectiveness of theaforementioned steps after a certain period of time. These
steps should then be codified into written rules. Related
internal discussions must be documented to preserve thelessons gleaned from the accident for the next generation.
Also, the Company should appoint specific persons to be
in charge of dealing with subcontractors and make surethat subcontractors do the same, so that communication
between two sides is unmarred by omission or oversight.
Having visited manufacturing sites, I was impressedthat every plant worker seemed to be well instructed. They
were properly exchanging courtesies while meticulously
performing the 3-Ss, namely, Seiri (sort), Seiton (set inorder) and Seiso (shine). Although it is predicted thatJapan’s manufacturing industry will face an even harsher
business environment, I believe that the Omi Plant can
thrive by building further on the Company’s 100-year
heritage. I expect it to be a place where
every worker can have great hope forthe future. Have a safe day!

Masayoshi Nakamura
Visiting Professor, Graduate School of
Innovation Management, Tokyo Instituteof Technology

Denka Group CSR Report 201531

Caring for the Global Environment

Status of Fifth Medium-Term Environmental Plan

Focusing on Responsible Care Activities, We Seek to Reduce Energy and Resource
Consumption and Environmental Burdens throughout the Life Cycles of Our Products.

Fifth Medium-Term Environmental Plan
Items

Energy consumption intensity (fiscal 2012 base)CO2 emissions intensity(from energy sources: fiscal 2012 base)
Emissions of PRTR substances (tons)
Final landfill waste (tons)

Tetsuya Shinmura

OUTPUT

Business Activities

373,000kl

Air emissions(409,000kl)

1.32 million t (1.33 million t)
CO2 (from non-energy sources) 0.97 million t (1.01 million t)
SOx
65t
(84t)
NOx
4,252t(4,460t)
Soot and dust
72t
(73t)
PRTR substances*
52t
(67t)
CO2 (from energy sources)

Electricity

1.43 billion kWh(1.41 billion kWh)

Denka Plants

Water

70.36 million t(76.75 million t)

Water discharges

760t
24t

COD

External waste

660,000t

PRTR substances*(674,000t)(860t)(23t)

Soil discharges

0t

(0t)

119,000t(123,000t)

PRTR substances*

Raw materials
Waste generated

Waste reduction(water removal and incineration)(102,000t)

This environmental impact data encompasses Denka’s plants andmain affiliates within those facilities.
Major plants

Omi, Omuta, Chiba, Shibukawa, Ofuna, Isesaki

Major affiliates

Omi Plant

・Denal Silane Co., Ltd., ・Denak Co., Ltd.

Explanation of Inputs●

Fuels are the sum of all fuels used at each production
site, converted into calorific crude oil equivalents. They
include fuels for in-house power plants.

Denka Group CSR Report 2015

12,439t(10,440t)(9,687t)

156t(210t)*

PRTR substances calculation excludes TOYO STYRENE Co., Ltd. and Taiyo Vinyl Corp.
inside the Chiba Plant. Waste emissions calculation excludes TOYO STYRENE Co., Ltd.
Note: Figures in parentheses are fiscal 2013 figures and are provided for the purpose of
year-on-year comparisons.

Chiba Plant

・TOYO STYRENE Co., Ltd., ・Taiyo Vinyl Corp.

Explanation of Outputs
●

●

32

8,363tRecycled
externally

Final disposal(as landfill)

Recycled in-house

98,000t

ResultTarget0.99
1.24(0.99)
95
177

0.97
1.24
(0.99)
90
210

0.97
1.22
(0.98)
92
178

0.95
1.25
(1.00)
76
156

0.96
1.20
(0.97)
88
176

CO2 Reduction Attributable to the Use of CO2 SUICOM
300

CO2 emissions from energy sources represents emissions fromin-house fuel consumption and from electricity purchases. CO2
emissions from non-energy sources cover mainly the portion thatis derived from raw materials.
COD is the BOD discharge into rivers converted into COD values.

●●

External waste recycling covers materials converted
externally into resources or fuel.
Final disposal refers to material buried on Company
premises or at external landfill sites.

The ongoing construction of Denka’s New Omigawa Power
Plant involves building a dam, which will inevitably reducethe volume of water running in the river, as the plan calls
for installing an inflow-type hydroelectric power generation
system. We have been conducting various surveys tofind ways of mitigating the negative impact of the facilityon the river as well as on the landscape and surrounding
environment, including the flora and fauna. The results ofsurveys are reflected in the specifications of this facility.
In particular, we are working with external specialists tominimize the impact on raptor species’ habitat.
As the operational kickoff of this power plant is scheduled
for 2018, we will ensure that careful consideration is given to
the environment in the course of this construction project.

Environment-Friendly Products and Services
Denka boasts an array of environment-friendly products
and services. (Please also see the web-based CSR
Report 2015 references for details.) Environment-friendly
products refer to products capable of contributing, directly
or indirectly, to the reduction of environmental burdens—
including CO2 emissions, resource use and energy
consumption or workload—throughout their life cycles,
including during the manufacturing process.
Among these products are CO2 SUICOM (CO2absorbing concrete), DENKA AN Plate and ALSINK(thermal conductive plates used in the power modules ofrolling stock), all of which make significant contributions to
CO2 reduction. In the following section, we elaborate on
the environmental performance of these products.

Decrease in the volume
of cement used dueto the switchover tothis product

288

250
200

-197

150
100

Carbonization

50

-109

0

Initiatives to Preserve Biodiversity

Products

Fuels

Fiscal 2015

TargetOn December 9, 2014, Denka became a signatory to
the International Council of Chemical Associations (ICCA)
Responsible Care Global Charter 2014, declaring its
support of Responsible Care principles and commitment topracticing such principles alongside other leading chemical
manufacturers around the world.

Overview of Environmental Impacts (totals for all production sites in fiscal 2014)

Fiscal 2014
ResultDenka Signs Responsible Care Global Charter
2014

Executive Officer, Technology Div.,
Leader of CDP Task ForceINPUT

Fiscal 2013
TargetCO2 emissions (kg/m3)

Pursuing lasting trust as an outstanding manufacturer, Denka pursues
CSR activities from the economic, social and environmental perspectives.
As part of these activities, we began disclosing information on ourgreenhouse gas (GHG) emissions employing the CDP* scheme, which
covers the entire value chain. In these ways, we are promoting
environmental management aimed at ensuring the sustainable use ofresources and energy while enhancing our corporate value.
* Carbon Disclosure Project: A London-based NPO run by an association of
institutional investors with the aim of encouraging businesses to disclose theirenvironmental strategies and the status of their GHG emissions.

