ESG Management
Basic policy and structure
To further underscore our stance on contributing to environmental and social issues of a global magnitude through our
corporate activities, the establishment of an ESG management base is currently one of our key medium-term measures.
To propel such a structure, the Company’s CSR Committee meets four times a year, in principle, to continuously run the
PDCA cycle.
Global ESG framework
Tokai Carbon Head Ofﬁce

Human Resources
Department

Environment & Safety
Department

General Affairs Department
and Legal Affairs Department

Administration

Reporting
KPI results reporting

Administration

Reporting

Subsidiaries (contact person)

ReportingCorporate Planning
Department

Business divisions /Corporate Planning
Department

Board of Directors

Management Committee

Information sharing

CSR Committee
Administration

Subsidiaries
Relevant
departments
Relevant
departments
Relevant
departments

Sustainability targets (KPIs) and results
ThemesHarmony with theglobal environment

Contributing tosociety throughour business

Strengthening
management baseMateriality

Elements

Reducing environmental impact

Specific numerical targets

FY2020

Reduce greenhousegas emissions• Reduce energy consumption per unit production (cut by 1% or more on an annual basis)

Reduce pollution• Dispose all of the low-concentration PCB waste, by March 31, 2025
• Maintain zero environmental claims against the Company(contamination of air, water, etc.)

Scope

Non-consolidated• Recycle 75% or more of waste

Realizing a recycling-oriented society

Recycle waste

Technological innovation

Emphasize research anddevelopment• Invest 60% or more of the development expenditures to reduce environmental burden• 60% or more of patent applications in areas of reducing environmental burden

Non-consolidated

Supplying safe and secured products

Further elevate quality• Reduce electrode consumption rate (3% reduction from 2019)Non-consolidated

Supply chain management

Raise supplier awarenessof CSR• Make all key suppliers aware of Tokai Carbon Group procurement policies

Reduce CSR risks at suppliers• Conduct CSR surveys at key suppliers (first year)

Respect for human rights

Raise employee awareness ofhuman rights

Non-consolidated• Conduct human rights training at all Tokai Carbon locations (total hours)• Set human rights training time requirements for all Tokai Carbon Group companies in Japan Group companies
in Japan(total hours)• Establish global human rights policies and ensure all employees understand them
Consolidated

Contribution to community

Actively engage in community contribution activities

Strengthening corporate governance

Establish a consolidated governance system

Ensuring compliance

Maintain ethical standards,
regulatory compliance• Zero serious regulatory violations• Attendance of 80% or more employees to the education and training program forcompliance issue.

Increase employment of
women• Larger portion of female workers• 30% of new graduate recruit to be female

Effectively implement training• Total employee training hours planned by head office(new-hire training / specialist training)

Reduce occupational accidents• Reduce frequency rate of occupational accidents (0.98 or lower)• Reduce lost-time accidents to 13 days or less (severity rate of 0.007 or lower)

Human resource development

Promoting occupational safety andhealth32

Goals

TOKAI CARBON INTEGRATED REPORT 2020

• Final disposal rate of 30% or lower

Non-consolidated

Non-consolidated
Consolidated
Non-consolidated

Non-consolidated

Non-consolidated

INTRODUCTION

Tokai Carbon Value Creation

Strategy for Value Creation

Foundation that Supports Corporate Value

Financial Section & Corporate Data

Materiality identification process
In November 2019, as a first step to establish an ESG management base, we specified our “Materiality” issues for Tokai Carbon.

Identified theissues from theperspectives of both
Tokai Carbon andour stakeholders

Discussion in CSR
Committee (underthe management
committee) by
having an input fromexternal experts

Assessed theimportance of theissues identified

Resolution of theBoard of Directors

Setting sustainability targets (KPIs)
Sustainability targets (KPIs) have been set for each

include all Tokai Carbon Group companies in Japan. We

materiality issues followed up by running the PDCA cycle.

have been also working to set up a system to gather ESG-In 2020, we started our initiatives from Tokai Carbon

related data from global group companies to establish aJapan. From FY2021, we have expanded our scope toGroup-wide ESG framework.

RatingResults
Target unmet due to an increased ratio of fixed energy consumption of equipment
as a result of reduced production amid the COVID-19 pandemic and other factors(up about 11% year on year during the April–December 2020 period)• Almost on target with about 40% of low-concentration PCB waste having been
disposed of•N o environmental claims filed
91% of waste recycled

15% final disposal rate
87% of development expenditures devoted to reducing environmental burden
100% of patent applications filed in areas related to reducing environmental burden
67% of relevant users met the reduction target, 33% did not meet the target withno change: Target met: Less than 60% of target met

FY2021
Specific numerical targets

Rating*1: 60%–90% of target met

Scope• Reduce energy consumption per unit production (cut by 1% or more annually)

Group companies
in Japan*2• Dispose of all low-concentration PCB waste by March 31, 2025
• Maintain zero environmental claims against the Company (contamination of air, water, etc.)

Group companies
in Japan• Recycle 80% or more of waste• Final disposal rate of 25% or lower

Group companies
in Japan• Devote 80% or more of development expenditures to reducing environmental burden• Devote 60% or more of development expenditures to reducing environmental burden• Make 80% or more of patent applications in areas related to reducing environmental burden• Make 60% or more of patent applications in areas related to reducing environmental burden

Non-consolidated
Tokai Konetsu Kogyo
Non-consolidated
Tokai Konetsu Kogyo• Reduce electrode consumption rate (3% reduction from 2019)Non-consolidated

Selected key suppliers, familiarized them with our procurement policy, andconducted a socially responsible procurement survey• Make all key suppliers in the Tokai Carbon Group aware of the Group’s procurement policies

Provided human rights training to managers and candidates for managerial
positions at the parent company and affiliates in Japan[Hours of training provided] 182 hours at the parent company, 141 hours ataffiliates in Japan
Formulated the Global Human Rights Policy in July 2020 and informed all
employees (on a consolidated basis) about it
Total amount of donations and activity spending: Approx. 20,620,000 yen
Number of employees who participated: Approx. 420
Continued promotion of internal controls, the Group-wide rollout of an internalreporting system, and the development of similar functions at the US headquarters• Implement harassment training based on the results of a harassment awareness survey

