KURARAY CO., LTD. KURARAY REPORT 2019

Kuraray Report 2019

KURARAY CO., LTD.
Head Office: Ote Center Building, 1-1-3, Otemachi, Chiyoda-ku, Tokyo 100-8115, Japan
TEL: +81-3-6701-1000 FAX: +81-3-6701-1005

https://www.kuraray.com

Issued in May 2019

Corporate Data (December 31, 2018)

In order to make today better than yesterday, and tomorrow
better than today, we at Kuraray have made completely new andCorporate Overview

unique things by harnessing the power of chemistry.

Company Name

Kuraray Co., Ltd.

Representative
Director and President

Masaaki Ito

Established

June 1926

Kuraray’s technologies, products, and services.

Head Office

Ote Center Building, 1-1-3, Otemachi,
Chiyoda-ku, Tokyo 100-8115, Japan

We take pride in this fact and are deeply grateful to our

URL

https://www.kuraray.com

Capital

JPY89 billion

customers around the world for making this possible.

Employees(Consolidated)

10,768Group Companies

77 consolidated subsidiaries,
3 equity-method affiliate

Major Operations

The United States, Germany, Belgium,
China, Singapore

Many industries and people around the world now choose

Since our founding, we have valued the pioneering spirit.
We continually ask ourselves what we can do for the world of
tomorrow and the people living in it.

The Master Trust Bank of Japan, Ltd. (Trust Account)40,318Japan Trustee Services Bank, Ltd. (Trust Account)

24,629National Mutual Insurance Federation of Agricultural Cooperatives

10,882

Nippon Life Insurance Company

10,448Japan Trustee Services Bank, Ltd. (Trust Account5)

6,479

Meiji Yasuda Life Insurance Company

5,969

STATE STREET BANK WEST CLIENT - TREATY 505234

5,851

Japan Trustee Services Bank, Ltd. (Trust Account7)

5,776

STATE STREET BANK AND TRUST COMPANY 505001

5,765

NOTHERN TRUST CO. (AVFC) RE - SSD00

5,442

Stock Information

Shareholder Composition (Shareholding Ratio)

Passed down through the generations, this has been our

Securities Code3405

constant motivation.

Issued and Outstanding
Shares354,863,603 shares

Number of Shareholders

47,260

Domestic Stock
Exchange Listing

Tokyo Stock Exchange

Securities
Corporations
4.09%

Shareholder Register
Agent

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku,
Tokyo 100-8223, Japan

Independent Auditor

PricewaterhouseCoopers Aarata LLC

Other Domestic
Corporations
3.34%
Foreign Investors
30.40%

We still maintain this mission firmly today. It is Kuraray’s value
and our driving force.
We continue to cultivate our unique traits, in order to benefit
society and the environment.

Individuals and Others
12.52%
Shares Held byKuraray Co., Ltd.
1.74%

Trust and Banking
Companies
29.93%

Life Insurance
Companies
7.12%
Major Commercial
Banks and Other
Financial Institutions
10.86%

Kuraray Group Network (As of January 1, 2019)

Our goal is continual corporate growth, and we have alreadytaken the next step forward.

CONTENTS
Introduction

Value Creation Report

03

The Kuraray Group’s History

15

05

The Kuraray Group’s Strengths

07

The Kuraray Group’s Aims

Overview of Our Long-Term Vision andthe “PROUD 2020” Medium-Term
Management Plan

16

Business Overview

09

Financial and Non-Financial Highlights

19

Key Person Interview

11

TOP STATEMENT

19 1 Aiming for Greater Growth through Technological
Development as the Global Leader in Water-Soluble
Films
21 2 Transforming Carbon Materials Into One ofKuraray’s Core Businesses: Toward True Leadershipin Activated Carbon
23 3 Aiming to Create Economic Value by Applying ourTechnological Prowess

KURARAY REPORT 2019

Number ofshares held
(thousands)

Name of shareholders

Note: Kuraray Co., Ltd. holds 6,179,578 shares of treasury stock.

“For people and the planet—to achieve what no one else can.”01

Major Shareholders (As of Dec 31, 2018)

Domestic

Overseas

Group Main Bases
Head Office (Chiyoda-ku, Tokyo)
Osaka Office (Osaka)
Kuraray Trading Co., Ltd. (Osaka)
Kuraray Noritake Dental Inc. (Chiyoda-ku, Tokyo)
Kuraray Plastics Co., Ltd. (Osaka)
Kuraray Engineering Co., Ltd. (Osaka)
Kuraray Techno Co., Ltd. (Osaka)
Kuraray Kuraflex Co., Ltd. (Osaka)
Kuraray Fastening Co., Ltd. (Osaka)

Regional Headquarters
Kuraray America, Inc. (Texas, U.S.A.)
Kuraray Europe GmbH (Frankfurt, Germany)
Kuraray Asia Pacific Pte. Ltd. (Singapore)
Kuraray (Shanghai) Co., Ltd. (Shanghai, China)
Kuraray Hong Kong Co., Ltd. (Hong Kong)
Kuraray India Private Limited (New Delhi, India)
Kuraray South America Ltda. (São Paulo, Brazil)
Kuraray (Thailand) Co., Ltd. (Bangkok, Thailand)

PlantsKurashiki Plant (Kurashiki City, Okayama)
Saijo Plant (Saijo City, Ehime)
Okayama Plant (Okayama City, Okayama)
Niigata Plant (Tainai City, Niigata)
Kashima Plant (Kamisu City, Ibaraki)
Tsurumi Plant (Bizen City, Okayama)
Laboratories
Kurashiki Research Center (Kurashiki City, Okayama)
Tsukuba Research Center (Tsukuba City, Ibaraki)

Plants
Kuraray America, Inc. (Texas, North Carolina, and West Virginia, U.S.A.)
MonoSol Holdings, Inc. (Indiana, U.S.A., Worcestershire, U.K.)
Kuraray Europe GmbH (Frankfurt and Troisdorf, Germany)
EVAL Europe N.V. (Antwerp, Belgium)
OOO TROSIFOL (Nizhny Novgorod, Russian)
Kuraray Asia Pacific Pte. Ltd. (Singapore)
Kuraray Methacrylate (Zhang Jia Gang) Co., Ltd.
(Zhang Jia Gang, China)

Kuraray Chemical (Ningxia) Environmental Industry Co., Ltd.
(Ningxia, China)

Kuraray Korea Ltd. (Ulsan, South Korea)
Plantic Technologies Limited (Victoria, Australia)
Calgon Carbon Corporation(Pennsylvania, Kentucky, and Mississippi, U.S.A., U.K., France, and other countries)

Laboratory
KAI Corporate R&D (Texas, U.S.A.)

KURARAY REPORT 201946

Corporate Statements

Our Mission
We are committed to developing new fields ofbusiness using pioneering technology that improves
the environment and enhances the quality of life
throughout the world.
For people and the planet—to achieve what no one else canOur Values• Respect for individuals
Philosophy• Close cooperation to attain shared goals• Constant creation of new value

Guiding
Principles• Safety is the cornerstone of everything we do• Customers’ needs are our top priority• We act on ideas in the workplace

Our Commitment• We will constantly develop and provide safe, high-quality
products and services.

• We will maintain a sound relationship with society throughgood communication.

• We will strive to preserve and improve the global environment,
and to secure safety and health in all our workplaces.

• We will value all members of the Kuraray community andrespect their rights.

• We will always conduct businesses in a free, fair andtransparent manner.

• We will honor all intellectual property and secure data andinformation in a proper manner.

Foundation for Value Creation25

Corporate Governance

33

Sustainability Management

35

Advancing Resources That Support
Sustainable Growth
35 Technological Development Capabilities
37 Human Resources
39 Safety Activities
41 Environmental Management
43 Trust

46

Corporate Data

Editorial Policy
Starting from 2018, the Kuraray Group has issued the Kuraray Report so that all the stakeholders,
including shareholders and investors, can gain a deeper understanding of the Group’s efforts
toward value creation over the medium to long term.
Kuraray Report 2019 uses the GRI Standards (2016) as references. Comparison between
them is shown on our website. (https://www.kuraray.com/csr/report2019/guidelines)
The Report also concisely conveys the Group’s financial information as well as the important
non-financial information that affects its corporate value, with reference to the International
Integrated Reported Framework from the International Integrated Reporting Council (IIRC), the“Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative
Value Creation” (Guidance for Collaborative Value Creation) from the Japanese Ministry of
Economy, Trade and Industry, and other sources. For detailed information on our products andbusinesses, please visit our website.
Reporting Period
January 1 to December 31, 2018
(Some information after January 2019 is included.)
Scope of the Report
Kuraray Co., Ltd. and the Kuraray Group companies

KURARAY REPORT 201902

Introduction

The Kuraray Group’s History
Moving Through Shifts in Business Structure to Becomea Specialty Chemical Company
Kuraray was founded in 1926 for the purpose of commercializing regenerated cellulose fiber rayon, which
was cutting-edge technology at the time. The company has expanded ever since, with a focus on fibers
and textiles. Following the eventual transition of fiber and textile production moving overseas and otherchanges to the business environment, and drawing on its accumulated base of unique technologies inpolymer and synthetic chemistry, Kuraray has continued to expand in the field of chemical products.
This includes playing a leading role in the global vinyl acetate-related business, as well as strengthening
its business portfolio.
61%

Sales Ratio

2000

44%

Fibers and Textiles
Chemicals

39%

1990
56%

Overseas Expansion
in the Chemicals Business

Creating Highly Functional
Synthetic Fibers
Promoting diversification of our business has yieldedhighly functional synthetic fibers ideal not only for clothing—developing the industrial materials KURALON™
and VECTRAN™ has opened the doors
to other areas of business, too.

We have been reducing and withdrawing businesses
from the multipurpose fiber and textile market due
to decreased market competitiveness.
On the positive side, however, we have achieved
increased sales overseas in the chemicals businessowing to a high market share, and have constructed
production systems at overseas locations.

1983

1986

Commercialized KURALON™ short fiber
for reinforcing concrete

Eval Company of America began production of EVAL™

1989

1996

Commercialized the meltblown
non-woven fabrics

Established a PVA resin manufacturing facility in Singapore

1990

Eval Europe began production of EVAL™

1999

Commercialized VECTRAN™

2001
Withdrew from the rayon business

90

91

Domestic sales (Billions of yen) /03

KURARAY REPORT 2019

92

93

94

95

Overseas sales (Billions of yen)

96

97

98

99

00

01

02

03

Changes in the portfolio

Shifting the Focus from
Fibers and Textiles Businessto Chemicals Business

Chemicals

Chemicals

78%

85%

15%

2018

22%
2010

Challenges for a Renewed
Business Portfolio
Expansion in the Vinyl Acetate-Related
Business through M&As

To maintain sustainable growth as a chemical company,
we are developing and expanding the next pillars
after the Vinyl Acetate Business.

Since 2001, we have been actively pursuing overseas
M&As in the vinyl acetate-related business to advance
downstream developments and business expansion,as well as to strengthen our business portfolio.

Established a PVA resin brand in the U.S.A.

2016
2017
Merged Kuraray Chemical, Co., Ltd.
(activated carbon)

2001

2018

Acquired the PVA- and PVB-related businesses of Clariant AG

Acquired Calgon Carbon Corporation(activated carbon)

2004
Acquired HT Trotplast GmbH (PVB film)

2018

2012

Decided to invest in a plant in Thailand
for elastomers, GENESTAR™, andisoprene chemicals

Acquired MonoSol LLC (water-soluble poval film)

2014
Acquired the VAM, PVA, PVB resin and film businesses of DuPont

603.0

2015
Acquired Plantic Technologies Limited(biomass-derived gas barrier materials)

192.9

Domestic
Sales

32%
410.1

Overseas
Sales

68%

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

KURARAY REPORT 201904

Introduction

The Kuraray Group’s Strengths
The Source of Competitiveness That Creates Unique Products
We at Kuraray have used our unique technical strengths to create products that the world had never seen
before. We were the first company in the world to commercialize KURALON™ (PVA fiber), the first synthetic
fiber produced using made-in-Japan technology. Other businesses we have created include poval resin(PVA resin), which is a raw material of KURALON™; PVA film, which is essential for LCDs; EVAL™ (EVOH
resin), which features excellent gas barrier properties; and a lineup of various commercialized chemical
products that use the world’s first industrialized synthetic isoprene monomers as materials. We havealso launched a wide range of products that have become an integrated part of people’s lives, such as
CLARINO™ (man-made leather), which recreates the structure of natural leather, and MAGIC TAPE™
(hook-and-loop fastener).
Sales of products having the highest global market shares* that we have created using our unique
technologies account for more than half of the Kuraray Group’s total sales in FY2018.

Invisible assets
Information on
particular markets
acquired throughdevelopment
efforts

Accumulationof uniquetechnologies
and know-how

A Wide Variety of
Number One Products
World’s top
market share

Net Sales (Billions of yen)
Others
400
300
200
100
0

2000

2005

2010

2017

2018

Sales of our products having the world’s
top market shares* reached 58% of
the Kuraray Group’s total sales
in fiscal 2018.

Strong trusting
relationships
with our business
partners

Uniquetechnical

Application
development

strengths

capability

Core Competences05

KURARAY REPORT 2019

High-quality
human resources
well-versedin their areasof expertiseKuraray Group Products with Top Market Share Worldwide*

PVA resin

Optical-use PVA film

Water-soluble PVA film

PVA resin was industrialized as a raw material

Used in a wide variety of applications such as

Water-soluble PVA film is used for individual

for the synthetic fiber KURALON™. It has apolarizing film, which is vital to LCD displays

packaging for detergents, cosmetics, food,number of characteristics: it is water soluble,

such as large flat-panel TVs and tablets.

agrochemicals, pharmaceuticals, and otheremulsifiable, resistant to oil and chemicals,

products.

and easy to form into film. It is used in a wide

This film is expected to contribute torange of applications such as paper processing

solving the problem of microplastics because it

agents, adhesives, and as a stabilizer for theis made of a material that dissolves completely

polymerization of vinyl chloride resin.

in water and has a low environmental impact.

EVAL™ (EVOH resin)

KURALON™/KURALON K-II™ (PVA fiber)

Isoprene chemicals

EVAL™ provides excellent barrier properties
against the permeation of gases, superior tothose of any other plastics. It is used widely infood packaging materials to block out oxygen
and preserve the flavor and quality of foods. It isalso adopted in automotive plastic fuel tanks, as itprovides a highly effective barrier against fuel vapor
permeation. It is being used increasingly in a wide
variety of applications, such as vacuum insulation
panels for large refrigerators, in order to improveenergy efficiency.

KURALON™ is a synthetic fiber based on polyvinyl
alcohol (PVA) with several unique properties,
including high tenacity, low elongation, andhydrophilicity. It is widely used in various industrial
fields for applications that include as a substitutefor asbestos in cement reinforcement and as
a separator for alkaline manganese batteries.
KURALON K-II™ is another PVA fiber made by
new production technologies. Water-soluble fibers
with different dissolving temperatures and hightenacity fibers can be obtained.

We apply our unique synthesizing

GENESTAR™

Activated carbon

VECTRAN™

(highly heat-resistant polyamide resin)

Activated carbon is created through a(high-strength polyarylate fiber)

GENESTAR™ is a new highly heat-resistantreaction with gas and chemical agents at high

VECTRAN™ fiber has about seven times thepolyamide resin created with our proprietary

temperatures using a carbon substrate, suchtensile strength of steel by weight and provides

technologies. It is used in electronic parts

as bituminous coal and coconut shells, and has

excellent abrasion, flex fatigue and chemicalof mobile phones, personal computers, andmicropores (diameter: 10 – 200 Å. 10 Å = 1 nm).

resistance, among other physical properties.

the like, and it is applied in backlights for LED

The micropores form a meshwork structure

It is used in a range of applications including

liquid-crystal TV panels and in the automotive

inside the activated carbon, and the walls ofaerospace uses, composites, electronic

field as well.

these micropores give the material a large

components, ropes, and sporting goods.

technologies to produce a cleaner MMB
that is highly safe and easy to handle, as
well as diols, aroma chemical and cosmetic
ingredients, pharmaceutical and agrichemicalintermediates, and more.
*One-of-a-kind products derived from synthetic
isoprene (MMB, MPD, etc.)

surface area (500 – 2,500 m2/g) for adsorbing awide range of substances.
*In-house survey

KURARAY REPORT 201906

Introduction

The Kuraray Group’s Aims
Value Creation Process

Input

Business activities

Strategy of KurarayLong-term vision
Vision of Kuraray

Specialty Chemical
growing sustainably by
new foundational platforms
technologies
UniqueApplication

technical

development

strengths

capabilityCore
Competences

Issues facing
society
Global warming
 epletion ofDwater resources

Financial
capitalStable cash flows

Intellectual
capitalA broad spectrum of base technologies
ranging from materials technologies toprocessing technologies

Food crisis

Basic
Policies
Pursue competitive
superiority
Enhance thestrengths of

A Variety of Number-One

and others

Human capital

Diversity of human resources

Manufacturing
capitalGlobal production system

Social andrelationshipcapitalThe Kuraray Group’s
We are committed to
new fields of business using
technology that improves theand enhances the quality of
the world.
“For people and the planet—to
one else can.”Trust from customers
Trust from the local community

Sustainable Growth through07

KURARAY REPORT 2019

As a corporate group engaged in manufacturing, Kuraray Group creates economic and social value throughproviding its excellent products and services to the market.