CO2
In fiscal 2014, the CO2 emissions intensity was 100% of
the fiscal 2012 level, failing to meet the reduction targetof 98% or less. Factors contributing to this result included
the deterioration of CO2 emissions intensity attributable topurchased electricity, which outpaced the effect of suchenergy-saving efforts as facility upgrades.

Caring for the Global Environment

Promoting Environmental Management Aimed at Ensuring
the Sustainable Use of Resources and Energy

EnergyIn fiscal 2014, the energy consumption intensity was 95% of the
fiscal 2012 level, meeting our target of 98% or less. This was
mainly attributable to the steps taken to enhance the efficiency of
our chloroprene rubber production facilities, upgrades of styrene
monomer production facilities and an increase in output from our inhouse hydroelectric power plants. We are continuing to implement
facility upgrades aimed at reducing energy consumption while
enhancing the efficiency of in-house power generation.

-18

-50
Effects
CO2
emissionsdecrease tozero or turnnegative

Conventional concrete

CO2-SUICOM

Volume of CO2 absorbed
into concrete

CO2 emissions from concrete
production process

CO2 Reduction Attributable to the Use of DENKA AN Plate and
ALSINK (Use in an IGBT inverter)
CO2 Reduction EffectEnvironmental
Conservation

5

①

4

②

3

2.3

2

1.0

1
0

③

3.5

1

1

1

Raw material stage – manufacturing stage

When in use

The changeover of rolling stock power modules from a Gate Turn-Off (GTO) thyristor to an Insulated
Gate Bipolar Transistor (IGBT) inverter helps deliver a significant reduction in energy consumption
during operation. The results of our calculations of CO2 emissions reductions that can be achieved
through the use of IGBT inverters incorporating DENKA AN Plate/ALSINK are shown in the graph.
Conditions: An IGBT inverter consisting of a silicon chip, an electronic circuit substrate and athermal conductive plate is used.
CO2 emissions from the raw material processing through manufacturing stages aredefined as 1.
The graph ① shows the reduction per unit cost of components, while ② shows the reduction
attributable to the reduced number of components. The graph ③ shows the reduction purely
attributable to the use of AN Plate/ALSINK.
Note: Calculations are based on the JCIA’s Guideline for Calculating the Reduction in CO2 Emissions.

Denka Group CSR Report 201533

Environmental
Conservation

Initiatives to Secure Our Electricity Supply

Resource Recycling through Cement Production

We Are Striving to Generate Clean Energy to Bolster Our Environment-Friendly Operations.

As a Cement Producer, We Are Committed to Fulfilling Our Social Responsibility to Contribute to a RecyclingOriented Society.

Itoigawa

Since its founding, Denka has been striving to augment
the capacity of its hydroelectric power generation facilities
while constructing new power plants.
In fiscal 2014, Denka obtained permission to increase
its annual water intake and raised the maximum output
of its Oami Power Plant from 25,900kW to 28,400kW.
This move is intended to more effectively utilize the river’s
current during high-water season (from the mid-April spring
thaw to the end of July). As this approach has no impact
on the river environment, we are considering rolling out
similar measures at other power plants. Moreover, we areupgrading the facilities of the Kotakigawa Power Plant toachieve highly-efficient operations, thereby boosting theoverall capacity of our power plants.
In addition, upstream of the Omigawa Power Plant theconstruction of the New Omigawa Power Plant (maximum
output: approximately 8,000kW), launched in fiscal 2014, isprogressing steadily. Meanwhile, Kurobegawa Electric Power
Company, in which we hold half the equity, has initiatedsurveys to assess the potential environmental impact of theplanned construction of its New Himekawa Power Plant No.
6 (maximum output: approximately 27,500kW).
Leveraging a scheme under the feed-in-tariff law for
renewable energy, the Shibukawa and Isesaki plants
have established mega solar power generation facilities,
commencing the sale of electricity to Tokyo Electric Power
Company in July 2013. In November 2014, the Isesaki Plant
increased the capacity of its mega solar power generation
facility by 200kW. The combined maximum output of solar
power generation facilities at these two locations now
amounts to 3,400kW.
To reduce CO2 emissions from our thermal power
generation facilities, we are promoting a fuel changeoverfrom heavy oil to natural gas. At the Omi Plant’s cement
production facility, we operate a biomass boiler fed byscrap wood and utilize waste heat from cement production
for power generation. Looking ahead, we will continuously
promote the effective utilization of clean energy.
Power Sources in Fiscal 2014
Total generated in-house

55%

HydroelectricElectricity purchased

45%

Total consumption

34% (clean)

1.81 billion kWh
Thermal power (natural gas)

19% (clean)

Omigawa Omi

Hayakawa

Himekawa
Kubiki-Ono

Oyashirazu

1

0%
34

Denka Group CSR Report 2015

Cement waste heat

2% (clean)

10
9
8

16

12

2

13

11
17
4

14

Waste and byproducts

Used tires

Sewage sludge

Limestone

Waterworks sludge

Waste plastic

Waste oil

Clay

Incinerator ash

Raw materials

Dryer and raw
materials
grinder

Kotaki

3

Hiraiwa

Fly ashGypsum byproducts

Blast furnace slag

Construction soil

7

Nechi

SilicaFoundry sandIron materials

Slag

Rotary kiln

Biomass boiler for
in-house power
generation

Note: Waterworks sludge, incinerator ash and construction
soil are used in place of clay.

5
6

CementFinishing mill

Woodchips
Waste plastic

15

Recycling Business in Cement Production

Kita-Otari

Hydroelectric
1 Omigawa2 Kotakigawa
3 Oami4 Otokorogawa
5 Yokokawa No. 1
6 Yokokawa No. 2
7 Umikawa No. 1
8 Umikawa No. 2

3,300kW
5,200kW
28,400kW9,800kW
10,000kW
16,000kW3,800kW
4,700kW

9 Umikawa No. 3
10 Umikawa No. 4
11 Himekawa No. 6*
12 Takigami*
13 Nagatsuga*
14 Sasakura No. 2*
15 Kita-otari*

2,600kW900kW
26,000kW
15,000kW
5,000kW
10,200kW
10,700kW* Jointly owned with Hokuriku Electric Power Company

16 New Omigawa*1(8,000 kW) The total maximum output of(Completion scheduled for 2018)hydroelectric power generation: 118,150kW
1 2(27,500kW) Note: Figures represent the amount of electricity that
17 New Himekawa No. 6* ,Denka is entitled to in line with its proportion offacility ownership.