Non-consolidated• Implement human rights due diligence training

Group companies
in Japan• Improve understanding of the Global Human Rights PolicyGroup companies
in Japan• Roll out CSR surveys to key suppliers in the Tokai Carbon Group

Consolidated
Consolidated

No serious regulatory violations• No serious regulatory violations

90% of employees received compliance education/training• Formulate and disseminate a global code of conduct to all global subsidiaries

Ratio of female employees as of the end of December 2020 on a non-consolidated
basis: 8.5% (7.9% as of the end of December 2019)• Increase percentage of career-track female employees (Tokai Carbon Japan)

Ratio of female new graduates hired in FY2021: 33.3%

New-hire training: 13,392 hours; specialist training: 1,672 hours(global leader training, job rank-based training)
Frequency rate: 0.55

Target unmet with 90 lost workdays (severity rate of 0.05), although there was only
one lost time incident

Consolidated• New career-track female graduate hiring ratio of 30% (Tokai Carbon Japan)

Consolidated
Non-consolidated
Non-consolidated• Total training hours planned by head office (new-hire training / specialist training)Group companies
in Japan• Reduce frequency rate (0.98 or lower)• Reduce severity rate (0.007 or lower)

Group companies
in Japan*1 Since the period covered is from April of each year to March of the following year, the estimated achievement level is based on the status up to December.
*2 Group companies in Japan consists from the Tokai Carbon (standalone) plus the major domestic subsidiaries (Tokai Konetsu Kogyo, Tokai Fine Carbon, Tokai Material)

TOKAI CARBON INTEGRATED REPORT 202033

Environmental Management
Basic ideas

Environmental policy principles

Tokai Carbon Group treats protection of the global environment as one ofits highest management priorities. To harmonize our business activities withenvironmental needs, we have implemented an environmental management
system based on an independently established environmental policy and theISO 14001 international standard. Toward that same end, we also qualitatively
and quantitatively evaluate the environmental impacts of our business activities,
focusing on production and distribution, and take various steps to reduce them.

1. Enhance our environmental
management system
2. Promote effective use of resourcesand energy
3. Comply with relevant
environmental laws
4. Promote environmental education
activities and social contribution
activities
5. Disclose environmental information

Management structure for advancing environmental disaster prevention
Tokai Carbon has established an environmental

take on challenges, the achievement of which will havemanagement structure consisting of the Environmental

progressively greater benefits for the environment.

Disaster Prevention Head Office Committee and theEnvironmental Disaster Prevention Business Division
Committees through which Group companies participate.
The Environmental Disaster Prevention Head Office

Management structure for environmental disaster prevention
Environmental Disaster
Prevention Head Ofﬁce
Committee

Committee establishes major strategies and policies,and each business division pursues activities in line with
the ISO14001 international standard for environmental
management and is subjected to the PDCA cycle. Moving

Environmental Disaster
Prevention Business Division
Committees

General Manager, Technology & Engineering Division
Environment Safety Management Department
Managers of relevant departments
Business division manager or person designatedby business division manager
Production Technology / Department manager /Plant manager / Designated person
Ofﬁce

forward, we aim to ensure ongoing improvements andISO 14001-based environmental management system
Tokai Carbon has obtained ISO 14001 certification forenhance the effectiveness of our environmental protection

all of its plants in Japan. As of October 2020, 80.7% ofactivities through regular audits internal audits performed

Tokai Carbon Group major manufacturing site, including

by designated Company auditors and external audits

the overseas, have the certificate. We are striving toperformed by independent certification bodies.

Environmental objectives
In advancing its environmental activities, Tokai Carbon undertakes initiatives focused on the following four targets.
1. Legal compliance
We carefully confirm the requirements of relevant laws, ordinances, community treaties, and agreements and properly comply with them. In 2020, we
had no business locations in violation of key regulatory limits or standards, and we had no cases of environmental lawsuits or penalties.

2. Zero environmental claims
Even when within standards outlined in relevant laws, ordinances, community treaties, and agreements, we appropriately respond to any incidents
that could cause trouble for the local community. No significant environmental claims were made against Tokai Carbon in 2020.

3. Reduction of energy consumption per unit
Tokai Carbon works to cut its emissions of CO2 and other greenhouse gases by reducing its energy consumption per unit production. As a midterm target, we aim to achieve S-class rating by reducing 1% energy consumption on a year-on year basis following the standards of the Energy
Conservation Law.

4. Reduction of industrial waste
In 2020, Tokai Carbon furthered its recycling efforts by searching for and hiring a new company to process valuable waste items. As a result, werealized reductions in the volumes of industrial waste sent out for consigned treatment or final disposal. Based on our 2020 results, we have raised
our 2021 recycling target to 80% or more and reduced our final disposal rate to 25% or less. Going forward, we will redouble our efforts to separate
waste by category and recycle whenever possible to further reduce the amounts of waste handled through consigned treatment or final disposal.

34

TOKAI CARBON INTEGRATED REPORT 2020

INTRODUCTION

Tokai Carbon Value Creation

Strategy for Value Creation

Awareness of risks and opportunities
in climate change, risk management

Foundation that Supports Corporate Value

Financial Section & Corporate Data

Just like other key risks, the Board of Directors manages
and monitors climate change risks within the framework of
the Company-wide risk management system. Whenever

The Tokai Carbon Group recognizes that responding tonecessary, the director responsible for risk management

climate change is a key management issue. While we havereports on important items to the Board.

already devised flood countermeasures at high-priority
divisions, decentralized risk by setting up multiple sites

Carbon-neutral initiatives

for mainstay businesses, and incorporated climate changerisks into our business continuity plan (BCP), in order togauge the risks and opportunities in the Group posed by

On May, we have launched a Carbon Neutrality Promotion

climate change, since December 2020 we have continued

Project with the president as project leader. This is toto perform business impact assessments with the use ofpropel the Group’s efforts on reducing carbon emissions

scenario analysis, one of the requirements of the TCFD

to net zero across the entire organization with the goal ofrecommendations. Going forward, we plan to disclose therealizing a carbon-neutral society. We have started to review

results of our scenario analyses.

reduction targets and measures through this project.

