2011 - sdk.co.jp · Period covered by this Report This Report covers information for the period January 1 to December 31, 2010, with some information also provided for 2011. The term

Relations with Society / Environment and Safety Efforts

Our Action with Evolving,

Individualized Chemicals for

People and the Earth...

SHOWA DENKO CSR Report

2011

This Report has been edited as an annual report on non-financial information, presenting

efforts by the Showa Denko Group to contribute to the environment and society. This

Report is divided into the following four sections:

CSR Management; Social Commitment Report; Environmental Efforts and Safety Efforts.

For detailed financial information, please refer to the Financial Results and Financial

Statements.

http://www.sdk.co.jp/english/library/results.html

As for disclosure items, we analyzed our stakeholders' opinions and requests and

covered priority topics, focusing on action policies and performance in 2010 and giving

specific examples.

Please note that the website provides more comprehensive and detailed information on

Showa Denko Group CSR activities, including the latest information and environmental

and social activity reports for individual worksites.

Period covered by this Report

This Report covers information for the period January 1 to December 31, 2010, with

some information also provided for 2011. The term ”the year” as used in this Report refers

to the 2010 calendar year. The term ”fiscal year” as used in this Report refers to the period

from April 1, 2010, through March 31, 2011.

Organization covered

”Showa Denko” as used in the text of this Report refers to Showa Denko K.K., while

“Showa Denko Group” refers mainly to Showa Denko and its consolidated subsidiaries

in Japan. The financial performance data provided herein are consolidated figures for

the Showa Denko Group; environmental performance data are for Showa Denko K.K.

Where environmental performance data include figures for Group member companies,

the scope of applicability is noted for each category of data. Social performance data

provided herein represent information and figures for Showa Denko K.K. Information

on consolidated subsidiaries in Japan and abroad has been added to the sections of

Community Relations and Employee Relations.

Publication date

September 2011 (The next edition is scheduled for publication in July 2012.)

Guidelines/guidance referenced

• ISO 26000 (2010)

• Sustainability Reporting Guidelines 2006 (G3 Guidelines) from the Global Reporting

Initiative (GRI)

• Environmental Reporting Guidelines 2007 from the Ministry of the Environment of Japan

Prepared by

CSR Office, Showa Denko K.K.

13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, Japan

Editorial policies

CSR Report 2011

Report Scope

SHOWA DENKO CSR REPORT 20112

Editorial policies / Report Scope ................................................................................. 2An Overview of the Showa Denko Group / Main products ........................... 4Top Message ........................................................................................................................... 6CSR Activity Report

CSR Management

Past efforts and Future policies and plans ................................................................................... 8CRS Achievements in 2010 and Issues ........................................................................................ 9Corporate governance .................................................................................................................10Risk management ........................................................................................................................12Responsible Care management ..................................................................................................14Responsible Care Activities Plan .................................................................................................16

Social Commitment Report

Relationships with our stakeholders ......................................................................................... 18Stakeholder perspectives ........................................................................................................... 19Employee relations ..................................................................................................................... 20Customer relations ..................................................................................................................... 24Shareholder and investor relations ........................................................................................... 26Partner relations .......................................................................................................................... 27Community relations ................................................................................................................... 28

Environmental efforts

Resource use and environmental impact ................................................................................. 32Environmental accounting .......................................................................................................... 33Climate change efforts ............................................................................................................... 34Reducing chemical substance discharge ................................................................................. 36Environmental considerations: Atmosphere, water, and, soil .................................................. 38Reducing waste and encouraging recycling ............................................................................. 40Biodiversity efforts ...................................................................................................................... 41

Safety efforts

Disaster prevention ..................................................................................................................... 42Occupational health and safety ................................................................................................. 44Chemical substances safety efforts .......................................................................................... 46

Third-party Verification /Assurance .................................................................... 48CSR Report 2011 Response to Third-party Verification/Assurance ......................................... 50

CONTENTS

SHOWA DENKO CSR REPORT 2011 3

An Overview of the Showa Denko Group (as of December 2010)

Major products by sector

Rolled Products Division, Extrusions/Specialty Products Division, Shotic Division, Heat Exchanger Division, Aluminum Can Division, Cooling Device Business Development DepartmentThe Aluminum Sector provides aluminum materials, including rolled products, extruded products, and forged products, as well as high-value-added fabricated aluminum products like heat exchangers and beverage cans.

Aluminum

The HD Sector provides the hard disks used as high-capacity storage media for computers, consumer electronics, and enterprise applications.

HD (Hard Disk)

Electronics Materials Division Rare Earth Division

The Electronics Sector provides compound semiconductors (e.g., ultrabright and high-output LEDs) and rare earth magnetic alloys for high-performance motors.

Electronics

Olefins Division, Organic Chemicals Division

The Petrochemicals Sector provides basic petrochemical products (e.g., ethylene, propylene) and organic chemicals derived from these products, including acetyls and allyl alcohol derivatives.

Petrochemicals

Functional Polymers Division, Chemicals Division

The Chemicals Sector provides wide-ranging products from industrial gases and chemicals, high-performance chemicals, and elastomers to high-purity gases and chemicals for the semiconductor industry and resin composites.

Chemicals

Ceramics Division, Carbons Division, Fine Carbon Department

The Inorganics Sector provides ceramic products (e.g., alumina, polishing materials, abrasives, and refractories) as well as graphite electrodes for electric steel furnaces and highly functional carbon products.

Inorganics

The Advanced Battery Materials Department provides lithium ion battery materials (e.g., anode materials, conductive additives and carbon coated aluminium thin films) and fuel cell carbon components (e.g., separators). The department also develops new products in the field of cutting-edge battery materials to respond to the ongoing technical breakthroughs in this area.

Advanced Battery Materials Department

Company name: Showa Denko K.K.

Head office location: 13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, Japan

Number of Group member companies: 158

Consolidated business results:

Sales: 797.2 billion yen

Operating income: 38.7 billion yen

Net income: 12.7 billion yen

Total number of employees: 11,597


America

Showa Denko Carbon, Inc.

Showa Aluminum Corporation of America

Showa Denko America, Inc.

Europe

F2 Chemicals Limited

SHOTIC Europa Industria de Aluminio Lda

Showa Aluminium Czech s.r.o.

Showa Denko Europe GmbH

China, Taiwan, Korea

Shanghai Showa Chemicals Co., Ltd.

Shanghai Showa Highpolymer Co., Ltd.

Shanghai Showa Specialty Gases Purification Co., Ltd.

Showa Denko Scientific Instrument (Shanghai) Co., Ltd.

Zhejiang Quzhou Juhua Showa Electronic Chemical Materials Co., Ltd.

Lianyungang Zaoling Abrasives Co., Ltd.

Showa Denko (Dalian) Co., Ltd.

Grand Ocean-Showa Auto Air Conditioning (Dalian) Co., Ltd.

Ganzhou Zhaori Rare Earth New Materials Co., Ltd.

Baotou Showa Rare Earth Hi-tech New Material Co., Ltd.

Showa Denko (Shanghai) Co., Ltd.

Showa Specialty Gas (Taiwan) Co., Ltd.

Taiwan Showa Chemicals Manufacturing Co., Ltd.

Showa Denko HD Trace Corp.

Taiwan Showa Denko Electronics Co., Ltd.

Korea Showa Chemicals Co.

Other Asian countries

Showa Specialty Gas Singapore (Pte.) Ltd.

SHOTIC (Singapore) Pte. Ltd.

Showa Denko HD Singapore Pte. Ltd.