(Completion scheduled for 2022)

Solar*1
ThermalShibukawa*3
IsesakiOmi
Omi cement
Tomi
Chiba

(2,200kW)(1,200kW)
17,000kW
11,100kW
25,000kW
9,000kWGas turbine
Tomi
17,760kW(cogeneration) Chiba
12,720kW
Ofuna
680kW
DieselShibukawa
1,000kW
Total maximum output ofthermal power generation:
94,260kW
Total maximum output of Denka’s
in-house power generation:
212,410kW*1 Output from the New Omigawa Power Plant, New Himekawa Power Plant No. 6 and solar power generation
facilities are not included as these facilities’ sole purpose is supplying electricity to external companies.
*2 Jointly owned with Hokuriku Electric Power Company*3 Denka Solar Power Shibukawa

A Comment from the General Manager
With fiscal 2015 set as the target year, we have striven
to increase the overall capacity of our hydroelectric
power generation facilities 10% compared with the fiscal
2007 levels by enhancing power generation efficiency
and by increasing water intake. Although we missed thistarget, we were able to increase the capacity by 8.5%,
which, I believe, represents a significant step forward
toward the greater utilization of clean energy.
In addition to augmenting the capacity of existinghydroelectric power plants, we have begun building
a new power plant and are giving due consideration
to the surrounding environment in the course of
construction. We will continue tomake the best use of resources
available as we strive to contributeto society through environmentfriendly corporate activities.

Shuichi Hirai
Thermal power (heavy oil)

Recycling Process Flowchart

Kajiyashiki

Umikawa

Initiatives to Secure Our Electricity Supply / Resource Recycling through Cement Production

Initiatives to Utilize Clean Energy

General Manager, Electric Power Dept.,
Technology Div.

The waste material recycling business at the Omi Plant
involves the utilization of coal ash from thermal power
stations, waste soil from construction sites, inorganic
sludge from waterworks facilities, foundry sand left overfrom die-casting and industrial waste from the plant’s
facilities as raw materials for cement. The plant also receives
organic sludge, recycled oil, automobile shredder residue(ASR) and waste plastic for use as fuel sources. Thus, theOmi Plant’s recycling and cement production process isdesigned to minimize the generation of waste emitted to
final disposal sites. This process also utilizes byproducts
from metal manufacturers, including granulated blast
furnace slag from steelworks as well as slag from nonferrous metal production facilities, as cement materials.
In fiscal 2014, Denka used 590 kilograms of waste andbyproducts for every metric ton of cement produced.
The Omi Plant has a biomass power generation facility
fed by scrap wood. This facility contributes a portion of
the power used in cement production, bolstering theplant’s policy of reducing the environmental impact of its
manufacturing activities.
Volume of Waste Accepted (total and per unit of production)
Waste accepted per unit of production
Amount processed(1,000 tons)

External sources

In-house sources

Waste accepted per unit of production (kg/t)

1,200

600

1,000

590 500

800

285

400

600

300

400

200

200

660 100
0

0
05

06

07

08

09

10

11

12

13

14 (FY)

Breakdown of Waste Accepted in Fiscal 2014
Other

Sludge11%

33%

Waste oil and plastic andwood chips

4%

Accepted

Construction soil

8%945,000 tons
Slag and foundry sand23%

Fly ash22%
A Comment from the Manager

Following the 2013 Great East Japan Earthquake,
Denka began accepting waterworks sludge from Niigata
City on the condition that it met the clearance level
for radioactivity (below 100Bq/kg). This initiative is still
under way in line with our policy on social contribution.
In connection with this move, Denka monitors thewaterworks sludge, taking a variety of measurements
and disclosing the results to citizens of Itoigawa City
through the Itoigawa Municipal Office. Because thewaterworks sludge is used as a cement raw material,
we are also posting data on radioactive concentrations
in cement products on our website, maintaining a
stance of proactive information disclosure.
Going forward, we will proactively expand ourfacilities’ waste processing capacities as well as therange of waste materials we accept. Simultaneously, we
will work with other businesses
that emit waste materials andlocal government bodies tohelp realize a recycling-oriented
society.

Satoshi Anzawa
Manager, Resource Recycle Promoting
Section, Cement Department

Denka Group CSR Report 201535

Engaging with Our Employees

Society

Developing a Strong Workforce, We Are Fostering an Organizational Culture That
Allows Every Employee to Realize Their Full Potential.

Nurturing People Who Can Proactively Think, Learn and Take Action While
Creating a Rewarding Workplace
We have positioned human resource development as critical to strengthening ouroperating base and securing business growth. To survive amid a rapidly changing
business environment, people must be action-oriented and capable of making prompt
and accurate decisions. With this in mind, we have established programs aimed at
nurturing proactive minds. These programs are updated every year under the initiativeof the Human Resource Development Center.
Meanwhile, we are working to create a comfortable working environmentthat allows every employee to realize their full potential. For example, weare systematically offering greater career opportunities to highly-motivatedemployees. Moreover, we are eliminating excessive overtime, encouraging thefull use of annual paid leave, upgrading childcare leave plans to help employees
strike a good work-life balance and offering a program that facilitates theManaging Executive Officer,
reinstatement of employees who have left the Company. We are thus striving
Chief Compliance Officer (CCO),
to introduce various programs and plans aimed at promoting diversity.
Representative in China;

Kenji Nakano

Secretary Dept., Administrative Dept., Legal Dept.,
HR Dept., DENKA100 Promoting Dept.

Fiscal 2014 Human Resource Development
Initiatives and Results
1. Mandatory Job Level-Based Training
We provided those in their first and second years witheducational programs aimed at enhancing presentation
skills and boosting business documentation ability,
respectively.
2. Special-Purpose Training❶ In response to the enforcement of the revised law pertaining
to the employment of the elderly, we held the Career andLife Planning Seminar, targeting specialists who had reached
the age of 55. This program was intended to provide themwith options regarding career development to the age of 65
and how to ensure satisfactory lives post retirement.
❷ We implemented overseas training programs for fifthyear technological specialists to encourage the adoptionof diverse perspectives and develop such employees’
competencies as engineers.

