CSR Report 2011
Corporate Social Responsibility

Report Policy
We are pleased to present our CSR Report 2011, which has
been made available in a digital version and as a printed
brochure. The report includes a special feature called “CSR
in the Age of ISO26000—What Does Society Expect from
Corporate Enterprises?,” a stakeholder dialogue held by the
ZEON management team with three outside experts.
The Web-based version includes descriptions of all our
activities and includes detailed background data, while thebrochure provides selected content that we would like more
stakeholders to read. The latest CSR news is posted on our
website.
We hope the report will enrich your understanding of the
ZEON Group’s CSR activities.
August 2011

About the Report
Period Covered
April 2010 to March 2011 (also includes some new informationfrom April 2011 and later)
Organizations Covered
ZEON and the following subsidiaries and affiliates are included.
Japan:ZEON Kasei Co., Ltd., ZEON Polymix Inc., Optes Inc., ZEON
Chemicals Yonezawa Co., Ltd., RIMTEC Corp., Tokyo ZairyoCo., Ltd., ZEON Environmental Materials Co., Ltd., ZEON
Medical Inc., ZEON Yamaguchi Co., Ltd., ZEON North Co.,
Ltd., Okayama Butadiene Co., Ltd.
Overseas:
ZEON Chemicals LP. (USA), ZEON Chemicals Europe Ltd.
(UK), ZEON Chemicals Thailand Co., Ltd. (Thailand), ZEON
Advanced Polymix Co., Ltd. (Thailand)
Notes on the Report(1) This report is published annually.
(2) The report was compiled with reference to the 2007
Environmental Reporting Guidelines of the Ministry of theEnvironment and the 2006 Sustainability Reporting Guidelinesof the Global Reporting Initiative (GRI).

http://www.zeon.co.jp/index_e.html

Contents
President’s Message ............................................................................................................. 2
Business Overview ............................................................................................................... 4

CSR at ZEON CORPORATION
Corporate Philosophy, CSR Policy and CSR Code of Conduct ............................................ 6
CSR Promotion System......................................................................................................... 7
Safety Philosophy and Environmental Philosophy ............................................................... 9
Corporate Governance and Internal Controls ...................................................................... 10
Risk Management and Compliance System ....................................................................... 11

Special Feature
Stakeholder Dialogue
CSR in the Age of ISO26000—What Does Society Expect from Corporate Enterprises?............................................... 12

Relationship with Stakeholders
Relationship with Stakeholders............................................................................................ 18
Communication with Shareholders and Investors .............................................................. 18
Relationship with the Local Community .............................................................................. 19
Relationship with Suppliers .................................................................................................. 19
Relationship with Employees ............................................................................................... 20

Environmental Activities
Environmentally Conscious Product Development ............................................................. 22
Special Topic:
Development of Synthetic Rubber that Contributes to the Fuel Efficiency of Tires .......... 24
Targets and Results .............................................................................................................. 25
Resource and Energy Conservation and Reduction of Greenhouse Gas Emissions ......... 26
Occupational Health and Safety ........................................................................................... 27
Environmental Policy Based on Economic Perspective ..................................................... 27
Third-Party Opinion .............................................................................................................. 29

Head Office (Shin Marunouchi Center Building)

ZEON CORPORATION 2011 CSR Report 1

President’s Message
I extend my thoughts and prayers to all of those whose lives
have been impacted by the Great East Japan Earthquake. On
behalf of all employees of the ZEON Group, I hope the affectedareas will soon be restored and rebuilt.
In accordance with our Mid-Term Management Plans,
developed every three years, we have implemented policies
each fiscal year. In fiscal 2010, the final year of IZ-60 (Innovation
ZEON-60), we summed up the results of the past three years
and set out a new three-year Mid-Term Management Plan,
which started in fiscal 2011. A large number of ZEON Group
employees from various positions participated in discussions
on the development of the new Mid-Term Management Plan
through workshops and other activities.
As the foundation supporting the new Mid-Term Management
Plan, we defined our key sense of value as speed, dialogue andcontribution to society and our treasured ZEON characteristics
as mutual trust and fellowship. These are based on our
corporate philosophy, “ZEON will contribute to the preservation

fractions, we recognize we must improve the transparency ofof the Earth and the prosperity of the human race” as well as

product impact not only from the perspective of production

elements of our CSR Policy established in April 2010, which

processes, but also in Life Cycle Assessment, which evaluatesstates: “We will ensure compliance and meet society’s needs

the total energy balance from production and use by customers

for safety and security,” “We will contribute to sustainably

through disposal.

developing society and protecting the global environment

We established the ZEON CSR Policy and CSR Code ofthrough our corporate activities,” and “We will ensure that each

Conduct in April of last year to guide our CSR activities. Thisand every ZEON person is aware of CSR and acts accordingly.”

January, we inaugurated a new CSR promotion system underWe then created an enterprise blueprint for 2020: “ZEON

the guidance of the CSR Conference, and we have focused

creates the future today through the power of chemistry” andon installing our systems for developing our CSR activities.

“ZEON will continue to contribute to the realization of customer

In order to lay a new foundation for ZEON’s CSR within thisdreams and a prosperous society.”framework, this fiscal year we will organize our CSR activities

The new Mid-Term Management Plan lays out the specificby category and stakeholder to increase visibility through thesteps through fiscal 2013 for embodying our enterprise blueprintdevelopment of a CSR Matrix, while developing an outline forfor 2020. The essential component of our business strategy

new CSR activities—CSR Core Projects—in which everyone

is: “We will further strengthen our elastomer and specialty

can participate.

materials businesses as the twin pillars for expanding business

The ZEON Group will continue working to realize theworldwide.” Details on this strategy can be found in the plan, andsustainable development of society and meet the demands

the corporate philosophy and CSR Policy lie at the heart of theand expectations of all of its stakeholders, including suppliers,

strategy. With this in mind, all our executives and employees arecustomers, shareholders, investors, concerned parties of eachcommitted to taking CSR to the next level and pushing forwardof our local plants and offices, and affiliated companies throughwith our business activities to contribute to society.

timely action, dialogue and contribution to society. Our goal is

The ZEON Group has developed an impressive range ofto establish ourselves as a group deeply committed to CSR,

environmentally friendly products through its original technology

which earns the trust of society at large as well as the pride ofthat does not imitate others and cannot itself be imitated. We

its employees.

supply these products to society reliably and safely throughFinally, I would like to say thank you for taking the time to review

our Responsible Care activities. In fiscal 2010, we reduced

this report, and we welcome your opinions and suggestions.

CO2 emissions by 8.8% from 1990 levels, achieving the 6%

August 2011

reduction goal of the Kyoto Protocol. As a chemicals company

Naozumi Furukawathat comprehensively uses petroleum-derived C4 and C5

President and CEO

2 ZEON CORPORATION 2011 CSR ReportNew Mid-Term Management Plan
● Positioning of the Mid-Term Management Plan

● Business Strategy$PSQPSBUF
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the global environment through our corporate activities.
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Key senseof valuet4QFFEt%JBMPHVFt$POUSJCVUJPOUP4PDJFUZ

Treasured ZEON characteristics
Mutual trust and fellowship

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4USBUFHZCZCVTJOFTTTFHNFOUElastomer BusinessEnterprise Blueprint for 2020

Further bolster our areas of strength byresponding to growing markets throughour global operations

ZEON creates the future todayUISPVHIUIFQPXFSPGDIFNJTUSZZEON will continue to contribute to the realizationof customer dreams and a prosperous society.

4QFDJBMUZ.BUFSJBMT#VTJOFTT
Expand business by accelerating
R&D in three vital business fields&WPMWFBCPWFJEFBTUPXBSEUIFJSGJTDBMoFYFDVUJPO.JE5FSN.BOBHFNFOU1MBO /FXZFBS1MBO

Enhance cost competitivenessOur new Mid-Term Management Plan defines our key sense of value and the most treasured ZEON characteristics in order to create an
enterprise blueprint for 2020 based on our corporate philosophy and the ZEON CSR Policy.
The new Mid-Term Management Plan lays out the specific steps through fiscal 2013 for embodying our enterprise blueprint for 2020.
Here are the essential components of our business strategy.
In the elastomer business, we are responding to growing markets through our global operations by constructing an S-SBR* production
plant in Singapore and planning to build a plant for Zetpol® (HNBR) in order to further bolster our areas of strength. At the same time,
we are striving to enhance our cost competitiveness.
In the specialty materials business, we intend to focus on R&D for three vital business fields: IT components (film for 3D televisions,
coatable organic insulators, a new low-dielectric constant inter-layer insulation film (Low-k) material, digital signage film, LCD retardation
film, organic EL materials, etching gas, and film for mobile terminal devices); energy components (binder for lithium-ion rechargeable
batteries, high volume capacitor electrodes, and sealing compounds for lithium-ion rechargeable batteries); and medical devices (sensor
equipped IABP balloon catheters, Bipolar ESD treatment devices, IABP balloon catheters, and bipolar snares).
ZEON will establish the global operation network illustrated below to lift its overseas production ratio to more than 50% by 2020.
*S-SBR: Solution-polymerized Styrene-Butadiene Rubber

Establish a network for quickly and steadily conducting R&D, production, and sales in growing markets*ODSFBTFPWFSTFBTQSPEVDUJPOUPPWFSCZGJTDBM
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14$QPXEFSTMVTIDPNQPVOEGPSBVUPNPCJMFTZEON CORPORATION 2011 CSR Report 3

Business Overview
ZEON’s unique technology delivers vital benefits to society
ZEON’s extensive range of products occupies a commanding position, particularly in international markets. These
include synthetic rubber designed specifically for timing belts and other safety-critical components in automobile
engines, green note aroma chemicals (leaf alcohol) for perfumes and food flavors, and environmentally sound products
such as lightweight, transparent cycloolefin polymer resins and etching gases for semiconductors that do not damage
the ozone layer.
At ZEON, we strive for innovative and revolutionary new technology that does not imitate others and cannot itself
be imitated while pursuing continuous improvement of our core strengths. Our ultimate aim is to establish a leading
presence in society.

Company Profile● Company Name: ZEON CORPORATION● Established: April 12, 1950
● Capital: 24.2 billion yen (as of March 31, 2011)● Employees: 2,836 (consolidated), 1,590 (ZEON CORPORATION only)(as of March 31, 2011)● Description of Businesses:• Elastomer Business: Manufacture and sale of synthetic rubber,
synthetic latex, and chemical products• Specialty Materials Business: Manufacture and sale of chemical
products, electronic materials, and specialty plastics• Other Businesses (including ZEON Group businesses): RIM
combination liquid and molded items, medical equipment materials,

Overview of the Mizushima Plant (Kurashiki, Okayama Prefecture)butadiene extraction technology, packaging and distribution materials,
building materials, etc.
● Head Office: Shin-Marunouchi Center Building, 1-6-2 Marunouchi,

Chiyoda-ku, Tokyo 100-8246 Japan● TEL: 03 (3216) 1772 (reception) FAX: 03 (3216) 0501

Financial Results
100 million yen

Other Businesses■ $POTPMJEBUFEOFUTBMFT

400

3,500

17.9%

3,000

3,029
2,816

18.4%

billion
yen

2,689

2,704

300

2,259

253/206

200
150

1,000

Elastomer Business

Sales Share (FY2010)

0

93/94

100

500

4 ZEON CORPORATION 2011 CSR Report

302/298

250

2,000
1,500

64.1%

Specialty Material
Business353/336

350

2,500

270.4

■ Operating income■ Ordinary income

100 million yen

29/38

50
06

07

08

09

10

FY

Consolidated Net Sales

0

06

07

08

09

10

Operating income,Ordinary incomeFY

ZEON’s Businesses
Elastomer Business• Synthetic Rubber
Styrene-butadiene rubber, butadiene rubber,isoprene rubber, acrylonitrile-butadiene
rubber, acrylic rubber, epichlorohydrin rubber,hydrogenated nitrile rubber, carbon masterbatch, etc.
• Synthetic Latex
Styrene-butadiene latex, butadiene latex,
acrylonitrile butadiene latex, acrylate latex• Chemical Products
C5 petroleum resin, thermoplastic elastomer
SIS, etc.