OutcomeContribute to Sustainable Society
through Our Businesses
EVAL™
Food packaging materials(Long-term food preservation/
Extension of expiration dates)

PLANTIC™

Company,
incorporating

Bio-based gas barrier material(Long-term food preservation/
Extension of expiration dates)

Contribute to food loss reduction

into its own
Activated carbon
Water purification and wastewater
treatment, air purification

Water treatment membrane

Expand new
business fields

Water purification and wastewater
treatment

PVA-gelWastewater treatment

Contribute to providing cleaner water and air,and help to conserve resources

comprehensive
the Kuraray Group

Products

EVAL™
Plastic fuel tanks

GENESTAR™
Replacement for automotive
metal parts

Contribute to fuel efficiency improvement
by reducing the weight of automobiles

Missiondeveloping
pioneering
environment
life throughout

PVB film
Interlayer for safety glass

Liquid rubber
High-performance automobile tires

KURALON™

achieve what no

Cement and concrete reinforcement

Contribute to safety

Accumulation of Management Resources
Solutions to social issues
KURARAY REPORT 201908

Introduction

Financial and Non-Financial Highlights
Net Sales of Businesses Having
the World’s Highest Market Shares*1

Net Sales / Operating Income
Net sales (Billions of yen) /Operating income (Billions of yen)

Businesses having the world’s highest market shares (Billions of yen) /Others (Billions of yen)(Billions of yen)(Billions of yen)

800

603.0

600

400

65.8

200

0

2010

2011

2012

2013 2014*2 2015

2016

2017

2018

(Billions of yen)

120

400

90

300

60

200

30

100

0

0

349.6

253.4

2010

2011

2012

2013 2014*2 2015

2016

2017

2018

*1 In-house survey

Net Income Attributable to Owners of the Parent /Net Income per ShareTotal Assets / Equity Ratio

Net income attributable to owners of the parent (Billions of yen) /Basic net income per share (Yen)

Total assets (Billions of yen) /(Billions of yen)

60

33.6

40

(Yen)

(Billions of yen)

180

1,000

947.1*3 100

800

90

600

80

400

70

120

96.1
20

Equity ratio (%)

60

(%)

58.6*3

60

200

0

2010

2011

2012

2013 2014*2 2015

2016

2017

2018

0

0

2010

2011

2012

2013 2014*2 2015

2016

2017

2018

0

*3 In fiscal 2018, the total assets increased due to consolidation of Calgon Carbon
Corporation. Meanwhile, the equity ratio declined due to debt financing for its acquisition.

Capital Expenditure / Depreciation and Amortization

Capital expenditure (Billions of yen) /Depreciation and amortization (Billions of yen)

R&D expenses (Billions of yen) /(Billions of yen)

66.8

(%)

25

21.2

56.7

40

20

2010

2011

2012

KURARAY REPORT 20192013 2014*2 2015

2016

2017

2018

5
4

20

60

09

R&D expenses ratio (%)(Billions of yen)80

0

R&D Expenses / R&D Expenses Ratio

3.5

15

3

10

2

5

1

0

2010

2011

2012

2013 2014*2 2015

2016

2017

2018

0

1 Frequency Rate of All Occupational Incidents*4

2 GHG Emissions

Domestic Kuraray Group /Overseas affiliates /Kuraray Group inside and outside Japan

Domestic Kuraray Group /Overseas affiliates(1,000 tons/CO2)

10
8

5.69

6
4

0

2010

2011

2012

2013

2014

2015

2016

2017

1,868*5

1,500

1,320

1,000

3.33
2.08

2

2,000

500

0

2018

2010

2011

2012

2013 2014*2 2015

2016

2017

2018

*4 The number of occupational incidents requiring medical treatment per one million
work hours*5 Calgon Carbon Corporation is included in data for fiscal 2018.

3 Number of Female Employees / umber of Female Employees in Managerial Positions /4 N

Ratio of Female Employees

Ratio of Female Employees in Managerial Positions

Number of female employees (Persons) /Ratio of female employees (%)(Persons)

1,930

2,000

17.9

1,500

Number of female managers (Persons) /(%)(Persons)

20

150

Ratio of female managers (%)

(%)

122

12

120
18

15

8.2

90

9

1,000
16
500

0

2014*2

2015

2016

2017

2018

0

60

6

30

3

0

2014*2

2015

2016

2017

2018

0

Brief Commentary on Non-Financial Information
1 Frequency Rate of All Occupational Incidents
In the Kuraray Group’s business activities, safety is the cornerstone, an absolute requirement that forms the basis for all activities. Realizing workplaces
where people can safely work at ease without accidents is an important theme we need to work on to maintain stable supply of products and continue tobe trusted by society.
Based on this view, the Kuraray Group develops and operates safety management systems and conducts various activities. We are putting various
measures in place to raise employee awareness of safety and establish safe actions and safety checks as routine practices.

2 GHG Emissions
We believe that the Kuraray Group’s mission is to manufacture basic and intermediate materials that will contribute to creating a low-carbon and ecofriendly society and minimize their environmental impact as much as possible. Drawing from this philosophy, the Kuraray Group is continuing to conserve
the environment by promoting measures to combat global warming, curb chemical emissions, and effectively use by adopting global manufacturing.

3 Number of Female Employees / Ratio of Female Employees
4 Number of Female Employees in Managerial Positions / Ratio of Female Employees in Managerial Positions
Kuraray is striving to enhance its organizational strengths by making the most of the abilities of its diverse human resources. From the viewpoint ofpromoting women’s active participation in the workplace, Kuraray is making various efforts with a focus on three points—employing more female
employees, expanding areas of their responsibility at work and improving the retention of female employees.
*2 The account closing date changed from March 31 to December 31 in fiscal 2014. The consolidated financial results for fiscal 2014 covered 9 months, from April to December 2014, inJapan and 12 months, from January to December 2014, overseas. Values shown have been corrected as the results for January to December 2014 for both Japan and overseas.

KURARAY REPORT 201910

TOP STATEMENT

Masaaki Ito
Representative Director and President

11

KURARAY REPORT 2019

Aiming to Become a Company That All People
Surrounding the Kuraray Group Can Take Pride In
The Kuraray Group is aiming to grow sustainably according to the long-term vision set out in “Kuraray
Vision 2026” by further expanding our existing businesses and creating a portfolio of new ones, as well as
bolstering our initiatives to promote diversity and other workstyle reforms.
Please read on to discover our vision and the progress of the “PROUD 2020” medium-term
management plan launched in 2018.

The Source of Our Competitiveness: The Kuraray Group’s Basic Stance
Kuraray began as a fiber and textile manufacturer in 1926
to produce regenerated cellulose fiber rayon. At the time,
the Japanese fiber and textile industry depended on raw
materials and technologies from overseas, but Kuraraylaunched determined initiatives to use only domestic resins
as raw materials for production, and succeeded in 1950 tocommercialize synthetic fiber made with Japanesetechnologies under the KURALON™ brand. It was
Kuraray’s willingness to take on challenges ahead of others
in a new field, on top of its intent to pursue high quality
and high added value, that the Company dared as a fiber
and textile manufacturer to integrate production startingwith resin as the raw material. This spirit reflects the strong
belief of our second-generation president Soichiro Ohara:“It is only through originality that a business can truly
contribute to society and generate profits.” Since day one,

the Kuraray Group has worked tirelessly to develop
technologies and cultivate markets, and has focused on
manufacturing unique products. The words “For people
and the planet—to achieve what no one else can” in the
Kuraray Group’s Corporate Statement express the strong
belief of the Company’s founder and second-generationpresident. These words demonstrate the Kuraray Group’s
stance of constantly providing value to the world. The
result of the Kuraray Group applying its unique
technologies to boldly take on the unknown has been to
create many businesses that have clinched the world’s top
market share in their respective fields. In fact, currently ourbusinesses with world-leading market share account for asmuch as 58% of the Kuraray Group’s total sales and are
the source of our competitiveness.

Targets and Long-Term Vision Toward 2026
Looking toward celebrating its centennial in 2026, Kuraray has
set the vision it aims to achieve along with the basic policy as
outlined in the “Kuraray Vision 2026” long-term vision.
We predict that several factors will inflict dramaticchanges in the Kuraray Group’s business environment in
the medium to long term. These are likely to include majorrevisions to rules, laws and regulations, the emergence oftechnological innovation and advances in digitalization
through information networks and AI. In addition, whiledevelopment of emerging countries is further expanding
the world economy and their presence strengthens, it ispredicted that social and environmental issues such as
water shortages and food crises will surface.
In light of such circumstances, we see increasing
opportunities to apply our technical capabilities in chemistry

to resolve the challenges and problems that may newly
arise from drastic changes that could occur right across theindustrial landscape.
In the long-term vision set out in “Kuraray Vision
2026,” we have defined three basic policies: “Pursue
competitive superiority,” “Expand new business fields,”
and “Enhance the comprehensive strength of the Kuraray
Group.” In addition, we established our targeted vision for2026 as being a “Specialty Chemical Company, growing
sustainably by incorporating new foundational platforms
into its own technologies.” Based on these principles, wewill strive to achieve sustainable growth and build a stablebusiness portfolio through further expanding our existing
businesses and spawning new ones.

KURARAY REPORT 201912

TOP STATEMENT

Progress in the Medium-Term Management Plan “PROUD 2020”and Priority Activities for FY2019
Starting in fiscal 2018, our medium-term management plan
“PROUD 2020” was established with four key
management strategies: the three strategies included in
the basic policy of our long-term vision, with the additionof “Contribute to the environment.” Over fiscal 2018, we
executed concrete actions based on these key strategies.

Also seeing steady progress were initiatives to achieve“Kuraray Vision 2026” through activities that offer a
promising future, such as acquiring Calgon Carbon
Corporation, a global leader in the manufacture of activatedcarbon products, and deciding to invest in a manufacturing
plant for butadiene derivatives in Thailand.

Activities Conducted in FY2018
Optical-use PVA film: Decided on capital expenditure to cater to market needs
PVB film: Increased the production capabilities for highly functional film at our Korean plant
Pursuecompetitive
superiority

 ater-soluble PVA film: Finished increasing the production capabilities in the U.S.A., and decided to invest inWbuilding new plants in the U.S.A.
EVAL™: Boosted production capabilities in the U.S.A. and began running at 11,000 ton/year
Isoprene: Decided on investing in new plant facilities in Thailand efined target areas for the newly established Corporate Marketing Group, and commenced crossD
functional work

Expand new
business fields

Enhancecomprehensive
strength of theKuraray GroupVECSTAR™ (liquid crystalline polymer film): Increased production capabilities in response to higher demand
PLANTIC™ (bio-based gas barrier material): Decided to invest in resin production facilities in the U.S.A. withthe aim of expanding this businessPromoted integration with Calgon Carbon Corporation, after completing acquisition in March 2018
Installed the Global SAP System
Strengthened initiatives for workstyle reforms

Priority Activities for FY2019
EVAL™: Consider investment for a new plant
Water-soluble PVA film: Consider plots and investments for building new plants
Pursuecompetitive
superiority

Isoprene: Proceed with the project for the new plant in Thailand
Calgon Carbon Corporation: Consider investment to increase capabilities in the U.S.A.
Meltblown nonwoven fabric: Decide on boosting production capabilities
Strengthen initiatives that use IoT to improve production efficiency and quality

Expand new
business fields
Enhancecomprehensive
strength of theKuraray Group ECSTAR™ (liquid crystalline polymer film): Consider investment regarding facilities for full-scale massV
production
Search for new opportunities and create new uses by strengthening corporate marketing functions
Promote integration of Calgon Carbon Corporation businesses, and realize synergy
Promote workstyle reforms

The planned amount for capital expenditure during“PROUD 2020” was initially determined as 250 billion yen.
However, owing to investments for the butadienederivative manufacturing plant in Thailand and to increase
the activated carbon production capabilities to further
expand this business, we forecast that the three-year

13

KURARAY REPORT 2019

investment figure will exceed 300 billion yen. Moving
forward, we will take care to maintain healthy finances
while investing in infrastructure to reinforce our futurecompetitive strength. In this way, we are focusing on
building the Kuraray Group’s corporate value with a mediumto long-term mindset, in view of our centenary in 2026.

Recognizing Problems and Taking Concrete Approaches to Sustainability
Recent years have seen a demand for corporate
management to carry out proactive initiatives forsustainability. To be good corporate citizens, companies
must increase transparency in their management andconsider society and the environment, as well as makemore proactive contributions. These activities work as adriving source for long-term growth in companies and help
create a sustainable society.
Based on its mission “For people and the planet—toachieve what no one else can,” the Kuraray Group has
aimed to develop businesses that contribute to society
ever since its establishment. The United Nations recently
adopted the Sustainable Development Goals (SDGs)—17
goals and specific aims for achieving them—in order torealize a sustainable world by 2030, and the Kuraray Group
has already put some of these goals into practice. For
example, the resin EVAL™ has excellent gas barrier
properties, and can be used as a packaging material tostore food for long periods and thereby help reduce foodloss and wastage. Hollow-fiber membranes and activatedcarbon are also essential products for supplying safe water.
Activated carbon is a particularly promising product, as its
material properties make it easier for a variety of harmful
substances to adsorb and desorb. We will develop theactivated carbon business into a major pillar, as the productcan contribute toward environmental improvements in avariety of fields.
Problems related to microplastics (ocean plastic) andplastic waste are other environmental issues that wemust concentrate on as a chemical manufacturer. Specificcircumstances in each country and region mean there iscurrently no definite course of action in terms ofgovernmental policy or regulations. The Kuraray Group willorganize a global system to gather accurate informationfrom each country and region, and will carefully consider
what actions to take based on this information. The
Kuraray Group also makes biodegradable products derived
from biomass, such as the barrier material PLANTIC™,
and will offer solutions for environmental issues withthese products in a precise and timely manner to cater tomarket needs. In addition, we appreciate that it is vital toshare information with stakeholders regarding the type ofproblems we aim to solve as we conduct these activities,
as well as the criteria for setting our goals. Moving
forward, we wish to offer additional information where itis needed.
I continually share with employees my wish to makethe Kuraray Group a “safe and secure company,” “acompany that people can take pride in” and “a company
growing sustainably by incorporating new foundational

platforms into its own technologies.” In particular, it isessential to further reinforce our system of compliance inorder to earn the trust of people around the world as atruly global corporate group, and to be “a company thatpeople can take pride in.” We understand workstylereform is to mean the creation of a workplace where adiverse range of people can be confident in theirindividuality as they work, and where people can feel
more comfortable at work and experience high job
satisfaction. We are conducting Group-wide initiatives toachieve such workstyle reforms, including those toencourage greater participation by women in theworkplace. In addition, we have made progress inachieving diversity among the management, with afemale external director and corporate auditor newly
joining us in fiscal 2019, together with four foreign
executive officers (one of whom is a managing executive
officer). We will continue promoting diversity across theGroup by building a “safe and secure company” and “acompany that people can take pride in.” On top of these
initiatives to reinforce our foundations, we will continue
with our aim to be a proud company “growing sustainably”
by solving social and environmental issues through“incorporating new foundational platforms into our own
technologies.”