Showa Denko Singapore (Pte.) Ltd.

P.T. Showa Esterindo Indonesia

P.T. Indonesia Chemical Alumina

Eternal Showa Highpolymer Co., Ltd.

Showa Aluminum (Thailand) Co., Ltd.

Showa Denko Rare-Earth Vietnam Co., Ltd.

Showa Aluminum Manufacturing Philippines Corporation

Showa Denko HD (Malaysia) Sdn. Bhd.

· Tatsuno Plant· Sakai Plant· Hikone Plant

· Tokuyama Plant

· Oita Complex

· Isesaki Plant· Chichibu Plant· Kawasaki Plant· Yokohama Plant· Chiba Plant

Aluminum Technology Center (Oyama)

Corporate R&D CenterAnalysis & Physical Properties CenterSafety Evaluation Center

Head Office

Nagoya Branch

Osaka BranchFukuoka Branch

· Kitakata Plant· Higashinagahara Plant· Oyama Plant· Oyama Plant (Nasu)

· Omachi Plant· Shiojiri Plant

Overseas Sites

Sites in Japan■Changes in consolidated sales

■�Changes in consolidated operating income and ratio of operating income to sales

■�Changes in total number of employees

07 1008 0906

(Billion yen)

(year)0

200

400

600

800

1,000

1,200

(%)

07 10090806

102030405060708090

0-10

0

-1

1

2

3

4

5

6

7

8

(Billion yen)

(year)

Operating income Ratio of operating income to sales

0

2,000

4,000

6,000

8,000

10,000

12,000

07

5,304

6,025

08

5,510

6,246

09

5,115

6,449

10

5,496

6,101

06

4,933

6,251

(year)

(persons) OverseasJapan

■�Consolidated sales by segment

Petrochemicals

34.3%Inorganics

9.4%

Aluminum

22.8%

Chemicals

11.3%Electronics

22.1%

Europe

China, Taiwan, Korea

Etc. Asia

Corporate R&D Center (Kawasaki)Production Technology CenterEngineering Center

Note: Due to rounding, percentage figures for sales by segment may not total 100%.

For information on main Group companies in Japan, please go to the following http://www.sdk.co.jp/english/about/group.html

America


TOP MESSAGE

[Message delivered March 18 ]Look ahead and join hands, for yourselves and for the society. The social and economic impact on Japan of the Great East Japan Earthquake is extensive. The scale and depth of damage remain unknown. We must remain watchful. The Showa Denko Group itself suffered minimal direct damage to production and other facilities, but the effects on the supply chain were significant, ranging from procurement of raw materials, fuels, and electricity to production and sales. The saddest and most painful news was the death of our colleague of a Group company who was working at the ammonia distribution center in Soma, Fukushima Prefecture, to fulfill his duties when the huge tsunami struck. I express my sincere condolences for the loss of the life of a fellow employee.

I am proud that each of you returned so quickly to your duties and are working to restore business operations to restart Group operations, despite the strong anxiety generated by these devastating circumstances. I wish to express my deepest gratitude to each and every one of you.

Our production facilities located in the district affected by the earthquake halted operations immediately after the earthquake, due to shortages in electricity and equipment safety considerations. As the safety of equipment and other aspects was confirmed at each plant, production of the basic chemicals needed to ensure a stable supply of drinkable water, electric power and other energy, medicine, and food resumed from the 17th. In addition, we plan to resume operations at facilities in other business sectors as soon as we can confirm safety, a stable supply of electricity, and the supply of raw materials. The independent power production facility at the Kawasaki Plant resumed operations at the earliest possible date following the earthquake and began supplying power to the electric power company to help meet electric power shortfalls.

As described above, our Group is taking the first step to achieve recovery from the earthquake disaster, although prospects remain unclear. The Group resumed production of products after ranking various products by significance for social needs. These products are essential for the restoration of areas affected by the disaster.

Wewish to express ourheartfelt sympathies to thevictimsof theGreatEast JapanEarthquakeofMarch11 ,2011.Wehopefortheearliestpossiblerecoveryforallthoseaffectedbythistragedy.Wewouldalso liketoexpressourheartfeltappreciationforall thehelpandsupporttoJapangivenbythepeopleallovertheworld. The ShowaDenkoGroupestablished the emergencycountermeasureheadquartersatthemainofficeimmediatelyafter theearthquakeandstrove to identifyconditionsanddamagesatourplantsandtoconfirmsituationsandsafetyofouremployeesandtheirfamilies.MythoughtsonthisdisasterareexpressedinthefollowingtwomessagesdeliveredtoallemployeesoftheGroup.

[Message delivered March 14 ]

Let's be united groupwide to overcome this unparalleled difficulties and hardships. The mornig of the Day 4 after the earthquake has arrived.People in disaster-stricken areas continue to face extreme difficulties. I want to express my sincere condolences to the Group company employee who fell victim to the tsunami at the ammonia distribution center in Soma, Fukushima Prefecture.

Unless you have urgent business matters to attend to, I urge you all the employees of Group companies in the Tohoku and Kanto districts to stay home with your families for the next three days (14th through 16th), in light of potential strong aftershocks. To ensure safety, please act calmly.

We have made the decision to suspend operations at Group facilities located in the Kanto district and northward for three days to ensure safety against possible aftershocks and to reduce electric power consumption in response to the planned power outages.

We have also established the emergency countermeasures headquarters at the head office to assess conditions at all Group companies and to take appropriate countermeasures.

I ask you all the employees of Group companies for your understanding and cooperation to overcome these unparalleled difficulties.

With evolving, individualized chemicals, we contribute to create a society where affluence and sustainability are harmonized


I want all of you to be proud that our Group supplies products essential for the restoration of Japan's lifelines and, therefore, that we ourselves are of great service to society. At the same time, I want to ask all of you to do your utmost to restore our business activities. Employees at worksites and Group companies not directly affected by the earthquake will be asked to provide cooperation and support in various circumstances. I ask that all of you to unite to tackle this difficult situation.

I realize many of those engaged in restoration work have endured significant mental and physical burdens, with accumulating fatigue. Please remember that adequate rest is crucial to good judgment. I also ask that you take adequate precautions to ensure that you, your family, and your friends remain safe and in good health.

We must accept the fact that challenging conditions will remain for some time. Full-fledged recovery of the areas in the Tohoku and Kanto districts devastated by the earthquake will take time. In times like this, we must join hands and move forward. We hold our future in our own hands. Let's work to meet and overcome the ordeal we currently face.

TheShowaDenkoGrouphasbeencommittedtobuildingacompanythatcontributestothesoundgrowthofsocietythroughitsproductsandbusinessactivitiessincetheGroupestablishedanewcorporatestructurein2005,whereinCSRfunctionsasamanagementcornerstone. BecausethefundamentalmaterialsandpartsproducedbyourGroupareusedinupstreamprocessesinthemanufactureoffinalproducts, theyarenotvisibletogeneralconsumers.However,onceasocietyfacesacrisislikethecurrentone,werealizetheweightofresponsibilityformaintainingastablesupplyofproducts. The Showa Denko Group manufactures variousproductsandengagesinawiderangeofbusinessactivities.Immediatelyaftertheearthquake,however,weputpriorityon supplying products essential to the social lifelines:productsrequired toensureair,water,energy,andhealthmaintenance.TheseeffortsaresummarizedintheseparatelyeditedSpecialEditionofCSRReportentitled"OurCSREfforts:TowardRestorationfromtheGreatEastJapanEarthquake." This year, ourGroup launched a newmedium-termconsolidatedbusinessplanPEGASUS. Under thisplan, theGroup focuses twokeybusinessdomains,“Energy/Environment”and“Electronics”,withthegoalofestablishingan“evolvingchemicalcompanygroupwith individualizedproductstohelpcreateasocietywhereaffluenceandsustainabilityareharmonized.” This concept continues to apply, even after theearthquake.Weratherbelievewemustnowsharpen thisconceptatacceleratedspeed. The CSRReport 2011 describes our CSR activitiesconducted in linkwith thismedium-term consolidatedbusinessplan. PleasereadtheseCSRreportsandgiveusyourcandidopinions.