Synthetic latex

Zetpol ® hydrogenated nitrile(HNBR) elastomers

Gaskets

C5 petroleum resin

Timing belt usingsynthetic rubber

Gloves usingsynthetic latex

Aroma chemicals

Raw film

Specialty Material Business• Chemicals
Aroma chemicals, specialty solvents, functional
chemicals, etc.
• Electronics Materials
Photoresist, etching gas, toner products,
binder resin for electromagnetic tape, sealing
compounds for lithium-ion rechargeable
batteries, binder for lithium-ion rechargeable
batteries, etc.
• Specialty Plastics
Cycloolefin polymers and processed products

Cycloolefin polymer

Medical devices using
specialty plastics

Mobile phone using
specialty plastics

Other Businesses• RIM
Combined septic tank, building equipment
components, RIM (reaction injection molding)combination liquid, construction and agriculturalequipment components, game console cases, etc.
• Medical Devices
Various therapeutic catheters, etc.
• Other Products
Butadiene extraction technology, isoprene extraction
technology, butane-1 extraction technology,
synthetic rubber and latex manufacturing technology,
packaging and distribution materials, and building
and construction materials

Combined septic tank

Truck wind deflector made by
RIM (Reaction Injection Molding)

Bathtub pan madeby RIM

Medical equipment(IABP balloon)

ZEON CORPORATION 2011 CSR Report 5

CSR at ZEON CORPORATION

Corporate Philosophy, CSR Policy andCSR Code of Conduct
Borrowed from the Greek words “geo,” meaning “Earth,” and “eon,” meaning “eternity,” ZEON, in keeping with theorigin of its name, reflects the significance of these terms in its corporate philosophy as a company that contributes
to the preservation of the Earth and the prosperity of the human race. Our goal is to be a creative enterprise that has aunique character.
In addition, we want everyone at ZEON to have the ability to be discerning, to think, act, and always take on challenges
in line with the ZEON CSR Policy, established in 2010.

Corporate Philosophy (Established April 1997)“ZEON will contribute to the preservation of the Earthand the prosperity of the human race.”
In keeping with its name, which derives from the Greek words “geo” (the Earth) and “eon” (eternity),
ZEON will contribute to the sustainable development of people, society and the global environment
through innovative world-class technologies.

ZEON CSR Policy (Established April 2010)■ We will ensure compliance and meet society’s needs for safety and security.
■ We will contribute to sustainably developing society and protecting the global
environment through our corporate activities.
■ We will ensure that each and every ZEON person is aware of CSR and acts accordingly.
The ZEON CSR Policy was established in April 2010 to replace ZEON’s 7 Articles (established September 1997) and willserve as the basic philosophy on which the ZEON Group’s CSR is built. Each policy is further defined as follows.

First principle
Beyond complying with laws and regulations, we intend to firmly uphold the values and ethics required of a corporate member of society andcause no distress to society. Moreover, we will conduct all business operations appropriately in order to prevent accidents, provide a sense of
security to our employees as well as our local communities, thoroughly address quality and product liability issues, and undertake enterprisewide environment and safety initiatives to avoid impairing the safety and security of society.

Second principle
We will contribute to the realization of a ubiquitous society and protect the global environment through our core business. We will encourage
proactive action across the world, refine innovative technology, and continually create new products. As an indispensable and valuable corporate
citizen, we will enhance our corporate value and meet the expectations of society.

Third principle
Through our CSR management, we will continue to strengthen our corporate governance and ensure that all employees thoroughly recognize CSR
as a personal commitment, perform their duties in accordance with this understanding, achieve our mission to meet the public’s expectations, andfulfill ZEON’s CSR with enthusiasm. We will remain dedicated to environmental preservation as well as safety and quality assurance through theparticipation of every individual and in every corporate activity.

CSR Code of Conduct (Established April 2010)
This code of conduct was established after the ZEON CSR Policy by thoroughly reviewing the previous Zeon Compliance Code of Business
Practice (established October 2003). While the Zeon Compliance Code of Business Practice was essentially regarded as a list of prohibited
activities by stakeholder category, with an emphasis on legal and regulatory compliance, the new code clearly outlines the behavior to be
progressively adopted with the perspective of meeting society’s expectations in accordance with the ZEON CSR Policy.

6 ZEON CORPORATION 2011 CSR ReportCSR Promotion System
CSR Promotion Organization
With the restructuring in January 2011, we reconfigured and integrated organizational units that decide on and promote
the ZEON Group’s CSR activities under the CSR conference.

CSR Promotion Structure

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This conference was established as the chief decision-making organ
for the Group’s CSR. It deliberates and decides on annual activity
plans for the CSR Basic Policy Committee, Compliance Committee,
Risk Management Committee, Public Relations Committee, Quality
Assurance Committee, PL Committee, and the Environment and
Safety Committee as well as related measures. It also provides
necessary instructions based on the results of progress reports fromthese committees. The conference is held as the need arises andchaired by the President.

This committee was established to stimulate the ZEON Group’s CSR
activities. It formulates basic policies for CSR activities and promotes
their implementation throughout the Group.

ZEON CORPORATION 2011 CSR Report 7

CSR at ZEON CORPORATION● Compliance Committee● Public Relations Committee

This committee was established to prevent violations of laws andregulations and is responsible for creating education and training
programs on legal compliance. The programs are assigned to thedepartment in charge of their implementation. The purpose of thiscommittee is to make sure each executive and employee of the
ZEON Group acts in full accordance with the values and ethics thatsociety expects of them, and by so doing maintains fair and proper
business practices while developing business in harmony with local
communities and the general public. The committee meets from time
to time as the need arises.

This committee deliberates on the content and availability of
information that is disclosed in order to enhance corporate image
and ensure the appropriate and timely release of information. The
committee meets from time to time as the need arises.

● Quality Assurance Committee
This committee is responsible for the planning of management
improvement activities and training for the ZEON Group’s quality
assurance as well as supervising their execution. The committee
meets twice a year in principle.

• Antitrust Law Regulatory Subcommittee
This subcommittee was set up under the Compliance Committee
to proactively prevent any breaches of antitrust law by executives
or employees of the ZEON Group with the goal of maintaining fairand free competition. The committee meets from time to time as theneed arises.

● PL Committee
This committee formulates prevention activities and training related to
product liability of the ZEON Group. It also oversees how emergencies
are being handled. The committee meets twice a year in principle.

• Export Security Control Subcommittee
This subcommittee was set up under the Compliance Committee toexercise appropriate export and domestic sales in compliance with
the Foreign Exchange Law, the Foreign Trade Control Law and otherapplicable laws and regulations concerning products, commodities,
and technologies provided by the ZEON Group. The committee
meets from time to time as the need arises.

• Corporate Governance Subcommittee
This subcommittee was set up under the Compliance Committee
to promote internal control related to the ZEON Group’s financial
reports. The committee meets from time to time as the need arises.

• Information Security Subcommittee
This subcommittee was set up under the Compliance Committee
to manage information appropriately in the ZEON Group and protect
the confidentiality, integrity, and availability of its intellectual property
from the threat of intentional or unintentional errors, accidents, anddisasters. The committee meets from time to time as the need arises.

● Risk Management Committee
This committee was established to manage risks for maintaining
business continuity. It is responsible for systematically preventing
potential risks and gaining control over emerging risks. It is also
responsible for coordinating sound action to minimize loss from anycrisis that may occur. The committee meets from time to time as theneed arises.

8 ZEON CORPORATION 2011 CSR Report● Environment and Safety Committee
This committee plans and formulates concrete items to be included in
the ZEON Group’s environmental and safety measures and oversees
the execution of environmental and safety activities. The committee
meets four times a year in principle.

Safety Philosophy andEnvironmental Philosophy
A stable, safe workplace is the foundation for production operations. ZEON is working to provide customers withsafe, consistently high-quality products while reducing its environmental impact under its Safety Philosophy,
established in 1997, and its Environmental Philosophy, introduced in 2001.

Safety Philosophy

Environmental Philosophy(Established March 1997)(Established August 2001)

1. Safety is the foundation of all business activities
and the greatest priority.
2. Our basic belief regarding safety is that we canprevent all accidents.
3. Safety will be achieved by performing the 5Ss*
and when everyone takes responsibility for theirown actions.

1. Environmental protection is a mission of asocially responsible organization.
2. Our basic belief is that environmental protection
can be achieved with innovative technology.
3. Environmental protection will be achieved when
all employees work together with a sense of
mission to overcome challenges.

Responsible Care Policy (Established June 1998)
1. Prioritize the environment and safety
Protecting the environment and ensuring safety are preconditions for all business activities and are the most important priorities.
We will work continuously to enact full accident prevention countermeasures, and provide education and training for all employees to prevent
safety and environmental accidents.

2. Collect and distribute the latest information on chemical products
We will collect, store and manage the latest information required for the appropriate handling, use and disposal of chemical products, anddistribute this information to employees and users.

3. Minimize the discharge of toxic chemicals and waste
We will work to reduce the discharge of hazardous chemical substances, minimize waste, and develop technology for recycling and reusingmaterials.

4. Promote activities for conserving resources and energy
We will aim to dramatically reduce the amount of energy we use and help alleviate global warming by developing innovative technology andactively promoting resource and energy conservation activities that involve all employees.

5. Take the environment and safety into account when developing new processes and products and performing quality assurance
We will perform thorough environmental and safety evaluations from the initial stages of research, develop technology and products that takethe environment and safety into account, and work to maintain and improve the quality of technology and products.

6. Live together with society
We will strictly observe regulations related to the environment and safety, whether the regulations come from the local community, the national
government, overseas, or organizations to which we belong.
While cooperating in these activities, we will work to enhance our communication with the local community and society in order to convey a
better understanding of ZEON’s activities and further strengthen the trust that society has in our company.

7. Perform continuous improvements
We will continuously improve our environment safety management and technology by operating a Responsible Care Audit, the Safety
Management System, an Environment Management System based on ISO14001, and an Occupational Health and Safety Management System.

5Ss: Seiri (neatness), Seiton (order), Seisou (cleanliness), Seiketsu (hygiene), and Shitsuke (discipline)

ZEON CORPORATION 2011 CSR Report 9

CSR at ZEON CORPORATION

Corporate Governance and Internal Controls
Our Basic Philosophy Regarding
Corporate GovernanceThe company focuses on increasing profits andconsistently enhancing corporate value whilebalancing the various interests of its shareholders
and other diverse stakeholders. To this end,
we have been working to establish a systemthat supports efficient and sound corporate
management through corporate governance.
By putting into place our corporate governancesystem, we are clarifying the functions androles of each organizational entity within thecompany and facilitating quick decision-making
and implementation. We are also accurately
monitoring the status and results of our activities
and disclosing information to improve business
transparency.
We are determined to further enhance ourcorporate governance system to effectively carryout these functions.
The components of our corporate governancestructure are summarized below.

● Board of Directors
Board of Directors meetings are, in principle, held every month with the attendance of corporate
auditors to ensure the directors act in compliance with applicable laws and the articles ofincorporation in the execution of the company’s businesses. The Board of Directors primarily
makes decisions about basic management policy, strategies and other key aspects of businessexecution, including directors’ duties as stipulated by laws and regulations. An outside director
was appointed to the Board of Directors at the June 2011 shareholders’ meeting.