KURARAY REPORT 201914

Value Creation Report

Overview of Our Long-Term Vision and the “PROUD 2020”
Medium-Term Management Plan
The Kuraray Group’s Mission
We are committed to developing new fields of business using
pioneering technology that improves and enhances the qualityof life throughout the world.
— For people and the planet—to achieve what no one else can —“Kuraray Vision 2026” Long-Term Vision
Vision for Kuraray

Specialty Chemical Company growing sustainably by incorporating
new foundational platforms into its own technologies

Basic
Policies
Pursue competitive superiority

Expand new business fields

Increase existing businesses’
competitive edge

Strengthen our business portfolio while
expanding the scope of operations

Enhance comprehensive strength of the Kuraray Group
Establish global business foundations to ensure
the realization of the vision

Medium-Term Management Plan “PROUD 2020”

Expand new business fields

Pursue competitive superiority
Develop high-value-added products andapplications based on customer needs
Create more demand in emerging
countries
Achieve innovation of production andoperational processes through use of IoT

Enhance comprehensive strengthof the Kuraray Group
Establish global business foundations
Create a workplace in which employees
find their job rewarding
Cultivate a strong culture of unity within
the Kuraray Group15

KURARAY REPORT 2019

Medium-Term
Management Plan“PROUD 2020”
Making Kuraraya Company That People
Can Take Pride In

Create new businesses by improving
on Kuraray’s own technologies andincorporating external ones
Capture new business areas by M&A
and alliance
Establish a new business model bundlingtechnology and services

Contribute to the environment
Provide products contributing toenvironmental protection
Put in place a production process with low
environmental footprint
Provide products that help enhance qualityof life (QOL)Business Overview
Segment name

Vinyl Acetate

Medium-term management plan/strategies for each business
PVA resin• Shift to high-added-value products• Optimally manage global production operations

Review of the medium-term management plan
• Decided to withdraw from the EVA emulsion business as part of a shift to high-addedvalue products• Boosted the production rate at U.S. plants and propelled global optimizations in the
supply chain• Expand and maintain a high market share in line with

Percentageof net sales

38%

Isoprene

Percentageof net sales

8%

Functional Materials

Percentageof net sales

18%

increasing demand for LCDs
Optical-use PVA• Add new functions and enhance workability to satisfy thefilmlatest market and customer needs

Water-soluble
PVA film• Execute the timely expansion of production facilities in stepwith growth in operations• Allocate development resources to new industrial applications• Finished increasing production capabilities in the U.S.A. in response to rising demand
for single-use detergent packets, and began production. Decided to build new plants
in the U.S.A. for further business expansion• Promoted development activities for new uses, including single-use packets forpharmaceuticals, cosmetics, and food

PVB film• Bolster the development and sale of highly functional films forautomobiles• Expand sales of high-strength films for construction• Began production of highly functional film in our Korean plant, and launched sales• Achieved sales expansion with SentryGlas™ for construction

EVAL™

• Create new demand in emerging countries and boost sales• Expand EVAL™-related operations to help reduce food wastage• Continued activities to cultivate demand in developing countries, despite the impactof fire in U.S. plants• Proposed extension of expiry dates using EVAL™ for food and logistics industries
with an aim of expanding business

Isoprenechemicals• Pursue expansion of one-of-a-kind products• Commercialize newly developed products, including oil-gas
chemicals• Achieved sales expansion in one-of-a-kind products, such as MMB and MPD

Elastomer• Build a more sophisticated portfolio of products by enhancing
their functionalities• Expand global sales of liquid rubber• Added the SEPTON™ BIO-series, a new brand using bio-derived farnesene, to our
product portfolio• Engaged in marketing to promote the use of SEPTON™ in cable gels for protecting
optical fiber• Expanded the adoption of liquid rubber by domestic and overseas tire manufacturers

GENESTAR™

• Expand the range of products for automotive applications,such as components for on-board electronics• Develop new polymers• Strengthened marketing regarding automotive applications, including components foron-board electronics• Promoted development activities for a new functional polyamide resin

Methacrylic• Expand the sales of newly developed products, such as soft
resin and multi-layered substrates• Bolster sales of highly functional grades of optical-use resin• Steadily expanded the adoption of multi-layer sheets for on-board displays• Achieved sales growth in highly functional grades of resin to achieve thinner andlighter laptop computers

Medical• Expand sales of CAD/CAM products (e.g., zirconia blocks)• Upgrade communication of information to users (dentists anddental technicians)• Took the lead in the industry by commencing sales in Japan, the U.S.A., and Europe
for zirconia blocks that deliver outstanding aesthetics• Released an app with videos describing how to use our products, as part of user
service enhancement

Carbonmaterials• Swiftly achieve synergy via collaboration with Calgon Carbon
Corporation• Expand the range of products for automobile canisters• Expand the sales of products for battery applications(capacitors and lithium-ion batteries)• Moved forward with the integration by streamlining sales bases that overlap with
Calgon Carbon Corporation, among other activities• Began considering improving the capabilities of Calgon Carbon Corporation• Promoted joint research activities with Calgon Carbon Corporation to enrich our
product lineup for applications in automobile canisters

CLARINO™

• Roll out products targeting luxury brands• Achieve full-scale entry into the automobile interior market• Made progress with new adoption by luxury brands, and increased the sales volume• Accelerated development activities to enter the automobile interior market

Fiber Materials• Promote the VIP project for KURALON™
• Expand the VECTRAN™ business• Expanded the adoption of KURALON™ for industrial filaments with revolutionary
production process VIPs
• Achieved progress in expansion with high-added-value uses of VECTRAN™

Lifestyle
Materials• Expand sales of new meltblown nonwoven fabrics• Accelerate expansion into Southeast Asia

• Grew sales of high-added-value products in the meltblown nonwoven fabric business• Further developed the Southeast Asian market with KURAFLEX™ counter cloths

Fibers and Textiles

Percentageof net sales

9%• Decided to increase production capabilities in response to increasing demand for widefilms in large LCDs

Trading• Increase the scale of business in Asia

Percentageof net sales

19%• Expand revenue in the fibers and textiles business• Achieved progress in strengthening integrated production spanning raw material toproduct, and in creating high added value through investments to bolster the sewing
business in Vietnam• Strengthen initiatives with high-value customers• Grew sales in Asia for resin and synthetic products• Launch new businesses

OthersPercentageof net sales8%• Accelerate market cultivation of products from new
businesses• Increased sales of VECSTAR™ (liquid crystalline polymer film) for 5G high-speed
networks, and boosted our production capacity• Expanded the adoption of polishing pads for semiconductors, mainly within Japan

KURARAY REPORT 201916

Value Creation Report Business Overview

Segment name

Net sales (Millions of yen)

Operating income (Millions of yen)

Vinyl Acetate
In this business, we manufacture and sell PVA resin,which features water solubility and adhesive properties,
PVA film, which can be applied to liquid crystal displays
and is also used for single-use packets for detergentsand so on; PVB film used as an interlayer for laminatedglass; and EVAL™, which has an excellent gas barrier
property.

300,000

266,894

279,379

90,000200,000

60,000100,000

30,000

0

2017

2018

0

Isoprene
In this business, we manufacture and sell synthetic
isoprene chemical products; and SEPTON™, athermoplastic elastomer that is a derivative of synthetic
isoprene chemical products; as well as GENESTAR™, a
new polyamide resin with excellent heat resistance.

9,000

90,00061,6192017

54,739

2018

9,010

7,272
60,00056,36657,2073,000

30,000

0

6,000

2017

2018

0

2017

2018

Functional Materials
In this business, we manufacture and sell methacrylate
resin, which boasts excellent weather resistance; dental
materials which enable repairs that closely resemble
natural teeth; activated carbon, whose adsorption
properties are used to purify water and air; equipment
for water treatment; and others.

150,000

131,533

9,000

6,665
100,000

6,000

4,396
50,000055,199

2017

3,000

2018

0

2017

2018

Fibers and Textiles
In this business, we manufacture and sell CLARINO™, a
man-made leather with a structure and functionality as
elaborate as natural leather; vinylon fiber, used in
automotive components and to reinforce concrete;
KURAFLEX™ nonwoven fabric, used for lifestyle
products and industrial materials; and MAGIC TAPE™
hook-and-loop fasteners.

90,0009,000

66,3696,279

60,0006,000

30,000

3,000

0

2017

7,551

64,716

2018

0

2017

2018

Trading
In this business, we manufacture and sell polyester andother fiber and textile products, as well as export/import
and wholesale resin and chemical products.

150,000

131,734

138,848

6,000

100,000

4,000

50,000

2,000

0

2017

2018

0

3,924

2017

4,215

2018

OthersIn this business, we manufacture and sell highly
functional membranes and systems used in water
treatment, and conduct the engineering business, aswell as manufacture and sell VECSTAR™, a liquid
crystalline polymer film used mainly for flexible circuitboards.

60,000KURARAY REPORT 2019

6,000

40,0004,000

20,000

2,000

0

17

58,02551,399

2017

2018

0

3,022
1,178

2017

2018

Major products

KURARAY POVAL™, ELVANOL™ (PVA resin)

TROSIFOL™ (PVB film and Ionoplast interlayer)

Water-soluble PVA film

Optical-use PVA film

Paper/fiber processing
agents, adhesives, stabilizer
for polyvinyl chloride
polymerization and others
EVAL™ (EVOH resin)Interlayer film for safety glass

Plantic™ (Bio-based gas barrier material)
Food packaging, automotive
fuel tanks, stain-resistantwallpaper, vacuum insulation
panels, and others

SEPTON™ (Thermoplastic elastomer)

Isoprene chemicals
Cleaner, aroma chemical
and cosmetic ingredients,
pharmaceutical and agrichemicalintermediates, and others

Liquid rubber

Electronic parts of smartphones
and personal computers,
LED reflector applications,
automobile parts and others
Dental materials

Light guide plates for LCDs,
automobile parts, signboards,
construction materials andothersCLARINO™ (Man-made leather)
Men’s and women’s shoes,bags, athletic footwear, large
inflatable sports balls

MAGIC TAPE™ (Hook and loop fastener)
Clothing, sporting goods,
industrial materials and others

Additive agent for automobile
tires and others

GENESTAR™ (Highly heat-resistant polyamide resin)

Adhesives, molding materials
and others

Methacrylic resin

Food packaging materials

Substitute for rubber,
automobile parts, electronicparts, stationary, toys,
sporting goods, and others* One and only products derived fromsynthetic isoprene (MMB, MPD, etc.)

KURARITY™ (Acrylic thermoplastic elastomer)

Single-use packages fordetergents and others

Polarizers for LCDs andothersActivated carbon
Various organicand inorganic
dental materials

KURALON™ (PVA fiber)

Water purification,
wastewater treatment,
capacitor electrode materials
and others

KURAFLEX™ (Nonwoven fabrics)
Reinforcing material for
cement and concrete,
automotive brake hoses andothersDaily goods, industrial
products (wipers, filtration
media, automobile
applications) and others

VECTRAN™ (High-strength polyarylate fiber)
Aerospace, composites,
electronic components,
ropes, sporting goods andothersPolyesterNonwoven fabrics, industrial
materials, woven fabrics, knit
fabrics, tents, sheets andothersAqua business
Water purification,
wastewater treatment, ballast
water management systemand others
VECSTAR™ (Liquid crystalline polymer film)
High-speed signaltransmission flexible printed
circuit boards and others

Changes in Business Activities
Since fiscal 2018, we have implemented the first-in, first-out (FIFO) method as a unified
evaluation method for products, raw materials, and semi-manufactured items among our
audited assets. We have used figures after post-facto processing for business results inthe previous fiscal year. In addition, we have made changes to the service life and themethods of depreciation and amortization regarding tangible fixed assets, as well as tothe method of allocating costs shared across the Group to each segment.
We have also moved the CLARINO™ business from the functional materials
segment to the fibers and textiles segment, following organizational reforms effectivefrom January 1, 2018. All segment information is based on the categories as they areafter this change.
Finally, Calgon Carbon Corporation has been included in consolidated results fromJanuary 1, 2018 onward.

KURARAY REPORT 201918

Value Creation Report

Aiming for Greater Growth throughTechnological Development as
the Global Leader in Water-Soluble Films
P. Scott Bening
Executive Officer
General Manager of WS Film Division,
President of MonoSol, LLC.

Key Person Interview

1

Corporate Culture that Pursues Superior Technology and High Quality
MonoSol specializes in manufacturing water soluble films.
The company has continued to steadily grow since its
founding in 1953 in the U.S. state of Indiana, focusing
mainly on industrial applications for release films andother products. Every year since its integration into theKuraray family in 2012, MonoSol has registered doubledigit growth, with sales of single-use (water soluble unit
dose, or SUD) pods for laundry and dishwashingdetergents—created using technology and know-how
acquired for industrial film applications—leading the way
and solidifying our position as the world’s No. 1
manufacturer of water soluble films. We are currently
leveraging these films’ unique properties, such assolubility and biodegradability, to create packaging
materials with an even smaller environmental impact. In
addition, we are branching out from our mainstay singleuse laundry detergent pods with an eye to developing awider range of packaging material applications, from water
treatment and cosmetics to food products.
MonoSol’s consistent growth is attributable to its
proprietary film formulations and constantly improving
manufacturing systems as well as efforts to maintainrelationships and enter into deep collaboration withcustomers. In addition, we consider intellectual property
to be an important part of our strategy. MonoSol’s patents
facilitate its competitive advantages and next-generation

19

KURARAY REPORT 2019

R&D and also act as a barrier to entry for othercompanies. Becoming part of the Kuraray Group has
meant that we can engage in R&D extending all the way
upstream to the raw material poval resin, shift to a highervalue-added product lineup and processing technology
continues to advance. Furthermore, MonoSol is not just aprovider of high-quality products and services. MonoSol
boasts a culture of quality underpinned by the
responsiveness of all our employees, including those in
the back office. This culture of quality flows into ourcompany governance such as compliance and safety,
which is the foundation that supports our current position
as the world’s leading supplier of water soluble films.

MonoSol Headquarters in Indiana, U.S.A.

Initiatives to Achieve Mid-Term Management Plan “PROUD 2020” Targets andSustainable Society
In “PROUD 2020,” we aim to expand sales in line with therising market penetration of single-use pods for laundry
detergent while maintaining our high market share. We
will also continue to create new demands for industrial
and consumer applications for such products as personalcare soaps and shampoo, cosmetics, single dose nutrition
supplements, and release films.
Reflecting differences in daily habits among countries
around the world, people use daily consumables likedetergent in different ways. MonoSol develops andprovides films that meet various conditions around theworld through continuous co-development withcustomers, including film technology that can dissolve
even in cold water, which had been difficult previously. In
addition, our efforts to solve environmental problems suchas waste volume reduction and plastic disposal problems
utilizing the films’ solubility and biodegradability, havegarnered acclaim and MonoSol’s films are currently
adopted by the top five global detergent suppliers. We
intend to deepen our technology and expand our businesswhile contributing to the improvement of living conditions
and the solutions of the environmental problems in not
only developed countries but also emerging markets.
On the other hand, in parallel with growth in the sizeand complexity of the overall business, the supply chain
challenges are also increasing. In “PROUD 2020,” we willplan a “Glocal” future through improvements in theefficiency of inter-Group procurement of raw materials,
optimizing locations for film production bases which are
currently concentrated in the U.S. Midwest, andenhancing our distribution network. Our ultimate goal is toestablish a regional supply chain and thereby avoid any
external risk.

In 2018 MonoSol achieved its sales goal. However,
our operating profit goal was not achieved as planned. Thiswas because of unexpected difficulties during the initialstages of the new product introductions. However, sales
are expected to increase by the expansion of the unit
dose detergent market, and by the further improvement infilm production yield, we are convinced that we canachieve the “PROUD 2020” plan by compensating for theoperating income by 2020.
Through maintaining its overwhelming presence inthe unit dose detergent market and creating new
applications while working to further strengthen the
supply chain, I believe MonoSol will continue growing ator near its current pace through at least 2026—thecentennial of Kuraray’s founding.

Single-use detergent packets using the water soluble poval film

MonoSol’s Purpose and HR Development to Support Growth
MonoSol is focusing its efforts on employee training. We
are especially focusing on “coaching and developing” in“PROUD 2020.” We are training employees who can act
globally and excel in MonoSol’s highly specializedbusiness. We support our employees’ growth by providing
unique training programs related to MonoSol’s operations
alongside Kuraray’s HR training programs.
Before joining the Kuraray family, MonoSol had long
been focused on building value with a view to ultimately
selling the company. However, building long-term value
and securing rapid earnings growth through increased
volume are not necessarily the same goal. Our purpose isto grow in breadth and depth for the people and theplanet. Yes, we must work hard to deliver financial results
and returns for all the stakeholders. But above all, wealways remember our purpose. By focusing on what is
important to customers and society, we will build acompany that can deliver both growth and profit over thelong term.
Kuraray Group has been globalized rapidly in recent
years. As a non-Japanese Executive Officer of the Kuraray
Group, I always keep in mind that I have to take on therole of “bridge between different cultures” and makeintentional efforts to play a role in the sustained growth of
the Kuraray Group.

