CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

Bolstering our capabilities to propose solutions that satisfy needs
The strength as our foundation
As a general manufacturer of high-performance materials—
polyurethane, rubber, and plastic—we have strength in being
able to leverage technologies and expertise built up over longyears of R&D to perform everything from materials
compositions and compounds to design and processing, allin one place. We also have the ability to conduct manydifferent types of product development that suit various needsby combining high-performance materials with foaming andmolding technology.

Creating added value
In addition to simply dealing with our customers’ needs, wealso propose additional and improved functionality as weengage in dialogue to learn more about the usage purpose
and applications, problems, and other details. In theautomotive industry where development schedules are clearlyset, we also do what we call “front-loading.” Establishingcontact with the customer early on, we do our best topropose our own distinctive solutions and communicate thetype of value that we can add.

TOPICS: INOAC R&D Sections
Our R&D is comprised of two sections—the section that develops our own original solutions (INOAC Technical Center Co.,Ltd.), and the section that develops materials and products closely together with our customers (the Global Technology
Development Division). They propose what they develop to the development and sales sections of our various departments,
get them included in product designs in every industry, commercialize the results, and turn them into products.
INOAC Technical Center Co., Ltd.
Our technical center selects topics with a high degree ofnovelty that go beyond the boundaries of our existing business
entities to develop original future-oriented solutions. Humanresources are also particularly important to making that
happen. Therefore, the center also actively dedicates effort tohuman resources development. For instance, the center
actively organizes study sessions for acquiring high levels ofexpertise, including opportunities to learn basic technologies
through industry-academia collaboration.

At a study session

Global Technical DivisionThis division ascertains various industry needs and conducts R&D for materials and products toaddress them. In addition to developing materials, the division also works to establish morein-depth manufacturing (developing production methods) as well as analytical and evaluation
technologies. To acquire the intellectual property rights to the results of these development efforts,
an Intellectual Property Department has been established within the division’s organization. This
group contributes to the creation of both tangible and intangible intellectual property.

Working with the automotive industry
As a company that has strong relationships with automakers,
we are focusing on industry changes such as CASE andMaaS as priority topics. The shift to electric vehicles requires
functionalities such as weight reduction, sound absorption,
soundproofing, thermal insulation, and heat radiation.
Leveraging our strengths in compounding and foaming
CSR REPORT 2022

INOAC Technical Center Co., Ltd.

Sound-absorbing PUF mold component
containing biomaterials

technologies, we are working dedicatedly to develop productsthat automakers desire. We have also established what wecall a “Production Prep Review Panel” that handles thefunction of checking on the progress of production
preparation. For each item that they review, we strive toimprove our quality by achieving the numerical targets andmaking improvements.
15CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

Creating enterprise value
Environmental initiatives

Intellectual property strategy

There is increasing demand for environmental considerations
such as the SDGs to counteract the environmental problems
spreading around us. Taking this social landscape into
consideration, we are developing products that help reduce
CO2 emissions and pushing forward with other eco-friendly
initiatives such as recycling activities and reducing resourceusage.
In product development, we launched development withbiomass levels over 50% among other efforts to shift towardplant-based raw materials as we chart a course away fromfossil fuel-based products.
In our recycling efforts, our activities in the field of material
recycling have been ongoing for many years. We are striving
to establish chemical recycling technologies with even higher
recycling rates, choosing the necessary equipment andconsidering the reaction and equipment conditions for eachdifferent material.

As an initiative to acquire patents in product development, wehave set a goal of 300 patent applications per year. In thedevelopment of our flagship products, we are also working tobolster our competitiveness by owning a concentration ofmultiple patents for each individual product.
Overseas, we are expanding the presence of our R&D
sections globally to address needs that must be met quickly. We
are also establishing a support organization in parallel with thisexpansion in order to facilitate smooth local patent applications.

Polyurethane foam

Decomposition
agent

Decomposition

Regenerated polyol
Impurities
Purification

Regenerated
polyolIllustration of the polyurethane foam chemical recycling process
CSR REPORT 2022