● Executive Committee
This committee is composed of the President and directors serving as corporate executive
officers at managing-director grade or above as well as other members separately
nominated by the President in accordance with the rules for the Executive Committee.
The committee meets, in principle, twice a month and deliberates and decides onmatters including consultation with corporate auditors in attendance. Of the agenda items
discussed and determined by the committee, key items as stipulated in the regulations for
the Board of Directors are taken up by the board for further discussion and deliberation.

● Board of Corporate Auditors
The Board of Corporate Auditors is composed of five members, including three outside
corporate auditors. The board meets quarterly, in principle, to report, discuss and resolve
important issues related to corporate audits. In accordance with the auditing policy set
by the Board of Corporate Auditors, each member audits directors’ execution of duties
through various means, such as attending meetings of the Board of Directors andmonitoring the status of company business operations, including subsidiaries.

Governance System

General meeting of shareholders
Decisions, supervision(Appointments, dismissals)(Audits)

Board ofdirectors

Auditors (board)

Decisions, supervision(Appointments, dismissals)

Business implementation andinternal controls system

Collaboration (assistance)(Appointments, dismissals)(Dismissal)

Audits(Appointments, dismissals)

Accounting
auditor

Audit
staff

Accounting auditsCEO

Collaboration

Executive
Committee
CSR
Basic Policy
Committee

PublicRelations
Committee

CSR Conference

Quality
Assurance
Committee

PL Committee

Reporting

Environment
and Safety
Committee

Compliance
Committee

Risk
Management
Committee

Internal
audits

Audit
group

Reporting(external)
External
lawyer

Antitrust
Law
Regulatory
Subcommittee

ExportCorporate Information
Security Governance
Security
Control
SubSubSubcommittee committee
committee

Business divisions, related departments, research laboratories, plants
Control, monitoring

Subsidiaries and affiliates

10 ZEON CORPORATION 2011 CSR Report

Reporting(internal)

Reporting(internal)

Reporting(external)

Risk Management and Compliance System
Under the CSR Conference chaired by the President, standing committees manage risks of loss. The Antitrust Law
Regulatory Subcommittee, the Export Security Control Subcommittee, the Internal Control Subcommittee, andthe Information Security Subcommittee, which were established under the Risk Management Committee and theCompliance Committee, are advancing the ZEON Group’s risk management and compliance efforts. Here are the main
activities of the committees and subcommittees in fiscal 2010.
● The Risk Management Committee continued handling incidents● The Compliance Committee conducted orientations at worksites

as they occurred in fiscal 2010 and took steps to prevent theirrecurrence. As part of our efforts related to Business Continuity
Planning (BCP) in fiscal 2010, this committee reviewed and revised
action plans for five leading potential risk areas that we identified: amajor earthquake in the Kanto region, an explosion at a production
plant, an outbreak of a new strain of influenza, disruption of
product distribution or supply of raw materials, and product liability
problems. A comprehensive review is under way, however, in lightof the Great East Japan Earthquake.

in Japan in fiscal 2010 as well as at affiliated companies in Asia
to ensure all employees understood the newly established ZEONCSR Policy and CSR Code of Conduct. The committee strived
to improve compliance awareness among all executives andemployees of the ZEON Group by conducting monthly workshops
on legal and regulatory compliance at each worksite. During
Compliance Month, the committee called for compliance slogan
submissions and conducted simultaneous inspections to ensure
legal and regulatory compliance.

◉ The Antitrust Law Regulatory Subcommittee analyzed the reasons◉ The Corporate Governance Subcommittee, marking its third year,

for raising prices, the timing of the price increases, conformity
with the rising prices of raw materials, and other factors in fiscal
2010 prior to raising prices for ZEON products (including Group
companies). In addition, the subcommittee reviewed the status ofattendance for industry entities to thoroughly implement rules andheld in-house seminars on the Antitrust Law.

strived to improve the efficiency of the internal control evaluationteam and focused on standardizing operations. As a result, thissubcommittee produced nine operation manuals and integrated
pending on-site inventory procedures for domestic groupcompanies.
◉ The Information Security Subcommittee was established under◉ The Export Security Control Subcommittee conducted 189

assessments in fiscal 2010 to ascertain whether our products
fall under categories stipulated in Annex 1 of the Export Trade
Control Order. It also conducted 32 inspections regarding CatchAll Controls and 318 assessments requested by users on theapplicability of ZEON products. In addition, this subcommittee held
in-house seminars.

the Compliance Committee and began work in January 2010.
This subcommittee will provide training for and the auditing of
information security and establish an information management
system for the ZEON Group.

ZEON Group’s Risk Management and Compliance System

ZEON CSR Policyt8FXJMMFOTVSFDPNQMJBODFBOE
meet society’s needs for safety
and security.
t8FXJMMDPOUSJCVUFUPTVTUBJOBCMZ
developing society and protecting
the global environment throughour corporate activities.
t8FXJMMFOTVSFUIBUFBDIBOEFWFSZZEON person is aware of CSR andacts accordingly.

CSR Conference
Compliance Committee
Prevention of law violations Education,
training, and audit of compliancewith laws

Risk Management
Committee
Prevention and control of
Risks; Dealing with crises

Internal reporting
systemAntitrust Law Regulatory Subcommittee
Prevention of violations of the Antitrust Law

Internal
route

External
route

Export Security Control Subcommittee
Proper security export control(1) Superior(2) Crisis
Management
Committee(3) Attorneyfrom law firm

Corporate Governance Subcommittee
Reliability in financial reporting
Information Security Subcommittee
Management of corporate confidentiality
and information security

Internal reporters
Employees, dispatchedemployees, and officers andemployees of contractors

CSR Code of Conduct
Individual stakeholders of the ZEON Group such as its officers,
employees, shareholders, and customers

ZEON CORPORATION 2011 CSR Report 11

Special Feature: Stakeholder Dialogue

CSR in the Age of ISO26000—What Does Society Expect from Corporate Enterprises?
ZEON has been conducting CSR activities under a new promotion system established in January this year. With thegoal of gathering external opinions in the context of this effort, a management team led by President Furukawa held a
dialogue with three outside experts on June 9, 2011, under the theme, “CSR in the age of ISO26000—What does society
expect from corporate enterprises?” The discussion deepened their understanding of CSR.

Wone Akiyama

Eiichiro Adachi

Toshihiko Fujii

President, Integrex Inc.

Research Chief, Headof ESG Research Center,
The Japan ResearchInstitute, Ltd.

Consulting Fellow, Research Institute of
Economy, Trade and Industry (RIETI)Visiting Professor, Graduate School of
Economic Science, Saitama University
Principal Director, Multilateral Trade System
Department, Trade Policy Bureau, Ministryof Economy, Trade and Industry

Naozumi Furukawa
President and CEO

Hiroshi Takegami
Director and Corporate
Officer

CSR at ZEON CORPORATION:
Cue to Start CSR Efforts and Recent Activities
Yamamoto: Today we invited three outside experts for a dialogue
on what society expects from corporate enterprises in the age of
ISO26000. Our guests have already viewed a video introduction to
ZEON CORPORATION as well as a television commercial about thecompany to gain an overall understanding of our business. President
Furukawa will lead off the discussion by confirming his commitment
to CSR as the head of the company.
Furukawa: I assumed the post of company president at the endof June 2003. In March of the same year, I was called before theEuropean Commission to testify on an alleged anti-competitive
practice in our NBR (nitrile-butadiene rubber) transactions, witha similar allegation subsequently announced in the United States.

12 ZEON CORPORATION 2011 CSR Report

Shunichi Yamamoto
Director & Senior Corporate
Officer, Director of CSR (served
as facilitator)

Around May, several chemical makers were found to have omitted
safety inspections under the High-Pressure Gas Safety Law.
Suspecting similar omissions, the Nuclear and Industrial Safety
Agency of the Ministry of Economy, Trade and Industry inspected
other companies and discovered that our Tokuyama and Mizushimaplants also omitted these safety inspections, and in November, theministry consequently revoked our authorization to carry out these
inspections.
I believe the historical background for the anti-competitive practice
was the antirecession cartel in the vinyl chloride industry from themid-1970s to the 1980s, which may have influenced our behavior
overseas. The omission of the safety inspections may have been aresult of cutting back too much on spending at our plants to reduce
fixed costs while suspending dividend payments for two consecutive
years in 1993 and 1994 and struggling to achieve profit targets after

the bursting of the economic
bubble.
To break away from this kind ofpractice, we first worked only toensure full compliance. Although
the corrective actions were notas sophisticated as today’s CSR
efforts, the executive officer atthat time took the initiative andregained authorization to carry out the safety inspections. From what
we have learned, I believe we can now guarantee compliance. At
the time, however, I was worried if we were doing enough. I had
the opportunity to hear Shigeru Nakajima, an attorney, talk aboutcompliance and CSR, and was inspired to work on CSR and create acompany that could make a greater contribution to society.
We want to advance our CSR efforts, including quality assurance,
across our entire business operations, starting at the regional
level, such as by organizing summer festivals at our plants for local
residents. For example, we intend to apply Life Cycle Assessment(LCA) to accurately estimate the benefits provided by using ourrubber products for fuel-efficient tires. Despite any challenges thatAny decision-making and activities of an organization inevitably havesome impact. Some stakeholders may appreciate the impact, butsome may speak out against it. How a company responds to thisinteraction between impact and feedback is CSR.
Company presidents in Japan are typically unable to immediately
answer questions with a list of what their stakeholders within andoutside of their company are saying. Overseas, however, I sometimes
observe a distinct difference in the sense of urgency and priorities
related to CSR. For example, Shell was publicly criticized in the late
90s for dumping waste into the sea from its rigs in the North Sea oilfield. What I remember from an interview with the manager of thatcompany was his comment saying “CSR for Shell at that time was
not a mid- to long-term issue; we had to make urgent decisions withthe possibility of seeing our gas stations burned the next day.” Thisis clearly a different perception of CSR.
I mentioned that the ZEON experience is a typical example of how
Japanese companies begin engaging in CSR. Since the President
has included globalization in the new Mid-Term Management Plan,
the company’s next task may be to identify the appropriate ways of
conducting business in overseas operations. I would advise you toadopt this perspective in the CSR Matrix and CSR Core Projects your

may arise, we are seriously exploring this kind of direction.
We are now developing a new Mid-Term Management Plan alignedwith our vision of society in 2020. The plan is geared toward making
us a company that contributes to society and that works to embody
the spirit of the ZEON CSR Policy. We are now polishing the final
details of this plan.
Yamamoto: Let me add to what the president has said by describing
the CSR activities at ZEON over the past year or so. Fiscal 2010 wasa year of major changes for ZEON. We established the ZEON CSR
Policy and CSR Code of Conduct in April, reviewed meetings held
across the company to reconfigure our CSR promotion system in
December and launched a new promotion system under the CSR
Conference in January this year.
We held two CSR briefing sessions for all head office employees
as well as all plants and group companies to provide an opportunity
for considering CSR at each milestone of our efforts. We areencouraging everyone to be aware of, think about and act for CSR
by developing a CSR Matrix. The matrix will increase the visibility of
our CSR activities through a system chart, organized by category andstakeholder in each department, under the new promotion system
in cooperation between the CSR Basic Policy Committee and CSR
Promotion Committees at the Head Office, five operating sites and
10 group companies. We have also launched the CSR Core Project
to develop activities in which all employees participate that could be
regarded as ZEON’s CSR project. I think these two pursuits will form
the foundation of ZEON’s CSR in the future.