Message from the General Manager
We believe human resources are indispensable assets
as they are one of the most crucial management
resources securing Denka’s future growth. Accordingly,
as we have defined responsiveness to change, adrive to pursue higher goals and perseverance in theface of difficult challenges as desired traits of Denka
employees, we ask all employees to proactively think,learn and take action. In support, we are implementing
various human resource development initiatives
to ensure that every employee
can freely enhance their skills
and potentials and pursue selfmotivated career development.

Specialists

General Manager,
Human Resource Development Center

New
Class-9New managers(Class-8)

New
Class-8

New assistantmanagers (Class-7)

New
Class-7

5th-year employees
3rd-year employees
Business unit training

6-month employees
New employees

36

Denka Group CSR Report 2015

Specialist courses

All job categories:
Internal control, CSR, legal
affairs, accounting, information
technology, quality management,
External training sessions (open seminars)
logistics, intellectual property,
Career and Life Planning Seminartrade administration, English
Mental health training sessions (group- and self-care)language and various
correspondence courses

Engineers General staff Administrative skills

New general managers(Class-9)

2nd-year employees

Special-purpose training

Overseas study
program at Beijing
Language andCulture University
Overseas training
program

Technological skills

Technological networking
Technological job categories:
meetings
Engineering and analysis
Process technology training
techniques
Intellectual property and plantmaintenance training
Overseas study program
Overseas training program

GCP Activity Reports and Commendations
Every business unit and team that takes part in GCP
activities formulates its own action plan, with its managers
spearheading efforts to fundamentally improve safety,
quality, cleanliness, human resource development andother concerns. Every six months, initiatives are reported
on and results data shared among Group members
via Denka’s intranet. Departments and teams whose
performance of said initiatives is judged outstanding are
asked to give presentations at the biannual Denka100
presentation meetings. The Company president, officers,
general managers of administrative departments andheads of business sites serve as judges and choose
winners for GCP Grand Prizes, Excellent Prizes andSpecial Prizes. Moreover, the Denka100 Promoting
Committee members separately review activity reports
submitted by all business units Groupwide, and commend
brilliant initiatives with the “GCP Activity Award.”

Fiscal 2014 GCP Activities and Results
Outstanding Initiatives Introduced at the 20th
Denka100 Presentation Meeting Themed on “Change”
On December 3, 2014, we held the 20th Denka100
presentation meeting at the Denka Innovation Center mainbuilding newly completed in April 2014. The event featured
presentations by representatives from ten departments
and units selected from domestic and overseas businesssites and affiliates. With “Change” serving as theoverarching theme, this round focused on reviewing areasin which improvements were made through GCP activities
and how workplaces changed as a result.
Among the departments and units commended was
the Osaka Branch, which has successfully improved
its workplace environment by appointing a number offemale employees as editors of internal magazines—amove that invigorated its GCP activities. Meanwhile,
the Agri-Products Department’s salespeople worked
together to identify technological challenges basedon customer feedback, lending momentum to thedevelopment of next-generation businesses. The 2nd
Production Department of the Chiba Plant strove topass on its technological heritage to younger employees
in concert with its facility integration project aimed
at optimizing the overall production system. Denka
Advantech Private Limited (DAPL), a Singapore-basedGroup subsidiary, carried out praiseworthy safety andquality assurance activities in the course of launching a
new production facility. These activities were evaluatedas outstanding and deserving prizes as they nicely
exemplified the overarching theme “Change.”
GCP
Grand
Prize

Osaka Branch
How do we effect“Change?”

Excellent
Prize

Agri-Products Dept.
Meeting the needs of achanging agricultural market

Denka100 presentation meetings

Takao Shigihara

Content of Human Resource Development Programs (Fiscal 2015)
Mandatory job level-based training programs

The Good Company Program (GCP) is a Groupwide initiative
involving both individual departments and cross-organizational
teams formed to promote collaboration between sections.
In fiscal 2014, a total of 150 departments and teams
implemented their own GCP activities. The DENKA100
Promoting Department supervises these activities while
DENKA100 Promoting Committee members are assigned toeach section and business site to provide support.

Engaging with Our Employees

Our Structure for Promoting GCP Activities

Denka Techno
In-house academic
Schools
meetings• DENKA100
Manufacturing
presentation meetingstechniques,• Results presentationengineering,meetings
R&D, SQC, safety• Technological symposia
and health, plantmaintenance, mental • Analysis researchpresentation meetings
health (group- and• Quality symposia
self-care), legal• Process symposia
affairs, labor
management,
accounting, English
and Chinese

Message from the General Manager
First initiated in 2004, our GCP activities have been
going on more than a decade. Yet, I believe that theCompany can enjoy further growth if each employee
pursues GCP activities on their own, bringing a fresh
perspective to daily tasks. Cumulatively, individual
efforts can make a big difference. Having celebrated
the centennial of our founding, we will pursue thecreation of a “Good Company”
by bolstering our operating base.

Excellent
Prize

Chiba Plant 2nd
Production Dept.
Integration of the ABS andKJ finishing processes

SpecialPrize

DAPL
Building a safe and efficient
production system

Nobuhiko Yagi
General Manager,
DENKA100 Promoting Dept.

Denka Group CSR Report 201537

Society

Engaging with Our Employees

Underlying Policy

Along with our efforts toward the creation of a better
society through our business activities, we have placed
fundamental emphasis on ensuring that all employees cantake pride in their duties while being free to enjoy positiveand fulfilling lives. Specifically, we believe that one key to thesuccess of the new growth strategies under the Denka100
management plan lies in the steady and quiet day-to-day
contributions of individual employees. To become a “Good
Global Company” capable of growing over the next 100
years, we are thus fostering a corporate culture that helps
each employee develop their full potential and maximizesorganizational strength and performance.

Revisions to the Personnel System

As a part of our Denka100 human resource strategies, we areupgrading our personnel system. The new system adopted
at Denka (parent company only) has made it possible for
employees to change their job category between specialists,
engineers and general staff. We have also incorporated the“Engineers’ Promotion Plan” aimed at promoting engineers
who proactively strive to acquire more advanced skills andtechniques, as well as the in-house “Meister Certification
System” for outstanding employees to encourage them toserve as role models for their junior colleagues. From April
2015, age limitations and other conditions that determine
eligibility for these programs have been relaxed. Furthermore,
we have upgraded plans aimed at assisting young employees
and women with their career development, such as childcare
leave and reinstatement programs.