KURARAY REPORT 201920

Value Creation Report

Transforming Carbon Materials Into
One of Kuraray’s Core Businesses:
Toward True Leadership in
Activated Carbon
Nobuhiko Takai
Senior Executive Officer
Vice President of Functional Materials Company,
General Manager of Carbon Materials Division

Key Person Interview

2

History and Overview of the Carbon Materials Business
The Kuraray Group’s history in the carbon materials
business started with manufacturing and selling activatedcarbon in 1965.
Activated carbon is the product of a reaction between
bituminous coal, wood, coconut shells or other raw
materials with gas and chemical agents at a hightemperature. This process creates micropores (measuring
20 nanometers or less in diameter) that purify gases or
liquids by selectively separating and removing particular
substances. The micropores form a meshwork structure
within the activated carbon to give the material highadsorption strength owing to their large surface area(500 to 2,500 m2/g). For this reason, the activation
process that forms and controls the size of thesemicropores is critical. Kuraray possesses refinedmanufacturing technologies used in the activation
process that keeps pore diameter within a suitable range
to adsorb particular materials.
Activated carbon is used in a variety of fields, such as
waterworks plants, sewage treatment, household water

purifiers, food and drink processing, and other areas
related to water treatment, as well as exhaust-gas
treatment, air purifiers, and other applications connected
to air treatment. Activated carbon also plays an importantrole in electrical materials such as capacitors in theenergy-related field and nitrogen scrubbers in the chemicaland food industries. Recently, the material has also shownpromise in value-added areas like automotive applications.

Activated carbon

Creating Synergy by Acquiring Calgon Carbon Corporation and Achieving Integration
The Kuraray Group considers the fields of water, theenvironment, and energy as areas for focused strategies.
The Group has promoted initiatives to strengthen andenhance its carbon materials business in line with the“Next-generation growth model” and “Contribution to theenvironment,” the key business strategies in “GS-STEP,”
our previous medium-term management plan. As part ofthese initiatives, in January 2017 we merged our
subsidiary Kuraray Chemical Co., Ltd., which was handling

21

KURARAY REPORT 2019the manufacture and sale of activated carbon, and newly
established Carbon Materials Division, to concentrate theKuraray Group’s resources. Meanwhile, we continued
discussions on expansion through M&As to grow ourpresence in the activated carbon market and accelerate
the development of our global business. One fruit ofthese discussions was March 2018’s acquisition of
Calgon Carbon Corporation, a global leader in activatedcarbon materials.

As mentioned earlier, the raw materials for activatedcarbon are categorized into three groups: coconut shells,
bituminous coal, and wood. Kuraray’s original expertisewith activated carbon extended mainly to coconut shells,
handling bituminous coal and wood to a limited extent
only. Calgon Carbon Corporation, on the other hand,includes activated carbon from bituminous coal and woodin its product lineup, and the company has particularly
strong production capabilities in activated carbon frombituminous coal, one of its major products. Through thisacquisition, Kuraray has become the world’s largest overall
manufacturer of activated carbon that can produce all
three types of products, taking the lead among the world’s
many activated carbon manufacturers.
This acquisition will bring a wide range of benefits. In
terms of raw materials, coconut shells are susceptible torisk from variations in supply volume and price, but theunified purchasing strength of Kuraray with Calgon Carbon
Corporation enables us to secure more stableprocurement from the many coconut shell providers inSoutheast Asia. We will also be able to procure bituminous
coal and wood while leveraging our presence as a leading
manufacturer. In terms of sales, Calgon Carbon
Corporation has mainly developed its businesses in
Europe and the U.S.A., while Kuraray has focused onJapan and Asia, allowing us to complement each other’sbusiness regions. In addition, by further accumulatingclient information, we can expect to cultivate new markets.

We are also looking to achieve a multifaceted synergy,
including better product development capabilities byfusing both companies’ technologies, as well as stronger
cost competitiveness through mass production.
In addition, we feel that we have welcomed
extremely talented people from Calgon Carbon
Corporation. The company is listed on the New York Stock
Exchange, and has built good relationships withshareholders, customers, and other stakeholders. Its
employees have a strong awareness regarding
compliance, and we believe that we can build a system ofgovernance to serve as a foundation as we aim for future
global growth. In 2018, we launched integration processes
within each region in the U.S.A., Europe, and Asia, andhave conducted consolidation activities for sales bases,
among other initiatives.

Big Sandy Plant
Calgon Carbon Corporation
Kentucky, U.S.A.

Our Ideals for Future BusinessIn 2019, we will concentrate on achieving quick results togain some tangible synergy through this acquisition, andact to more closely integrate our carbon materials
business. In addition, as worldwide demand grows for
activated carbon in response to ever tighter environmental
regulations, we are considering making investments toboost the production capacity of Calgon Carbon
Corporation's American plant, which is operating at full
capacity. We plan to swiftly make such decisions.
Regarding the market outlook, we can expect growthat an annual rate of 3% to 5% with highly versatile
bituminous coal-based and wood-based activated carbon,
in line with the world’s annual economic growth rate. As
such, we will work to further amplify our presence andexpand sales in these areas that already have a large
market scale. In addition, we will add further value to our
coconut shell-based products, and aim for an annual

growth rate of 10% or more in our high-end product groupwithin the activated carbon market.
In this growing market, it is imperative to swiftly
grasp changes in the world as well as the needs of themarket, and take advantage of the Kuraray Group’s
technological capabilities to provide comprehensive
solutions for environmental problems. In this way, we willcontribute to improving people’s health and comfort
around the world, as well as to sustainability of the global
environment.
In the “PROUD 2020” medium-term management
plan, Kuraray identified the key strategies of “Expand new
business fields” and “Contribute to the environment.” Ourinitiatives to strengthen and expand the carbon materials
business are precisely in line with these strategies, andwe will endeavor to grow this business into a large pillarof the Kuraray Group.

KURARAY REPORT 201922

Value Creation Report

Aiming to Create Economic Valueby Applying our Technological Prowess
Tsugunori Kashimura
Senior Executive Officer
Officer Responsible for Research and Development Division,
Officer Responsible for Environmental Business Development
and Promotion Division,
General Manager of Research and Development Division,
General Manager of Environmental Business Development
and Promotion Division

Key Person Interview

3

Shifting to a Viewpoint and Actions with a Focus on Earning
The Research and Development Division has twofunctions. The first involves research and development
through two research centers. The second involves
developing new business through the business promotion
departments for molding materials and in VECSTARTM, aswell as the Functional Products Development Departmentthat deals with CMP polishing pads for semiconductors.
In addition to these two functions, the organizational
structure at the Research and Development Division
includes a base for information gathering in the U.S.A. as
well as the Intellectual Property Department, the Market
and Business Development Department, and the Planningand Administration Department. The New Business
Development Division (in charge of projects close tocommercialization) was previously an independent
organization, but was reintegrated into the Research andDevelopment Division in January 2017 with the aim offundamentally reviewing all development operations.
Together with this organizational reform, we spent a
year selecting the most important themes fordevelopment, and narrowed these themes down to thosethat should be worked on as part of corporate R&D. All
people in charge of the themes were consulted to address
points that were missing from previous judgment criteria,
including the questions of “Why should Kuraray do it?”“How can we commercialize it and win?” and “Can it bothcontribute to society and bring profit to the company?” The

result was to cancel approximately 70 percent of theresearch themes, allowing us to focus on what remained.
We are currently making progress in about 30 projects,
including new themes that sprouted after the reforms.
In addition to these measures, researchers in the
Research and Development Division are expected tomaintain a perspective and conduct their actions so as tofocus on generating profits in addition to achieving resultsin the research theme they are working on. This isachieved through encouraging researchers to view
themselves as “technological pillars” who work in an
appropriate way to solve the wide range of problems intechnology and development tackled by businessdepartments in terms of corporate development. We also
grasp this challenge by quantifying the contributions toresults gained through solving these problems.
When fostering human resources to support our
technologies, it is vital to accumulate a bank of successful
experience. To this end, we nurture outstanding
researchers by having them actively engage in personal
interactions with business divisions and accumulate
experience while directly involving themselves in businessas they produce results. Occupying around 100th place inglobal sales rankings among chemical manufacturers,
Kuraray is not large in scale; however, we wish for our
researchers to be confident that they will succeed in theirindividual endeavors.

Promoting the Partnership and Support Program Together with Strategies
for Intellectual Property
Kuraray’s strength is in its technological capabilities thatoriginate from developing novel vinyl acetate-based

23

KURARAY REPORT 2019

chemical products. We see our home turf centered aroundthis strength, and set targets for new businesses withinwalking distance of this home turf. We engage ininitiatives with the goal of expanding into new territory
step by step. Meanwhile, the Research and Development
Division plays a crucial role in organizing verification
activities throughout the entire Group to more firmly
secure our vinyl acetate-related businesses as well asother core businesses that support our growth as theGroup’s foundations.
As a part of these initiatives, the Research andDevelopment Division launched a “Supporting Program”
for the Kuraray Group, with the Tokyo Head Office serving
as its main point of contact. Over the past two years, thedivision has launched projects in which its researchersvisit bases in Europe, the U.S.A., and other regions tohold discussions. Over many sessions, the researchers
listened to the concerns and issues faced by people ateach base and discovered various problems in eachregion that had been left unsolved and overlooked. In
fact, there were over 80 problems regarding precision
analysis and technical matters for which the Researchand Development Division could offer support. Some ofthese can be solved relatively quickly, while others mayneed long-term

attention. In this light, we will strive to take these
discussions of these problems to a deeper level on a
global scale and address all of these issues without failover the next few years, working to secure thefoundations of businesses across the entire Group andprotect this foundation from cracks.
Adding to these initiatives, the Research andDevelopment Division supports the entire Group throughsurveying and management work conducted by theIntellectual Property Department in relation to patents.
In a similar vein to the Supporting Program mentioned
above, the Intellectual Property Department has createda system in which it first conducts patent surveys
covering all regions targeted by each base at the Group.
This is essential for understanding the actual conditions
in each region. The Program then provides support forfiling patents and utilizing patent rights in the global
market. In addition, “Intellectual Property Strategy
Conference” have been established through appointing
intellectual property staff in each business division,
thereby further honing value to derive profit from ourtechnologies and knowledge.

Working to Promote New Businesses and Create More Value
The Kurashiki Research Center celebrated its 50th
anniversary in July 2018. This facility comprises of four
laboratories, with each one linked to one of its coretechnologies: catalyst and synthetic technologies, VArelated polymer technologies, battery material design
technologies, and analytical technologies. The Kurashiki
Research Center has maintained three unwavering
missions across the past five decades: “Create new
businesses,” “Strengthen and expand existing
businesses,” and “Establish and deepen coretechnologies.” Together with the Tsukuba Research Center
serving as an Eastern Japan research base, the Kurashiki
Research Center will continue to operate as an R&D
facility that is trusted by all stakeholders both inside andoutside the Kuraray Group, and one that fulfills their
expectations. In 2026, the year marking the 100th
anniversary of company foundation, we have plans tobuild a new R&D facility in Kurashiki City to expand ourfunctionality, as well as plans to reorganize the R&D
system across the entire Group.
As the company’s corporate statement highlights,
Kuraray aspires to help solve social problems through ourbusinesses. Contributing to this effort is the Research andDevelopment Division’s ambition to create economic value
by taking advantage of its technological strengths; webelieve that such an endeavor is essential for thecompany’s continued existence as a part of society. This
Division will not simply engage with research themes tosolve a specific social problem. Rather, we will continue
exploring possibilities for research themes that carry thepotential to create economic value acceptable to greater
society and that will ultimately deliver solutions to a rangeof many social problems.

Kurashiki Research Center

Tsukuba Research Center

KURARAY REPORT 201924

Foundation for Value Creation•

Corporate Governance •Basic Views on Corporate Governance
Kuraray Co., Ltd. (hereinafter “Kuraray” or “the Company”)
believes that the maintenance of appropriate relationships
with various stakeholders and the fulfillment of social
responsibilities through establishing a corporate governancesystem that ensures effective and fair management would
contribute to the long term and sustainable enhancementof corporate value.
The Company has adopted the governance system as “acompany with the board of corporate auditors.” Under thisframework, the Company has established corporate
governance mechanism centered on its Board of Directors

and Board of Corporate Auditors to improve the effectivenessof supervisory and monitoring mechanism while maintaining
management efficiency and to handle issues including
management remuneration, selection of new company
officers, internal control and risk management.
Through the above establishment of mechanism, theCompany believes that the effectiveness of supervisory
and monitoring mechanism would be improved while
maintaining management efficiency, contributing to thelong term and sustainable enhancement of corporate value.

Kuraray’s Steps to Strengthen Corporate Governance
The Company has worked continuously to strengthen
corporate governance by taking steps such as separatingsupervision and execution functions through theintroduction of the Executive Officer System, appointing andincreasing the number of Outside Directors and Outside
Corporate Auditors, establishing the CSR Committee andthe Risk Management and Compliance Sub Committee,
evaluating the effectiveness of the Board of Directors, andestablishing the Corporate Advisory Committee.
The Company will further strengthen the corporate
governance system through measures such as managing
compliance risks in its overseas operations.

Kuraray’s Efforts for Improving Corporate Governance Thus Far• Reduced the maximum number and the term of office of Directors• Introduction of the Executive Officer System

2003• Increased the number of Outside Corporate Auditors from two to three
Purpose: Strengthening the management monitoring function of Corporate Auditors• Established the CSR Committee
Purpose: Reinforced the Group’s CSR promotion structure• Introduced two Outside Directors
Purpose: Strengthening the management monitoring function of the Board of Directors

2008• Started early delivery of the notice of convocation of the ordinary general meeting ofshareholders (at least three weeks before the date of the meeting)Purpose: Providing enough time for shareholders to examine each proposal• Started uploading an English translation of the notice of convocation of the ordinary general
meeting of shareholders to the TSE platform and the Company’s website

2016
2017

• Started Analysis and Evaluation of the Effectiveness of the Board of Directors• Established the Risk Management and Compliance Sub Committee
Purpose: Promoted the development and operation of the Group’s compliance structure• Established the Corporate Advisory Committee

2018

25

KURARAY REPORT 2019

Purpose: The Management Advisory Committee was abolished as an advisory body to the President,
and the “Corporate Advisory Committee,” comprised of Outside Officers and outside experts,
was established as an advisory body to the Board of Directors.

Key Points of Corporate Governance of the Kuraray GroupThe key points of Kuraray’s corporate governance are as follows:1.

Kuraray has adopted the governance system as “company with board of corporate auditors” andestablished the Board of Corporate Auditors comprised of five Corporate Auditors, at least three of whom
are Outside Corporate Auditors. It has done this to ensure the fairness and transparency of management.

2.

The Company has been appointing Outside Directors since 2008, and three Outside Directors are in office.

3.

The Company has established “Corporate Advisory Committee” comprised of Outside Officers
and outside experts, as an advisory organ to the Board of Directors, with a view to enhancing
transparency, fairness and objectively in decision making concerning important matters ofmanagement, including nomination and remuneration of Directors, and further strengthening its
corporate governance.
The Corporate Advisory Committee is comprised of six members: three Outside Directors, one Outside
Corporate Auditor and two outside experts, as of March 27, 2019.

Corporate Governance System
Board of Directors and Business Execution Body
The Board of Directors (convenes at least once a month),according to the Board of Directors’ Regulations,deliberates and decides important management matters,
including legal matters, and supervises the execution ofbusiness. The maximum number of Directors is 12 inorder to promote agile management decision-making by
the Board of Directors, and the term of office is one year
to clarify their responsibilities to the shareholders. Thereare currently 12 incumbent Directors, including three
Outside Directors, whom one is female, with wealth ofexperience in and broad insight into economy, finance,
management and corporate legal affairs. These three
Outside Directors are supervising management from an
independent third-party standpoint.
As the chief executive responsible for businessexecution, the President appointed by the Board of
Directors exercises control over the execution of businessin the Company and its subsidiaries (hereinafter “theGroup”). Every executive officer (one-year term of office)appointed by the Board of Directors is responsible forbusiness execution in the Group organization. As theheads of internal companies, divisions and major
functional organizations, the executive officers bear
responsibilities for operations and business results.
In this way, the Company clearly separates the

responsibilities of Directors, that is, decision-making on andsupervision of management, from the responsibilities ofbusiness execution. Some Directors hold concurrent
positions as executive officers. The President has establishedthe Executive Committee (in principle, convenes twice amonth) and various other councils and committees todeliberate and report on important matters concerning theGroup’s management policies and business execution.
Board of Corporate Auditors and Internal Audit
The Board of Corporate Auditors consists of five Corporate
Auditors, of which four are males and one is female, andthree of them are independent Outside Corporate
Auditors, the majority thereof. The current number ofCorporate Auditors is five, including three Outside
Corporate Auditors with extensive experience in andbroad insight into areas such as finance, law andmanagement, who perform their duties from an
independent third-party standpoint.
Corporate Auditors attend meetings of the Board of
Directors and other important meetings, and monitor the
Directors’ execution of duties through inquiries conductedby such means as the examination of important
documents and requests for explanations of the state ofbusiness affairs. In principle, the Board of Corporate
Auditors convenes monthly.

KURARAY REPORT 201926

Foundation for Value Creation• Corporate Governance •Corporate Auditors also serve as corporate auditors ofcore group companies to conduct group company audits
as needed and attend periodic Group Auditor Liaison
Meetings consisting of the group company auditors todeepen their understanding of each company.