Greenhouse gas emissions (non-consolidated)
2016

2017

2018

2019

CO2 emissions (t)*1, *2

228,904

256,943

255,989

3,900,214

Scope 1 (t)*1

38,99044,332

44,77836,681

Scope 1 breakdown: CO2

38,99044,332

44,77836,681

CH4

0

0

0

0

N2O

0

0

0

0

HFCs

0

0

0

0

PFCs

0

0

0

0

SF6

0

0

0

0

Others0000

Scope 2 (t)*1

185,474

206,312204,321

128,693

Scope 3 (t)*2

4,439

6,299

6,890

3,734,840

Category 1: Purchased goods and services*3

—

—

—

469,342

Category 2: Capital goods*4

—

—

—

19,862

—

—

—

N/A
4,903

Category 3:	Fuel-and energy-related activities not includedin scope 1 or scope 2
Category 4: Upstream transport and delivery*

4,439

5,551

6,234

Category 5: Waste generated by business operations*5

—

748

656

501

Category 6: Business travel

—

—

—

N/A

1

Category 7: Employee commuting*6

—

—

—

413,096

Category 8: Leased assets (upstream)

—

—

—

N/A

Category 9: Downstream transport and delivery

—

—

—

N/A

Category 10: Processing of sold products

—

—

—

N/A

Category 11: Use of sold products*7

—

—

—

2,827,136

Category 12: End-of-life treatment of sold products*8

—

—

—

0

Category 13: Downstream leased assets

—

—

—

N/A

Category 14: Franchises

—

—

—

N/A

Category 15: Investments

—

—

—

N/A

*1 Data collection period: From April to March each year. Only energy sources in Scope 1.
*2 The Data collection period for Categories 1–3 and 5–15 under scope 3, for which data collection commenced in 2019, is from January to December. References for the calculationof scope 3 include Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain (ver. 2.3; Ministry of the Environment and Ministry of Economy,
Trade and Industry (METI)), Database on Emissions Intensities for Calculating Greenhouse Gas Emissions, etc. through a Supply Chain (Ver. 2.6; Ministry of the Environment and
METI), and emission coefficients for each power supplier released by the Ministry of the Environment.
*3 Calculated by multiplying the total amount of main raw materials purchased by the applicable emission intensity.
*4 Calculated by multiplying the purchasing price of capital goods by the applicable emission intensity.
*5 Calculated by multiplying the volume of waste disposal by type and the volume of recycling by the applicable emission intensity.
*6 Calculated by multiplying the number of employees by the number of operating days and the applicable emission intensity.
*7 The Scope of reporting is the Graphite Electrode Division. Calculated by multiplying the energy consumption of products and the sales volume by the applicable emission
intensity and then adding CO2 emissions generated by the products when in use.
*8 The Scope of reporting is the Graphite Electrode Division.

TOKAI CARBON INTEGRATED REPORT 202035

Respect for Human Rights
Basics on human rights
We believe that consideration for human rights is important in order to realize our corporate philosophy of“Ties of Reliability”. We support the Universal Declaration of Human Rights, which declares the “common standards
that all peoples and all countries must achieve” in order to respect and ensure human rights and freedoms.

Global Policy on Human Rights
To fulfill our corporate responsibility on respecting humanrespecting human rights within the Group, applies to allrights, we undertake business activities with a strong sense

employees and business sites, and requires that our businessof ethics based on the United Nation’s Guiding Principles

partners comply with its provisions. The Tokai Carbon Groupfor Business and Human Rights. In keeping with these

Human Rights Promotion Committee plays a central roleinternational agreements on human rights, we establishedin promoting employee awareness about the policy and

the Tokai Carbon Group Global Policy on Human Rights

our approach so that we can further ramp up Group-widein July 2020. The policy sets out specific guidelines on

initiatives on respecting human rights.

Provisions of Tokai Carbon Group Global Policy on Human Rights1)	Compliance with laws andregulations2)	Prohibition of discrimination
3)	Prevention of child labor andslave labor4)	Support for basic labor rights5)	Reduction of excessive working hours
and securing right to wages6)	Health and safety standards7)	Prohibition of harassment

Human rights due diligence
Tokai Carbon Group conducts human rights due diligence
to ensure corporate respect for human rights in order
to identify and assess, as well as prevent and address,
potential human rights risk arising from the entire value
chain and corporate-related human rights-issues.

8)	Respect of privacy9)	Prevention and mitigation of negative
impacts on human rights10)	Response to human rights violations

Process of our human rights due diligence
1

Identifying country risks

2

Defining the scope of assessment

3

Putting investigation into practice4

Assessing5

Monitoring and conducting improvement measures

Initiatives for human rights awareness
Tokai Carbon conducts group-wide and division-specificviolations of the rights of person with disabilities andtraining to instill an awareness of human rights in its

people from other countries. In 2020, human rights training

employees. Based on the Global Human Rights Policy of

was conducted for management personnel, with thethe Tokai Carbon Group, training focuses on reinforcing

participation of 182 employees at Tokai Carbon and 141

an understanding of the basic way of Respecting Human

employees at Group companies in Japan.

Rights. It includes addressing discrimination, harassment,

36

TOKAI CARBON INTEGRATED REPORT 2020

INTRODUCTION

Tokai Carbon Value Creation

Foundation that Supports Corporate Value

Strategy for Value Creation

Financial Section & Corporate Data

Human Resources Development
Basic ideas on hiring and employment
Tokai Carbon guarantees fair employment opportunities for all individuals and considers only aptitudes and strengths
in making hiring decisions. We make no distinctions based on race, geographic origin, nationality, age, gender, sexual
orientation, or disability. In hiring recent college graduates, we seek goal-oriented, self-directed individuals who welcome
challenges, are problem solvers, and will cooperate with others. When it comes to mid-career hires, we look for people
who have skills that respond to our overseas business development, technical development, and other business needs.

Initiatives for human resources development
In line with our long-term vision of being“A Global

our ability to create value – two of the themes of our basic

Carbon company Contributing to a Better Society,” Tokai

philosophy. We aim to further strengthen the capabilities ofCarbon devotes significant attention to human resource

our employees and improve our value creation capabilities

development as a way to heighten internationalism andas an organization.