Work-Life Balance

Focusing on helping people strike work-life balance, we arepromoting healthy working styles so that employees can freely
develop their full potential while achieving success in various
aspects of their lives. To that end, two key initiatives are under
way at Denka (non-consolidated basis) to reduce excessive
overtime and encourage the full use of annual paid leave.
To reduce overtime, we are streamlining day to day
operations through such initiatives as GCP activities. Moreover,Wednesday is a “No Overtime Day” for the Head Office alongwith all branches and sales offices. Business units whose staff
are found to be working excessive overtime are subject to onsite assessments. By doing so, we make sure that appropriate
working hour management practices are in place.
We have raised the number of days of annual paid leave
granted to new recruits and employees who have served at
the Company for fewer than four years. In addition, annual
refreshment leave (one day) is available to employees at any
time, from the beginning of fiscal 2014 onward, with the aimof making it easier to take consecutive days of leave.
Other initiatives include upgrading childcare and nursing
care leave plans and facilitating the use of such plans, as
we recognize that employers’ assistance to those who
struggle with child rearing or nursing care issues ultimately
helps to resolve the challenges confronting society.

38

Denka Group CSR Report 2015

Status of Work-Life Balance (non-consolidated basis)
Fiscal 2012 Fiscal 2013 Fiscal 2014
Total working hours

1,928

1,925

1,931

Overtime hours

92

91

100

Average number of days of paid leave utilized

9.2

9.2

9.05

Ratio of annual paid leave utilized

50%

49%

48%

3
(0)

4
(0)

6
(0)

Number of employees who took childcare leave(Of which, male employees)
Number of employees who took nursing care leave

0

1

1

Number of employees who took volunteer activity leave

2

0

0

Denka’s Three-Year Action Plans
Three-Year Action Plans in line with national legislation to support
raising children (non-consolidated basis; launched in April 1, 2014)
1) Raise the average number of days of annual paid leave
utilized per employee to 12 or greater
2) Reduce overall working hours by improving the efficiency
of operations
3) Help young people enhance their understanding ofworking life and seek stable employment through theprovision of internship programs and plant tours; assist
college or university students who have grown up in
vicinity of the Company’s domestic plants in their pursuitof higher education through the provision of scholarship
4) Provide educational support by hosting plant tours andexperimental science classes

Initiatives to Promote Diversity
Respecting the individuality and value system of each
person, we are actively employing diverse human resources
while helping them realize their full potential.
For example, the proportion of women hired as specialists
in fiscal 2015 was 17%. We will continue to strive to raise thisfigure to 20%. Moreover, we revised our personnel system in
April 2015 with the aim of assisting women with their careerdevelopment. The revision allows women to work shorter
hours until their children finish the third grade of elementary
school (previously, this program was limited to the period
preceding the child’s third birthday). Also, employees
whose spouses are transferred by their employers are now
allowed to apply for a change in work location so that they
can continue in service at Denka. Furthermore, we haveintroduced a program to help reinstate employees who havebeen forced to leave Denka due to such private reasons as
the need to provide nursing care, marriage, childbirth, childrearing and changes in spouses’ work locations. Specifically,
this program allows personnel who were 35 or younger at
the time of their resignation to rejoin Denka within three years
of said resignation, providing they subscribed to the program
before leaving. In principle, their wages remain unchanged
from wages paid prior to resignation.

Initiatives to Create a Globally Competitive Workforce
Mental Health Promotion Plan
Given the recent rise in the number of people who suffer
mental illness, Denka has made addressing mental healthissues a critical management task. In addition to mental healthseminars provided at each production site, in fiscal 2013
we established the Mental Health Promotion Plan to launch
comprehensive countermeasures encompassing Head Officeand each branch as well as the Denka Innovation Center.
The countermeasures include training focused on“self-care” and “group-care.” In line with this plan, we
have launched a support structure run by in-house staff
while setting up a 24- hour helpline run by a third party.
Furthermore, we formulated a reinstatement program
for those who are on long-term leave due to mental
health problems. Thanks to these efforts, the number of
employees who suffer mental health problems as of April
2015 decreased 4% compared with April 2013.
Number of Employees Who Participated in Mental Health Training in
Fiscal 2014
Business Site

NumberFiscal 2013

Fiscal 2014

Head Office (specialists)

316

132

Head Office (general staff)

94–

Branches (five locations)

21

131

Innovation Center

35

133

Total

466

396

In line with the Denka100 management plan, we aim to achieve
an overseas sales to net sales ratio of 50% or greater by theend of fiscal 2017. For this, securing and nurturing humanresources with diverse value systems and responsivenessto various business settings is essential. Therefore, we
proactively promote locally hired staff at overseas subsidiaries.
As a result, our business sites in Singapore and China havemanagers and general managers appointed from among
locals. At the same time, we are looking to foreign students
as a source of competitive personnel and have hired two
new recruits from this pool in April 2011, 2013 and 2014. In
April 2015, we welcomed three foreign students from China.
In addition, four externally recruited Chinese nationals havejoined Denka in the last two years.
Since fiscal 2013, five new recruits hired in Singapore by
Denka Chemical Holdings Asia Pacific Private Limited (DCHA)
have been undergoing a two-year training program at businesssites in Japan aimed at nurturing future manager candidates.
In autumn 2015, more participants will enter this program inline with plans calling for providing similar training opportunities
to international employees. In these ways, we are continuing tofacilitate the exchange ofhuman resources among
Group members andthereby nurturing future
global leaders who canspearhead our overseas
expansion strategies.
Singaporean nationals receiving managerial
training at Denka’s Head Office

Engaging with Our Employees

Developing Comfortable Workplaces

Status of Employees (non-consolidated basis) and Diversity Data
Fiscal 2012 Fiscal 2013 Fiscal 2014
Number of employees
Gender
Employment status

2,832

2,873

2,934

Male

2,630

2,660

2,718

Female

202

213

216

Permanent

2,031

2,032

2,152

801

841

782

Average age

39.6

39.8

39.7

Average years of service

17.8

18

18

New recruits

122

103

100

Male

38

34

36

Female3119Female managers

1

1

1

Retiree reemployment rate

88

88

89

Specialists (hired from new
graduates)

Temporary

Ratio of people with disabilities

2.10

2.24

2.14

Resignees

35

30

40

Number of people who resigned within three
years of recruitment

14

4

3

Employing People with Disabilities
We are creating a workplace in which people with disabilities
can work with confidence and realize their full potential.
The HR Department, which provides systematic support
for employees with disabilities, is directly involved inselecting assignments for such employees and engages in
consultation with their supervisors as needed. In fiscal 2014,
the percentage of employees with disabilities stood at 2.14%(non-consolidated basis), exceeding the statutory quota.
Fiscal 2012 Fiscal 2013 Fiscal 2014
The Ratio of People with Disabilities in the Total Workforce

2.10%

2.24%

2.14%

Initiatives with Labor Unions
Denka holds periodic conferences, negotiations andother gatherings with the Denka Labor Union and Denka
Head Office Employees’ Union, maintaining favorable andmutual relationships of trust. In particular, we hold quarterly
meetings to review working conditions and to exchange
various views on this matter.