company is now working on.
Akiyama: When we began surveying companies for the purposeof SRI (socially responsible investment) in 2001, the acronym was
simply not present in Japan. Our surveys focused on corporate ethics
and compliance. The compliance efforts of Japanese companies
were triggered by a series of corporate misdeeds. Especially in 2001,
we observed incidents, one after another, at large corporations.
To prevent such incidents, many companies started focusing on
compliance. Compliance itself was a foreign word that was unfamiliar
to the general public at that time, and we were often asked, “Whatdoes the word mean? How can you operate a business with it?” As
companies proceeded with compliance efforts, however, we started
to think that it is not about what you shouldn’t do. Instead, we saw
it as a positive effort for fulfilling our responsibilities to society andthought that it is also important to be ready to explain how we do this,which led to the current understanding of CSR. The CSR of Japanesecompanies started off as an area for fulfilling responsibilities. In recent
years, the direction of CSR has shifted to proactively contributing
to society in addition to simply
fulfilling responsibilities. I think
enterprises that initially started
CSR efforts from a defensive
stance have now shifted to a moreproactive approach of using CSR
as a competitive advantage.
I believe CSR is deeply rooted in acompany’s corporate philosophy.
Compliance is not just about maintaining legal compliance; it is about
a company strictly adhering to its own philosophy. Your company’s
philosophy, “ZEON will contribute to the preservation of the Earthand the prosperity of the human race,” clearly proclaims yourcompany’s commitment to benefit society and the human race.
This inevitably leads to the question: How will the company benefit
society far beyond legal compliance? CSR is about defining yourcorporate values and corporate intentions, and then putting these into
practice every day while communicating them to society. I think it issignificantly noteworthy that the company last year developed the
ZEON CSR Policy, which is easy to understand and remember. Also,

What is CSR?
—Listening to What Each Expert Has to Say
Adachi: The President said he understood CSR in terms of correcting
one’s own behavior and launched CSR efforts to restore balance after
a one-sided pursuit of profits had resulted in harm. I think this is atypical example of how Japanese companies have begun to engage
in CSR activities.
I believe this type of engagement is right in a sense. I also became
keenly aware that different approaches to CSR are being used in
the development of ISO26000. The definition in ISO26000 states:

ZEON CORPORATION 2011 CSR Report 13

Special Feature: Stakeholder Dialogue

it reviewed and improved its corporate regulations and introduced a
new promotion system to establish the foundation for its CSR efforts.
There are two important points in working on CSR activities. One is todefine what area, focus and initiatives are right for managerial goals andfor the company. The other is to clearly communicate this information
to employees so they can perform their daily tasks in alignment withthis direction. These two tasks should be pursued simultaneously.
Since employees are the people who put CSR activities into practice,
the absence of employee awareness, in particular, would render eventhe best plan useless.
Fujii: I’d like to say two things. First, when considering the value of
CSR efforts, it is very important to recognize the difference between
what is considered good in Japan and what is considered goodoutside of Japan. The antirecession cartel mentioned by President
Furukawa was developed in what may be referred to as “the goodold age” in Japan, and it was publicly accepted as unique to Japan.
There has been nothing similar in Western history. So it’s not about
whether Japan was right or wrong; there is simply a difference inwhat is deemed acceptable.
Here’s another example. A certain Japanese company employedpeople with disabilities to work at a factory in which only people

engagement in CSR efforts is typical for Japanese companies, and healso described his experience in the process of developing ISO26000.
Although ISO26000 does not require certification, I think its status as
an international standard has a major impact on corporate operations.
How do you think Japanese companies should respond?
Adachi: The first point is: towhat extent you can identify yourimpact. Japanese companies may
find it somewhat embarrassing
to discuss their negative impacts,
much less, “An Inconvenient Truth.”
For example, it may be difficult fora chemicals company to talk about
running out of fossil fuels, which
are its raw materials, or tripling, even quadrupling prices. Other thandeveloping a management plan, I suspect people usually refrain fromdiscussing these kinds of issues. It’s pretty much the same with theissue of reducing CO 2 emissions. I think it is important to create an
atmosphere that encourages people to recognize these issues andfreely express their opinions.
This is a little off topic, but I am very curious about why the company

with disabilities worked and proclaimed this to overseas media
as an example of CSR. From the Western perspective on humanrights, however, setting up a work environment exclusively forpeople with disabilities was considered as segregation; Western
philosophy dictates that people with and without disabilities should
work together. Before the matter could become a major issue, it was
brought back onto safe ground.
What we now consider to beright is often not considered tobe right outside of Japan. This
could become an Achilles heel for
a company expanding its businessoverseas. Embracing different
cultures within a company as well
as differences in values could causesome troubles in the company.
My second point: The description of your CSR Policy includes thephrase, “We will contribute to sustainably developing society andprotecting the global environment through our corporate activities.”
Contribution through business activities may be divided into two
categories. One is contributing to the sustainable development ofsociety and the global environment through products and services.
The other is contributing to society by changing the manufacturing
process without changing the products themselves. The
shortcomings of the former are easier to see because you receive
immediate feedback from the market and lose customers. This is not
so true in the latter case because issues are difficult to identify anddo not cause any immediate problems. This is why it is important tostick to the philosophy Ms. Akiyama mentioned earlier. Without aclearly expressed philosophy, you may not attract much feedback,and there is always the risk that the company will deviate further
and further from its fundamental direction. I think it is important tofocus on things that are not usually visible to the public, such as
manufacturing processes.

withdrew from the vinyl chloride business. If you explained that
it was simply an issue of economic efficiency or there was someconsideration about social impact in 10 to 20 years, our perception
toward your company could change.
Second, I think Japanese companies have no choice but to carefully
listen to what stakeholders say. There are not many outspoken
groups or stakeholders in Japan. The market, however, is closely
monitoring what companies are doing at every moment, so you must
be able to hear them as well.
After we combine social impact and stakeholders’ feedback, I
think the third most important factor is the selection of business.
Many in Japan may say the existence of a company or turnoverof its sales activities in the market bear witness to its social value
and contribution to society. They also say that the goal of CSR is toaccomplish the business at hand or improve quality regardless ofthe specific business field or product portfolio. However, I think alittle bit differently: Companies need to establish an organizationalframework in which members constantly consider whether theyshould continue or stop their current business and production
operations in the context of society and the Earth 50 years from now.
It is not until such a practice works that their own sustainability as
well as that of society as a whole will be guaranteed.
Yamamoto: Mr. Adachi mentioned three points: the extent to which
we can identify impacts, our relative openness to what stakeholders
say, and conducting our entire business with a mid- to long-term
consideration of what we should deliver to the world. With respect
to the second point, one of the key aspects of ISO26000 and aprincipal statement in the amendment to the Keidanren Charter for
Good Corporate Behavior is to ensure trust through dialogue with abroad spectrum of stakeholders. We know we have not done enoughin this regard, and we must intensify our efforts. Concerning theselection of business, I think Japanese companies are doing this tosome extent. For example, in our new Mid-Term Management Plan,
we determined our activities for the three years using the image ofthe company we would like to be in 2020. President Furukawa, what
do you think about this?
Furukawa: I think that in addition to ISO26000, various regulations
such as the RoHS Directive, REACH Regulation and IFRS have

Impact of ISO26000
Yamamoto: Mr. Adachi suggested that the history of ZEON’s

14 ZEON CORPORATION 2011 CSR Reportbeen introduced overseas, making it difficult to respond to impacts.
[Laughing] I suspect we would be in big trouble if we selected
our business without first looking ahead 20 or 30 years. Merely
recognizing impacts, however, is not enough. We are planning toopen a plant in Singapore but have yet to know the countries inwhich we will recruit employees or what the corporate culture willbe. Since we are required to get all of these things right, corporate
management will definitely be challenging.
Fujii: Concerning ISO26000, I think it is important to become awareof the parts you have not considered before. Many business scholars
have observed that one of the driving forces behind the strengthof Japanese enterprises is the Japanese consumer’s passion for
quality, that is, Japanese companies have benefited from discerning
consumers who refuse to purchase any product with even theslightest flaw. On the other hand, as Mr. Adachi suggested, Japanese
consumers rarely express their concerns to companies. Althoughenvironmental issues may be an exception, in other areas of concern,such as discrimination, companies in Japan are rarely subject toboycotts with anywhere near the frequency that businesses in theWest face such protests. Since Japanese consumers remain patient
on social issues but strict on quality, I think Japanese companies

film ®” produced by a solvent-free extrusion method to improve theenergy efficiency of LCD TVs and make them even thinner; and (6)“Zeorora ®,” a next-generation fluorochemical cleaning agent that
won the Stratospheric Ozone Protection Award in the United Statesand helps protect the ozone layer to prevent global warming.
We supply these environmentallysound products through ecofriendly, reliable and safe production
methods
establishedthrough
our Responsible Care activities.
In respect to contributing tosociety through our manufacturing
processes, which was mentioned
earlier, we reduced unit energy
consumption in production to 67.8 in fiscal 2010. This represents a
32% reduction from 1990, significantly beating the 20% reduction
goal of the voluntary environment-related action plan of the Japan
Chemical Industry Association. If we converted this level of reduction
into CO 2 emissions, it would be equivalent to 581 thousand tons infiscal 2010, an 8.8% reduction from fiscal 1990 (637 thousand tons),
exceeding the 6% reduction target for fiscal 2008 and 2012 under thehave given extraordinary consideration to quality while not feelingpressed to give much thought to social issues. In a sense, Japanesecompanies, over the long term, may be handicapped compared totheir Western counterparts. So I think reading ISO26000 from theperspective of cultural differences can be useful for noting content
that may surprise Japanese companies, making them wonder why
they should consider certain kinds of things.
Furukawa: I agree. The Charter for Good Corporate Behavior was
revised because Japanese companies lack a global perspectivefrom which to respond to issues such as human rights and poverty.
ZEON’s Code of Conduct is also weak in this regard and requires
improvements.
Takegami: On a second reading of ZEON’s CSR Code of Conduct, I
noticed that it states: “We will not engage in child labor and forcedlabor nor will we purchase any product manufactured through suchlabor;” however, it is not significantly emphasized. I think ZEON’s
code reflects a part of ISO26000 here, but I feel we need to squarely
respond to such issues and act accordingly.

Kyoto Protocol.
Yamamoto: Earlier Mr. Fujii stated that there are two categories ofcontribution through business activities: the products and services
themselves and the process for producing them. The polymerized
toner mentioned before is not only an environmentally sound product,
but it is produced using a method that is completely different fromconventional pulverization. In this sense, I think we are doing fairly
well in terms of process and marketability as well. Since ZEON’s
products are material or semi-manufactured goods, it is not always
easy to see whether they are truly contributing to society. We were
wondering what we can do to increase this awareness, and one
possibility is the lifecycle assessment mentioned by the President in
his opening presentation.
Furukawa: The chemical industry can create a variety of materials,
including those with very unique characteristics. For example,
airplane tires are high in natural rubber content. You could almost
say they consist solely of natural rubber, which has a well-balanced
durability. As Mr. Takegami has explained, we can develop rubberwith ever-increasing fuel efficiency, but taken to the extreme, a car
would not stop when it should. So we create distinctive rubbers thatto a certain degree compromise on fuel efficiency. The exact opposite
situation is rubber used for F1 races. Since racing cars drive at highspeeds without any consideration for fuel efficiency, tire makers ask
us to produce rubber that will not skid at high speeds, regardless offuel efficiency. We can create products with a variety of distinctive
features. Now, in the context of wanting to genuinely contribute tosociety while meeting customer demands, I believe our job is toturn out products that are environmentally sound throughout their
entire lifecycle, from production through consumption and ultimate
disposal. We want to clearly present this analysis in concrete,quantitative measures, despite the difficulty, which is our concern.