Certification and ranking system

Education and training

Tokai Carbon operates a certification and ranking system thatdiffers depending on career development track, as definedby responsibilities, department assignment, and rotation. Thissystem allows career development tracks to be changed based on
Company needs or employee preferences and opens the door to
rapid promotion of outstanding individuals.

1. Selective training
In 2017, we introduced overseas language training, global leadershiptraining, and executive management training to develop candidates
for future leadership positions at Tokai Carbon. In 2020, mid-career
employees selected by the business divisions for participation in these
programs global leadership training for six months. In 2021, we willconduct overseas language training for two months and executive
management training for six months.

Evaluation system
We employ a goal management system that outlines performancegoals and topics to clarify target goals for each employee. Each
employee participates in a meeting during which they set specificgoals and are given progress evaluations to increase individual
motivation, promote personnel development, and ensure
performance management.

Self-assessment
Tokai Carbon has a system under which employees — mainly
general career-track employees whose professional education
includes position rotations — annually assess the volume andquality of their work and express desires for current and future
positions and locations.

2. Stratified training
Tokai Carbon regularly conducts stratified training for generalmanager, manager, mid-level, second year, and new hires. These
training programs are open to participation by employees of Group
companies, as well. We enhanced training for new hires from 2019and conducted about three months of on-site training at plants, alongwith introductory training at the Head Office, in order to provide
new hires with basic knowledge regarding the safety and production
management, etc. required of employees of a manufacturing company.
From 2021, we will enhance the stratified training for younger
employees by years of service and mid-level employees by each level,in order to offer opportunities to nurture career design and a global
mindset and obtain basic knowledge of MBA, etc.
The training time per employee of selective and stratified training is 19
hours per year.

Opportunities for women
In our general employer action plans for promoting the
careers of women formulated in 2020, we set goals overNo. of employees, employee turnover (voluntary), and percentage
of female employees to total employees (Non-consolidated)

a two-year period beginning April 2020 and extending to* Excluding fixed-term workers

March 2022 to increase the hiring of female new graduates
to at least 30% of people taken on for career-track positions
and to attain a 65% or higher acquisition rate of annual
paid holidays. While the percentage of females to thetotal number of new graduates taken on for career-track
positions hired in 2021 reached 33%, we will continuously
work on increasing the hiring of female new graduates forcareer-track positions and creating a comfortable work
environment for female employees.

2018

2019

2020

No. of employees

729

769

778

Employee turnover (voluntary)

14

17

11

Percentage of female employees tototal employees

6.7%

7.9%

8.5%

Percentage of females to the total
number of employees taken on forcareer-track positions

20.0%

42.9%

20.8%

TOKAI CARBON INTEGRATED REPORT 202037

Occupational Safety and Health
Basic ideas for occupational safety and healthOccupational safety and health is one of the Tokai Carbon Group’s highest priorities and a key concern of management.
Aiming to keep our operations free of occupational accidents, we strive to ensure that everyone working in our facilities
is sensitive to potential dangers.

Health and safety management structure
To confirm the status of health and safety activities at

Tokai Carbon health and safety organization charteach operating site and to deliberate and outline core
initiatives related to health and safety, we convene Central
Health and Safety Committee meetings attended by labor

Environment & Safety Department
Central Health and
Safety Committee

Technology departments
Labor unionand management representatives, including executives
responsible for occupational safety. Every year, we set policies

Operation sites

for enhancing occupational safety and health at Central

Site manager

Health and Safety Committee meetings in order to keep
improving occupational safety and health going forward. In
2021, the frequency rate management value is 0.98 or less. At

Regional Health and
Safety Committee

Safety manager / health manager /industrial physician
Labor union

Tokai Carbon, the Board of Directors supervise occupational

Officesafety and health risk, and the board member in charge ofrisk reports important matters such as occupational accidents
to the Board of Directors as necessary.

Improving occupational safety and health
At Tokai Carbon, we continually engage in full-participationthat resulted in lost workdays. When an accident resulting

safety management and regularly conduct activities toin lost workdays occurs, we first analyze the situation

nip danger in the bud, give presentations of near misses,

in on-site verification, then thoroughly understand thehold KYT (hazard prediction training), and so on, as riskroot cause through further analysis, and then develop

assessments for the present dangerous work procedures

recurrence prevention plans. Moreover, we not only draw

and dangerous places in facilities, ultimately eliminating

up those countermeasures, but also visit plants to do safety

occupational accidents. In 2020, there was one accident,

inspections and check the effectiveness of the recurrence

involving a worker who was hurt by a falling heavy object

prevention plans.

Labor relations
Tokai Carbon respects the rights of employees, including theExpert Committee on Human Resources Systems. Working

freedom of association and the right to collective bargaining.

from a foundation of trust and cooperation labor andTokai Carbon has signed a union shop agreement withmanagement fulfill their respective responsibilities and strive

the Tokai Carbon Labor Union. Union membershipto implement policies that promote positive interaction.

includes 86.3% of Tokai Carbon employees (as of the

When it seeks to implement organizational and employment

end of December 2020). Labor and management discuss

policy changes, management consults with the union before

matters concerning labor relations and business activities infinalizing decisions.

meetings of the Labor Committee, Work Committee, and

38

TOKAI CARBON INTEGRATED REPORT 2020

INTRODUCTION

Tokai Carbon Value Creation

Strategy for Value Creation

Foundation that Supports Corporate Value

Financial Section & Corporate Data

Reliable Product Supply / CSR Procurement
Business/customer attributes and basic way of thinking
Owing to a customer base spanning a wide array of industries and sectors, Tokai Carbon Group’s products are utilized
in a broad range of fields, including automotive, steel, electronic components, agricultural equipment, and lithiumion batteries. Accordingly, we believe that maintaining a stable supply of high-quality products is our most basic
responsibility. Moreover, given that we form part of the supply chain of our customers, it goes without saying we abide
by relevant laws, regulations, and social norms, but we also continually make every effort to minimize the environmental
impact of our manufacturing operations.