Message from the General Manager
Denka is undergoing a major change with a newname and corporate logo and slogan. We have alsoestablished the Denka Principles in order to clarify
the Group’s core values. What I believe will prove thetrue game changer, though, will be the contributionsof individual employees faithfully pursuing their dayto-day duties. The HR Department will strive to help
all realize their full potential while
creating a corporate culture thatmaximizes organizational strengthand performance.

Terumitsu Nakano
General Manager, HR Dept.

Denka Group CSR Report 201539

Society

Working with the Supply Chain

Engaging with Local Communities

We Are Implementing Our CSR Procurement Policies and Guidelines in Cooperation with the
Entire Supply Chain.

To Maintain the Trust of Society, We Will Contribute to Local Communities
While Supporting the Upbringing of Future Generations.

Our Policies on Quality Management

The Denka Group recognizes that all of its suppliers are
essential partners in its pursuit of initiatives aimed at fulfilling
its social responsibilities. In line with this recognition,
the Group works hand in hand with its supply chain topromote CSR procurement while clarifying its approachand standards through the CSR Procurement Policies
and CSR Procurement Guidelines that it formulated basedon the Denka Group Guidelines. In fiscal 2014, we sentout questionnaires with regard to our CSR Procurement
Guidelines to key suppliers representing 70% of our raw
material supply chain in terms of transaction value. As ofJune 2015, we had heard back from half those queried,
and all respondents expressed approval of Denka’s CSR
Procurement Policies and Guidelines.
Going forward, we will conduct a detailed analysis of thesurvey results while engaging in dialogue with those whohave yet to reply in order to identify upcoming challenges
and thus determine countermeasures to be implemented.
In these ways, we will step up CSR activities by encouraging
the involvement of suppliers in CSR procurement.

In fiscal 2014, we implemented ongoing quality improvement
activities in line with the following Companywide Quality Policies.

Message from the General Manager
We are striving to enhance our corporate value through
CSR activities with the aim of creating a company
capable of growing over the next 100 years. As partof these activities, we asked our suppliers to fill inquestionnaires with regard to our CSR Procurement
Guidelines, thereby reconfirming the importance ofcommunication with our business partners. Looking
ahead, we will work hand in hand with them to resolve
challenges while maintaining
favorable partnerships and enhancing
relationships of trust.

Masataka Yoshitomi
General Manager,
Purchasing Dept.

Response to the Conflict Minerals Issue
In the United States, listed companies are obliged toreport on the status of the use of conflict minerals to the
Securities and Exchange Commission (SEC) in accordancewith the Dodd-Frank Wall Street Reform and Consumer
Protection Act enacted in July 2010 and rules issued by
the SEC in August 2012. Although Denka is not subject
to this legislation, the Company undertakes tracking
surveys when requested by customers to make sure thatits products are conflict mineral free.

1. Improve quality assurance levels Companywide
2. Enhance technologies to ensure built-in quality
3. Strengthen compliance with laws and regulations andenhance customer satisfaction
4. Raise awareness of employees engaged in
manufacturing
5. Facilitate the adoption of quality control technologies
and methods at each production site

Although we experienced no major quality problems
such as those related to product liability, the number ofcomplaints increased slightly (fiscal 2013: 465 cases; fiscal
2014: 496 cases). In May 2014, we introduced a system
for handling customer complaints on a Companywide
basis, thereby speeding up the registration and analysis
of complaints and ensuring the swift implementation ofcountermeasures. We also began evaluating the impact ofeach complaint in terms of financial loss.
In the face of a global trend toward the tightening of
regulations on chemical substances, we are developinga more robust database of documents related to theregistration and management of chemicals, including
Safety Data Sheets (SDSs). By doing so, we strive toensure strict compliance with laws and regulations.

Life Cycle Assessment (LCA) Initiative
With an eye to securing the sustainability of its corporate
activities and society as a whole, Denka is promoting
LCA initiatives aimed at saving energy and reducing CO2
emissions. These initiatives also help us identify risk andbusiness opportunities.
In addition to calculating the emissions of greenhousegases (GHGs) directly attributable our products’ lifecycles,
we began calculating Scope 3 (indirect) emissions, with the
CDP task force.
Main Initiatives:❶ ‌Prepared a list of environment-friendly productsthat directly or indirectly contribute to environmentalload reduction throughout their lifecycles andcalculated the volume of GHG emissions that canbe curbed through the use of these products❷ ‌Participated in in the carbon-Life Cycle Analysis(c-LCA) Committee hosted by the JCIA andcooperated in the preparation of Guidelines for
Calculating and Reporting the Reduction in GHG
Emissions from the Value Chain (Supplement), a
forward-looking project based on the comparative
analysis of GHG emissions from various
components of the chemical industry’s value chain❸ ‌Providing LCA-related information in response tocustomers’ requests❹ ‌Calculated Scope 3 emission volume

Our Social Contribution Activities

Hosting Experimental Chemical Classes

In line with Article 9 of the Denka Group Guidelines stating“We will contribute to society as a good corporate citizen,”
Denka recognizes that implementing local contribution andcultural activities in collaboration with other community
members is essential to fulfilling its social responsibilities.
Based on this recognition, our key social contribution
initiatives include hosting experimental chemical classes
and plant tours (academics and education); undertaking
cleanup and greenery maintenance activities in neighboringareas (environmental conservation); supporting local
festivals and art and sports events (culture, art and sports);
and dispatching volunteers to aid in reconstruction efforts
in disaster-stricken areas (humanitarian aid).
Not only do we aim to contribute to society throughthese activities, we also consider them as key to facilitating
the understanding of our operations among the generalpublic and enhancing our relationship of trust with
community members. Moreover, we believe that allowing
employees to engage in self-motivated social contribution
activities enables them to attain personal growth and gain
a sense of accomplishment. We have therefore positioned
these activities as opportunities to enhance the value of ourhuman resources.