Hideo IchikawaPresident and Chief Executive Officer of Showa Denko K.K.CEO of Showa Denko GroupChairman of CSR Committee


Through the medium-term consolidated business plan PEGASUS, the Showa Denko Group, with its evolving, individualized chemicals, pursues the goal to “contribute to create a society where affluence and susutainability are harmonized.”As part of its CSR (corporate social responsibility) activities, the Showa Denko Group makes every effort to ensure that each of its employees undertakes Group activities in good faith and meets the expectations of Group stakeholders.

CSR Activity Report: CSR Management

The medium-term CSR plan launched in 2006 ends in 2010. Summarized below are the activities pursued

over the past five years. An overview of medium-term CSR policies and plans from 2011 is also provided.

[Summary of efforts from 2006 to 2010]

(1) Corporate ethics and complianceWhile activities to establish compliance structures and educational programs are advancing according to schedule, further improvements must be made with respect to response to unrecognized violations of laws and ethical awareness among organizations and individuals.

(2) General risk managementThe PDCA cycle (plan-do-check-act management system) for enterprise risk management has taken a firmhold in the company. The company has also invested heavily to achieve progress in long-term measures and in risk countermeasures.We will have the Group's PDCA cycle for enterprise risk management serve as the foundations for PDCA cycles applied to production activities, financial affairs, personnel and labor affairs, and response to legislation. We will address further integration and streamlining of these cycles.

(3) Dialogue with stakeholdersThe Group strengthened tools for communication with society and with communities by expanding the scope of its CSR Report and publishing the Report on our website. Other activities, including guided plant tours and education on chemistry and the environment, have improved mutual dialogue. In this area, efforts to continuously build mutual trust are the keys.We will focus on developing methods to communicate information on our CSR efforts in line with characteristics of each country, local community and our form of operation. Each worksite will pursue activities tailored to its specific locale.Other Group measures will seek to more clarify our course of action and strengthen each employee’s motivation and awareness regarding CSR.

CSR policies for the period from 2011 to 2015 are based on the results above.

[Policies for 2011 to 2015]Contributing to create a society where affluence and sustainability are harmonized

(1) All employees worldwide shall act in clear awareness of corporate ethics and compliance issues.

(2) Companywide general risk management shall function effectively at all levels at each worksite.

(3) Efforts will ensure effective mutual dialogue with stakeholders and establish mutual trust.

(4) Efforts will ensure compliance with guidelines for social responsibility (ISO 26000) and the reliable application of the PDCA cycle to core issues.

Basic action each employee should take: Good-faith implementation of the Code of Conduct and its Guidelines

The following page provides a summary of the plans and achievements in 2010 and plans for 2011 for each of the abovementioned items.

Past Efforts and Future Policies and Plans

CSR Management


◎…Fully achieved　○…Achieved 80% or more

2010 plans 2010 achievements Evaluation 2011 plans

Corporate ethics, compliance

● Responding to individual laws; education ● Improved response to antitrust law ● Improved account processing levels of

Group companies◎

● Reviewing and revising the Code of Conduct and its guidelines ● Expanding education on corporate ethics and compliance

● Extracting unrecognized risks ● Compliance risk follow-up ◎ ● Organizing compliance education system

● Providing ethics education through level-specific training

● Provided integrated education on CSR, corporate ethics, and compliance ◎

● Raising awareness through group discussions and e-learning ● Disseminating and promoting use of corporate ethics hotline

General risk management

● Thoroughly implementing general risk management

● Promoted risk response actions among sales personnel and other staff

◎● Simplifying and integrating various management systems (PDCA

cycles) based on general risk management

● Identifying unrecognized risks ● Extracted risks with checklists ◎

● BCP ● Incorporated countermeasure investments against major earthquakes in next medium-term business plan

◎● Promoting countermeasures to major earthquakes

● Extracting general affairs risks ● Risk measures pertaining to community relations strengthened

◎● Follow-up for extracted items

● Reducing overseas risks ● Began providing support for internal controls in China ◎

● Providing support for risk management and internal controls to overseas subsidiaries (including those in China and other Asian countries)

CSR dialogue with stakeholders

● Revising the content of CSR Report ● Issued digest version; posted full report on website

◎● Integrating stakeholder engagement (mutual dialogue)

● Issuing site CSR reports ● Issued reports of 18 worksites◎

● Setting KPI (key performance indicator) for CSR Report based on dialogue with major stakeholders

● Promoting risk communication

Customers, consumers

● Maintaining lines of communication with customers through business transactions

● Reducing complaints

● Continued improving quality assurance activities

● Reduced claims◎

● Maintaining dialogue with customers through business transactions ● Reducing complaints

Shareholders

● Promoting IR (promoting overseas IR) ● Promoted as scheduled ◎ ● Continuing activities to promote IR (promotion of overseas IR)

● Responding to SRI (socially responsible investment) movement

● Continued posting on SRI lists such as FTSE and MS ◎

● Continuing response to SRI ● Continuing response to SRI lists

Employees

● Promoting cooperation with labor union concerning CSR activities

● Continued dialogue with labor union ● Continued CO2 diet*1 activities

○● Examining and implementing new activities

● Promoting programs to support the career advancement of female employees

● Provided education and raised awareness ● Established thoroughly implementation and

application of child support policies ● Expanded career opportunities for female

employees

◎

● Promoting programs for the career advancement of female employees

● Human rights ● Expanded employment of handicapped persons

● Providing human rights education groupwide◎

● Strengthening human rights efforts as part of corporate ethics promotion

● Continuing groupwide human rights education

● Globalization ● Continued employment of foreign national employees

◎● Promoting globalization

Partners● Promoting CSR procurement ● Provided feedback to partners engaged in

self-assessments of CSR procurement ● Commenced CSR visits

◎● Beginning global CSR procurement

Local communities, society

● Promoting interactive communication ● Promoted community activities, including plant tours, classes-on-demand, instructor dispatch, and internships

● Addressing issues in link with general affairs risk reduction

◎

● Contributing to local communities through in-house resources: classes-on-demand, environmental education, plant tours, internships

● Promoting CSR and environmental public relations (inside and outside the company)

● Site or area CSR reports worldwide

CSR Managem

entSocial Com

mitm

ent reportSafety Efforts

Environmental Efforts

*1 CO2 diet : In 2008, the Showa Denko Group initiated carbon-dioxide diet efforts. The key point of these activities

is to have each employee declare his or her own efforts to reduce carbon-dioxide emissions and to

strengthen his or her efforts while keeping a monthly self-assessment log on the corporate intranet.

Progress on these efforts will proceed through labor-management cooperative efforts.