The Corporate Auditors regularly have meetings with
the Accounting Auditor receive reports on audit planning,
implementation status and audit content. Also, theyreceive reports on internal audit results by the Internal
Auditors Office (consisting of ten members). The
Corporate Governance System (As of March 27, 2019)

General Meetings of Shareholders

Appoint/Dismiss

Corporate Advisory
Committee

Consult
Reportback

Appoint/Dismiss

Board of Directors
12 Directors

Audit

Board or Corporate
Auditors
5 Corporate Auditors Coordinate Accounting Auditor(including 3 Outside
Corporate Auditors)(including 3 Outside
Directors)

ReportAppoint/Dismiss

ReportAppoint/Dismiss
Supervise

Risk Management andCompliance Sub Committee

CSR Committee

Report andProposeReport andProposePresident

Executive
Committee

ReportAccounting
Audit

Audit

Coordinate

Internal Auditors
OfficeExecutive
Function

Coordinate

Audit

Internal Companies, Functional Organizations, Group Companies

Policies for the Appointment of the Candidates for Directors and Corporate Auditors
and the Independence Standards for Outside Officers
 olicies for the Appointment of the Candidates forP
Directors and Corporate Auditors(1) The Company appoints individuals who haveexperience, knowledge and capabilities required for
Directors of the Company as candidates at the Boardof Directors meeting with the attendance of Outside
Officers and elect them as Directors with the resolutionof the General Meeting of Shareholders. However,the candidates for Outside Directors shall satisfy thecriteria of independence provided separately.

27

KURARAY REPORT 2019(2)	The Company appoints individuals who haveexperience, knowledge and capabilities required for
Corporate Auditors of the Company as candidates at
the Board of Directors meeting with the presence ofOutside Officers, and elect them as Corporate
Auditors with the resolution of the General Meetingof Shareholders after obtaining the consent of theBoard of Corporate Auditors. However, the candidates
for Outside Corporate Auditors shall satisfy the criteria
of independence provided separately.

Independence Standards for Outside Officers(1) The Company judges that its Outside Officers andthe candidates for the Outside Officers are fully
independent from the Company if they do not fallunder any of the following items:(i)	 A business executive of the Group(ii) A counterparty which has transactions principallywith the Group, or its business executive thereof(iii)	 A major business partner of the Group, or its
business executive thereof(iv)	 A major lender of the Group, or its businessexecutive thereof(v)	 A counterparty that receives a large amount of donations
from the Group, or its business executive thereof(vi)	 A major shareholder of the Company (who possesses
10% or more of the total voting right either directly
or indirectly), or its business executive thereof(vii)	 A business executive of the party whose major
investor (who possesses 10% or more of the total
voting right either directly or indirectly) is the Group(viii)	A consultant, certified public accountant or otheraccounting professional, attorney or other legal
professional who receives a large amount of monetaryor other assets from the Group other than the executive
remunerations (in case of a legal entity, associationor other organization, a person belonging thereto)(ix)	A person who belongs to an accounting firm that
conducts the statutory audit of the Company(x)	A person who has fallen under the above criteria (i) in
the past ten years(xi) A person who has fallen under any of the above
criteria (ii) through (ix) in the past three years(xii)	A person whose position constitutes him/her as
having an Outside Officer’s interlocking relationshipwith the Group(xiii) A relative of the persons listed in the above criteria (i)through (xi)(2) Even in cases where a person falls under any of theabove items, if the person is deemed to beappropriate for the post of an independent Outside
Officer in light of his/her personality, knowledge andother qualities, the Company may appoint him/her as
independent Outside Officer on the condition thatthe reasons why the person is deemed appropriate
for the post are explained to the public.

Directors’ Remuneration System olicies for Determining the Remuneration for Directors
P(1) Remunerations for Directors are determined bytaking into consideration the remuneration level ofother companies and other factors so that the
remuneration will function as one of the incentives
for mid to long term and sustainable enhancementof the corporate value.
(2) Remunerations for Directors are comprised ofmonetary remuneration consisting of fixed
remuneration by position and performance-linked
remunerations, and stock option-based
remunerations. However, monetary remuneration for
Outside Directors does not include performancelinked remunerations.
(3) Remuneration for each Director is determined basedon the calculation method stipulated by the Board of
Directors within the limit amount resolved at the General
Meeting of Shareholders. The remuneration for the
President which serves as the basis for calculating the
remuneration for each Director is determined after the
deliberation at the Management Advisory Committee
comprised of Outside Officers and outside experts.
		 Changes in the remuneration system andstructure as well as the amount of remuneration for
Directors are also determined by the Board of
Directors after the deliberation at the aforementioned
Management Advisory Committee.
Performance-Linked Remuneration System
The Company abolished the bonus scheme to Directors
and introduced a performance-linked remuneration system

in July 2006, thereby strengthening the incentives of
Directors for increasing the Company’s corporate value.
In addition, to respond to the increase in the amount of
performance-linked remuneration in conjunction with the
improved business performance, it was resolved toincrease the maximum amount of annual remunerations
to Directors from ¥450 million to ¥800 million (including¥100 million annually for Outside Directors) at theCompany’s 131st Ordinary General Meeting of
Shareholders held on June 22, 2012.
 alculation Method of Performance-Linked RemunerationC
As a short term performance incentive, the performancelinked remuneration for the President shall be the amountthat is obtained by multiplying the amount of actual
consolidated net income for the prior fiscal year with apredetermined coefficient. The performance-linked
remuneration for Directors shall be determined by dividing
the said amount in proportion to the index corresponding
to each position of Directors. The Company does not havea performance-linked remuneration system for Outside
Directors based on the above calculation method.
Remuneration-Type Stock Option Scheme
The Company abolished the prior severance andretirement benefits system for Directors in July 2006 andintroduced a remuneration-type stock option scheme thatentails the issue of share acquisition rights for the purposeof further boosting Directors’ sensitivity and motivation
towards improving the Company’s performance. The stock
option-based remunerations under this scheme shall not

KURARAY REPORT 201928

Foundation for Value Creation• Corporate Governance •exceed ¥90 million, separately from the maximum amountof annual remunerations to Directors. The number ofshare acquisition rights to be granted shall not exceed 120

each year (The number of common stock to be issued
upon exercise of share acquisition rights shall not exceed
60,000 shares each year.)

Corporate Officer Remuneration for Fiscal 2018
Director classification

Total amount of
remuneration, etc.
(Millions of yen)

Total amount by type of remuneration, etc. (Millions of yen)
Monetary remuneration Stock option-based remuneration*2

Number of eligible
officers (persons)*1

Directors (excluding Outside Directors)

461

429

32

8

Corporate Auditors (excluding Outside Corporate Auditors)

55

55

—

3

Outside Officers

63

59

4

6

*1 The above number of eligible Directors and Corporate Auditors include one Director and two Corporate Auditors who retired at the close of the 137th Ordinary General Meeting of
Shareholders held on March 23, 2018.
*2 Separately from the above stock option-based remuneration, share acquisition rights amounting to ¥21 million were granted to Directors who concurrently serve as Executive Officers(seven Directors) as stock option-based remuneration for Executive Officers.

Evaluation of the Effectiveness of the Board of Directors
Analysis and Evaluation of the Effectiveness of
the Board of Directors(1) Analysis and Evaluation Method
The Company distributed “Questionnaire on Evaluation of
the Effectiveness of the Board of Directors” (nonanonymous) to all the Directors and Corporate Auditors in
December 2018 and collected responses and opinionsfrom all members in January 2019. The secretariat of theBoard of Directors aggregated the responses, andanalyzed and evaluated the effectiveness of the Board of
Directors based on the data.
<Questionnaire > (32 questions in total)• Concerning Structure of the Board of Directors• Concerning Agenda of the Board of Directors• Concerning Operations of the Board of Directors• Systems Outside the Board of Directors(2) Outline of Analysis and Evaluation Results
The evaluation confirmed that the Company’s Board of
Directors is generally functioning properly and that theeffectiveness of the Board of Directors is secured in all
aspects such as its size, composition, diversity, agenda
selection, the scope of matters to be discussed orreported, the timing for scheduling the Board of Directors
meetings, frequency of the meetings, operations of theBoard of Directors including deliberation time, provision of
additional information to the Directors, systems outside
the Board of Directors such as those for providing training
opportunities, etc.
In light of the results from this evaluation, theCompany will continue to examine and implement
necessary measures to make discussions more lively andproductive at the Board of Directors meetings.

Cross-Shareholdings
The Company has set forth the policy on crossshareholdings and standards for exercising voting rights
pertaining to cross-held shares as follows.
1. Coming from the viewpoint of stable and long termbusiness operation, the Company may hold the shares of
its business partners, etc. if maintaining and strengthening
the relationships with such business partners are deemed
to contribute to corporate value enhancement.
2. Regarding the shares held pursuant to the preceding
paragraph (hereinafter, “cross-held shares”), the Company
regularly examines economic rationality and significanceof holding individual stock at the Board of Directors
meetings in consideration of benefits and risks associatedwith such holding, capital cost and other factors. The
Company will sell shares of stocks, as necessary,
whose holding was deemed not to be appropriate
based on the examination to reduce such stocks.
3. Concerning the voting rights pertaining to the cross-heldshares, the Company appropriately exercises such voting
rights in light of the objectives of shareholdings set forthin the preceding two paragraphs, taking into consideration

29

KURARAY REPORT 2019the business conditions of the companies and potential
impact to the business operation of the Company or asubsidiary of the Company (hereinafter “the Group”).
Particularly, the Company carefully exercises such voting
rights in a case where performance of the companies has
been sluggish for a long period of time or a serious
scandal has occurred or in a case where a proposal thatwould impair shareholders’ value was made.
Content of Examination on the Propriety of Holding
Cross-Held Shares
In the fiscal year ended December 31, 2018, the Company
sold all shares of 8 stocks and part of 1 stock of its crossheld shares. Additionally, as the result of an examination
at the Board of Directors meeting held on February 21,
2019 of the economic rationality and significance ofholding individual cross-held stock for the fiscal year
ended December 31, 2018 (examination on cross-heldshares as of the end of December 2018) in considerationof benefits and risks, capital cost and other factors
associated with such holding, the Company plans tocontinue with the sale of some stocks.

Message from Outside Director
Establishing global governance while taking advantageof the strength of corporate culture

Jun Hamano
Outside Director

In March 2016, I was appointed as an Outside Director and the fiscal year 2019 is my fourthyear. During this period, I realized that discussions at meetings of the Board of Directors
have become active over the years. In the past, discussions were made focusing onquestions and answers from only one point of view, but recently discussions have been
made from many different perspectives. In addition, a variety of opinions are expressed by
Outside Officers who have different backgrounds and expertise. Furthermore, Outside
Officers can attend meetings of the Board of Directors with a full understanding of thedetails of agenda thanks to clear explanations provided before the meeting is held.
In recent years, Kuraray has rapidly expanded its global business, but it seems that
there is still room to improve the control by the Head Office over its overseas operations.
I believe that improving the level of governance while supporting the optimization of local
management according to the circumstances of each country is the key point for Kuraray tobe recognized as a real global company. Moreover, the spirit of “For people and the planet—to achieve what no one else can” that is declared in the corporate statement is the greatest
strength that Kuraray has cultivated. I believe that spreading the spirit, which demonstrates
simultaneous development of both this enterprise and society, throughout local
management will lead to the global development of Kuraray.
Last December, the Company established the Corporate Advisory Committee, which iscomprised of Outside Officers and outside experts. Through experience as an Outside
Director, I fully understood the role of the President and its weight of responsibility in theprocess of management. The Corporate Advisory Committee will properly discuss theelection and dismissal process of the President, as well as the development of humanresources who will be successors.

Message from Outside Corporate Auditor
Provide support for further efforts from the sustainability
perspective from the standpoint of an Outside Corporate Auditor
I will fulfill my duties as an Outside Corporate Auditor and contribute to the development of
the Company using my knowledge and experience from a standpoint that is different fromthat of a Standing Corporate Auditor who has an advanced knowledge of Kuraray’s businessand the ability to gather information, through analysis and evaluation as well as byexpressing opinions from mainly three perspectives.
Firstly, an outside perspective referring to values of other business sectors andcategories that are significantly different from Kuraray’s corporate culture. Secondly, a global
development perspective based on my experience, where I have engaged in overseas
business over the years. Thirdly, the perspective of finance as a person having experience inbanking and securities businesses, which promotes a dialogue between Kuraray and thecapital market.
I believe that Kuraray is an honest Company group where employees are loyal to theCompany and have a mindset of contributing to society. The Company has established arobust corporate governance framework, but it should continue to improve systems such ascompliance, quality assurance and its system to deal with serious accidents or natural
disasters, as well as strengthen internal controls and improve the reasonableness ofmanagement judgments. I hope that taking in different outside perspectives helps theCompany strengthen its governance system.
Looking at the capital market, these efforts for taking in the sustainability perspective,
which focuses also on such governance aspects, are currently vital, and so I believe that myexperience in the financial industry might be helpful for Kuraray to promote a dialogue withthe capital market. I will contribute to the development of Kuraray by fulfilling the role of an
Outside Corporate Auditor.

Mitsuhiro Nagahama
Outside Corporate Auditor

KURARAY REPORT 201930

Foundation for Value Creation• Corporate Governance •Executives(As of March 27, 2019)

Board of Directors
Representative Director and President

Representative Director and Senior Managing Executive Officer

1 Masaaki Ito (Date of birth: June 23, 1957)

2 Sadaaki Matsuyama

Director and Senior Managing Executive Officer

3 Kazuhiko Kugawa(Date of birth: October 18, 1950)(Date of birth: January 22, 1954)

 resident of Fibers and Textiles Company, Officer
P
Responsible for Osaka Head OfficeDirector and Senior Managing Executive Officer

Director and Managing Executive Officer

4 Hiroaya Hayase

6 Kenichi Abe(Date of birth: January 1, 1956)

President of Vinyl Acetate Film Company(Date of birth: May 3, 1956)

 fficer Responsible for Technology Division,
O
Officer Responsible for Plants in Japan and Officer
Responsible for Environmental and Industrial Safety
Management Center

Director and Managing Executive Officer

 resident of Isoprene Company, General Manager ofP
Elastomer Division, Isoprene Company

Director and Managing Executive Officer

7 Yoshimasa Sano

Director and Managing Executive Officer

8 Hitoshi Kawahara(Date of birth: April 12, 1956)

9 Keiji Taga (Date of birth: October 16, 1961)
Officer Responsible for Corporate Management Planning
Office, Officer Responsible for CSR Division, General
Manager of Corporate Management Planning Office(Date of birth: March 12, 1962)

President of Functional Materials Company

President of Vinyl Acetate Resin Company

Outside Director (Independent Director)

Outside Director (Independent Director)

10 Tomokazu Hamaguchi*1

Outside Director (Independent Director)

11 Jun Hamano*1(Date of birth: April 20, 1944)

12 Mie Fujimoto*1(Date of birth: February 27, 1951)(Date of birth: August 17, 1967)

Entered Nippon Telegraph and Telephone Public
Corporation

Apr. 1974

Entered Economic Planning Agency of Japan

Apr. 1993

Registered with Daini Tokyo Bar Association

Jul. 1999

Director, Minister's Secretariat Division, EPA

Apr. 1993

Jun. 1995

Director, NTT Data Communications Systems
Corporation (present NTT DATA Corporation)

Jul. 2004

Director General for Economic and Fiscal
Management, Cabinet OfficeEntered Shin-Tokyo Sohgoh Law Office(later merged with Bingham Sakai Mimura
Aizawa-Foreign Law Joint Enterprise)

Jun. 1997

Executive Vice President, NTT Data
Communications Systems Corporation

Jul. 2006

Vice-Minister for Policy Coordination,
Cabinet OfficeJan. 2003

Partner, Shin-Tokyo Sohgoh Law OfficeJun. 2009

Jun. 2001

Senior Executive Vice President,
NTT DATA Corporation

Jul. 2008

Director General, Cabinet OfficeOutside Corporate Auditor, Kuraray Co., Ltd.
(Current position)

Vice-Minister, Cabinet OfficePartner, TMI Associates (Current position)

President & CEO, NTT DATA Corporation

Jul. 2009

Apr. 2015

Jun. 2003

Director & Senior Corporate Advisor,
NTT DATA Corporation

Advisor, Cabinet OfficeJun. 2015

Jun. 2007

Jan. 2012
Apr. 2013

Executive Advisor, DENTSU INC.