Bolstering development capability throughindustry-academia collaboration
We engage in joint development with universities and otherinstitutions, primarily in medium- to long-term basic
development. Taking on new perspectives and mechanisms in
more specialized fields of research enables us to bolster ourdevelopment capability. To manage progress, we hold internalbriefing sessions twice per year to verify the progress anddirection of our research. Through participation in academicpresentations, we are able to further enhance our cutting-edge
technologies while at the same time sharing our researchfindings with society.
One example of our industry-academia collaboration is“flexible aerogel” high performance thermal insulator, a productof joint development efforts with the Research Institute for
Chemical Process Technology at the National Institute ofAdvanced Industrial Science and Technology (AIST). In light ofworld trends such as carbon neutrality and the SDGs in addition
to Japan’s Top Runner Program, demand for energy saving isincreasing and superior high performance thermal insulators areattracting greater attention. Rigid polyurethane foam andvacuum thermal insulator are well-known conventional thermal
insulators, but they both have issues with molding processability
since they are hard materials. We engaged in this joint research

Patent applications per year
(Applications)

300

280

260

245

237

(Forecast)

2021

2022

(Goal)(Goal)

300(Goal)

200

100
02024

2023

2025

in order to solve that problem. Devising a compound of silica
aerogel and fine cell foam, we successfully developed ahigh-performance thermal insulator with superior properties interms of thermal insulation, processability, and aging
performance.
Development of flexible aerogel high performance thermal insulator

Silica aerogel

Fine cell foam
CompoundFlexible aerogel
16CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

Quality improvement efforts

FY 2022 Quality Policy
1. Practice thorough quality compliance(1) Observing laws (official accreditations & certifications)(2) Quality assurance that meets clients’ requirements

2. Receive quality awards from clients
3. Improve our quality globally(1) Develop local human resources to facilitate global businessexpansion(2) Build an INOAC global standard quality system(3) Improve quality by conducting quality assurance audits ofoverseas business entities* Audit production sites based on an INOAC global standard quality system

4. More robust quality risk management for new and criticalquality products(1) Conduct thorough quality audits for new products and ensure
quality at production launch(2) Thoroughly audit critical quality products (including officiallyaccredited & certified products)

Specific efforts
Auditing observance of official accreditations & certifications
Our products which have received official accreditations orcertifications are registered in the Global Quality Assurance Division
which is in charge of our management system for quality. We verify
whether there are any discrepancies between what is written in theapplications and the corresponding products, production
processes, and related specifications. We also periodically inspect
whether there are any discrepancies between the registeredinformation and the actual products, production processes, andrelated specifications.

For products created using new technologies, new materials, newprocesses or for new usage applications, we strive to prevent
serious quality issues in advance through audits by staff membersincluding our president to determine whether they are ready formarket launch.

Biomass Mark certification

Audit areas

6. Utilize IoT to streamline, reduce labor, increase precision,and reduce workforce in quality-related work

CoolEco hard cold storage agent
made with biomass plastic(1) Increase reliability by automating test work

7. Increase the reliability of products and production
processes by building measurement control systems

Basic approach
We strive to create satisfactory quality for all of our customers
by thoroughly ensuring quality compliance based on ourQuality Policy and strengthening our quality risk management.
We have implemented a comprehensive management system
based on ISO 9001 to guarantee the quality of products thatcan be used safely with confidence, and to provide products
and services that deliver satisfaction. We are also engaged inefforts to improve quality by collaborating with our customers.
CSR REPORT 2022

Audit members
President, Global Technology Development Division, Global Quality
Assurance Division, persons in charge of technology, quality
assurance, and sales in the applicable departments

Material quality, product characteristics, product performance,
structure, exterior, comparison with similar products, productsafety, production safety, quality risks

5. Prevent critical quality problems in advance by thoroughlymanaging implemented changes(1) Thoroughly manage changes in production processes resulting
from changes to materials or compositions

Quality audit of new products

Product component audit for critical quality
We guide audits of critical quality components at our production
sites in Japan and abroad to prevent any serious quality issues inadvance that could threaten the loss of social trust.

QC group activities
We have been carrying out QC (quality control) group
activities for small groups to voluntarily gather on the topic ofquality improvement since around 1965. These activities havesince expanded worldwide. Starting in fiscal 1985, INOAC has
held the World QC & Improvement Competition on a global
scale in order to share quality control activities taking placethroughout the group of companies.

Managing new materials changes
For materials changes with high risk of serious quality issues, webuild frameworks in which the Global Technology Development
Division and the persons in charge of technology and quality
assurance at the departments in charge deliberate over thechanges, and approval is given by the Global Quality Assurance
Division. We are enhancing our quality risk management by making
our management systems even stronger.

Many of our locations still conducted QC group activities infiscal 2021 even as the problems surrounding the COVID-19
pandemic continued. We spread the message about whatthese activities have achieved by selecting some particularly
outstanding examples of such activities and recording a video
about them. This video featuring eight case examples inJapan and eight overseas was recorded in three languages
was streamed worldwide.
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