CSR-related Achievements in 2010 and Issues to Be Addressed


CSR Management

Corporate governance

Showa Denko works to ensure the soundness, effectiveness,

and transparency of its management and to continually improve its

corporate value. To this end, the Group is improving its corporate

governance*1 based on the following strategies:

• Strengthening compliance

• Strengthening management supervision and oversight functions

• Clarifying management responsibilities

• Rapid, effective decision-making and task implementation

• Strengthening the information disclosure system

Group management

While maintaining respect for the independence of affiliated

companies, the Showa Denko Group has established its Vision,

Code of Conduct, medium-term consolidated business plans,

management policies, and annual action plans. Group affiliates

undertake business activities in cooperation with sections in

charge of their businesses and report on the execution of their

business activities in accordance with Group management rules.

Risk management is carried out on a Group basis in

accordance with Group's risk-management rules. The Group

works to ensure thorough compliance throughout the entire

Group by establishing guidelines for corporate conduct based on

business type and conditions of affiliates.

Showa Denko auditors and internal-audit sections audit and

examine the performance of affiliates as necessary. In addition,

auditors work to ensure coordination with corporate auditors of

key affiliates in various ways, including periodic meetings.

The Corporate Vision and the Showa Denko Group Code of Conduct

In 1998, Showa Denko established a Code of Conduct,

which stipulates standards of behavior and basic goals for group

companies, executives and employees. Positioning the Code of

Conduct as the Group's principles for promoting CSR, we have

abided by the Code of Conduct since its establishment.

The Code of Conduct is now being revised in light of ISO 26000

(guidelines for social responsibility) published in 2010.

Corporate governance structure

Cooperation

Decision-making/supervision

Business execution

Business audit

Accounting audit

AuditAccounting office

General meeting of shareholders

Board of Directors

Management CommitteeR&D Committee

Corporate OfficersBusiness sectors

Internal Audit Office

President & CEO

Safety Measures Committee

Responsible Care Committee

IR Committee

Corporate Ethics CommitteeSecurity Export Control

Committee

Risk Management Committee

CSR Committee

Auditors

Guidelines for the Code of Conduct

Established in 1999, the Guidelines for the Code of Conduct

provide specific examples to make the Code of Conduct easier to

understand. The Guidelines were revised in 2005 and 2008 in line

with changes in social trends. Our employees use the Guidelines

to confirm that their speech and behavior is in compliance with the

Code of Conduct.

Aff i l iated companies have also established their own

Guidelines, based on their own specific circumstances.

Study began in 2011 on revising the Guidelines to reflect revisions

in the Code of Conduct.

The Showa Denko Group's VisionWe at the Showa Denko Group will provide products and services that are useful and safe and exceed our customers' expectations, thereby enhancing the value of the Group, giving satisfaction to our shareholders, and contributing to the sound growth of international society as a responsible corporate citizen.

Code of Conduct1. We will develop and provide useful and safe technologies,

products, and services to contribute to the sound growth of society.

2. We will observe the laws of Japan and of foreign countries in which we operate, abide by the company rules and strive to maintain the social order.

3. We will conduct business in Japan and abroad based on the principle of fair and free competition.

4. We will do our best to ensure safety and to protect the global environment.

5. We will make sure that we maintain good communications with the public, and disclose accurate information on our company in a timely manner.

6. We will respect human rights and create a cheerful and comfortable working environment.

7. We will act as a member of the international society and contribute to the development of the regions in which we operate.

http://www.sdk.co.jp/english/about/message/conduct.html

Corporate Governance

Board of Auditors


CSR Managem

entSocial Com

mitm



*1 Corporate governance: In the narrow sense, this term refers to the relationship between the

shareholders and the managers of a company and the mechanism or structure of decision making

and business operations in the company. In the broad sense, it refers to the relationship between

the company and its stakeholders and is also related to the question, “For whom does the company

exist?”

*2 Responsible Care: “Responsible Care”is the chemical industry’s global voluntary initiative,

representing a commitment to work together to continuously improve the environmental, health and

safety performance of chemicals over their entire life cycles, namely, the development, production,

distribution, use, final consumption and disposal.

Management Organizations

Board of Directors

At Showa Denko, the Board of Directors is responsible for

important decision-making and supervisory functions, while corpo-

rate officers are responsible for business execution functions. The

Board of Directors consists of 8 directors, including one outside

director. Chaired by the Chairman of the Board, the Board both

determines the company's fundamental policies and considers

and makes decisions on matters stipulated in the Companies Act

and the Articles of Incorporation, in addition to decisions related

to key issues regarding the execution of business operations. The

Board of Directors also oversees each Director's executive ac-

tions.

Board of Auditors

Showa Denko employs an auditor system. The Board of

Auditors consists of five auditors, including three outside auditors.

Auditors attend meetings of the Board of Directors and other

important meetings within the company, offer opinions when

needed, and audit the execution of business operations, offering

suggestions and advice to ensure that the Company operates in

a sound manner. Auditors also seek to strengthen consolidated

Group management by enhancing the overall auditing of Group

member companies.

Corporate Officers

To ensure swift decision-making in the execution of business

operations and to invigorate such operations, Showa Denko has

adopted a corporate officers system.

CSR Committee

Showa Denko has established a CSR Committee at the

highest management level to oversee all management strategies

from a CSR perspective. Chaired by the President & CEO, the

CSR Committee's membership consists of members of the

Management Committee.

Management Committee and R&D Committee

Meeting weekly in principle, the Management Committee

consults and makes decisions on issues to be submitted to the

Board of Directors and on important general issues related to

company management. The R&D Committee deliberates and

makes decisions on important issues related to research and

development.

Business-sector structure

To clarify its system of responsibility for implementing business

operations, Showa Denko has adopted a structure based on

business sectors. To ensure thorough performance evaluations

that focus on results, we have also implemented a system for

evaluating the performance of business sectors.

Committees

Showa Denko has established a number of committees to

handle specific issues central to the undertaking of its business

operations. These include the Risk Management Committee, the

Corporate Ethics Committee, the Responsible Care*2 Committee,

the Security Export Control Committee, and the IR Committee.

Each committee conducts in investigations, research, and

deliberations related to its areas of responsibility.

Internal Audit Office

As an organization under the direct authority of the President,

the Audit Office performs internal audits. The Audit Office

investigates the status of execution of company business

operations, including those of Group member companies, and

verifies their accuracy, appropriateness, efficiency, compatibility

with Group management policies and plans, and soundness.

These measures also include assessment of internal control

over financial reporting as well as the planning, drafting, and

implementation of various steps to maintain and improve the

quality of such reporting.

Legal Advisor

Showa Denko works to ensure compliance with laws,

obtaining advice on legal matters from its Legal Advisor as

needed.

Accounting audits

Showa Denko works to ensure the soundness of i ts

accounting practices, undergoing periodic accounting audits by

certified public accountants.


CSR Management

Risk management

Showa Denko regards risk management as one of the most important aspects of company management. As such, the company seeks to improve, maintain, and promote its risk management system. The Company has established a Risk Management Committee to promote risk management groupwide. This Committee prioritizes risks that threaten company policies, plans, and the Group as a whole based on assessments of their potential impact and likelihood. It also provides support for promoting measures to circumvent such risks and to respond to them should they occur. Major topics affecting the entire Group are presented for discussion at the CSR Committee, where decisions are based on deliberations from a wide range of perspectives. In addit ion, specif ic r isks involv ing matters such as environmental protection, security and disaster prevention, chemical substances, quality, intellectual property, fair trade, export controls, and contractual agreements are managed through a system of prior examination and decision-making, in accordance with internal regulations. Actions taken in the event of emergencies, including accidents and disasters, are implemented as stipulated in the emergency situation action guidelines and other internal regulations.