Outside Audit & Supervisory Board Member,
SEIKAGAKU CORPORATION (Current position)

Senior Corporate Advisor, NTT DATA Corporation

Jun. 2014

Outside Auditor, Tokyo Broadcasting System
Holdings, Inc. (Current position)

Jun. 2010

Outside Director, East Japan Railway Company(Current position)

Director, Ohara Healthcare Foundation(Current position)

Jun. 2016

Jun. 2009

Jun. 2015

Jun. 2016

Outside Auditor, Tokyo Broadcasting System
Television, Inc. (Current position)

Jun. 2013

Outside Director, Kuraray Co., Ltd.
(Current position)

Chairman, the Institute for Science of Labour(present the Ohara Memorial Institute for
Science of Labour) (Current position)

Mar. 2019

Mar. 2016

Outside Director, Kuraray Co., Ltd.
(Current position)

Outside Director, Kuraray Co., Ltd.
(Current position)

7

9Oct. 2014

Director, FPT Corporation (Current position)

17

15
16

31

Director and Managing Executive Officer

5 Kazuhiro Nakayama(Date of birth: February 28, 1956)

Apr. 1967

Officer Responsible for Administrative Unit

KURARAY REPORT 2019

14
13

8
4

6
2

5
1

3

10

11
12

*1 Tomokazu Hamaguchi, Jun Hamano and Mie Fujimoto are Outside Directors.
*2 Mitsuhiro Nagahama, Tomomi Yatsu and Kenji Komatsu are Outside Corporate Auditors.

Corporate Auditors
Corporate Auditor

Corporate Auditor

13 Kunio Yukiyoshi

14 Yukinori Yamane(Date of birth: May 2, 1951)(Date of birth: September 9, 1955)

Outside Corporate Auditor (Independent Corporate Auditor)

Outside Corporate Auditor (Independent Corporate Auditor)

15 Mitsuhiro Nagahama*2(Date of birth: October 24, 1953)
Apr. 1976
Apr. 2002
Mar. 2003
Apr. 2005
Mar. 2006
Apr. 2010
Apr. 2013
Apr. 2015
Jun. 2015
Mar. 2018

Entered The Fuji Bank Limited
General Manager, Americas non-JapaneseCorporate Banking Division No. 2, Mizuho
Corporate Bank, Ltd.
Executive Officer and General Manager,
Otemachi Corporate Banking Division No. 6 andNo. 7, Mizuho Corporate Bank, Ltd.
Managing Executive Officer in charge ofcorporate banking, Mizuho Corporate Bank, Ltd.
Managing Executive Officer, Head of theAmericas, Mizuho Corporate Bank, Ltd.
Deputy President, Head of the Americas, Mizuho
Corporate Bank, Ltd.
Chairman of the Board, Mizuho Securities Co., Ltd.
Chairman of the Board, Mizuho Securities USA Inc.
Senior Adviser, Mizuho Securities Co., Ltd.
(Current position)
Chairman of the Board, Mizuho Securities USA Inc.
Outside Audit & Supervisory Board Member,
Azbil Co., Ltd. (Current position)
Outside Corporate Auditor, Kuraray Co., Ltd.
(Current position)

16 Tomomi Yatsu*2(Date of birth: May 30, 1960)
Apr. 1983
Oct. 1986
Sep. 1990
Oct. 2001
Oct. 2001
Jun. 2009
Jun. 2010
Mar. 2012
Mar. 2015
Apr. 2015
Jun. 2016
Jun. 2017
Mar. 2019(Date of birth: March 24, 1953)

Entered Tokyo Electron Ltd.
Entered Tohmatsu Awoki & Sanwa (present
Deloitte Touche Tohmatsu LLC)
Registered as a Certified Public Accountant
Registered with Tokyo Bar Association
Entered Shin-Tokyo Sohgoh Law Office (later
merged with Bingham Sakai Mimura AizawaForeign Law Joint Enterprise)
Outside Corporate Auditor, Calbee, Inc.
Outside Corporate Auditor, Taiko PharmaceuticalCo., Ltd.
Outside Corporate Auditor, KOKUYO Co., Ltd.
Outside Corporate Auditor, Yamaha Motor Co., Ltd.
Partner, TMI Associates (Current position)
Outside Director, SMBC Nikko Securities Inc.
(Current position)
Outside Corporate Auditor, IHI Corporation(Current position)
Outside Corporate Auditor, Kuraray Co., Ltd.
(Current position)

Please refer to our website for personal histories of Directors and Corporate Auditors.

Outside Corporate Auditor (Independent Corporate Auditor)

17 Kenji Komatsu*2
Apr. 1978
Feb. 1996
Jul. 2005

Entered Mitsubishi Corporation
Entered GE International Inc.
Representative Director and President, Ecolab
Inc. (present Ecolab GK)
Ecolab Inc. Senior Vice President
Senior Executive Officer, Sanden Corporation(present SANDEN HOLDINGS CORPORATION)Entered Bain Capital Asia, LLC
Director, President and CEO, BELLSYSTEM24,
Inc.
Director and Chairman, BELLSYSTEM24
Holdings, Inc.
Advisor, COACH A Co., Ltd. (Current position)
Advisor, API Consultants CO., LTD. (Current
position)
Outside Corporate Auditor, Kuraray Co., Ltd.
(Current position)

Apr. 2007
Dec. 2010
Nov. 2011
Mar. 2013
Mar. 2016
Jun. 2016
Dec. 2018
Mar. 2019https://www.kuraray.com/company/directors/

Executive Officers
Senior Managing Executive Officer

Hitoshi Toyoura

President of Kuraray America, Inc.

Managing Executive Officer

Nobuhiko Takai

 ice President of Functional Materials Company, General
V
Manager of Carbon Materials Division

Stephen Cox

Executive Officer ‌General Manager of PVB Division
Executive Officer

Toshihiro Omatsu

General Manager of Isoprene Chemical Division
Executive Officer

Ichiro Matsuzaki

General Manager of Kurashiki Plant

Executive Officer

Tomoyuki WatanabeV ice President of Vinyl Acetate Resin Company,
General Manager of Poval Resin Division,
Senior Manager of Poval Resin Sales Management Department
Executive Officer

Managing Executive Officer

Tsugunori Kashimura fficer Responsible for Research and Development Division,
O
Officer Responsible for Environmental Business Development
and Promotion Division, General Manager of Research andDevelopment Division, General Manager of Environmental
Business Development and Promotion Division
Executive Officer

Akira Omura

General Manager of Technology Division

Executive Officer

Toshinori Tsugaru

General Manager of Okayama Plant
Executive Officer

Hajime Suzuki

Vice President of Kuraray America, Inc.
Executive Officer

Takaharu Kawahara eneral Manager of Production and Technology
GManagement Division, Vinyl Acetate Resin Company
General Manager of Production and Technology
Management Division, Vinyl Acetate Film Company
Executive Officer

Katsumasa Yamaguchi

General Manager of EVAL Division

Matthias Gutweiler

Managing Executive Officer ‌President of Kuraray Europe GmbHP. Scott Bening

Executive Officer ‌ eneral Manager of WS Film Division, President ofG
MonoSol, LLC
Executive Officer

Koichi Takano

General Manager of Purchasing and Logistics Division
Executive Officer

Ikuo Nakamura

General Manager of Clarino Division
Executive Officer

Fuyuo Ueyama

Vice President of Calgon Carbon Corporation

Stevan R. Schott

Executive Officer  eneral Manager of Calgon Carbon Division,G
President of Calgon Carbon Corporation

Yoji Ikemori

General Manager of Genestar Division

KURARAY REPORT 201932

Foundation for Value Creation•

Sustainability Management •Basic Approachcreation through quality management in manufacturingwith compliance, safety, and risk management serving
as a base.
The Kuraray Group’s corporate activities are
established by relationships with many stakeholders
including customers and consumers, shareholders andinvestors, suppliers and partners, employees, local
communities, and central and local governments. The
Group will further deepen dialogue and cooperation witheach stakeholder to realize sustainable growth.

The Kuraray Group creates economic and social value
through the provision of its excellent products andservices to the market and aims to contribute to therealization of a sustainable society.
The Kuraray Group’s business utilizing its unique
technologies is related to various social issues such as
resource saving, energy saving, environmental
conservation, and improving the quality of life. The Group
believes that its most fundamental responsibility is toresolve these issues, and therefore we aim to fulfill our
corporate social responsibility by sustaining value

Sustainability Concept

Corporate Statements

Realization of Corporate Statements
Customers
andConsumers

Shareholders
andInvestors

Our Mission

Local
Communities

Our Values

Value creation
through business activities

Employees

Quality management activities

Our Commitment

Compliance

SafetyCentraland Local
Governments,
NPOs andNGOs

Suppliers
andPartners

Risk management

Involvement with Stakeholders
Shareholders and Investors

Suppliers and Partners

Employees

Kuraray will strive to expand its corporate value, will
return profits to its shareholders and investors and willappropriately disclose information available to it.

Striving to build a relationship of mutual growth with its
suppliers and partners, Kuraray will conduct fair andtransparent transactions and CSR procurement activities.

Kuraray will continue creating safe and healthy
workplaces in which its diverse human resources aretreated fairly and the employees can maximize theircapabilities and competencies.

Local Communities

Central and Local Governments,
NPOs and NGOs

Customers and Consumers

Giving its consideration to environmental conservation
and work safety and promoting positive
communication, Kuraray will build a good relationshipof coexistence with the local communities.

We will continue building sound and constructive
relations based on transparent corporate governance.

Kuraray is committed to building a relationship of trust
over many years by providing “safe, trustful andsatisfactory” products and services and by providing
appropriate information.

Stakeholder Communication
Stakeholders

33

Communication

Shareholders and Investors

General meetings of shareholders, plant tours, meetings to explain settlement of accounts

Suppliers and Partners

Purchasing activities, safety councils, liaison meetings, etc.

Employees

Employee awareness surveys, labor-management meetings, personnel evaluation interviews, company newsletter, various events

Local Communities

Responsible care regional dialogue, meetings to exchange views with local resident associations, plant tours, chemistry classes forboys and girls, cherry blossom viewing parties, summer festivals and other events

Central and Local Governments, NPOs and NGOs

Plant tours, firefighting drills, volunteer activities

Customers and Consumers

Sales and marketing activities, trade fairs (eco-friendly products fair and other fairs), questionnaires

KURARAY REPORT 2019

Materiality of the Kuraray Group
United Nations Summit in September 2015, that we cancontribute to, and will be finalized by the end of FY2019.
In addition, we will review it regularly.

The range of the Kuraray Group’s material issues iscurrently under review. It will include some of the
Sustainable Development Goals (SDGs), adopted at the
2018

1

2019

FutureSelection of social issues• Social issues in the fields
of economics, society, andenvironment were identified
from various guidelines suchas GRI.
• With the participation ofEuropean and American
members in the project,social issues such as thecircular economy andocean plastic pollution weresuggested.

2

Incorporation of SDGs

• Goals were incorporated
to which the Kuraray group
could contribute.

3

Materiality analysis and material issue selection• Materiality analysis was
performed from theperspectives of stakeholder’
expectations and its
importance for the Kuraray
Group.
• The materiality analysis
result was discussed at the
Expanded CSR Committee
meeting, which includes
business managers (FY2018).
• Material issues will beselected at the board meeting
after being discussed
again at the Expanded CSR
Committee meeting (FY2019).

4

KPI setting and companywide dissemination• KPIs will be set for thematerial issues.
• Workshops will be provided
mainly for the Expanded
CSR Committee members.
• Explanatory meetings will
be held at the Tokyo andOsaka Head Offices as well
as plants in Japan (2020 and
onward, outside Japan)

Regular review
Changes in the social landscape,stakeholders’ expectations,and opportunities and risks
for the Kuraray Group will beincorporated into the material
issues in a timely manner toeffectively employ resources.

For the current materiality issues, please visit
our website:
https://www.kuraray.com/csr/report2019/materialities

Non-Financial Capital as a Foundation to Support Value Creationfrom materials technologies to those for processing,human capital to achieve human resource diversity,
manufacturing capital such as a global production system,and social and relationship capital based on the trust of
stakeholders. Furthermore, the Group views appropriate
return of earnings to society including social contribution
activities as an important responsibility to fulfill. It will also
aim to create sustainable supply chain that is friendly to
non-financial capital.

Our corporate activities create a value chain in which weinvest funds from shareholders and investors into thebusiness, offer various top-level or one-of-a-kind products
and services with higher added value, and distribute or
reinvest financial value obtained through offering theseproducts and services. To support the chain of value
creation with the aim of sustainable growth anddevelopment, the Kuraray Group strives to strengthen its
non-financial capital—including intellectual capital—that
provides a broad spectrum of core technologies ranging
Value Chain
Business FundDistribution of Earnings,
Reinvestment

Business Activities

Procurement(Raw materials,
equipment, and parts)

Development –Production(Waste emission)

Sales, Marketingand Shipping

Processing,
Consumption and
Disposal (Recycling)

Material Cycle

KURARAY REPORT 201934

Foundation for Value Creation

Advancing Resources That Support Sustainable Growth•Technological Development Capabilities •Basic Strategy for Research and Development
Competition is increasing in the chemicals industry due tothe entry of companies from emerging countries and thecommoditization of specialty chemicals is also underway.
Technological development capabilities to create valueadded products are increasing in importance as an
essential management resource for maintaining andstrengthening global competitiveness.
In corporate research and development, which is thecore of the Kuraray Group’s technological development
capabilities, projects that contribute to group-widebusiness expansion and profit increase are promoted
under the corporate missions of “Create new businesses,”“Strengthen and expand existing businesses,” and“Establish and deepen core technologies” through close
collaboration with in-house companies, business divisions,and R&D divisions in group companies.

Research and Development Organization
The Research and Development Division, which engages
in corporate research and development, manages theKurashiki Research Center, Tsukuba Research Center,
KAI Corporate R&D (U.S.A), Functional Products
Development Department, Molding Component
Business Department, Vecstar Business Promotion
Department, Intellectual Property Department, Market
and Business Development Department, and Planningand Administration Department.
The two research centers promote research anddevelopment of new business, products, and technologies
using their core technologies, which comprise organic
synthesis and synthetic polymer technologies, catalytic
chemistry, VA-related polymer materials technology,
carbon materials technology, battery material design
technology, precision polymerization and denaturation,
molding, polymer processing, and computational
chemistry. Taking advantage of their analysis and safetyassessment techniques in addition to their research anddevelopment capabilities, the research centers also play a

35

KURARAY REPORT 2019role as analysis hubs for all Kuraray Group companies tosolve their technical problems.
Each business division has its own R&D department at
Kuraray Group’s base plants. Including overseas bases,
these plants engage in research and development activities
while closely working with corporate and businessdivisions’ research, development, and production bases.

R&D Expenses(Billions of yen)

25
20

18.0

19.1

19.8

2015

2016

21.0

21.2

2017

2018

15
10
5
0

2014*

* The figure for FY2014 is adjusted for the 12-month period from January to
December 2014.

Technological
Development
Capabilities

Human Resources

The Technology Division, which is responsible forcorporate production technology development, manages
the Technology Development Center and the Technology
and Maintenance Management Department. It promotes
progress in production technology by collaborating with
the Production and Technology Management Division ofeach in-house company and the Production and

Safety Activities

Environmental
Management

Trust

Technology Development Department of each plant. It has
also begun collaborating with the Research andDevelopment Division in the early stages of development
to accelerate the evolution of new business and products.
Since 2018, this department has taken the lead in
implementing digital strategies for company-wide researchand development as well as production technology.

Priority Policy

R&D Focus

Kuraray’s corporate R&D activities are guided by its
corporate missions to “Create new business,”“Strengthen and expand existing business,” and“Establish and deepen core technologies.”
To promote “Create new business,” our policy is tocommercialize materials that society needs in areas
where only Kuraray can commercialize them. Focusing on
our strengths, we set our target in the area within“walking distance” from our home ground (existing
business), repeatedly taking half-steps or full strides
forward from the home ground to expand our business

into new domains.
To advance the concept to “Strengthen and expand
existing business,” every one of our business divisions
and group companies collaborate in symphony to quickly
resolve problems in production and development
fundamentals to fortify Kuraray’s core business.
To promote “Establish and deepen coretechnologies,” we will establish and deepen necessary
core technologies through the “Create of new business”
and “Strengthen and expand existing business.”

R&D Topic 1
VECSTAR™ Liquid Crystalline Polymer Film
There is increasing demand for high-speed signal transmission
through high-frequency waves, such as vehicle-mounted
millimeter-wave radar and 5G antennas. In this connection, thesales volume of VECSTAR™ increased due to its high reputation
for low transmission loss in the high-frequency wave range andexcellent workability as a flexible printed circuit board. This has
led us to upgrade the existing production facilities in 2018. Since
it is expected that demand for high-speed signal transmission
will rise even faster, we are considering investments in full-scalemass production facilities, and will continue to actively expand
this business.