Diversified plant location and local production
Diversified plant location, local production

Raw material procurement

In the past, Tokai Carbon Group based its production in Asia. In the

For both carbon black and graphite electrodes, there are only a

1990s, however, we expanded our business area to the global market.

limited number of raw material suppliers. It is our responsibility to the

In an effort to add production facilities in various locations, we havestakeholders to stably provide our quality products to our customers

taken actions such as establishing a carbon black plant in China inby continuously sourcing the raw material. In procuring raw materials

2004, acquiring the German graphite electrode manufacturer TOKAI

for carbon black, we select suppliers based on careful considerations of

ERFTCARBON GmbH in 2005, and acquiring the Canadian carbon

volume, pricing, and raw material types.

black manufacturer Cancarb Limited in 2014. In 2017 and 2018 we also

As for needle coke for graphite electrode, we could centralize theacquired graphite electrode and carbon black manufacturers in Northprocurement which now are handled by individual locations as Japan,

America. These actions have made us a global player with production

U.S. and Europe if that works for a greater stability in procurement.

and sales functions near customers, and the ability to reliably supply
high-quality products, in both of these businesses.

Quality management
To establish a basis for quality management, we havelevel of quality. We also conduct a periodical assessment

acquired the international quality management standard ofand exchange opinions regarding the effectiveness of

ISO 9001 for all of our manufacturing facilities in Japan. We

our quality management system to gain a unified quality

are running the plan-do-check-act (PDCA) cycle for all of ourmanagement throughout the division’s offices and plants.

processes to ensure that our customers are satisfied with the

Basic way of thinking on CSR procurement
In order to face the global environmental and social challenges as

Tokai Carbon Group Procurement Policy
https://www.tokaicarbon.co.jp/en/sustanability/
pdf/pdf_procurement.pdf

an involved party, we are intent on contributing to the building of a sustainable society together with our suppliers byadhering to our Procurement Policy.

Implementation of CSR procurement survey for our business partners
Tokai Carbon Group procure raw materials from suppliers worldwide at each global site. We request our business partners toagree with our Procurement Policy and respond to our CSR procurement survey so that we can confirm their compliance status.

TOKAI CARBON INTEGRATED REPORT 202039

Corporate GovernanceCorporate governance structure
As a company with an Audit & Supervisory Board, Tokai Carbon focuses on enhancing the effectiveness of audits by
Audit & Supervisory Board members and our internal audit functions. At the same time, we work to strengthen the
management supervision functions of the Board of Directors by appointing multiple external directors and establishingvoluntary committees in order to realize an appropriate corporate governance structure.

Board of Directors

Management Committee

The Board of Directors is responsible for making decisions

The Company has established the Management Committee

on important management matters and overseeing

under the Board of Directors. This committee deliberates

business execution. In principle, the Board meets monthly.

and makes decisions on important management matters

As of March 30, 2021, there are nine directors, includingin accordance with basic policies adopted by the Board

three external directors.

of Directors. The Management Committee meets once aweek, in principle, with participation by executive officers
and Audit & Supervisory Board members, etc.

Audit & Supervisory Board members and Audit & Supervisory Board
Audit & Supervisory Board members audit the performancefour Audit & Supervisory Board members, two of whom hailof duties by directors by attending important meetingsfrom outside of the Company.

such as Board of Directors’ meetings and conducting
investigations into the Company’s operations and assets in

Corporate Governanceaccordance with auditing policies and plans adopted by the

https://www.tokaicarbon.co.jp/en/sustanability/corporate_
governance.html

Audit & Supervisory Board. As of March 30, 2021, there are

Corporate governance system

Appointment /Dismissal◎ : Chairman (Board of Directors) / Chairperson (committees)● : External / Independent 〇 : Internal

General Meeting of Shareholders
Appointment /Dismissal

Appointment /Dismissal

Audit & Supervisory Board

Board of Directors

Audits execution of duties by board members
and executive ofﬁcers

Oversees execution of duties by board members
and executive ofﬁcers

Control

Audit

Cooperation
Voluntary advisory bodies

Nomination Committee
Appointment/dismissal of directors

Remuneration Committee

Accounting Auditor

President
Management Committee

Determination of remuneration forboard members and executive ofﬁcers

Risk Management & Compliance Committee
Risk governance advice

Internal Auditing Ofﬁce

Executive bodies

40

TOKAI CARBON INTEGRATED REPORT 2020

INTRODUCTION

Tokai Carbon Value Creation

Strategy for Value Creation

Foundation that Supports Corporate Value

Financial Section & Corporate Data

Discussion items
Subject category
Governance, risk management,
and subsidiary management

Human resources and organization
Accounting and financeManagement strategy and sustainability
Other

Topic

Analysis and evaluation of effectiveness of Board of Directors
Reports on financing, investments, and market risk management
Internal audit reports
Risk Management & Compliance Committee reports
Board member and executive officer candidates
Reorganization
Financial statements
Annual budget plans
Formulation of medium-term management plans
Reports on ESG activities and sustainability targets
Matters concerning the General Meeting of Shareholders
July 2020 Kyushu flood relief donations
Subject category
Management
strategy andsustainability

15.2%

Accounting
and ﬁnance

23.2%

Other 2.4%

Governance,risk management,
and subsidiarymanagement

32.8%
Human resourcesand organization

26.4%

Strengthening the effectiveness of
the Board of Directors
In 2016 we established the Nomination Committee,
Remuneration Committee, Management Committee, andRisk Management & Compliance Committee in an effort
to drastically bolster the Company’s governance structure
under the Board of the Directors. The effectiveness of
the Board of Directors is annually evaluated by the issues
identified and improved. Through this process, the initial
benefits are being appropriately maintained and enabling
further development of the board effectiveness.

Management appointment process
The appointment of board members, Audit & Supervisory
Board members, and executive officers begins with theformulation of recommendations by the Nomination
Committee, an advisory body to the Board of Directors
consisting of one internal board member and three externalboard members. The Nomination Committee preparesits recommendations by comprehensively considering theexperience, knowledge, expertise, and other qualities ofinternal and external candidates. After approval by the
Board of Directors, candidates for director and Audit &Supervisory Board positions are submitted to the General
Meeting of Shareholders for approval.