In the review undertaken in 2010, we provided information on various cases to other workplaces within the Group to help identify risks from a broad-ranging perspective, including viewpoints not previously recognized. We also organized information on the progress in safeguards and countermeasures against major earthquakes, along with information on BCP efforts.

Risk management

Business Continuity Plan (BCP)

Since 2007, each business section has prepared its own BCP. After establishing a promotion structure and formulating basic policies, each section performs a business impact analysis (BIA) and takes other steps to identify key, high-priority measures. This is followed by process analysis, including identifying bottlenecks for priority measures and considerations of strategies and countermeasures. These activities are documented and implemented fully through training and drills.

The risk-management PDCA cycle

The Group has taken “r isk inventor ies” since 2007, assessing the importance of risks, proposing and promoting risk countermeasures, and implementing annual reviews to strengthen risk management. The results of these efforts are summarized and presented at meetings of the Risk Management Committee. The information is organized into specific topics to be addressed companywide. When necessary, cross-functional efforts based on these topics are implemented companywide. Examples of companywide efforts include preparation of the Business Continuity Plan (BCP) for the event of large-scale earthquakes and countermeasures against a new strain of influenza (H5N1) in 2007 and 2008, and responses to actual outbreak of new influenza (H1N1) in Japan and overseas in 2009.

Countermeasures against new influenza strains

Based on the basic plan for responding to new influenza strains (H5N1), established in 2008 as a fundamental policy for such measures, all Group member companies have prepared their own action plans and drafted specific countermeasures corresponding to various alert levels. Specific measures focus on steps to prevent employee exposure to new flu strains and the spread of such viruses and on the BCP. These measures are discussed in detail in action manuals and implemented firmly through training and drills. With the actual outbreak in 2009 of the new H1N1 influenza strain, we implemented these measures after ascertaining accurate information on various related issues both in Japan and around the world, based on plans developed for the H5N1 influenza.

Information Security

With the rapid growth of the internet, the quality and quantity of the information a company can handle and the speed at which it can do so have grown dramatically. At the same time, the risk of information-related crimes and accidents has never been higher, including the theft of personal information, leaks of internal company information, and unauthorized alteration of company

The risk-management PDCA cycle

Sector summaries Company summaries

Analyzing current conditions

Proposing countermeasures

Implementing risk countermeasure plans

Reviewing companywide tasks

Listing risks Implementing countermeasures

Assessing the potential impact

Management review


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websites. Showa Denko has established Basic Guidelines for Information Security, Information Security Regulations, as well as Personal Information Protection Guidelines, seeking to develop a system to prevent information security incidents and to minimize any resulting damage to its business while ensuring business continuity. We are also proceeding with activities intended to raise employee awareness through e-learning-based training. This will ensure a thorough understanding of these basic guidelines and regulations throughout the organization. As part of efforts to maintain the effectiveness of our information security systems, we take steps to prevent unauthorized access from outside the organization, to prevent information leaks, and to strengthen information security governance at each overseas Group member company. Especially in 2009, we strengthened measures to prevent infections by and the proliferation of computer viruses. As part of its BCP, Showa Denko in 2009 sought to secure stakeholders' confidence by enhancing the reliability of its information networks, establishing a system for allowing employees to work from home in the event of disasters, and enhancing its measures to protect information assets from various threats.

Corporate Ethics Month

Since January 2004, we have designated each January as Corporate Ethics Month. During Corporate Ethics Month, all Showa Denko Group executives and employees are encouraged to carefully review the Code of Conduct and its Guidelines and to reexamine his or her actions in that light. Each year, all executives and managers are required to sign and submit a declaration of compliance with the Code of Conduct and the corresponding Guidelines. From 2011, executives of Group companies are also required to sign and submit a declaration of compliance with the Code of Conduct and the corresponding Guidelines. Case-study-based learning continues as part of Corporate Ethics Month, drawing on the company intranet and other means. An e-learning program for managers, introduced in 2009, continues to provide required training for personnel promoted to management positions.

Compliance

The Showa Denko Group places adherence to societal norms and business ethics at the top of its management agenda and emphasizes compliance in all management activities. In January 2003, we established the Corporate Ethics Committee to ensure legally compliant management. Since 2005, we have strengthened compliance organizations and systems in each business sector and at each site. Other efforts include preparing lists of and ensuring thorough compliance with applicable laws and regulations. In 2010, we strengthened support for subsidiaries in China. In 1987, in the area of security-related trade controls, we established the Security Export Control Committee, which works to enhance compliance with these controls.

Security Export Controls

In 2009, the Foreign Exchange and Foreign Trade Act was amended for the first time in 22 years in response to changing conditions, including advancing globalization and growing importance of information technologies, as well as the increasing incidence of improprieties. In particular, in the area of technology exports, al l international transactions are now subject to regulations, including the provision of technologies from residents in Japan to residents staying overseas. Regulations have been tightened for transactions related to the buying and selling of goods involving their movements between foreign states, and the brokering of technology between foreign states. Corresponding penalties have also been increased. The Showa Denko Group will therefore review its own systems and internal rules to ensure even more rigorous compliance with security export controls. The Showa Denko Group strives to prevent illegal exports through careful, multistage inspections of all products and technologies targeted for export, focusing especially on the following major aspects of export control: 1) identifying whether the items are subject to export restrictions; 2) confirming the applications of the items to be exported; and 3) reviewing customers and consulting with the relevant authorities in case of doubt. Personnel in charge of export operations participate in in-house training programs, e-learning activities, outside training sessions, and practical skil ls certif ication exams to raise awareness of security export controls. Due to rigorous export control measures and efforts by the personnel concerned, there was no violation of the Foreign Exchange and Foreign Trade Act in 2010 with regard to our security export controls.

Corporate Ethics Hotline

Our Corporate Ethics Hotline serves employees of all Showa Denko Group companies. The purpose of this Hotline is to prevent or quickly correct violations of corporate ethics or of laws, regulations, or company rules. Under this system, employees can report any concerns directly to the Corporate Ethics Committee, through the company intranet or e-mail, telephone, or post. Anonymous reports are accepted, but measures are in place to ensure no disadvantages occur when employees provide names. Other measures also ensure employees filing reports receive feedback on the results and that this feedback is adequate. Since January 2006, in addition to their availability within the company, these services have been made available at outside law offices.

Tools for corporate ethics education


CSR Management

*1 15 Group companies which work together with Showa Denko in promoting Responsible Care

(as of June 2011): Tsurusaki Kyodo Doryoku K.K., Tokyo Liquefied Oxygen Co., Ltd., Showa Titanium

Co., Ltd., Shinshu Showa Co., Ltd., Showa Denko Packaging Co., Ltd., Showa Aluminum Can Corp.,

Showa Denko Sakai Aluminum Co., Ltd., Showa Denko Electronics K.K., Showa Denko Kenzai K.K.,

Union Showa K.K., Niigata Showa K.K., Showa Aluminum Can Recycling Center, HI-PACK CO., LTD.,

Showa Tansan K.K., and Clean-S Showa Co., Ltd.

Responsible Care Action Guidelines

Showa Denko enacted the Responsible Care Action Guide-

lines in March, 1995 as its corporate policy related to the environ-

ment, safety, and health and declared that it would implement

Responsible Care.

Since then, all business sectors of the Company have been

engaged continuously in the relevant activities under these Guide-

lines. These activities also are being expanded throughout the

entire Group.