Contribution to Society through Core BusinessYamamoto: Now, let’s leave the issue of ISO26000. Ms. Akiyama
and Mr. Fujii have mentioned “contribution to society,” so let’s
discuss how we should make a difference through our corebusinesses, which would also impact environmental concerns.
First, Director Takegami will briefly explain how ZEON is contributing
to the environment through its core business.
Takegami: At the risk of sounding like a commercial for ZEON
products, I truly believe that the right way to contribute to society andthe environment through our core business is to consistently deliverproducts that meet the needs of society by taking advantage of our“original technology that does not imitate others and cannot itself
be imitated.” Representative products include: (1) rubber for fuelefficient tires; (2) latex for gloves that reduces protein allergies; (3)“Zeoglobule ®” polymerized toner that enables copiers to consumeless energy; (4) “ZEONOR ®” and “ZEONEX®” cycloolefin polymer
products featuring outstanding optical characteristics for suchapplications as mobile phone camera lenses; (5) “ZEONOR optical

Global Business Building and CSR
Yamamoto: Now, let’s start exploring our third topic, how should
we think about CSR in the midst of the globalization we discussed
earlier. We have already expressed the fundamental concept of our
new Mid-Term Management Plan, mentioned by the President in the

ZEON CORPORATION 2011 CSR Report 15

Special Feature: Stakeholder Dialogue

opening of this dialogue. It is based on our Corporate Philosophy andCSR Policy. These two will not and should not change. With this inmind, all our executives and employees are committed to taking CSR
to the next level. On the other hand, we will apply our CSR Codeof Conduct worldwide while modifying it in response to the needsof the times. Mr. Fujii, you have already started discussing how weshould think about CSR in relation to globalization. Could you pleaseelaborate on it a little more?
Fujii: I think CSR will serve as a strong walking stick for supporting
us in globalization. When one company has acquired a foreigncompany, especially a large foreign enterprise, it is not at all unusual
to later have a hard time remembering which company acquired theother in terms of, say, corporate philosophy. Westerners are good at
expressing their worldviews, while Japanese companies discuss thenext half step based on a deep-seated kaizen policy. In this way, thetwo sides talk right past each other forever. This situation could makeit particularly difficult for the head office in Japan to control decisions
on overall policy. This kind of situation tests how strongly you holdto your philosophy. The other day, I read President Furukawa’s 2011
New Year message. I have never read a president’s message thatwas so explicit. Each word was very simple and convincing. Because

Everyone should think about how they should work, what products
they should make and what manufacturing processes to apply, while
examining their own jobs in light of the corporate philosophy. It is,of course, important in overseas operations to disseminate yourphilosophy throughout the plant. But you must also pay attention to
your business partners as well as the supply chain. Otherwise, you
could incur significant risks.
Furukawa: I think so too. It is important to reflect the corporate
philosophy in each worker’s job. This is expressed in the third item of
our CSR Policy, which states: “each and every ZEON person is awareof CSR and acts accordingly.” Regarding the CSR Matrix mentioned
earlier, we will establish a framework for ZEON CORPORATION’s
CSR activities through a process in which the CSR promotion
committees at all 16 sites will discuss a matrix and propose it to the
CSR Basic Policy Committee for further discussion and compilation.
Adachi: In this context, when you talk about ZEON’s dream, I think it
is important to stick to your products and services when expressing
your philosophy. The core of your business appears to be byproductsof naphtha. That is, it seems your company’s history began withproducing byproducts of naphtha and has thoroughly pursued every
possibility for making good use of them. We could even say that theWesterners value clearly articulated thoughts, I think it is ultimately
essential to express your ideas about human rights, the world wehope to create, or how we can address poverty, for example, when
discussing values on the global stage.
In addition, I am concerned about the use of the phrase “contributeto the realization of customer dreams and a prosperous society” tocreate an enterprise blueprint for 2020. Westerners may well ask,
“what is the dream of our customers?” The idea comes from theJapanese notion of serving customers. I fear that losing the uniquely
positive aspects of Japanese companies is tantamount to digging
your own grave, which you should never do. The Japanese notion ofcustomer service, however, is hard to understand at the global level.
Western companies, such as Google, talk about their own dreams
first. They say they are working to realize their own dreams andnot to realize their customers’ dreams. Of course, they serve theircustomers, but they talk about their own dreams first. This meansthat when you travel overseas you will be asked, “What is ZEON’s
dream?” and I think it is very important to explain this in a way thateveryone can understand.
Akiyama: As you expand your business overseas, it is essential tomaintain a sense of center, and I think this is the role of the corporate
philosophy, as I said earlier. You must gain an understanding of
how much every employee understands the philosophy. When we
use the term “overseas,” it clearly does not refer to any one place.
Countries in the Americas and Europe are quite different from eachother, just as countries are different in Asia. When developing
business overseas, you must remain aware of the differences thatvary by region or nation. The main role of your corporate philosophy
is to unite these differences. When communicating your philosophy,
be sure not to change its core spirit, but also be sensitive to how
it could be perceived by local residents. We use the term “global
business development,” but I think what we are actually doing isdealing appropriately with individual areas, which together makeup the global community (“glocal”). In order to disseminate thephilosophy to each area, you should make sure to fully explain it in
a way that every local worker can understand. At the same time, it
is very important to provide opportunities for local workers to ask
themselves: “What exactly does this philosophy mean in our job?”company’s history is a history of recycling naphtha.
In a manner of speaking, the company holds seeds that haveinherited its DNA and aspires to have a certain technology flourish.
This information must be clearly presented to the public. If you do
this, it will play a symbolic role when you talk about the company’s
dream and philosophy.
Furukawa: Yes, as Mr. Adachi has said, the core of our business is
byproducts of naphtha and we are trying to use the C5 fraction in
every possible way. At first, our ideas were not at all lofty. We wanted
to use all of the C5 fraction, simply because transporting it by shipback and forth was very costly. I think we successfully differentiatedthe company as a result of how we used the C5 fraction. In addition,
because it is only 15% isoprene, we tried a variety of ways to exploit
the remainder of the C5 fraction, and as result, discovered a perfume,for example.
Adachi: I think these stories make your CSR much more accessible.

16 ZEON CORPORATION 2011 CSR Report

Conclusion: Advice from the Experts
Yamamoto: We have certainly covered a wide range of topics. I
would like to ask all our guests to offer their suggestions for ZEON.

Since it is the first time for ZEON
to exchange opinions on CSR withpeople outside the company using
this format, I invite President
Furukawa to speak first.
Furukawa: Although ZEON does
not have a wealth of experiencein M&A, I would like to mention
our experience in this area. Our
first entry into the United States
started out well, although we subsequently experienced somedifficulty with the president we had recruited in regard to culturaldifferences in such areas as quality management and layoffs. At thetime, I realized the difference between the Japanese way of thinking
and how others think.
I think global business development is really difficult. We are planningto establish a base in Singapore, where Singaporeans, Indonesians
and Bangladeshis will work together. This could prove to be evenmore challenging than our entry into the United States.
I wonder if people overseas understand why we put “the preservationof the Earth” in our corporate philosophy. It originally referred tothe production of vinyl chloride using raw material taken from the
Earth. We dug carbide out of the ground, brought in limestone,
used electricity for burning, added water to make acetylene, andcombined it with chloride to produce vinyl chloride. This is why weuse the term, “the Earth.” Perhaps employees in the U.S. subsidiary
haven’t been fully aware of this. [Laughing]
Akiyama: Have you told this story to all the employees there? Has it
been told in a manner that people in the United States can understand?
Americans are just as fond of these stories as the Japanese. They
like to hear about the corporate philosophy or history, what theysometimes refer to as the “back story.” If you have a story, I think you
should effectively communicate it. After hearing your explanation, I
feel I now fully understand the relationship between the Earth andyour company’s back story. Knowing this can completely change
how you view the video that introduces the company.
Furukawa: I don’t think I have shared it often enough. I will tell thestory more often in the future.
Fujii: Every company says it will do business globally, but even a
global company is still managed by people. So in the end, this dialogue
has been nothing more than a discussion about how each one of
us can become genuinely global. In order to call ourselves “global
persons,” we must realize that the key to doing business globally is
becoming a community of global persons. Nevertheless, we should
not abandon our Japanese sensibilities. We tend to approach thisissue from the extreme positions of clinging to it exclusively orcompletely abandoning it. For example, the way in which you express
your opinion about child labor reflects your own understanding of
the issue. How and what we understand is an eternal challenge foreveryone, which I believe is essential for making globalization work.
Akiyama: I think both corporate management and CSR should
be based on maintaining a certain essence while taking on newchanges. There are things you should not change and things you
should change quickly. You can never be overly strict in preserving
the core tenets of your corporate philosophy, but with othermatters, particularly those you deal with abroad, you have to change
depending on the situation and where you are. And understanding
the local situation accurately is necessary for making changes. If you
are from somewhere else, you must get to know and understand thepeople, their cultural background and their ways of thinking. And I
think it is important to appropriately communicate the story behind
your philosophy including some of the stories you have mentioned,
and share the necessary information.
One more thing I’d like to mention is the pride in your work. Yourphilosophy is one component of your pride, but you should also
communicate, both inside and outside the company, stories about
your products, like the one we have just heard. Those involved in
making the products know this information, but others, such asadministration staff members at the head office, might not completely
realize how your company’s products contribute to society, which
would be a waste. The information must be communicated to
employees because it cultivates pride in their work and the company.
In addition to sharing information about CSR efforts, I strongly advise
you to share these aspects with your employees.

Adachi: A large part of my advice may overlap with what Ms.
Akiyama has just said.
I advise you to maintain your corporate philosophy and speak out.
I encourage you to speak out because I think it is a challenge formany Japanese companies to have the confidence and means ofexpression for stating their contributions to society and to proudly
declare how they intend to make a difference. It might sometimes benecessary to make an objection or defend a viewpoint upon hearing
opinions from outside the company. Companies in the West aresuperior to Japanese companies in their abilities to speak out boldly.
In my experience, I see they are often staging a performance andsaying that they are doing something different than what they are
actually doing. As you go global, however, you must compete withthem. So Japanese companies simply must speak out more often,
regardless of the cost or time required. I feel CSR efforts represent
an ideal and are an important arena for speaking out.
Yamamoto: Thank you for your time today. Last year, we exchanged
our thoughts on CSR through a round-table discussion with young
employees, which was related to the recently announced ZEONCSR Policy and CSR Code of Conduct. This year, we discussed CSR
with external experts. We looked at the importance of paying close
attention to what people outside the company have to say in order tomeet society’s expectations and demands.
I would like to end the meeting by expressing hope that this dialogue
will stimulate further discussions related to CSR throughout thecompany.

ZEON CORPORATION 2011 CSR Report 17

Relationship with Stakeholders
We engage in a variety of activities to maintain a sense of harmony and mutual growthwith all our stakeholders, including customers, shareholders, investors, local communities,
suppliers, and employees.

Relationship with Customers
Quality Assurance
To consistently manufacture products that reflect the needs and wantsof customers and to ensure product quality, ZEON is undertaking quality
assurance efforts throughout the company by strengthening cooperation
among operational departments, research units (R&D Center) and plants
and more effectively integrating production, sales and technology.
Independent departments were established at each plant to enhancequality assurance company-wide, and the overall system was reorganized
to reinforce cooperation with the Head Office Quality Assurance
Department. We are actively improving communications and addressing
problems for plants and the company as a whole.
Particular company-wide efforts for the fiscal year are focused on ensuringthat we identify root causes, take countermeasures, confirm effectivenessand standardize quality targets. Our intent is to decrease the number of
persistent production problems at plants, and we will also take steps toprevent defective products from reaching the market toward our goal of
reducing customers’ claims and complaints to zero.