R&D Topic 2
Polishing Pads for Semiconductors (CMP Pads)
Polishing pads for semiconductors are made of high-hardness polyurethane, a new material developed by leveraging thepolyurethane design and manufacturing technologies cultivated through the development of CLARINO™ man-made leather.
Multiple customers have begun the shift to Kuraray’s CMP pads since their super-hard surfaces offer outstanding device
polishing and smoothening capabilities, create few scratches despite their hardness, and deliver a long service life due totheir high abrasion resistance. We have a system in place
to provide pads that meet customer needs, and overseas
customers are increasingly rating the products. We willcontinue to refine the business structure toaccommodate customer needs for both advanced andexisting processes.

KURARAY REPORT 201936

Foundation for Value Creation

Advancing Resources That Support Sustainable Growth•

Human Resources •Basic Approach to Human Resource Management
Based on the Kuraray Group Global Human Resource (HR)Policy, the Kuraray Group is making efforts to develop its
organizational system regarding the promotion of diversity,
fostering of human resources, and fair and just evaluationof performance, as well as establishing a healthy
corporate culture and creating new employment
opportunities, so that each employee can grow personallythrough work.

The Kuraray Group Global HR Policy
1. We will respect the human rights of individuals.

6.	We will strive to employ personnel who are able to contribute to thedevelopment of the Kuraray Group.

2. We will abolish discrimination and respect diversity and individuality.

7. We will place the right person in the right job.

3.	We will carry out our HR activities in full compliance with applicablelaws and regulations.

8.	We will implement evaluation and benefits systems that are fairly
satisfactory.

4.	We will create HR systems that uphold equality, fairness andtransparency.

9. We will support professional development.

5. We will strive to improve the environment of workplaces.

10.	We will strive to promote communication and disclose information
as appropriate.

Mechanisms and Systems for Human Resource Development
Executives and Manager Candidate Development (EMT)
To strengthen our management capability, the Kuraray
Group has been providing Executive Management Training
since 2012 for our business heads, as well as thoseheading corporate and administrative divisions, in addition
to the presidents and similar level personnel of theGroup’s subsidiaries outside Japan. Executive
Management Training enables participants acrossbusinesses and regions to hold discussions and more fully
perceive the direction the Kuraray Group should take. At
each training seminar, we have firstrate consultants who
provide information on a variety of themes to participants.

37

KURARAY REPORT 2019

Career Support (Career Training)
Amid rapid changes in the business environment, the Kuraray
Group supports the career development of employees
through the following systems to enable them to improvetheir human resource value independently and autonomously.
(1) Training for designing one’s own career
We provide training for employees at turning-point ages
at the Company (ages 30, 42, and 50) to give them
opportunities to look back on their career and design
their future career path. At the training, employees’
superiors also receive guidance and participate insupporting subordinates’ career development.
(2) Provision of opportunities for career consultation
We have a in-house career advisors to help employees
design their career and implement career programs.

Human Resources

Environmental
Management

Trust

information systems. With these systems in place, weplan to implement basic human resource management ona global basis that encompasses (1) work goal-setting andpersonnel evaluation based on those goals; (2) support forcapability and career development; and (3) discovery ofcompetent human resources, rotation and optimal
allocation of human resources, and development of a
succession plan.
Meanwhile, the globally standardized Kuraray Groupbehavioral index “Kuraray Competency 5x5” is being
implemented and used as a personnel evaluation item andcapability development benchmark. In addition, Kuraraysorted out job grades, which were different in each country
and company, as global grades based on the duty size andis utilizing them for personnel allocation and selection ofparticipants for human resource development programs.
Global Talent Development Program

Department
manager class

Executive Management Training(EMT)

Advanced Global Management Training(AGM)

Sectionmanager class esponding to Globalization of Operations (Global
R
Talent Development Program)
Kuraray Group’s sales ratio outside Japan has grown to
68% in fiscal 2018, and approximately 30% of theGroup’s employees are working in the Group’s operations
outside Japan.
In order to foster human resources who can actively
take part in conducting business internationally with theaim of achieving growth on a global basis, the Kuraray
Group has been providing the global human resource
development program since fiscal 2007, and more than 800
employees in Japan and from overseas operations
participated in the program over the 12-year period throughfiscal 2018. This program has been provided continuously,with the content of training revised every year.
Global Team Training (GTT), designed to develop global
leadership capabilities for the section manager class, hasbeen provided 17 times, with a total of 300 employees
participating. The network of training alumni has
contributed significantly to the promotion of cross-bordercommunication within the Group.
A trainee system, whereby younger employees aredispatched between the Head Office in Japan andoverseas subsidiaries for a limited period of three months,
has had about 100 employees participating, and many ofthe participants are actively taking part in conducting
business internationally as global personnel by going on
assignments to the Group’s subsidiaries outside Japanafter they finish the trainee program.
Global Human Resource Management
The Kuraray Group is developing a foundation for global humanresource management to optimize the way we apply ourhuman resources right across the Group’s global operations.
Specifically, in FY2017, the Group began phased introductionof globally standardized personnel evaluation and

Safety Activities

Cross-company
training

GTT follow-up

Intercultural
understanding

Global Team Training
(GTT)

Staff

Technological
Development Capabilities

Communication

Overseas safety training

Trainees

Area training

Work-Style Reforms and Promotion of Diversity
 ork-Style Reforms (Productivity Improvement,
W
Working Hour Management, etc.)
Kuraray is promoting work-style reforms toward realizing
the ideal work style conveyed in the Top Statement.
While driving the creation of a healthy corporate
culture and employee mindset reform, Kuraray is also
examining and implementing initiatives to enhance
productivity and introducing flexible work programs. In
FY2018, it launched the telework program at the Head
Offices (Tokyo and Osaka). Also, the rate of taking paid
holidays by regular employees, excluding managers, wasabout 84%.
Furthermore, to support employees’ active engagementin productivity improvement, by the end of this mid-term
management plan, Kuraray will start paying employees
the amount equivalent to overtime compensation forovertime hours reduced from the previous year.

Promotion of Women in the Workplace
Kuraray is placing emphasis on creating a corporate culture topromote more active participation by female employees with afocus on three points—employing more female employees,
expanding areas of their responsibility at work and improving
retention of female employees. It is doing this in order toenhance its organizational strengths by making the most of theabilities of its diverse human resources. Specifically, we provide
workshops for employees in managerial positions (division
general manager class and department general manager class)and training for female employees aimed at fostering careerdevelopment and leadership development, etc.
The ideal work styles• Carry out your tasks with awareness of regular work hours.
• Aim to deliver high-quality work within a given time.
• Cooperate with the people around you and share an efficient work stylethroughout the whole workplace.
• Keep in mind to get refreshed and stay in good physical condition to gearup for your next work day.

KURARAY REPORT 201938

Foundation for Value Creation

Advancing Resources That Support Sustainable Growth•

Safety Activities •Kuraray’s Approach to Safety
In the Kuraray Group’s business activities, safety is thecornerstone, an absolute requirement that forms the basis
for all activities. Realizing workplaces where people cansafely work at ease without accidents is an important
theme we need to work on to maintain stable supply of
products and continue to be trusted by society.
Based on this view, the Kuraray Group develops andoperates safety management systems and conducts
various activities. We are putting various measures inplace to raise employee awareness of safety and establish

safe actions and safety checks as routine practices.
At each workplace, we carry out risk assessments toevaluate the risk of process accidents and occupational
incidents, promote fundamental equipment safetymeasures, and prevent accidents and incidents. In orderto prepare for such situations, we share information suchas cases of process accidents and occupational incidents,
are preventing recurrence by horizontal deployment of
measures, and are training to minimize damage.

Safety Activity Management
In accordance with Corporate’s Safety Activity
Management Rules, the Kuraray Group develops safety
activity plans every fiscal year and operates them toensure occupational safety and process safety.
Specifically, at the Safety Promotion Committee attended
by the President and executives in charge, we carry out an
overall assessment of the safety activity performance ofthe current year and decide an activity policy for the next
fiscal year. Each plant and department conducts safety
activities in accordance with their action plans that reflect
the determined activity policy. Safety personnel from theHead Office, including the executives in charge, visit eachplant in Japan twice a year to check the activity plan,
progress, and outcomes. Head Office staff members visit
overseas affiliates once every three years to examine thesame. Problems identified in onsite checks and the annual
safety performance rating are used for overall
performance evaluation. The evaluation results are

39

KURARAY REPORT 2019

incorporated into company-wide policy making and thesafety activity management system for the next year.
In 2018, we held the Global Meeting at the Okayama
Plant, where Japanese and overseas environment andindustrial safety personnel gathered to introduce theirsafety activities and exchange opinions. The meeting willtake place again in the next fiscal year and onward.
In FY2018, there were eight accidents of minor
leakages of hazardous materials and one accident of aminor fire in an exhaust duct in Japan. Overseas,
meanwhile, there was also one accident of fire at thestartup of plant, causing injuries. There were ten process
accidents for the whole group. The frequency rate of all
occupational incidents deviated far from the evaluation
criteria both inside and outside Japan. As a result, we
could not achieve the goals. The Kuraray Group willaddress the problems identified and work to improvesafety for the whole group.

Technological
Development Capabilities

Human Resources

Environmental
Management

Safety Activities

Targets and Performance in Safety Priority Activities

Evaluation:

Accomplished,

FY2018Item

Process
Safety andDisasterPrevention,
Occupational
SafetyTargets

Performances

Evaluation

Promotion of integration ofsafety activities and daily
operation (tasks)

Safety activities which had been perfunctory were reviewed andimproved. We are embedding that into the flow of daily operations.

–Cultivation of a sense of
acceptance of the value ofsafety activities

We conducted personal interviews to foster employees’
understanding of the activity objectives. The resulting implementationof creative frameworks to encourage them to proactively think andact has motivated them to engage in these activities.

Implementation of
measures to discoverlatent risks and to minimize
actualization risks

Detecting and addressing risks during preparation, in work during
free moments, and during failures and problems have now
become established practice. Moreover, the quality of emergency
drills has improved and abnormality criteria are now clear.

Prevention of occupational
incidents caused by theunsafe or unconsideredbehaviors of individuals

Employees were instructed to pause for a moment and checkbefore carrying out work by, for example, pointing and calling.
However, incidents due to individuals’ careless or unthinking
behavior still occur frequently, and continued efforts are required
to minimize these behaviors.

Creation and operation of
the global safety
management system

Kuraray created and operated the Global Safety Activity
Management System covering global operations. In April,
Japanese and overseas safety personnel met in Okayama for the
Global Meeting and exchanged information.

–

Trust

Nearly accomplished, × Not accomplished
FY2019 safety activities items

Prevention of occupational
injuries caused by careless or
involuntary behavior of individuals
Transition to situation where all
employees actively take part insafety activities
Promotion of work place
improvement (facilities andoperation) by realizing whensomething feels wrong
Prevention of process accidents/
troubles by making thorough“Check”
Implementation of measures todiscover latent risks that canlead to process accidents andminimize the occurrence of
those risks
Reliable operation of the Global
Safety Activity Management
SystemNumerical Targets and Results
FY2018Targets
Japan

Process
safetyOverseasOccupationalsafetyZero

FY2019

Criteria for evaluation

Actualresults

Zero process accidents

9

Zero process accidents

1

Japan

Zero A, B rank incidents*

10Overseas

Zero A, B rank incidents*1

1

The frequency rate of all
occupational incidents*2:
0.5 or less

2.08

The frequency rate of all
occupational incidents*2:
3.0 or less

5.69

Japan

Overseas

Zero

Targets

Criteria for evaluation

Whole group(Japan, Overseas)

Zero

Zero process accidents
Zero A, B rank incidents*1

Whole group(Japan, Overseas)

Zero

The frequency rate of all
occupational incidents*2:
1.5 or less

*1: An indicator unique to Kuraray that
rates the seriousness of an
occupational incident based on theprobability of potential disability
and the seriousness of the flaw
that caused the injury. Ranks A andB denote serious incidents.
*2: The number of occupational
incidents requiring medical
treatment per one million work
hours (based on US OSHA
Recordable Incident).

Chemical Products and Product Safety

Focus

To ensure our products are safe, each business division of
the Kuraray Group companies evaluates and improves its
products using the risk management method whendeveloping a new product or managing product changes.
For products that require a particularly stringent safety
evaluation, such as those using nanomaterials or that are
ingested, a deliberation committee mainly comprising the
CSR Division checks their safety.

In the area of chemical management, these divisions
use IT systems and constantly educate managers andstaff members in charge of chemicals management toensure compliance with laws and regulations that are
increasingly tightening around the world. The divisions
also work with overseas group companies to conduct
studies and share information to achieve group-wide
effective chemicals management.

The First Global Environment and Industrial Safety Meeting
With the expectation of synergy and sharing of the philosophy and policy on
environment and industrial safety, the first Global Meeting was held at the
Okayama Plant. KAI and MonoSol from the US, KEG from Germany, EE from
Belgium, KAP from Singapore, Plantic from Australia, MonoSol from the UK,
Kuraray Korea from South Korea, and personnel from environment and industrial
safety divisions in Japan gathered for the conference. Although it was only the
first meeting, the participants introduced their safety activities and actively
exchanged opinions, providing a good opportunity for information sharing. It willtake place again in the next fiscal year and onward.

KURARAY REPORT 201940

Foundation for Value Creation

Advancing Resources That Support Sustainable Growth•

Environmental Management •Kuraray’s Approach to Environment-Friendly Manufacturing
We believe that the Kuraray Group’s mission is to
manufacture basic and intermediate materials that willcontribute to creating a low-carbon and eco-friendly
society and minimize their environmental impact asmuch as possible. Drawing from this philosophy, theKuraray Group is continuing to conserve the environment
by promoting measures to combat global warming, curb
chemical emissions, and effectively use by adopting
global manufacturing.

Environmental Management System
The Kuraray Group has established the Kuraray Group
Environmental Policy and is promoting environmental
conservation activities. These activities are in the P (plan)
D (do) C (check and evaluate) A (act and improve) cycle forconstant improvement according to the Kuraray Group
Environmental Activity Management Rule. Kuraray plants
and affiliates have acquired ISO 14001 certification andcompleted updating it to the 2015 version by May 2018.

Kuraray Group Environmental Policy
The Kuraray Group has established the following policy to contribute to the sustainable development of society and fulfill its
responsibilities to future generations through business activities in harmony with environment.
1. We give maximum consideration to the environment in conducting our business operations.
Basic Policy

2. We conduct perpetual environmental improvement activities.
3. We develop technologies and products which contribute to improvement of the environment.

41

KURARAY REPORT 2019

Technological
Development Capabilities

Activity item

Human Resources

Safety Activities

FY2018 targets• Kuraray Group in Japan:• Implement measures to reduce GHG emissions by 13,000 tons-

Globalwarmingprevention

CO2 or more.

• Add at least 1% to the GHG emission intensity index*1 from theprevious year.
• Overseas affiliates:• Add at least 1% to the energy intensity index from the previous year.
• Kuraray Group in Japan:• No specific numerical targets were set.
• Overseas affiliates:• Add at least 1% to the water (excluding sea water) usage
amount index*1 from the previous year.
• Kuraray Group in Japan:• Reduce the amount of JCIA-designated PRTR substanceemissions*2 to less than 957 tons. (Keep it below the FY2016 result.)• Overseas affiliates:• No specific numerical targets were set.
• Kuraray Group in Japan:• Implement measures to reduce waste by the equivalent of 1%
relative to FY2016 level (900 tons) or more.
• Reduce the amount of disposal to landfill to less than the FY2016
result (251 tons).
• Overseas affiliates:• No specific numerical targets were set.

Effective
utilizationof waterresources
Managementof chemical
substance
emissions

Reduction ofwaste

Environmental
Management

Trust

Results• Kuraray Group in Japan:• Implemented measures to reduce GHG emissions by

13,000 tons-CO2.

• The GHG emission intensity index fell by 3.5% from the previous year.

• Overseas affiliates:• The energy intensity index rose by 3.6% from the previous year.

• Kuraray Group in Japan:• Efforts were made to use water more effectively.

• Overseas affiliates:• The water (excluding sea water) usage amount index*1 rose by
24.3% from the previous year.

• Kuraray Group in Japan:• JCIA-designated PRTR substance emissions were 1,004 tons.

• Overseas affiliates:• Chemical emissions regulations were observed in eachcountry/area.

• Kuraray Group in Japan:• Implemented measures to reduce waste by 2,327 tons.
• The amount of disposal to landfill was 330 tons.

• Overseas affiliates:•	Legal requirements were observed in each country/area andefforts were made to reduce and quantitatively manage theamount of waste produced.

• The amount of investment for environmental conservation:

Environmental
accounting—¥1,153 million (FY2017: ¥752 million)• The cost of environmental conservation activities:¥2,402 million (FY2017: ¥2,399 million)*1: Intensity index: A value obtained by dividing equivalent production by environmental impact. The 2016 result was set to 100.
*2: JCIA-designated PRTR substance: Specific chemical substances in the Law concerning Pollutant Release and Transfer Register (PRTR Law) and substances targeted under voluntary control standards
set by the Japan Chemical Industry Association (JCIA).