In 2005 we signed the Responsible Care Global Charter,

which contains international

guidelines to Responsible

Care activities, declaring our

support for and intention to

implement Responsible Care.

Responsible Care promotion system

Responsible Care activities are promoted by the Responsible

Care Committee, throughout the Showa Denko organization and

throughout the Group.

As of June 2011, the head office, six business sectors (13

business divisions and 15 sites), three branches, the Corporate

R&D Center, and 15 Group companies*1 engaged in Responsible

Care activities.

In addition, as part of its efforts to strengthen the Group's Re-

sponsible Care activities, Showa Denko is expanding the scope of

such activities by ascertaining performance and providing on-site

guidance concerning Responsible Care for domestic and over-

seas Group member companies involved in manufacturing.

Furthermore, the Responsible Care Committee and the Risk

Management Committee were placed under the CSR Committee

to promote Responsible Care as a core element of our CSR ef-

forts.

Responsible Care management

Global Responsible Care Verification Certificate

Responsible Care promotion system Responsible Care Action Guidelines

Responsible Care Action improvement Guidelines

❶ Throughout the entire life cycle of chemical substances, we shall make our best efforts to review and improve business activities from the viewpoints of ensuring safety and health and protecting the environment.

❷ In manufacturing activities, we shall make our best efforts to reduce the burden on the global environment not only through conventional approaches to environmental protection but also through promotion of switching raw materials, energy conservation, waste reduction and recycling, and reductions in the release of chemical substances.

❸ In the development of new products and businesses and in the establishment, enlargement, and renovation of facilities, we shall undertake our best efforts to ensure safety and health and to protect the environment.

❹ We shall promote R&D and develop technologies that will contribute to the improvement of safety and health and to the protection of the environment. We shall also promote the marketing of alternative or new products.

❺ We shall investigate the effects of the products and materials we handle on safety, health, and the environment, and we shall encourage our employees to develop a deep knowledge of safe use and handling and provide our customers with such information as well.

❻ In overseas business activities, technology transfer, and international trading of chemical products, we shall give full consideration to ensuring safety and health and to protecting the environment.

❼ We shall comply with international rules and domestic laws and regulations and make our best efforts to cooperate with the relevant international organizations and both foreign and domestic regulators.

❽ We shall participate proactively in various activities related to environmental protection and make our best efforts to communicate with society and local communities to achieve better understanding and trust.

Security Export Control Com

mittee

President & CEO

Corporate Ethics Com

mittee

Aluminum

Can Recycling Prom

otion Comm

ittee

Accident Prevention Subcom

mittee

Secretariat (Environm

ent & Safety Office)

Responsible Care Planning Com

mittee

Safety Measures

Comm

ittee

CSR Committee

Risk Management Committee Responsible Care Committee

Occupational Health and Safety Subcom

mittee

Chemical Substances

Release Control Subcomm

ittee

Waste Reduction

Subcomm

ittee

Resource Saving/Recycling Subcom

mittee

Energy Saving/Global Warm

ing Issue Subcom

mittee


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*2 Third-party verification: This term refers to the verification of the information or data in

sustainability reports or environmental reports of a company or association when the verification is

conducted by an organization independent from the company or association in concern.

The PDCA cycle

The Showa Denko Group works to achieve continuous im-

provement in its Responsible Care activities through the plan-do-

check-act (PDCA) cycle of formulating Responsible Care activity

plans (plan), implementing these (do), auditing and evaluating the

results (check), and reflecting these via management review in the

next round of objectives and activity plans (act).

Auditing structure

The Showa Denko Group carries out the following audits at

each stage, to confirm that activity plans concerning Responsible

Care are implemented according to plans.

Self-auditing

Using checklists, the workplaces of Showa Denko and major

Group companies evaluate their own Responsible Care systems

and the status of its implementation, promoting continuous im-

provements by reporting to the Safety Measures Committee on

the results of these self audits and reflecting such results in objec-

tives and activity plans of the following fiscal year.

Workplace auditing

The Safety Measures Committee performs on-site audits of

the state of efforts at sites operated by Showa Denko and main

Group companies. The Committee also performs quantitative

evaluations based on the results of audits, identifying weaknesses.

Furthermore, it provides needed guidance and reports audit re-

sults to the Responsible Care Committee. The Responsible Care

Committee reviews these results and reflects them in company-

wide and groupwide policies, objectives, and plans.

At manufacturing companies within the Group, both in Japan

and overseas, other than the above companies, Responsible Care

efforts are subject to onsite checking of their status and to on-site

guidance.

Overall auditing

The Internal Audit Office audits the status of Responsible Care

measures throughout Showa Denko and reports on the results of

these audits to the Responsible Care Committee.

Third-party verification

Showa Denko has undergone third-party verification*2 in such

aspects as Responsible Care activities and the accuracy of data

collection. The content of this CSR Report 2011 has been verified

by SGS Japan Inc.

In the future, we will continue to draw energetically on third-

party verification to ensure continued improvements in our Re-

sponsible Care systems and in our performance.

The PDCA cycle

Continual improvement

Implementation

DInternal audit, evaluation of

results

C

Management review

Activity plans

PA

Formulating management policies and objectives


CSR Management

Responsible Care Activities Plan: Achievements in 2010 and Targets for 2011Every two or three years, the Showa Denko Group establishes a medium-term Responsible Care activities plan, which is then

used as the basis for annual action plans during the period covered. All workplaces promote Responsible Care and draft detailed action plans based on the comprehensive plan, tailored to local conditions and circumstances. The following table lists the policy, plans, achievements, and ratings for primary activities undertaken in 2010, together with the policy and plans for 2011.

We will continue these efforts to achieve our goals.

Environmental conservation

2010 policy and plans 2010 results and progress Evaluation 2011 policy and plans

Environmental management

[policy] Zero environmental problems[plans]• Steady implementation and comprehensive awareness of Active Safty

efforts (utilizing checklists to prevent environmental problems)• Planning and implementing reductions in potential risks

• Target of zero environmental problems achieved by Showa Denko Group.

• Using checklists to prevent environmental problems• �Implementing risk reduction measures at each site

◎

[policy] Zero environmental problems[plans]• Steady implementation and comprehensive awareness of Active Safty

efforts (utilizing checklists to prevent environmental problems)• Planning and implementing reductions in potential risks• Responding appropriately to revised laws

Global warming initiatives

[policy] Achieving the unit energy consumption target of 80% or better

[plans]• �Creating energy conservation measures

• Unit energy consumption: 91.8% (compared to 1990 levels), down 0.3% from 2009

• Implementing regular reporting△

[policy] Continuously reducing unit energy consumption[plans]• Creating energy conservation measures

[policy] Achieving Kyoto Protocol targets by the Showa Denko Group

[plans]• �Implementing reduction plans at each site

• Greenhouse gas emissions: 20% reductions at Showa Denko, 19% reductions across entire Showa Denko Group (compared to 1990 levels)

• Implementing the plan to achieve Kyoto Protocol targets in promise period (by Showa Denko)

• 2009 unit energy consumption as designated shippers and reduction plans for 2010 reported to authorities

◎

[policy] Achieving Kyoto Protocol targets for the Showa Denko Group by itself; preparations for post-Kyoto Protocol

[plans]• Implementing reduction plans at each site

Reducing industrial waste

[policy] Achieving zero emissions[plans]• � Eliminating landfill waste through efforts such as more effective use of

sludgeShowa Denko: 1,900 t or less

Showa Denko Group: 3,100 t or less

• Landfill waste: 2,591 t (down 161 t from 2009) across Showa Denko Group; targets achieved