Establishing an internal control system

Executive remuneration

To ensure that Tokai Carbon Group properly executes

At Tokai Carbon, executive remuneration is composedbusiness operations in accordance with relevant laws,of basic remuneration, which is a fixed amount, andregulations and the Articles of Incorporation, the Company

performance-based remuneration, which varies depending

continuously improves its internal control system.

on achievement of performance objectives. For directors

Improvements are undertaken in accordance with the “Basic

with executive responsibilities, the proportion of total

Policy for Establishing an Internal Control System,” which

remuneration that is variable is designed to rise with

was adopted at the May 2006 meeting of the Board of

executive rank. This is in consideration of the significance of

Directors and is revised as necessary.

management responsibilities borne.

TOKAI CARBON INTEGRATED REPORT 202041

Corporate Governance

Skills matrix
Knowledge and experience expected

Term of
Gender office
Corporate
Finance and(years) management accounting

Name

President and CEO
Hajime Nagasaka

M

15

Member of the Board/Executive Officer
Yuji Serizawa

M

8

Member of the Board/Executive Officer
Masafumi Tsuji

M

4Member of the Board/Executive Officer
Katsuyuki Yamaguchi

M

2

Member of the Board/Executive Officer
Shunji Yamamoto

M

2

Member of the Board/Executive Officer
Hirofumi Masuda

M

1

Member of the Board(external/independent)
Nobumitsu Kambayashi

M

5

Member of the Board(external/independent)
Junichi Tanahashi

M

1

Member of the Board(external/independent)
Mayumi AsadaF

0Audit & Supervisory Board Member(full-time)
Masanao Hosoya

M

2

Audit & Supervisory Board Member(full-time)
Kazuyuki Kakehashi

M

5

Audit & Supervisory Board Member(external/independent)
Kaoru Ogashiwa

M

2

Audit & Supervisory Board Member(external/independent)
Motokazu Hiura

M

1

Legal
affairs andcompliance

Overseasbusiness

Manufacturing
andtechnology

Sales andmarketing

Personnel
Governanceand HRand riskdevelopment management

ESG andsustainability

Attendance at meetings of the Board of Directors, Audit & Supervisory Board, and committees (attendance/meetings) in FY2020
Position
Member of
the Board

Audit &
Supervisory
Board members

Name

Audit & Supervisory
Board

Nomination Committee

Remuneration
Committee

Risk Management &Compliance Committee

Hajime Nagasaka(19/19)

—

(4/4)

(4/4)

Yuji Serizawa(19/19)

—

—

—

(5/5)

Masafumi Tsuji(19/19)

—

—

—

(4/5)

Katsuyuki Yamaguchi(19/19)

—

—

—

(5/5)

Shunji Yamamoto(19/19)———Hirofumi Masuda(14/14)———

Nobumitsu Kambayashi (external/independent)(19/19)

—

(4/4)

(4/4)

Junichi Tanahashi (external/independent)(13/14)

—

(3/3)

(2/2)

Masanao Hosoya(17/19)(14/14)

—

—

(5/5)

Kazuyuki Kakehashi(19/19)(14/14)

—

—

(5/5)

Kaoru Ogashiwa (external/independent)(19/19)(14/14)——

Motokazu Hiura (external/independent)(12/12)

(9/9)

—

—

* Positions as of end-December 2020
* The [ ] symbol denotes chair or chairperson

42

Board of Directors

TOKAI CARBON INTEGRATED REPORT 2020

INTRODUCTION

Tokai Carbon Value Creation

Foundation that Supports Corporate Value

Strategy for Value Creation

Financial Section & Corporate Data

ComplianceInternal reporting system

The Company has outlined a Basic Policy, Guidelines, and a

We have introduced an internal reporting system for

Corporate Code of Ethics. We conduct corporate activities

receiving reports from employees who have found out about

in accordance with these policies and based on a strong

legal violations or fraud (or signs thereof), including any

ethical viewpoint while also complying with the relevant

acts linked to corruption such as bribery etc. by executive

laws, rules, and regulations. We have also prepared theofficers or employees. We have established in-house contact

Compliance Manual based on the Tokai Carbon Corporate

points (Legal Affairs Department, Audit & Supervisory Board

Code of Ethics and our Ethical and Compliance Conduct

Member) and external contact points (legal advisors) toStandards. The manual outlines the conduct standards thatreceive reports or requests for advice by phone, fax, email,all officers and employees are required to maintain as they

letter, etc. Reports can also be made anonymously. The

carry out their everyday duties, and is intended to help

Company’s Guidelines on Handing Internal Reports clearly

everyone in the Company understand compliance properly.

states that, apart from cases when the system is deliberately
misused, informants will not be dismissed or subjected to
unfair treatment under this system.

Prevention of corruption
Cases of corrupt behavior

prevent acts of bribery or acts that could arouse suspicion

In the FY2020, there was no exposure of corrupt behaviorof bribery, such as proposing or delivering benefits as

and no fines or surcharges paid. There was no disciplinarycompensation for others, and demanding or receiving

action taken against employees due to corrupt behavior.

benefits such as cash, excessive business entertainment,
amusement or other services. We also prohibit corrupt

Prevention of bribery and other corrupt behavior

behavior in the form of conspiracy to embezzle company

Board oversight of corrupt behavior

funds or commit money laundering. The prohibition ofthis kind of corruption and bribery is also specified in our
procurement policy.

Our Code of Ethics states that we will conduct business

The Board of Directors oversees initiatives on complianceactivities through fair competition and maintain sound andnormal relations with politicians, government officials, andincluding the prevention of bribery and other corruption

suppliers. It also states that we will comply with all laws

and receives reports from the Risk Management &and conduct business activities based on social norms andCompliance Committee.

common sense. Because of this, we prohibit and strive to

Education and Enlightenment
We continuously provide compliance training for executive officers, managers, new employees, etc. conducted by internal andexternal lecturers. We are also striving to raise compliance awareness among executive officers and employees via the in-house
distribution of a compliance message video and the publication of related articles in our in-house magazine.