Customers
Requests andrequirements

Products andservices

Plants
Production

On-site training
Strengthen the
integration of quality
in design anddevelopment

R&D Center
Research anddevelopment

Assess current
conditions
Common view
between plants
Planning improvements
and modifications

Quality
Assurance
Department
Assess issues
Improvement
activities

Operational
Departments
Sales and
distribution

Communication with Shareholders
and Investors
Communication with Shareholders
To facilitate shareholder understanding of our business, we offer presentations and an exhibition on the day of the annual general shareholders’meeting, including displays for explaining clients’ commercial products or models of products that use our manufactured goods. We also post
information on our website about the annual general shareholders’ meeting, audio files of the financial results presentation at our quarterly
results briefing, and videos of the “Current Status of Management and Topics” given by top management (currently in Japanese only).

Communication with Investors
We encourage media coverage and visits by institutional investors and analysts from both Japan and abroad. In fiscal 2010, ZEON held briefing
sessions for analysts to announce quarterly results in August and November 2010 and February and May 2011. In addition to summarizing
financial results, sessions for the 2nd quarter and the end of the fiscal year included a briefing from top management on the current status ofmanagement and medium- and long-term plans.
ZEON held a Briefing for Individual Investors in September 2010,
which was organized by Nomura Investor Relations Co., Ltd., and,for the second time after 2008, a Briefing for Individual Investors inNovember 2010, which was organized by Takara Printing Co., Ltd.,publisher of Japanese Investor magazine.
Under the theme, “Surprisingly ZEON,” we presented our products
Briefing for Individual Investors
and business operations in an easy-to-understand manner. The
Displaying information at a Briefing
for Individual Investors
company will continue to actively disseminate information anddeepen mutual communications with individual investors throughthese briefings. At the same time, the company intends to be moreproactive in conducting IR activities for individual investors.

18 ZEON CORPORATION 2011 CSR ReportRelationship with the Local Community
Local Community and Society
Each plant is strengthening relationships with their local communities. Major activities are listed below.
● Festivals
Some of our plants host summer festivals.
• ZEON Summer Festivals (Takaoka, Kawasaki, and Mizushima plants)• ZEON Waraku Odori Dance Festival (Tokuyama Plant)
These plants also participate in summer festivals held by local communities.
● Cleaning
Cleanups are conducted in the areas surrounding each plant. Employees also participate
in volunteer cleanups held by local communities as well as joint cleanup activities withneighboring companies.
• Himi Waterfront Cleanup near the Takaoka Plant• Joint cleanup of Tonomachi Yakosen Street with neighboring companies

Jointly patrolling the streets under the “Ordinance for
Betterment of the Living Environment” in Chiyoda Ward

(R&D Center, Kawasaki Plant)• Higashi-gawa river cleanup (Tokuyama Plant)• Volunteer cleanups in the Shionasu District (Mizushima Plant)• Joint cleanup with the Marunouchi Neighborhood Association (Head Office)● Plant and laboratory tours
Plants and laboratories offer tours for high schools, vocational schools, universities, local governments, business partners, related organizations,and other interested community members.

Support for the victims and stricken areas of the Great East Japan Earthquake
ZEON donated 30 million yen through the Central Community Chest of Japan to aid victims of the earthquake that struck Japan on March 11,2011 and assist in the reconstruction of affected areas.
We pray for those whose lives were lost in this disaster and offer our deepest condolences to everyone affected by the calamity. All employeesof the ZEON Group hope for the speedy recovery of the stricken areas.

Relationship with Suppliers
Relationship with Suppliers
ZEON CORPORATION strives to reliably offer products that satisfy customers through our daily efforts, guided by our ZEON CSR Policy andCSR Code of Conduct. We have taken steps under our green procurement initiative to voluntarily prohibit suppliers from handling certain
substances and to monitor the content of substances governed by laws, regulations, and the RoHS Directive. We are diligently disclosing
information on substances contained in our products and establishing mechanisms to ensure the provision of safe products.

ZEON CORPORATION 2011 CSR Report 19

Relationship with Stakeholders

Relationship with Employees
Basic Policy
We encourage employees to seize the initiative in pursuing lofty goals, develop human resource systems that challenge them to achieve
their potential, and maintain comfortable working environments that value dialogue toward establishing ZEON as an enterprise in which every
employee can work with pride.

ZEON — “A company of which each andevery one of its employees can be proud”

Encourage employees tokeep pursuing lofty goals
under their own initiative

Human resources systemallows a sense of challenge
and achievement

A comfortable working
environment that values
dialogue

A wide variety of human resources

Human Resource Development
Encourage Employees to Keep Pursuing Lofty Goals under Their Own Initiative
ZEON’s concept of “being what we want to be” refers to people who act by thinking rigorously for themselves and continue to change in orderto achieve lofty goals. The company aims to foster people who take rigorous approaches to challenges, work independently, and pursue change
and improvement toward the achievement of their goals.
Up to now, ZEON has mapped out each individual’s objectives in the form of an “image of what we want to be,” and has revamped its
education and training practices to ensure their relevance to specific daily activities, and not to just fill in the gap between objectives andthe current situation. The aim is for employees to accept the challenges of even loftier goals after fairly evaluating results achieved throughperforming tasks, which can then be reflected in employees’ terms of employment. The end result of each employee achieving innovation andimprovement through specific daily activities is to build up workplace strength and the company as a whole.
Education and training at ZEON is broadly divided into core education, which is targeted at all employees and focuses primarily on raisingawareness and acquisition of common knowledge, specialized education for specific jobs, and on-the-job training conducted in the workplace.

Feedback on
employment conditions

Being what we want to be(Reaching a higher level)

Being what
we want to be
Evaluation

Education and training

Education and training

Tasks and results
Upon completion of the training program in June, these new
recruits are assigned to their respective departments and areready to take on their roles.

20 ZEON CORPORATION 2011 CSR Report

Personnel System
Human Resources System That Gives Employees a Senseof Challenge and Achievement
The ZEON Group believes that a truly competitive company is
the sum of the abilities of its employees, and we aim to create ahuman resources system that provides employees with a sense ofachievement by giving each one of them the opportunities to meetthe challenges of their lofty goals, to act on these goals, and to havethe outcomes reflected fairly in their employment terms, with theentire organization moving in the same direction.

Performanceappraisal
systemBonus linked toresults system

A human resources
system that gives
employees a senseof challenge andachievement

ZEON MastersystemZΣ allowance
awards system

Severance pay
systemWorkplace Environment
A Comfortable Working Environment that Values Dialogue
Building on foundational prerequisites emphasizing CSR and regulatorycompliance, ZEON implements flexible work practices guided bycorporate principles of motivation, reliability, achievement, stability
and safety, and security. In terms of health and welfare programs, thecompany maintains an ongoing commitment to creating a comfortableworking environment from the four perspectives of enhancing workplaceenvironments, encouraging dialogue, improving health, and supporting
self-reliance based on a life plan.

Motivation, reliability, achievement, stability
and safety, security

Creating a comfortableworking environment

Flexible work practices

Working environment,
dialogue, health,self-reliance

Health Management Initiatives
We are working to maintain and improve mental and physical healthcare
management for employees. At the same time, we are promoting the physicalhealth of employees through healthcare guidance provided by nurses and otherprofessionals.
In terms of employee mental health, several worksites have implemented stressassessment to assist employees in better understanding the physical and mental
influence of stress. In addition, ZEON conducts mental health training and assigns
psychiatrists and psychotherapists to support its industrial physicians.

Mental Health Training (Kawasaki Plant)

ZEON CORPORATION 2011 CSR Report 21

Environmental Activities

Environmentally Conscious
Product Development
We develop products that contribute to the environment, drawing upon our innovative, revolutionary technologies.
Products that Promote Energy Saving
Synthetic rubber for fuel-efficient tires: Nipol® S-SBR

Zeoglobule® Polymerized toner

ZEON’s S-SBR is attracting attention as atire material that contributes to vehicle safety
and saves energy. The use of fuel-efficienttires has been expanding, as evidenced
by the spare tire labeling system that was
introduced in Japan in 2010, and will be
implemented in Europe and North America.
Tire manufacturers in Japan and overseas
are expected to increasingly adopt ZEON’s
S-SBR as an advanced material that balances
a tire’s fuel efficiency and grip.

Pulverization is the conventional
method for producing the tonerused in copiers and other printing
equipment. Polymerization is arecognized toner production method
for consuming less energy.
The spherical microcapsule toner Toner electron microscope image
produced using the polymerization
method developed by ZEON contributes to better print quality at a

Automobile tires
made of fuel-efficientsynthetic rubber

lower fixing temperature. This in turn allows printers to achieve better
energy efficiency.

Products that Help Eliminate the Use of Organic Solvents

Environmentally Friendly Products that Conserve Energy

Binder for aqueous lithium-ion rechargeable batteries

QUINTIER™ SV

ZEON markets a binder for aqueous lithium-ion rechargeable
batteries that does not use organic solvents and therefore requires
less solvent recovery and reprocessing. The binder also maintains
working condition standards at battery production plants, which
lowers capital investment and operating costs. In addition, growinginterest in improved battery performance has led to the adoptionof this product for eco-friendly vehicles equipped with lithium-ion
rechargeable batteries.

The newly developed QUINTIER™
SV series of oxygen-absorbent resins
absorb oxygen when heated and aretransparent as well as easy to moldand process.
ZEON booth at TOKYO PACK
Applying the QUINTIER™ SV series
to packaging materials leads to maintaining the flavor of food andreducing waste by extending the shelf life of food products, sincethese resins absorb oxygen inside the packaging during the processesof sterilization, boiling, and retort.
Moreover, QUINTIER™ SV combined with transparent deposition
film can completely replace metal packaging materials such as
conventional retort aluminum pouches and cans. Because packaging
made entirely of plastic is easy to dispose of, environmental impact
is reduced. In addition, its light weight lowers transportation-related
energy consumption.

Products that Help Protect the Ozone Layer and Prevent Global Warming
Next-generation fluorocarbon detergent Zeorora® H, Etching gas Zeorora® ZFL-58
The Zeorora ® H fluorocarbon detergent and Zeorora ® ZFL-58 dry
etching gas used for manufacturing semiconductors received theStratospheric Ozone Protection Award from the U.S. Environmental
Protection Agency in 1998, and Zeorora subsequently won fiveawards, including the GSC Environmental Award from the Green &Sustainable Chemistry Network (GSCN) in 2003, and an excellence
award at the Eleventh Ozone Layer Protection and Global Warming
Prevention Awards sponsored by Nikkan Kogyo Shimbun, Ltd.,the Ministry of Economy, Trade and Industry, and the Ministry of
the Environment in 2008. Consequently, these globally recognizedproducts can contribute to mitigating global warming.

22 ZEON CORPORATION 2011 CSR Report

Ozone Layer Protection and Global
Warming Prevention Award

Products with Low Environmental Risks
New ether solvent Cyclopentyl methyl ether (CPME)

Plant growth regulator (active ingredient: Prohydrojasmon)

The world’s first eco-friendly either solvent,
CPME, was made in Japan. Because of its
high performance in reducing environmental
impact (less waste water, effluents, and CO 2
emissions) and its contribution to eliminatinghazardous
processes
andshortening
processing times, CPME is used across awide range of fields such as pharmaceuticals,
agrichemicals,aromachemicals,andCPhl Innovation Award
electronic materials. CPME was awarded thebronze prize at the CPhI Innovation Awards at
CPhI Worldwide 2010 in Paris, the world’s largest fine chemical trade
show, and a product award for Profiles in Sustainability, in recognitionof its contribution to green chemistry, at Informex 2011, the largest
fine chemical trade show in the United States.