◎

[policy] Achieving zero emissions[plans]• Eliminating landfill waste through efforts such as more effective use of sludge

Showa Denko (two sites added): 2,200 t or lessShowa Denko Group: 2,500 t or less

[policy] Contributing to a recycling-based society[plans]• � Promoting recycling

• Chemical-recycling production: up 4% from 2009• Paper-recycling rate (head office): 85% (up 2% from 2009)• �Aluminum can recycling: Group participation rate 94%, with each

employee bringing in an average of 191 cans over a three-month period

○

[policy] Contributing to recycling-based society[plans]• Promoting recycling

Occupational safety and health


Occupational safety and health

[policy] Zero lost-time and non lost-time injuries [plans]• � Enhancing safety strength of worksites and personnel• Addressing equipment and process deficiencies• Improving safety management levels (expanding attainment of

Occupational Safety and Health Management System accreditation)

• � Lost-time injuries in Showa Denko: one case (three cases in 2009), lost-time injuries in Showa Denko Group: One case (one case in 2009)

• Non lost-time injuries in Showa Denko: One case (three cases in 2009), Non lost-time injuries in Group companies: 0 cases (three cases in 2009)

• Rate of incidents resulting in lost-time injuries in Showa Denko Group: 0.14 (0.29 in 2009)

• Oita Complex, Shiojiri Plant, and Showa Denko Electronics K.K. win Accident-free Record Certification from the Ministry of Health, Labor and Welfare.

• Oita Complex and Ohmuta Plant of Showa Aluminum Can Corp.recognized by third-party safety awards

• Higashinagahara Plant, Shiojiri Plant and Kitakata Plant certified under the Occupational Safety and Health Management System (total of 11 sites now certified)

○

[policy]• � Zero lost-time and non lost-time injuries at each site• � Establishing the chemical industry’s strongest safety management system [plans]• Enhancing safety strength of worksites and personnel• Addressing equipment and process deficiencies• Improving safety management levels• Following up on special safety activities and strengthening measures

to prevent similar incidents

Security and fire prevention


Equipment safety

[policy] Zero equipment incidents[plans]• � Holding and utilizing Active Safety study meetings• Enhancing the engineering change management system• Promoting voluntary safety initiatives

• Showa Denko: Two cases of leakage, one case of fire, one case of damage (one case in 2009)

• Group companies: Two cases of leakage, one case of fire (one case in 2009)

• Active Safety activities expanded to and implemented by affiliated companies and research facilities

• Function-specific personnel meetings (electric, instrumentation, machinery, process) planned

• Oita Complex: Certification as continuous high-pressure gas operation site renewed for fourth consecutive year

△

[policy] Realizing zero equipment incidents[plans]• � Thoroughly implementing Active Safety activities• Organizing and applying function-specific personnel meetings• Thoroughly implementing HRM*1 examination• Promoting voluntary safety initiatives

◎Fully achieved （100%）　○Achieved 80% or more　△Achieved less than 80%(Numerical data without range indications apply to Showa Denko only.)


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Occupational health

[policy] Zero work-related illnesses*2

[plans]• Enhancing sanitation management structure• Improving work environment and work methods

• Zero work-related illnesses

◎

[policy] Zero work-related illnesses[plans]• Enhancing sanitation management structure • Improving work environment and work methods

Health management

[policy] Promoting Showa Denko Group Health 21 Plan[plans]• Enhancing health support system• Mental-healthcare efforts at worksites

• Implemented preventive activities to reduce lifestyle-related diseases in accordance with Showa Denko Group Health 21 Plan

• Twenty-six sites, divided into five groups, presented examples of activities and exchanged opinions

• Policy for promoting Health 21 Plan activities for the next two years determined in general worksite meetings

• Promoted participation in third-party seminars for improving skills of public health nurses and other nurses

• Mental health care seminars planned by each worksite• Provided stress check sheets to employees during National Industrial

Hygiene Week

◎

[policy] Addressing common priority targets specified in Showa Denko Group Health 21 Plan

[plans]• Common priority targets(1) Preventing or improving incidence of lifestyle-related diseases (BMI,

blood pressure, fat, blood glucose)(2) Enhancing mental healthcare efforts (3) Reducing smoking rates• Effectively applying health management system

Chemical substance safety


Chemical substance management

[policy] Zero accidents/incidents involving chemical substances or violations of chemical substances legislation

[plans]• Comprehensive implementation of compliance, education, and

management structures• Collecting, assessing, and providing safety information (REACH

compatibility, etc.)

• Zero accidents/incidents involving chemical substances or violations of chemical substances legislation

• Revision to GHS*3-compatible MSDS*4 promoted (completed for substances for which notification is required by Industrial Safety and Health Law)

• Chemicals Management Officer provided information on relevant legislation and follow-up training.

• Completed registration of substances under the REACH*5 regulations before deadlines for substances that must be registered by 2010

• Completed notification under the CLP regulation*6 before deadlines and amended CLP compliant labels and MSDS

◎

[policy] Appropriate response to revisions in domestic and overseas laws

[plans]• Comprehensive implementation of compliance, education, and

management structures• Collecting, assessing, and providing safety information• Establishing comprehensive chemicals management database

[policy] Reduced chemical emissions[plans]• Developing and implementing reduction plans for each worksite

• Emission of PRTR-listed substances: 316 t, up 35 t from 2009 (increased number of target substances due to legal updates)

• Emission of toxic atmospheric pollutants: 33 t, down 28% from 2009, target achieved

○

[policy] Reducing chemical emissions[plans]• Thoroughly disseminating information on PRTR revisions• Developing and implementing reduction plans for each worksite

Quality assurance


Quality assurance

[policy] • Making products that offer total safety in use• No product accidents, no major complaints[plans]• Securing product safety (performing appropriate risk assessments for newly

developed products and specified products; ensuring compliance with inspection standards for products subject to absorption by or contact with the human body)

• Thorough quality control (setting and pursuing challengingly high target values to achieve significant reductions in customer complaints)

• Product safety secured and zero product accidents maintained by performing appropriate risk assessments for newly developed products and specified products and by ensuring compliance with inspection standards for products subject to absorption by or contact with the human body

• Customer complaints reduced by 30% (compared to 2009 figures) by setting challengingly high reduction targets and thorough implementation of corresponding measures

◎

[policy]• Making products that offer total safety in use • No product accidents, no major complaints

*1 HRM: High Risk Material

*2 work-related illnesses: Legally recognized work-related sickness by the Workers' Compensation Insurance Law. Appearing symptoms of illness caused by exposure to harmful factors under circumstances of employers' control.

*3 GHS: (Globally Harmonized System of Classification and Labelling of Chemicals) This is a system for classifying the hazards and toxicity of chemical substances according to certain criteria, reflecting the results on labeling and MSDS, and using these to prevent accidents and protect human health and the environment.

*4 MSDS: (Material Safety Data Sheet) This is a document provided by the supplier to the user (customer) of a chemical substance, covering such matters as its name, toxicity, and physical/chemical properties; cautions concerning its handling and storage; and emergency measures.

*5 REACH Regulation: EU Regulation on Registration, Evaluation, Authorization, and Restriction of Chemicals

*6 CLP Regulation: EU Regulation on Classification, Labeling, and Packaging


The Showa Denko Group places great emphasis on continuous dialogue with customers, shareholders, local communities, raw materials and service providers, and our employees and their families. We believe the relationships of mutual trust we have established with these stakeholders are critical assets of the Showa Denko Group.