Training theme
Year

Theme

Participants

2017

Anti-Monopoly Act

About 50

2018

ESG

About 45

2019

Issue of quality falsification

About 50

2020

Dialogue with shareholders/ Response to proposals from shareholders

About 50TOKAI CARBON INTEGRATED REPORT 202043

Corporate GovernanceManagement (As of July 1, 2021)
Member of the Board

HajimeNagasaka
President & Chief
Executive Officer

Masafumi
Tsuji
Member of the Board
Executive Officer

Career Summary

1972	Joined Tokai Electrode Mfg. Co., Ltd. (currently the Company)
2006	Member of the Board/Executive Officer
Deputy General Manager, Carbon Black Division2008	Member of the Board/Managing Executive Officer
Deputy General Manager, Carbon Black Division2010	Member of the Board/Managing Executive Officer
General Manager, Carbon Black Division2011	Member of the Board/Senior Managing Executive Officer
General Manager, Carbon Black Division2012	Member of the Board/Senior Managing Executive Officer incharge of Carbon Black Division and Graphite Electrode Division2013	Representative Member of the Board/Senior Managing Executive
Officer in charge of Carbon Black Division andGraphite Electrode Division2014	Representative Member of the Board/Executive Vice President incharge of Carbon Black Division, Graphite Electrode Division and
Raw Material Procurement Department
2015	Representative Member of the Board/President & Chief Executive
Officer (incumbent)

1984	Joined the Company
2006	Executive Officer/Deputy General Manager,
Fine Carbon Division2009	Executive Officer/General Manager, Fine Carbon Division2012	Member of the Board/Executive Officer in charge ofFine Carbon Division
General Manager, Fine Carbon Division2013	Member of the Board/Executive Officer
General Manager, Tanoura Laboratory
General Manager, Tanoura Plant
2014	Executive Officer
General Manager, Graphite Electrode Division2015	Member of the Board/Executive Officer
General Manager, Graphite Electrode Division2016	Member of the Board/Executive Officer
General Manager, Corporate Planning Division2017	Member of the Board/Executive Officer
Responsible for Human Resources Department,
General Affairs Department, and Legal Affairs Department(incumbent)

Yuji
Serizawa
Member of the Board
Executive Officer

Career Summary

Career Summary

1986	Joined the Company
2014	Business Director/General Manager, Carbon Black Division2015	Executive Officer
General Manager, Carbon Black Division2016	Executive Officer
General Manager, Graphite Electrode Division2017	Executive Officer
General Manager, Fine Carbon Division2017	Member of the Board/Executive Officer
General Manager, Fine Carbon Division2020	Member of the Board/Executive Officer
Deputy Chairman, Corporate Planning Department, Strategic
Investment Department, and Sales Research & Planning Department
General Manager, Corporate Planning Department
2020	Member of the Board/Executive Officer
Deputy Chairman, Corporate Planning Department, Strategic
Investment Department, and Sales Research & Planning Department
General Manager, Corporate Planning Department
General Manger, Sales Research & Planning Department
2020	Member of the Board/Executive Officer
Responsible for Corporate Planning Department, Strategic
Investment Department, and Sales Research & Planning Department
General Manager, Corporate Planning Department
General Manager, Sales Research & Planning Department
2020	Member of the Board/Executive Officer
Responsible for Corporate Planning Department, Strategic
Investment Department, and Sales Research & Planning Department
General Manager, Corporate Planning Department (incumbent)

1988	Joined the Company
2015	General Manager, Engineering Department,
Technology & Engineering Division2016	Business Director
General Manager, Technology & Engineering Division2018	Executive Officer
General Manager, Technology & Engineering Division
2019	Member of the Board/Executive Officer
General Manager, Technology & Engineering Division
2019	Member of the Board/Executive Officer
General Manager, Technology & Engineering Division
General Manager, Environment & Safety Department
2020	Member of the Board/Executive Officer
General Manager, Technology & Engineering Division
2021	Member of the Board/Executive Officer
General Manager, R&D Strategy Division
General Manager, Intellectual Property Department (incumbent)

Katsuyuki
Yamaguchi
Member of the Board
Executive Officer

Career Summary

Career Summary

1985	Joined the Company
2013	General Manager, Kyushu-Wakamatsu Plant
2015	General Manager, Production & Technology Department, Carbon
Black Division2016	Managing Director, THAI TOKAI CARBON PRODUCT CO., LTD.
2018	Executive Officer
Managing Director, THAI TOKAI CARBON PRODUCT CO., LTD.
2019	Member of the Board/Executive Officer
Director, TCCB Genpar LLC (incumbent)

1985	Joined the Company
2012	General Manager, Sales Department, Graphite Electrode
Division2015	General Manager, Osaka Branch
General Manager, Nagoya Branch2016	General Manager, Marketing & Sales Department,
Carbon Black Division2017	Director and Deputy Managing Director,
THAI TOKAI CARBON PRODUCT CO., LTD.
2019	Executive Officer, Director and Deputy Managing Director,
THAI TOKAI CARBON PRODUCT CO., LTD.
2020	Executive Officer
General Manager, Carbon Black Division2020	Member of the Board/Executive Officer
General Manager, Carbon Black Division (incumbent)

Shunji
Yamamoto

Hirofumi
MasudaMember of the Board
Executive Officer

Member of the Board
Executive Officer

Nobumitsu
Kambayashi
External Member of the Board
part-time

44

Career Summary

Career Summary

Career Summary

1971	Joined Kawasaki Heavy Industries, Ltd.
2002	Member of the Board, Kawasaki Shipbuilding Corporation2005	Managing Member of the Board, Kawasaki Shipbuilding
Corporation
2008	Managing Executive Officer, Kawasaki Heavy Industries, Ltd.
Member of the Board/Senior Vice President, Kawasaki Shipbuilding
Corporation2009	Managing Member of the Board, Kawasaki Heavy Industries, Ltd.
2010	President & Representative Member of the Board, Kawasaki
Shipbuilding Corporation
Managing Member of the Board (part-time), Kawasaki Heavy
Industries, Ltd.
2010	Managing Member of the Board (Representative Member ofthe Board), Kawasaki Heavy Industries, Ltd.
President, Ship & Offshore Structure Company
2013	Member of the Board, Kawasaki Heavy Industries, Ltd.
2013	Adviser, Kawasaki Heavy Industries, Ltd.
2015	Chairman, Japan Ship Technology Research Association (incumbent)
2016	Member of the Board, the Company (incumbent)
2017	Member of the Board, Inui Global Logistics Co., Ltd. (incumbent)