We hold a number of experimental chemical classes forchildren to provide them with hands-on experience ofchemistry. We hope that, after attending such events,
children will go on to share with their friends, parents andfamilies the wonders and excitement of chemistry that theyexperienced at the classes. This is one way that we nurtureinterest in chemistry and gain people’s confidence in ourbusiness operations.
Specifically, Denka participates in the Summer Holiday
Chemical Experiment Show for Children sponsored by
the “Dream Chemistry 21” committee. Moreover, eachdomestic plant and the Innovation Center host facility
tours and other chemistry experiment shows to which they
invite local children and students. These sites also provide
on-demand lectures on chemistry at local elementary
schools while taking part in community events that involve
demonstrations of chemistry. In addition, the plants accept
interns looking to gain hands-on vocational experience at
production sites.
While supporting the upbringing of future generations, Denka
staff often find themselves
further motivated by theunreserved expressions
on children’s faces ofwonder and excitement
at seeing the possibility ofchemistry.

Revitalizing Local Communities by Promoting
Sports Activities
Denka has been supporting a number of sports events heldat the DENKA BIG SWAN STADIUM for the nearly two years
since renaming this arena following the acquisition of namingrights in January 2014. It is the home stadium for ALBIREXNIIGATA, a professional football team. The stadium also
provided a venue for the 99th Japan National Track & Field
Championships, a nationwide track and field competition.
In addition, having signed a uniform supplier agreementwith the NIIGATA Albirex BB Rabbits, a female basketballteam based in Niigata, Denka is proactively providing
assistance as the Company expects the team to help drive
the revitalization of local society. We will continue to promote
sports activities to create a more vibrant community.

A tour group of ALBIREX NIIGATA
supporters organized by Denka

Members of ALBIREX NIIGATA
exchanging high fives with children

40

Denka Group CSR Report 2015

Working with the Supply Chain / Engaging with Local Communities

CSR Procurement

Summer Holiday Chemical Experiment Show forChildren

Ongoing Social Contribution through Volunteer
Initiatives, Scholarship Programs, etc.
With the aim of supporting the reconstruction of areas
affected by the Great East Japan Earthquake, many Denka
employees have been participating in ongoing volunteer
activities. As of August 2015, Denka had dispatched a totalof 435 employees on 54 occasions to restore agriculture,
fishery and other local industries in Minami Sanriku-cho.
Denka also helps college or university students whogrew up in the vicinity of its domestic plants through the
Denka Scholarship System, which was established on theoccasion of the Company’s 90th anniversary to provide
students with rent assistance.
In addition, each production and business site is engaged
in various social contribution
activities, participating in
local festivals and othercommunity events, taking
part in blood donation
campaigns, cleaning up
roads and ditches andmaintaining the landscape
The Fujimicho Town Association Summer
around their premises.
festival (Ofuna Plant)
Denka Group CSR Report 201541

Engaging with Shareholders

Society

Third-Party Opinion

While Enhancing Communication with Our Shareholders and Investors, We Strive to Reflect
Their Opinions in Business Operations.

Denka’s Policies on Shareholder Returns

Corporate Briefing for Individual Investors

Denka established its Policy on Shareholder Returns
based on a resolution at a Board of Directors meeting held
on November 10, 2014, aiming to return profits yielded byinitiatives executed under the Denka100 management plan
to its shareholders. The Board simultaneously resolved
on a budget for M&A and other strategic investments forfurther growth, with the goal of swiftly achieving an ROE of
10% or greater.

On August 28, 2014, Denka held a corporate briefing forindividual investors at Niigata Convention Center “TOKI
MESSE” in Niigata City. The 12th of its kind, this briefing
welcomed more than 100 attendees and provided themwith Denka’s corporate overview, an outline of its domestic
and overseas business networks and a description of its
flagship Omi Plant as well as of Denka Seiken Co., Ltd., aGroup company specializing in the field of life science. We
also explained the progress of the construction of the New
Omigawa Power Plant and the status of other initiatives
undertaken in line with the Denka100 management plan. In
addition, we clarified our management stance on enhancing
shareholder returns and capital efficiency while aggressively
investing in the aforementioned initiatives for future growth.
At the venue, rapid diagnostic test kits produced by
Denka Seiken were exhibited alongside training uniforms andofficial game balls used by ALBIREX NIIGATA. These exhibits
drew investors’ attention as they attested to our technologicalstrengths as well as our relationship with the local community.

Policies on Shareholder Returns and Budget
for Forward-Looking Investments

1. Policies on Shareholder Returns
Target total payout ratio*: 50%* (Dividends paid + treasury stock purchased)/consolidated net income

2. Methods for Shareholder Returns❶ Cash dividends: Maintain steady cash dividends, with aminimum payout ratio set at 30%❷ Purchase of treasury stock: Flexibly purchase treasury
stock in step with trends in stock prices and the market
environment

3. Budget for Forward-Looking Strategic Investments
After paying out shareholder returns, Denka will appropriate
funds from retained earnings as well as cash inflows tofinance such investments. The total amount budgeted for isapproximately ¥50 billion.
(Over the four years from fiscal 2014 to 2017)

4. Term
Four years ending with fiscal 2017, the target year of the
Denka100 management plan

Results Briefings
Denka holds periodic results briefings for analysts andinstitutional investors, believing that maintaining a proactive
approach to disclosing the latest corporate information toshareholders and investors can enhance their understandingof our business operations and growth strategies.
A results briefing for the fiscal year ended March 31,
2015, was held on May 12, 2015. During the briefing, we
provided our fiscal 2014 financial results and performance
forecasts for fiscal 2015. We furnished updates on our
progress regarding the current growth strategies set forthin the Denka100 management plan and presented the newcorporate logo and slogan and change in company name.
We also gave a presentation on the status of our operations
related to acetylene black, DENKA AN Plate and ALSINK.