This plant growth regulator (agrichemical agent) is
the result of research into jasmonic acid (a flower
aroma compound) and helps prevent problems
such as discoloration in apples and skin damage
in citrus fruit, which have become more common
in recent years due to global warming. It has beenused in combination with gibberellin for practicaluse in the prevention of peel puffing in mandarinoranges since 2010. In addition, it has earned
high marks in the agriculture industry for showing
outstanding results after a single applicationand has low impact on the environment due toits excellent biodegradability and eco-friendly
ingredients.

Jasmomate

Products with Low Environmental Risks that Promote Energy Saving
Urethane blowing agent Cyclopentanone

Optical film: ZEONOR Film®

ZEON released a cyclopentanone blowing agent for thermal insulationin refrigerators nearly 20 years ago, before depletion of the ozone layer
and global warming became serious issues. Today, cyclopentanone
is a standard urethane blowing agent used for thermal insulation
in a range of products. With zero ozone depletion potential andextremely low impact on global warming, cyclopentanone is recently
being widely used for building materials such as thermal insulation
boards and panels and for improving the energy-saving performanceof houses and other buildings as well as the environmentally soundproperties of materials.

ZEON was the first company in the world
to successfully manufacture optical filmusing a sheet extrusion process. This
cutting-edge process is solvent-free
and therefore no toxic substances are
released into the atmosphere. In addition,
ZEONOR Film® can be used as retardation film and has become an
indispensible material for LCD TVs that consume less power. For
small and medium-sized LCDs, such as on smartphones, ZEONOR
Film® allows for a clear display, even in bright surroundings, while also
consuming less energy by incorporating solar power.

Cycloolefin polymer ZEONEX® and ZEONOR®
ZEONEX® and ZEONOR® are new thermoplastics with a high level oftransparency that are already being used in optical lenses and optical film.
Because these thermoplastics are lighter by 20% or more than conventional
engineering plastics and have high heat resistance, they can be used inplace of glass for a high level of transparency and for high-specific-gravity
engineering plastics such as heat resistant plastics. They are, therefore,
contributing to greater mass production and reduced weight, and are also
expected to improve the energy efficiency of transportation equipment
during transport.

Lenses and prisms

Products that Support the Environment
ZEON Johkaso GPU
ZEON’S GPU-type johkaso (septic tank) is tailored for the needs of alow carbon society, as it consumes far less energy to transport, install,and operate than conventional products because its outer case ismade of PENTAM®, a dicyclopentadiene resin with outstanding shock
resistance. This highly regarded combined unit septic tank can beinstalled in nearly the same space as existing stand-alone septic tanks,
making conversion easy. Its sophisticated processing unit also removes
nitrogen, contributing to the protection of our waterways.

Combined septic tanks:
conventional GPH (left) and
ZEON Johkaso GPU (right)

ZEON CORPORATION 2011 CSR Report 23

Environmental Activities

Special Topic

Development of Synthetic Rubberthat Contributes to the
Fuel Efficiency of Tires
Synthetic rubber is one of our main products, and Nipol® S-SBR*, in particular,
has been used to manufacture tires. Recently, energy conservation
properties have become a high priority for tires in the wake of the growing
environmental awareness of tire manufacturers. ZEON conducts R&D,
production, and sales of synthetic rubber for tires to improve their fuelefficiency as much as possible.
Life Cycle Assessment (LCA) is a method of environment assessment of acompany’s products and services. It is used to evaluate the environmental
impact of products from procurement of raw materials, production, and use
to disposal, as well as transportation between each stage. The evaluation isconducted for the purpose of selecting the production methods, alternative
materials, and alternative products that have the least impact. We launched
our LCA efforts after recognizing the importance of the environmental
impact of our products at every stage of their life cycle.
Tire manufacturers have already posted LCA results for tires on theirwebsites for public review.
LCA results for tires provided by the Japan Rubber Manufacturers
Association show that CO 2 released during the period a tire is usedaccounts for approximately 90% of the emissions across the entire life
cycle of a tire. In addition, according to data from estimates on the impactthat tires have on fuel efficiency, conducted by the Japan Automobile Tire
Manufacturer Association, a tire’s contribution to fuel efficiency can be up
to 25%, depending on operating conditions. If a tire’s contribution to fuelefficiency is 10% and rolling resistance between the tire and ground is
improved by 20%, overall fuel efficiency can be improved by 2%.
We view this 2% improvement in fuel efficiency as very significant for the
future of the human race, and therefore ZEON is doing everything it canto improve fuel efficiency through R&D, production, and sales of rubber
for tires.

CO2 Emissions During the Life Cycle of a Tire
Disposal and recycling

Raw materials

7.2% (21.3kg–CO )4.1% (12.2kg–CO )2

2

Production

1.5% (4.4kg–CO )2

Logistics

0.2% (0.5kg–CO )2*S-SBR: Solution-polymerized Styrene-Butadiene Rubber

Use of tire

87% (258.0kg–CO )2

Source: The Japan Rubber Manufacturers Association

24 ZEON CORPORATION 2011 CSR ReportTargets and Results
Overview of 2010 Targets and Results
Item2010 Targets

1. Eliminate
environmental andsafety incidents

2. Eliminate
workplace accidents

2010 Results

Evaluation2011 Targets(1) Full implementation of plant safety evaluation

17 investigations performed★★★

(1) Full implementation of plant safety evaluation(2) Implementation of voluntary safety audit (atleast 1 per year at all 4 plants)

Implemented at all 4 plants★★★

(2) Implementation of voluntary safety audit (atleast 1 per year at all 4 plants)(3) Training to raise awareness of accident
prevention (at 4 plants and 1 affiliated groupcompany)

Implemented at all 4 plants (also implemented
at head office and 1 affiliated group company)★★★

(3) Training to raise awareness of accident
prevention (at 4 plants and 1 affiliated groupcompany)(4) Zero environmental and safety incidents

No environmental incidents, 1 safety incident★

(4) Zero environmental and safety incidents

No lost-time accidents, no serious non-lost-time
accidents (including cooperating firms)

3 lost-time accidents, no serious non-lost-time
accidents★★★

No lost-time accidents, no serious non-lost-time
accidents

Reduce butadiene emissions from 2009 level Butadiene: 5.5 tons (edge up slightly fromof 5.4 tons to 3.9 tons
previous year)★

Reduce butadiene emissions from 2010 level of
5.5 tons to 3.0 tons

Reduce acrylonitrile emissions from 2009
level of 14.1 tons to 9.9 tons★

Reduce acrylonitrile emissions from 2010 levelof 15.2 tons to 9.0 tons★★★

Reduce volume of waste sent to landfill to 140
tons(1) Implement voluntary management plan for air-polluting toxic substances

Acrylonitrile: 15.2 tons (8% increase fromprevious year)(2) Implement zero emissions plan for industrial waste

3. Reduce
environmental
impactReduce volume of waste sent to landfill to
211 tons in 2010

Final landfill amount: 181 tons

(3) Strengthen company-wide energy conservation project

4. Promote
chemical safety
and product safety

5. Promote safety
in logistics

Reduce unit energy consumption to 87.0%
of 1990 level

Unit energy consumption was 67.8% of the1990 level★★★

Reduce unit energy consumption from 2010
level of 67.8% to 67%

Improve unit energy consumption in logistics
by 1% from previous year

Unit energy consumption in logistics: 6.7%
improved from previous year★★★

Improve unit energy consumption in logistics by
1% from previous year

(1) Implement product safety reviews for new
products and new applications

31 reviews performed★★★

(1) Implement product safety reviews for new
products and new applications(2) Provide customers with environmental andsafety information (MSDS)

Issued MSDSs for all products and implemented★★★
revisions (implementation rate: 100%)(2) Provide customers with environmental andsafety information (MSDS)(3) Report new substances (laws related
to chemical substance investigation andproduction regulations, Occupational Health and
Safety Law)

Performed fully★★★

(3) Report new substances (laws related
to chemical substance investigation andproduction regulations, Occupational Health and
Safety Law)

(4) Zero violations of law

No violations of law★★★

(4) Zero violations of law

Training performed through logistics council topromote understanding of yellow cards

Training performed through logistics council andconfirmed carrying status of yellow cards★★★

(2) Zero logistics accidents

No logistics accidents★★★

Zero logistics accidents★★★ Target reached ★★ Target was almost reached ★ Requires improvement

Overview of Environmental Loads

INPUT

OUTPUT

Energy211,000 kl(crude oil equivalent)

Products
R&D Center
Takaoka Plant

1,119,000 tons

PRTR substances handled

Kawasaki Plant

Atmospheric discharges

922,000 tons

Tokuyama Plant

Water resources

Mizushima Plant

PRTR
substances
CO2
SOx
NOx

16,595,000 m3

37 tons
572,000 tons
495 tons
459 tons

Water discharges
Total wateramount14,210,000 m3
COD
140 tons
Total nitrogen
153 tons
Total phosphorus
1.6 tons

Industrial waste
Final landfill
Recycled

181 tons
9,700 tons

ZEON CORPORATION 2011 CSR Report 25

Environmental Activities

Resource and Energy Conservation andReduction of Greenhouse Gas Emissions
Resource and Energy Conservation
In fiscal 2010, although production increased, energy use in terms of the equivalentconsumption of crude oil rose only slightly due to energy savings initiatives at theMizushima industrial complex and progress in companywide improvements. Theenergy consumption rate index (against 1990 levels) has improved to 67.8.
The Energy Conservation Project at the Mizushima industrial complex is intended
to conserve energy by reusing petroleum residue (or pitch) that is generated when
extracting light oil distillates from heavy oil distillates (such as asphalt) as fuel forboilers, while reducing the use of heavy oil that had previously been used for fuel.

Amount of Energy Consumed
and Consumption Rate Index
Equivalent consumption of crude oil (1,000 kl)
Unit consumption index (compared to 1990 levels)

Vo

300

110

250

100

200

90

150

80

100

70

50

60

0

50
1990 2006 2007 2008 2009 2010 FY

8

7

6

5

4

3

2

Amount of Energy Consumed
Reduction of Greenhouse
Gas Emissions
and Consumption
Rate Index (CO2 Reduction)
consumptionof crude oilderived(1,000 kl) from fuel to 80%
To achieve our ambitious goal Equivalentof reducing
CO2 emissions
Unitspecified
consumption
to 1990 levels) Law, we areof 1990 levels by fiscal 2020, as
byindexthe (compared
Energy Conservation
110an overall
300
taking aggressive steps toslash CO2 emissions. We have put into placeframework for reducing CO2 emissions by adding the impact of CO2 reduction to100
250
assessment items in ZΣActivities
for fiscal 2010.
CO2 emissions for fiscal 2010 were approximately 580,000 tons per year and 91%
90
200 we intend to further reduce this percentage
of 1990 levels. Looking ahead,by anaverage of 1% annually.
80
150
Due to amendments to the Energy Conservation Law, CSR Reports after fiscal
2009 have been changed from a business site basis to a business entity basis, and70
100
therefore the entity covered for calculation is limited to the ZEON CORPORATION;
Okayama Butadiene Co., Ltd., an affiliated company, was excluded from calculation.
60
50Consequently, the consumption amount in fiscal 1990 was also revised.