1981	Joined Nippon Chemical Industrial Co., Ltd.
1984	Member of the Board, Nippon Chemical Industrial Co., Ltd.
1986	Managing Member of the Board, Nippon Chemical IndustrialCo., Ltd.
1989	President, Nippon Chemical Industrial Co., Ltd.
2005	Chairman, Nippon Chemical Industrial Co., Ltd.
2005	Advisor, Japan Inorganic Chemical Industry Association(incumbent)
2009	Outside Member of the Board, Fuji Chemical Co., Ltd.
(incumbent)
2014	Vice President, The Association of Powder Process Industry andEngineering, JAPAN2015	Chairman of the Board, Nippon Chemical Industrial Co., Ltd.
2020	External Member of the Board, the Company (incumbent)
2020	Inspector, The Association of Powder Process Industry andEngineering, JAPAN (incumbent)
2021	Advisor, Nippon Chemical Industrial Co., Ltd. (incumbent)

TOKAI CARBON INTEGRATED REPORT 2020

JunichiTanahashi
External Member of the Board
part-timeINTRODUCTION

Tokai Carbon Value Creation

Strategy for Value Creation

Foundation that Supports Corporate Value

Financial Section & Corporate Data

Career Summary

Mayumi
Asada
External Member of the Board
part-time

2002	Registered as an attorney-at-law and joined Hiranuma Takaaki
Law Office
2003	Transferred to Akagi & Matsuoka Law Office2013	Member of the committee for medical dispute settlement, theTokyo Metropolitan Medical Association (incumbent)
2014	Representative, Marunouchi Building Aoi Law Office(incumbent)
2014	Acquired Doctor’s degree in Medicine at the Juntendo
University Graduate School of Medicine
2015	Member of the council for disclosure and personal information
protection, Meguro-ku (incumbent)
2017	Member of the external audit committee for medical safety at
Juntendo University Hospital (incumbent)
2018	Reconciliation officer at Tokyo Family Court (incumbent)
2020	Business Director, Incorporated Educational Institution Nikaido
Gakuen (incumbent)
2021	External Member of the Board, the Company (incumbent)
2021	Part-time lecturer, Department of Hospital Administration,
Juntendo University School of Medicine (incumbent)

Audit & Supervisory Board Members

Masanao
HosoyaAudit & Supervisory
Board Member (full-time)

Career Summary

Career Summary

1979	Joined The Mitsubishi Bank, Ltd.
(currently The Bank of Tokyo-Mitsubishi UFJ, Ltd.)
2008	Advisor, the Company
2008	Executive Officer
2009	Executive Officer
General Manager, Corporate Administration Division2010	Member of the Board/Executive Officer in charge of Corporate
Administration Division
General Manager, Corporate Administration Division2015	Member of the Board/Managing Executive Officer
General Manager, Corporate Administration Division2017	Member of the Board/Managing Executive Officer
Responsible for Accounting & Finance Department andInformation System Department
2019	Member of the Board/Managing Executive Officer
Responsible for Accounting & Finance Department andInformation System Department
2019	Audit & Supervisory Board Member (full-time) (incumbent)

1975	Joined Toyo Carbon Co., Ltd. (currently the Company)
2001	General Manager, Production & Technology Department,
Fine Carbon Division
2004	General Manager, Tanoura Plant
2009	General Manager, Shonan Office
General Manager, Chigasaki Plant
Industrialization Group Manager, R&D Strategy Division2009	Assistant to General Manager, Fine Carbon Division2009	Assistant to General Manager, R&D Strategy Division2010	General Manager, R&D Planning Department,
R&D Strategy Division2010	Member of the Board, Tokai Konetsu Kogyo Co., Ltd.
2015	Managing Executive Officer, Tokai Konetsu Kogyo Co., Ltd.
2016	Audit & Supervisory Board Member
2018	Audit & Supervisory Board Member (full-time)2019	Audit & Supervisory Board Member
2019	Audit & Supervisory Board Member (full-time) (incumbent)

Kazuyuki
Kakehashi
Audit & Supervisory
Board Member (full-time)

Career Summary

Career Summary

1990	Joined Shin Nihon Shoken Chosa Center Keiei Kenkyusho(currently Japan Investor Relations and Investor Support, Inc.)
1992	Registered as a certified tax accountant (to present)
2005	Auditor, Senkon Logistics Co., Ltd.
2017	Outside Member of the Board and Auditor, the Company(incumbent)
2019	Audit & Supervisory Board Member, the Company (incumbent)

1977	Joined Dainichiseika Color & Chemicals Mfg. Co., Ltd.
2014	Manager, Corporate Finance & Accounting Department,
Dainichiseika Color & Chemicals Mfg. Co., Ltd.
2015	General Manager, Corporate Finance & Accounting Division,
Dainichiseika Color & Chemicals Mfg. Co., Ltd.
2019	Retired Dainichiseika Color & Chemicals Mfg. Co., Ltd.
2020	Audit & Supervisory Board Member, the Company (incumbent)

Kaoru
Ogashiwa

Motokazu
Hiura

External Audit &Supervisory Board Member(Part-time)

External Audit &Supervisory Board Member(Part-time)

Executive Officers

Hiroshi Takahashi

Koji Miura

Akira Yamada

Executive Officer
CEO & Chairman of the Board,
Tokai Carbon Korea Co., Ltd.

Executive Officer
General Manager, Chita Laboratory

Executive Officer
General Manager, General Affairs Department;
General Manager, Legal Affairs Department

Takashi Masaki

Kenji Enokidani

Executive Officer
General Manager, Smelting and Lining Division
Chairman of the Board, Tokai COBEX GmbH

Executive Officer
General Manager, Graphite Electrode Division
Chairman of the Advisory Board, Tokai ErftCarbon GmbH
Chairman of the Board, Tokai Carbon GE LLC

Kazuhito Kataoka

Takeshi Nakashima

Executive Officer
General Manager, Japan Operations ofGraphite Electrodes

Executive Officer
Strategic Integration Officer, Tokai COBEX GmbH

Akihiko SatohExecutive Officer
Responsible for Accounting & Finance Department
and Information System Department,
and General Manager,
Accounting & Finance Department

TOKAI CARBON INTEGRATED REPORT 202045