General Meeting of Shareholders
Denka’s annual General Meeting of Shareholders provides avaluable opportunity for engaging in direct communication
with shareholders. Accordingly, we work to give shareholders
enough time to examine the reports and items up for vote.
To this end, we post the notice of convocation for the
General Meeting of Shareholders, prepared in Japaneseand English in PDF format, on the Company’s and the Tokyo
Stock Exchange’s websites before sending them out inprint. We have also switched the size of the printed versionof this notice from B6 (128 x 182 mm) to B5 (182 x 257 mm),with the aim of enhancing readability. In principle, the printed
version is sent three weeks prior to the date of the meeting.
Moreover, we try to schedule the meeting at the earliest
possible date to avoid overlaps with similar meetings held byother companies, thereby making it easier for shareholders
to attend. (June 20 in 2014 and June 19 in 2015)
At each meeting, we use narrated videos to supplement
our explanations of reported items while maintaining
exhibition booths to showcase our initiatives and products
and gain greater recognition of our operations.
We have adopted a voting system that allows shareholders
to use on-line voting via
personal computers andcellular phones in addition
to regular post. Denka alsojoined the Electronic Voting
Platform for institutional
investors run by the Tokyo
Stock Exchange.
The 156th ordinary General Meeting of
Shareholders

42

Denka Group CSR Report 2015

Tamio Yamaguchi
Director of Junkan Workers Club*A Landmark Edition Highlighting Denka’s Strategic
Priority and Future-Oriented Business Approach
Just as the Global Reporting Initiative (GRI) Guidelines are
periodically upgraded (now version 4), CSR reporting must
evolve in step with changes in society and its requirements. Thismeans that the reporting company should listen closely to whatsociety and its stakeholders around the world are saying. I haveprovided a third-party opinion for Denka’s CSR reports since
the fiscal 2011 edition and appreciate the Company’s steadyefforts to improve its reporting. In fact, in my two meetings withthe people involved in CSR reporting, which included several
executives and 25 employees, I could see that they did theirbest to communicate societal concerns within the organization
as well as my recommendations to the Company’s frontline staff.
The Denka Group CSR Report 2015 is a landmark edition
celebrating the centennial of the Company’s founding. Typically,businesses highlight past accomplishments in such publications—a
dated approach that does not reflect today’s growing need for
CSR reporting focused on strategic priorities and forward-looking
initiatives. It is therefore impressive that in this report Denka’semphasis is on its growth strategies for the next 100 years, thenewly established Denka Principles and the corporate slogan aswell as other future-oriented initiatives, while introducing its historyof hydroelectric power generation concisely in just two pages. I
believe that the overall content of this report draws the reader’sattention to Denka’s future growth potential rather than its past.
There are two more features that will inspire expectations of
future growth. The first of these is an impressive series of articles
regarding Denka’s business models and value creation flows.
Generally, a “business model” is a system whereby input (capital)
is converted into output through business activities aimed atachieving strategic targets and creating value. Often, it is hard toclearly describe a given business model and I have read many
reports with vague and abstractly defined business models. In
this report, however, Denka has been able to concisely describe
the various complex business models the Group employs and topresent sources of value and created value in a well-organizedmanner. A great deal of discussion and thought went into
preparing these articles and I believe that this report could serve
as a best practice case for the presentation of business models.
The second factor that makes this report stand out isthe inspiring explanation of “Creating Shared Value” (CSV).
Denka has positioned businesses aimed at helping to resolve
social issues as a growth driver. Accordingly, this reportprovides clear-cut examples of such social issues, expected
technological innovation and proposed technological solutions,with each division concisely presenting its growth drivers.
Denka seems to be well aware of the fact that stakeholders’expectations could easily be compromised by only a couple ofaccidents. In this edition, the president clarified his commitment
to taking a lead in safety-oriented activities while chairing the
Safety Measures Headquarters. Moreover, management’s
strong determination to create a safety-oriented corporate
culture is evident in the report’s look at ongoing initiatives
related to the two major accidents in fiscal 2013, a comment
from an outside expert who provided third-party evaluationof these initiatives and the newly formulated Basic Policy for
Workplace Safety, Health, Security and Disaster Prevention.
I was also impressed with the decisive shift that Denka has
made toward global expansion. I’ve seen many companies express
their commitment to achieving “true globalization” while avoiding
the negative corollary effects. Despite their efforts, however, theirpursuit of “true” globalization often leaves the definition of theterm unclear. As it pursues “true globalization,” I expect Denka will
establish a robust structure for promoting CSR initiatives that areon-trend with globalization, setting policies for local activities basedon that structure and ensuring that every business unit throughout
the Group embraces these policies as well as globally recognized“soft laws.” In addition to this, I recommend Denka to becomea signatory to such international initiatives as the UN Global
Compact and to take a role in setting forth global rules for thepromotion of environment-friendly products and technologies—
fields in which the Company itself boasts a broad lineup.
Working to minimize the negative impact of their operations on
the environment and society and to help resolve social issues are
key to businesses fulfilling their social responsibilities. Along withthese initiatives, I believe it is also essential that businesses moveproactively to effect change in society and contribute to the formationof international practices aimed at ensuring sustainability. As Denka is
now taking a step forward toward the next 100 years in 2015, I strongly
believe that it is time for the Company to begin with such actions.
* An NPO dedicated to fostering the harmonious coexistence of society and natural ecosystems throughresearch conducted from a global perspective. It studies and spearheads local community efforts
for creating a recycling-oriented society joining citizens, businesses and governments, presenting
recommendations through CSR workshops and other means.
URL: URL:http://junkanken.com/ (Japanese only)

Editorial Afterword
First of all, we would like to express our gratitude to the readers of the Denka Group CSR Report 2015. In thisedition, we highlighted the history of our hydroelectric power generation in the Special Feature section to celebrate
the milestone year of our centennial while focusing on each Denka100 initiative aimed at securing sustainablegrowth over the next 100 years. We have also reported on Companywide initiatives aimed at establishing a safetyoriented corporate culture that we launched based on lessons learned from two major accidents in 2013.
We would also like to thank Mr. Yamaguchi, who has provided us with a number of valuable suggestions,
including those related to the creation of a structure for promoting CSR initiatives in tune with globalization as
well as product development aimed at contributing to the environment and society. To create an even better
report for fiscal 2015, we will implement comprehensive review on Groupwide CSR activities while enhancing
the content of each activity.
We would like to ask our readers to give us their frank opinions and comments as we aspire to live up
to expectations and trust of all of our stakeholders. Looking ahead, we sincerely ask for your guidance andencouragement.

Noriyuki Shimizu
General Manager,
CSR & Corporate
Communications Dept.

Denka Group CSR Report 201543