0501990 2006 2007 2008 2009 2010 FY

Amount of CO2 Emitted
Volume of emissions (1,000 tons)

800
700
600
500
400
300
200
100
0
1990 2006 2007 2008 2009 2010 FY

Note: Our website has detailed information on other environmental activities including PRTR, safety training, air and water, safety
and accident prevention, toxic chemicals and waste, the environment, and safety in logistics.

26 ZEON CORPORATION 2011 CSR Report1Occupational Health and Safety
Moving Ahead with Measures to Eliminate Workplace Accidents and Promote Employee HealthTo achieve a safe and secure production system that increases workplace strength, ZEON puts considerable effort into “5Ss” (organization(Seiri), orderliness (Seiton), standardized cleanup (Seiso), cleanliness (Seiketsu) and discipline (Shitsuke)) safety audits, risk assessments andidentification of near-miss incidents, as well as the provision of hands-on training.

Trend in Lost-time Accident Rates*

Non-lost-time incident rates

2.50
Manufacturing industry (Ministry of Health, Labour and Welfare figures)
2.00
1.50
Chemical industry (Ministry of Health, Labour and Welfare figures)
1.00
0.50
ZEON CORPORATION
0.00

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09

10 FY

*Frequency of lost-time accidents
An indicator of the frequency of workplace accidents, calculated using the following formula.
Frequency of lost-time accidents = number of workers who experienced a lost-time accident / total actual working time × 1,000,000 hours.

Risk Assessment (Kiken Yochi)
To prevent workplace accidents and manage the risk of human error, ZEON has adopted the 4RKY (four-round risk assessment) practice, whereby
employees check for any unsafe situations before starting a task to avoid placing themselves in danger. In fiscal 2010, we continued to engage inthis activity, centering around KY trainers deployed at each workplace.

Environmental
Policy Based on
Economic Perspective

Environmental Accounting Summary for Fiscal 2010
Environment protection costs (million yen)Classification

Capital Investment forEnvironmental Protection
In fiscal 2010, we invested capital in reducing air pollution emissions
at the Mizushima and Tokuyama plants and replaced a facility sothat we can monitor water pollution at the Takaoka Plant. We also
invested in a facility that will improve wastewater treatment capacityand monitor water pollution at the Tokuyama Plant.
With regard to energy conservation, we invested in a waste-heatrecovery system for the Tokuyama Plant.

Expenses

239

2,457

215

1,761

(1) Costs within the business area
Pollution prevention costs
Breakdown

Environmental Protection Costs

2010
Investment
amountGlobal environmental protection costs

11

162

Resource recycling costs

12

534

(2) Upstream and downstream costs00(3) Management activity costs

090(4) Research and development costs

36

1,802

(5) Social activity costs

0141(6) Environmental damage handling costs

0

113

Total

275

4,603
(Million Yen)ZEON
CORPORATION

Item
Total investment amount within applicable period

9,214

Total research and development costs within applicable period

8,970

Scope of accounts: ZEON CORPORATION; ZEON Head Office, R&D Center, Takaoka Plant,
Kawasaki Plant, Tokuyama Plant, Mizushima Plant
Period covered: April 1, 2010 to March 31, 2011

ZEON CORPORATION 2011 CSR Report 27

Environmental Activities

Environmental Protection Costs
We are developing technologies to minimize wastewater and reduce the level of volatile substances that remain in products. We are particularly
focusing on reducing emissions of butadiene and acrylonitrile, both toxic air pollutants, and on developing technology, designing equipment,
and prototyping operating procedures to reduce levels of contaminants such as TN (total nitrogen) and COD (chemical oxygen demand) in
wastewater. In addition, we are also developing eco-friendly products and innovative energy conservation processes.

Environmental Protection Effects
Physical Results

Economic Effects

Following our low operational rate in fiscal 2008 and 2009 causedby the global financial crisis, we maintained a high operational rate
in fiscal 2010. All items in our environmental impact index increased
from fiscal 2009. Except for NOx, we have also reduced all of ouremissions compared to 2007 levels immediately preceding the
global financial crisis, and we will continue efforts to reduce ourenvironmental impact.

ZEON intends to beneficially repurpose the waste from oil by-productproduction and similar operations through such measures as recycling
or burning. Efforts are also being made to recycle metal products suchas empty drums and metal sticks. Also toward further energy savings,
ZEON is devoting particular attention to thermal recovery in its energyintensive distillation processes.

Economic Effects Associated with Environmental
Preservation Measures (Million Yen)

Environmental Protection Effects (Physical Results)
Environmental impact
index

Fiscal 2010

Compared tofiscal 2009

Compared tofiscal 2007

Description of effects

SOx emissions (tons)

495

+34

-206

Benefits of reclaiming material and utilization as fuelNOx emissions (tons)

459

+39

+43

Cost reduction through energy savings

1,119

Cost reduction through waste-elimination and recovery andreuse of solvents and catalysts

1,234

Total

2,390

COD emissions (tons)

140

+14

-54

CO 2 emissions (tons)

571,798+48,655-144,617181+15-1,323

37

+9

-19

Industrial waste sent tolandfill (tons)
Total emission of substances
subject to PRTR (tons)

37

Scope of accounts: ZEON CORPORATION; ZEON Head Office, R&D Center, Takaoka Plant,
Kawasaki Plant, Tokuyama Plant, Mizushima Plant
Period covered: April 1, 2010 to March 31, 2011

Scope of accounts: ZEON CORPORATION; ZEON Head Office, R&D Center, Takaoka Plant,
Kawasaki Plant, Tokuyama Plant, Mizushima Plant
Period covered: April 1, 2010 to March 31, 2011

Environmental and Safety Investment
Beyond investing in pollution prevention equipment as well as resource and energy conservation equipment, which appear in the environmental
accounts, we are also increasing safety through ongoing investments in safety improvement and eliminating risks (safety investment).
The graph below shows the cumulative trend in total environmental and safety investment (environmental investment + safety investment).

Environment and Safety Investment Amount (ZEON CORPORATION)

2010 investment amount(100 million yen)(100 million yen)

300

Investment amount

250
200

Environmental conservationrelated

2.8

Safety-related

1.9

Total

4.7

Scope of accounts: ZEON CORPORATION; ZEON
Head Office, R&D Center, Takaoka Plant, Kawasaki
Plant, Tokuyama Plant, Mizushima Plant
Period Covered: April 1, 2010 to March 31, 2011

150
100
50
0
1990

1993

28 ZEON CORPORATION 2011 CSR Report

1996

1999

2002

2005

2008

2010

FY

Third-Party Opinion
Review of the ZEON CORPORATION CSR Report 2011
Hitoshi Okada (Dr. of Engineering/Professional Engineer)
Senior Researcher,
Institute for Environmental Management Accounting■ Establishing a Foundation that Embodies
CSR-Oriented Management
President Furukawa has advocated for making CSR a priority for
management. In response to his views, ZEON has focused on
promoting CSR. I have commented on ZEON’s activities since fiscal
2008, and during this time, ZEON has strived to establish a structure
for moving forward with management that places priority on CSR,
including the development of a CSR policy and code of conduct aswell as the establishment of the CSR Conference, in a form that
concretely displays Mr. Furukawa’s leadership. Meanwhile, thecompany is constantly putting these efforts into practice throughconsistent CSR education and dissemination activities, such asreciting the CSR Policy, holding CSR explanatory meetings, andconducting CSR training at each plant and business site. As a result,
ZEON CORPORATION established a foundation for achieving
progress in CSR-oriented management in fiscal 2010.
■ ISO26000 and Performance Evaluation for
CSR-Oriented Management
It is important for ZEON CORPORATION, which does businessaround the world, to prepare for ISO26000. It would be good forthe company to review internal activities in the context of ISO26000
as well as to improve CSR-oriented management performanceand disclose the results. ZEON CORPORATION plans to work on
activities using CSR promotion tools, such as the CSR Matrix, andCSR core projects that engage all employees. While these efforts
are certainly praise worthy, KPI (Key Performance Indicator) based
CSR management should be put into place first. This would clearlypresent the significance of public expectations for CSR as clarified
through stakeholder dialogues, establish targets in the form of indicesfor achieving these expectations, and also facilitate progress through
PDCA cycles. ISO26000 places greater priority on these items alongwith stakeholder communications mentioned in the next item. I would
like to see vigorous efforts to embody the CSR-oriented management
envisioned by President Furukawa.
■ Interactive Communications with Stakeholders
Following the stakeholder dialogue with employees in fiscal 2009,

Response to Third-Party Opinion

ZEON CORPORATION convened a stakeholder dialogue with external
experts in fiscal 2010. This special project is well worth reading. It
shares an important message from ZEON and is expected to be more
widely disseminated, enabling all employees to understand ZEON’s
CSR. I would encourage the company to continue working on a broader
range of interactive stakeholder communications.
■ Contribution to the Conservation of the Global Environment
ZEON has unveiled its enterprise blueprint for 2020 as “ZEON creates
the future today through the power of chemistry—ZEON will continue
to contribute to the realization of customer dreams and a prosperous
society.” In addition, the ZEON Group has developed an impressive
range of environmentally conscious products through its originaltechnology that does not imitate others and cannot itself be imitated.
ZEON’s contribution to the environment with regard to CSR andthrough its core businesses is both significant and praise-worthy, eventhough it may not be readily apparent to general consumers. Also, in
terms of efforts to reduce global warming gases and industrial waste,
ZEON has for the most part achieved its goals, despite falling shortof its targets in some areas. ZEON’s contribution to the conservationof the global environment through these efforts certainly merits highmarks.
I look forward to seeing the further development of ZEON’s CSRoriented management with even greater results.
Hitoshi Okada
Senior Researcher, Institute for Environmental Management Accounting
Graduated in 1979 from the Division of Welding Engineering, the Graduate
School of Engineering, Osaka University; graduated in September 2006 fromthe Graduate School of Business Administration, Kobe University, specializing
in modern business administration (a professional graduate school for midcareer education); awarded PhD in Business Administration, Graduate Schoolof Business Administration, Kobe University in March 2010; part-time lecturer,
Osaka City University; appointed by the Ministry of Economy, Trade andIndustry to a committee investigating how to encourage the more efficient useof resources in supply chains.
While undertaking research into corporate misconduct, CSR, compliance,business ethics, revival management and other fields, he also renders
assistance in areas such as CSR management and the introduction of material
flow cost accounting.

Hiroshi Takegami CSR Director

We created a structure for ZEON’s CSR in fiscal 2010, the final year of IZ-60, through the establishment of the CSR
Policy and Code of Conduct in April and a new CSR promotion system in January 2011, with the CSR Conference as
the highest decision-making body.
Senior Researcher Hitoshi Okada from the Institute of Environmental Management Accounting has shared his comments on IZ-60 with us overthe past three years. In generally reviewing the progress of ZEON’s CSR during that period as well as this fiscal year and in light of future efforts,
Mr. Okada has pointed out the necessity of using KPIs to guide CSR activities and the significance of ongoing interactive communication
through stakeholder dialogues, which were launched in fiscal 2009. ISO26000, the international standard for corporate social responsibility,
which took effect in November 2011, likewise recommends implementing these items. We therefore intend to visualize our CSR efforts throughthe collective initiative of the newly established CSR Promotion Committee in the CSR Basic Policy Committee, the head office, business sites,
and Group companies using our CSR Matrix (CSR activities chart categorized by business, job type and stakeholder).
We hope to make even greater contributions to society by raising the level of our CSR efforts.

ZEON CORPORATION 2011 CSR Report 29

Inquiry: ZEON CORPORATION CSR Promotion Department
Shin Marunouchi Center Building, 1-6-2 Marunouchi, Chiyoda-ku, Tokyo 100-8246, Japan
Tel: +81-3-3216-0603 Fax: +81-3-3216-0604 http://www.zeon.co.jp