Environmental Performance
The Kuraray Group in Japan met the target of reducing atleast 13,000 tons-CO2 of greenhouse gas (GHG)
emissions (from FY2017) by reducing 13,000 tons-CO2.
It however failed to achieve the GHG emission intensity
index target (FY2018 target: at least 1% increase from
FY2017) with the result of a 3.5% decrease from FY2017.
Although the total GHG emissions decreased by 10,000
tons-CO2 from FY2017, the decrease in production(equivalent production) caused a further decrease in the
GHG emission intensity index.
The Group achieved the FY2018 target of waste
reduction by at least 900 tons with the result of a2,327-ton decrease. On the other hand, it did not meet

Kuraray
Insight

the target of keeping the emissions of JCIA-designated
PRTR substances below the FY2016 result (957 tons). The
FY2017 result was 1,004 tons.
Overseas affiliates met the target of adding 1% tothe energy intensity (production) index and the water
usage amount (production) index from the previous year.
The energy intensity index rose by 3.6% from FY2017, andthe water usage amount index increased by 24.3% from
FY2017. The significant improvement in the water usage
amount index was the result of upgrading exhaust gas
treatment equipment (scrubber system), which required alarge amount of water, to a thermal oxidizer at someproduction bases.

Environmental Data Audit

In FY2018, the Kuraray Group audited the environmental data of plants and affiliates in Japan. While problems such as
falsification of quality or quality check data are occurring at famous companies in Japan, the Kuraray Group focused not
only on quality check data but also on environmental data, and reexamined if those data have been properly handled,managed, reported and submitted to the government.
As a result, the Kuraray Group confirmed that effluent, air emission, wastes, and discharging of chemicals (PRTR
substances) measurement data for manufacturing sites were appropriately managed and stored in verifiable state, and thatenvironment-related reports and notifications were submitted appropriately based on actual measurement data. The
Kuraray Group will audit environmental data to prevent problems from occurring.

KURARAY REPORT 201942

Foundation for Value Creation

Photo to through the courtesy of JOICFPAdvancing Resources That Support Sustainable Growth•Trust •

Social Contribution Activities	With the understanding that sound and sustainable social development is a requirement for corporate growthand prosperity, we, the Kuraray Group, contribute to society through our products and businesses that provide
value to people and, as a corporate citizen, address social issues within a reasonable scope.
Kuraray Group Social Contribution Policy
The Kuraray Group shall make vigorous approaches to social contribution activities in accordance with the following policy.

Types of activities

Areas of activities

Activities that lead to a resolution of social issues
Activities rooted in local communities where Kuraray’s plants and sites are located
Activities emphasizing participation by employees on their own initiative
Activities that are sustainable in the long term
Priority areas: Culture, social welfare, environment, and science

Activities in Culture Field

Activities in Social Welfare Field

The Kuraray Group supports the Ohara
Museum of Art—Japan’s first privately
owned art museum—in Kurashiki, theplace where our company began, andcultural activities
at our plants andfacilities.

With the goal of supporting the employment,
maintaining the employment level, andincreasing the employment opportunities forindividuals with intellectual disabilities, theKuraray Group operates
workshops for them atplants and donates to theKuraray Fureai (Rapport)
Fund (a matching gift
program).

The Ohara Museum of Art

Activity item

Contribution
in cultural,academic,
environmental
and social
welfare fields

43

The Kuraray Group hosts greening
activities such as forest conservationand cleanup volunteering around ourplants.

Kurashiki: Kurashiki
WorkshopTarget• “Sending School Backpacks Across the Sea”
• “Chemistry Classes for Boys and Girls”• Operating workshops for people with intellectual
disabilities• “Kuraray Fureai Fund”• Activity with emphasis on link to local community

KURARAY REPORT 2019

Activities inEnvironmental Field

Okayama: cleanup of
Lake Kojima basin

Results

Activities were undertaken with a focus on the culture, artand science, environment and welfare fields in accordancewith the Kuraray Group Social Contribution Policy.

FocusTechnological
Development Capabilities

Human Resources

Safety Activities

Environmental
Management

Trust

Global Initiative to Foster Interest in Chemistry
Plants in Japan hold Chemistry Classes for Boys and Girls to foster interest in chemistry. This initiative began in Japan andworkshops now also take place in the US and Germany. For example, Kuraray America, Inc. hosted a chemistry class for
local children. They made slime and kaleidoscopes using poval resin to experience the fun ofchemistry. Also, volunteer employees offered a plant site tour and explained Kuraray’s business.
Meanwhile, Kuraray Europe GmbH invited a teacher and 18 students from a local school to thePoval plant in the Höchst Industrial Park. These students were at the age of Japanese senior highschool students and wanted to major in chemistry. The plant manager gave a Poval plant tour andoutlined its production. One of the participants commented that, “I now have a much
Okayama Fun
Chemistry
clearer picture of my career as a potential future chemist.”Class

Kuraray Europe

For more details, please visit our website:
https://www.kuraray.com/csr/report2019/relationship_with_society

Risk Management and Compliance	To strengthen the mechanism of promoting risk management and compliance, Kuraray separated the Risk
Compliance Committee from the CSR Committee in FY2017. The Risk Compliance Committee now reports directly
to the Board of Directors. With the Risk Compliance Committee placed at the core, the Kuraray Group willconduct activities to realize the implementation of priority countermeasures against critical risks, ensure strict
compliance with laws and regulations, uphold corporate ethics, and ensure fair business practices.

Risk Management
In the Kuraray Group, each year the President announces to the whole organization the basic risk management policy andrisk management tasks for the fiscal year.
FY2019 Kuraray Group Risk Management Policy
Basic policy

Tasks for the fiscal year

(1) Completely prevent illegal or inappropriate conduct that betrays thetrust of society.
(2) Completely prevent accidents and injuries (e.g., process accidents,
occupational injuries, pollution, and product defects) that threaten thehealth and safety of employees, the local community, clients,
partners, and so on.
(3) Should an event occur that seriously impacts the business or society,be sure to secure trust from society, safety, and health, andimplement measures to achieve business continuity or early recovery.
(Prioritize trust from society, safety, and health, and then work tocontinue or restore the business.)(1) Reexamine the risks of violating laws such as the Anti-Monopoly Law
and fully implement appropriate measures.
(2) Completely check, improve, and modify the quality assurance system
to enhance its reliability.
(3) Recognize the importance of information and data, and strengthen the
security measures.

Based on these tasks, the Group ensures that eachbusiness unit can flexibly and promptly accommodatechanges in the risk environment while maintaining thelong-term, continued approach to address risks.
The head of each business unit identifies, selfassesses, and appropriately addresses the risks for his/her business unit. From these risks, the Risk Compliance
Committee selects important ones to manage at the
management level, reports them to the management andthe Board of Directors. Executives in charge to promoteprioritized measures are designated.
For more details, please visit our website:
https://www.kuraray.com/csr/report2019/riskmanagement

Quality Management
The Kuraray Group implements quality management
systems such as ISO 9001 in each major manufacturingsite. Divisions have developed systems for each business
operation to supply products incorporating therequirements of customers. Aiming to strengthen quality
management for the whole group, in 2017, businessdivisions and the CSR Division worked together to createa PDCA cycle for company-wide progress checks on
issues introduced the previous year and on performanceof improvement activities. In 2018, the PDCA cycle wasused to share the outcomes of each division’s quality
improvement activities, provide education using theKuraray Group Quality Handbook, and develop internal
quality assurance rules to meet heightened demand from
customers and society.
The Group will continue to run this PDCA cycle tostrengthen quality management for the entire group.

KURARAY REPORT 201944

Technological
Development Capabilities

Human Resources

Safety Activities

Environmental
Management

Trust

Foundation for Value Creation
Advancing Resources That Support Sustainable Growth • Trust •Group Compliance“Our Commitment” states the principles of our conduct
which we should adhere to in doing our business. The“Kuraray Group Code of Conduct” serves as guidelines toimplement the commitment in performing day-to-day
work. The Group’s top executive has declared that we willcomply with laws and regulations and “Our Commitment”
under any and all circumstances. To share these principles
and commitments among all Kuraray Group personnel
throughout the world, the Compliance Handbook has
been compiled containing the foregoing declaration by the
top executive and explanations of the “Kuraray Group
Code of Conduct.” To disseminate these principles andcommitments among all Kuraray Group employees, acompliance handbook written in ten languages,

Japanese, English, German,
Chinese, Hangul, Russian,Flemish, Czech, French and Italian
has been distributed to the Group
employees worldwide.
In addition, we have appointed
Compliance Handbook
compliance officers at plants andoverseas offices of Kuraray and Group companies, andhave organized regional compliance committees. The
regional committees are working to effectively
implement not only Group-wide targets decided by the
Risk Management and Compliance Subcommittee but
also region-specific ones.

Whistleblower System
As a whistleblower system to prevent, identify andtroubleshoot any compliance violation at an early stage, theKuraray Group Employee Counseling Room has been set
up for all employees of the Kuraray Group in Japan,
including contract employees, temporary and part-time
employees. A whistleblower contact desk is also provided
for major subsidiaries in Europe and North America.
Due to the recent rapid globalization of the Kuraray
Group through M&A and other events, we created accessto the contact desk for overseas subsidiaries that hadn’t
had one yet. By the end of FY2018, all group companies

got to be access the contact desk.
The internal compliance seminar, which began in
2017, raised the recognition of the Kuraray Group
Employee Counseling Room. The number of consultations
seems to reflect such heightened recognition.
Number of Consultations at the Kuraray Group
Employee Counseling Room in Japan
FY2014

1

FY20153

FY20164FY20179FY201816

Thorough Compliance Measures
In March 2016, the Fair Trade Commission of Japan made anon-the-spot inspection of Kuraray, involving competitive bidding
on textile products purchased by the Acquisition, Technology
and Logistics Agency, Defense Ministry. Subsequently, in
March 2017, the commission ruled that Kuraray had violated
the Anti-Monopoly Law and issued a cease-and-desist order.
Following an on-the-spot inspection, the Kuraray Group
implemented various measures to ensure observation of
the Anti-Monopoly Law and compliance with it.
Despite these efforts, the Fair Trade Commission again
made an on-the-spot inspection in February 2017 regarding
manufacturing and sales of activated carbon for use infacilities such as water purification facilities and waste
incinerators. The Group took this event seriously andsincerely. We fully cooperated with the Commission during
the inspection and implemented the following measures toprevent the issues from recurring and ensure compliance.
Anti-Monopoly Law
Between 2017 and 2018, Kuraray in Japan introduced aninternal system that requires advance approval for bid
participation and transactions and meetings withcompetitors to monitor bid participation and competitor

45

KURARAY REPORT 2019contact. Bid results are audited annually.
For overseas operations, between 2017 and 2018, Kuraraycreated guidelines on compliance with the Anti-Monopoly
Law and bribery act and distributed them to employees ineach region. The company also provided training toemployees of overseas subsidiaries on the Anti-Monopoly
Law and bribery act, and interviewed them to grasp thesituation.
Compliance Seminar
Since 2017, department-based compliance education has
been provided to all group employees in Japan (including
contractors, temporary employees, and part-time employees).
In the training held in 2018, employees discussed
compliance violation case studies with their department
members. Through such training, Kuraray aimed to create awork environment where employees can always exchangehonest opinions. We believe that compliance violations canbe prevented if department members always pay attention
to each other and are able to talk to coworkers, superiors, or
supervisors when they have questions or worries. Kuraray
will continue holding similar training in futures.

Corporate Data (December 31, 2018)

Corporate Overview
Company Name

Kuraray Co., Ltd.

Representative
Director and President

Masaaki Ito

Established

June 1926

Head Office

Ote Center Building, 1-1-3, Otemachi,
Chiyoda-ku, Tokyo 100-8115, Japan

URL

https://www.kuraray.com

Capital

JPY89 billion

Employees(Consolidated)

10,768Group Companies

77 consolidated subsidiaries,
3 equity-method affiliate

Major Operations

The United States, Germany, Belgium,
China, Singapore

Major Shareholders (As of Dec 31, 2018)
Number ofshares held
(thousands)

Name of shareholders

The Master Trust Bank of Japan, Ltd. (Trust Account)40,318Japan Trustee Services Bank, Ltd. (Trust Account)

24,629National Mutual Insurance Federation of Agricultural Cooperatives

10,882

Nippon Life Insurance Company

10,448Japan Trustee Services Bank, Ltd. (Trust Account5)

6,479

Meiji Yasuda Life Insurance Company

5,969

STATE STREET BANK WEST CLIENT - TREATY 505234

5,851

Japan Trustee Services Bank, Ltd. (Trust Account7)

5,776

STATE STREET BANK AND TRUST COMPANY 505001

5,765

NOTHERN TRUST CO. (AVFC) RE - SSD00

5,442

Note: Kuraray Co., Ltd. holds 6,179,578 shares of treasury stock.

Stock Information

Shareholder Composition (Shareholding Ratio)

Securities Code

3405

Issued and Outstanding
Shares354,863,603 shares

Number of Shareholders

47,260

Domestic Stock
Exchange Listing

Tokyo Stock Exchange

Securities
Corporations
4.09%

Shareholder Register
Agent

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku,
Tokyo 100-8223, Japan

Independent Auditor

PricewaterhouseCoopers Aarata LLC

Other Domestic
Corporations
3.34%
Foreign Investors
30.40%

Individuals and Others
12.52%
Shares Held byKuraray Co., Ltd.
1.74%

Trust and Banking
Companies
29.93%

Life Insurance
Companies
7.12%
Major Commercial
Banks and Other
Financial Institutions
10.86%

Kuraray Group Network (As of January 1, 2019)
Domestic

Overseas

Group Main Bases
Head Office (Chiyoda-ku, Tokyo)
Osaka Office (Osaka)
Kuraray Trading Co., Ltd. (Osaka)
Kuraray Noritake Dental Inc. (Chiyoda-ku, Tokyo)
Kuraray Plastics Co., Ltd. (Osaka)
Kuraray Engineering Co., Ltd. (Osaka)
Kuraray Techno Co., Ltd. (Osaka)
Kuraray Kuraflex Co., Ltd. (Osaka)
Kuraray Fastening Co., Ltd. (Osaka)

Regional Headquarters
Kuraray America, Inc. (Texas, U.S.A.)
Kuraray Europe GmbH (Frankfurt, Germany)
Kuraray Asia Pacific Pte. Ltd. (Singapore)
Kuraray (Shanghai) Co., Ltd. (Shanghai, China)
Kuraray Hong Kong Co., Ltd. (Hong Kong, China)
Kuraray India Private Limited (New Delhi, India)
Kuraray South America Ltda. (São Paulo, Brazil)
Kuraray (Thailand) Co., Ltd. (Bangkok, Thailand)

PlantsKurashiki Plant (Kurashiki City, Okayama)
Saijo Plant (Saijo City, Ehime)
Okayama Plant (Okayama City, Okayama)
Niigata Plant (Tainai City, Niigata)
Kashima Plant (Kamisu City, Ibaraki)
Tsurumi Plant (Bizen City, Okayama)
Laboratories
Kurashiki Research Center (Kurashiki City, Okayama)
Tsukuba Research Center (Tsukuba City, Ibaraki)

Plants
Kuraray America, Inc. (Texas, North Carolina, and West Virginia, U.S.A.)
MonoSol Holdings, Inc. (Indiana, U.S.A., Worcestershire, U.K.)
Kuraray Europe GmbH (Frankfurt and Troisdorf, Germany)
EVAL Europe N.V. (Antwerp, Belgium)
OOO TROSIFOL (Nizhny Novgorod, Russian)
Kuraray Asia Pacific Pte. Ltd. (Singapore)
Kuraray Methacrylate (Zhang Jia Gang) Co., Ltd.
(Zhang Jia Gang, China)

Kuraray Chemical (Ningxia) Environmental Industry Co., Ltd.
(Ningxia, China)

Kuraray Korea Ltd. (Ulsan, South Korea)
Plantic Technologies Limited (Victoria, Australia)
Calgon Carbon Corporation(Pennsylvania, Kentucky, and Mississippi, U.S.A., U.K., France, and other countries)

Laboratory
KAI Corporate R&D (Texas, U.S.A.)

KURARAY REPORT 2019

46

KURARAY CO., LTD. KURARAY REPORT 2019

Kuraray Report 2019

KURARAY CO., LTD.
Head Office: Ote Center Building, 1-1-3, Otemachi, Chiyoda-ku, Tokyo 100-8115, Japan
TEL: +81-3-6701-1000 FAX: +81-3-6701-1005

https://www.kuraray.com

Issued in May 2019