CSR Activity Report: Social Commitment Report

Customers

We strive to ensure satisfaction with Group products and services, thereby securing our customers' patronage.

Local communities and authorities

We strive to ensure that local communities and authorities have confidence in the safety and stability of our operations.

Employees and their families

We strive to provide rewarding worksites in which employees and their families can take pride.

Shareholders and investors

We strive to ensure satisfaction with Group performance and continued shareholding.

Business partners

We strive to maintain mutually beneficial relationships based on trust in transactions with the Group.

お客様株主・投資家様

パートナーの皆様社員およびご家族

地域・行政の皆様













Each of us at the Showa Denko Group strives to build relationships of trust with our stakeholders.

Relationships with Our Stakeholders


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Stakeholder perspectivesThe Showa Denko Group communicates with its stakeholders in various contexts.

We believe it is important for us to review the Group's visions for the future with thorough understanding of our stakeholders'

expectations and concerns for the Group, which are identified through this communication.

The views of our stakeholders can serve as another yardstick for the Group to determine the priority assigned to various risk

management issues. Understanding the Group's issues from the perspective of our stakeholders helps us correctly prioritize

Group risk management issues and makes it possible for us to respond to stakeholder expectations with more rationales, thereby

permitting risk management in the broader sense.

Dialogue with stakeholders

Increased sales

Growing numbers of business

associates

SRI fund allocation

Improved fund-raising capabilities

Improved brand image

Improved reputation

Compensation

Loss due to business suspension

Loss due to property damage

Suspension of business transactions

Boycotts

Decline in asset value

Difficulty in finding new employees

Impaired fund-raising capabilities

Damage to corporate image

CSRActivities to maintain and improve corporate value by

responding to stakeholder expectations

Risk management (in the narrow sense)Activities that safeguard corporate value by focusing on actions

that prevent damage to stakeholder expectations

Expanding over time

Expanding over time

Contributing to local communitiesActive information disclosure

Developing eco-friendly productsEnergy and resource conservation efforts

Preventing accidents that could cause damage to surrounding areas

Preventing production stoppages that could inconvenience many parties

Preventing product liability accidentsPreventing environmental contamination and

pollutionPreventing industrial accidents

Eliminating discrimination; safeguarding human rights

Preventing improprietiesPreventing misconducts

Preventing violations of the law

Expectations for the companyResponding to expectations...

Positive aspects

Negative aspects

Failing to respond to expectations...

Comm

unication

Corporatevalue

Consumers

Society

Customers

Shareholders

Partners

Local communities

Employees

Administrativeoffice

NPOs,NGOs

Impression, opinion Business, product Issue of interest Issue of concern Expectations for Showa Denko Other comments

CustomersThe plant is clean. I understood the processes. Technology, Quality Technology, Quality Technology, Quality

Very informative I understood the products. Cost, Competitiveness Cost, Competitiveness Cost, Competitiveness

Local residents

Very informative I had a detailed understanding of the business. Environmental efforts Environmental efforts Mitigating global warming I hope plant tours will continue to be offered in the future.

I’ve always thought chemistry was hard to understand. I learned chemicals are used all around us.Good I gained an understanding of

how Showa Denko works.Environmental conservation

Environmental conservation Environmental conservation

Employee families

The plant is clean. I had a detailed understanding of the business.

Employees, Personnel system It gave me a chance to see where my father works.

It was reassuring to see the careful consideration given to ensuring safety.Very informative I gained an understanding of

how Showa Denko works.

Authorities

Very informative I had a detailed understanding of the business. Environmental efforts Technology, Quality Environmental efforts

The site was clean and well-managed.I gained an understanding of how Showa Denko works. Chemical substances Chemical substances Chemical substances

Shareholders, investors

Good I understood the processes. Cost, Competitiveness Technology, Quality

The plant is clean. I understood the products. Environmental efforts Cost, Competitiveness

SchoolsVery informative I understood the processes. Employees, Personnel

systemEmployees, Personnel system Employees, Personnel system

Good I understood the products. Scale, Size Technology, Quality Technology, Quality

The information gathered will be organized by each worksite and by the entire Group and examined during reviews of our Group CSR

issues, improving our CSR performance and allowing us to incorporate these perspectives into our risk management activities.

Communicating with stakeholders

In 2009, we began gathering the opinions, comments, and requests from stakeholders visiting our worksites. Although we have not

systematized the information-gathering procedures, introduced below are some of the viewpoints expressed during these visits.



Human rights policies and systems

The Showa Denko Group believes respect for human rights underlies all our efforts to realize the vision expressed in the following phrase: contributing to the sound growth of society.

Accordingly, the Group's Code of Conduct and its Guidelines makes the following declaration: "We will respect human rights and create a cheerful and comfortable working environment." We have also established a human rights promotion system that incorporates human rights activities as an integral part of efforts to improve corporate ethics and promote CSR.

Efforts to resolve human rights issues are reported and discussed annually by the Human Rights Committee. Policies for the next fiscal year are determined based on issues addressed in the previous year.

Last year, the Human Rights Committee took up matters related to human resource diversity, including career advancement for women, employment of non-Japanese employees and expanding job opportunities for handicapped persons.

We hold the annual Human Rights Promotion Conference, which consists of personnel in charge of human rights at each site, to share information on policies for the next fiscal year as deliberated on and approved by the Human Rights Committee. The Group also provides training for personnel in charge of human rights education to promote better understanding of human rights issues.

We will continue to address human rights issues with focuses on (1) respect for diversity; (2) promoting global initiatives; and (3) maintaining training to raise awareness of human rights issues.

Personnel system and training

The fundamental concept of Showa Denko's personnel system is to provide motivated and capable employees with opportunities to thrive, and to reward them appropriately in keeping with their contributions. Since the company and individual employees are bound on an equal footing by a contractual relationship based on the employment relationship, our goal is to build a win-win situation and to grow side-by-side.

Based on these fundamental concepts, Showa Denko operates a career-planning*1 system. This tool supports the efforts of employees to achieve autonomous and continual career development while helping the employees to consider what responsibilities they want to experience in the future and their own career goals.

Showa Denko has also established various systems, including a study-abroad program, support for foreign language study, and support for self-development, in addition to level-specific education and specialized training. These programs further proactive skills development among our employees. To further strengthen educational systems, we will examine and implement new programs from fiscal 2011.

Employee relations

Company appointment of trainees and transfer for development purposes Support for employees seeking to improve their skills on their own

Basic management training

Career training in second year after promotion to Class S

Overseas study assignment, study graduate schools in Japan (M

BA, law

school, accounting, research)

Specialized training by function

English-language education (TOEIC, foreign language program

for language study)

Self-Development Program

Education by correspondence

Career-planning systemDevelopment-based assignment and transfer

Eight years minimum

Year two

Year one

Six months

Entry

On the Job Training

Management qualification trials

Class S qualification trials

Class C selective trials

SHOWA DENKO Management School

Top Management Seminar

Management Leader Course

Professional Leader Course

Run-up Program

Finishing training

Follow-up training

Training on company entry

Basic technical-employee training

Basic clerical-employee training

Training themes

Showa Denko's training system

Since January 2011, I’ve been doing research to identify new battery materials at the University of Southampton, located in the south of England. I’m scheduled to stay here for two years.

Around half of the research staff come from countries outside the United Kingdom. In terms of national background, it’s a miniature version of the world. Everyone differs in the culture that forms the basis of their thoughts, and I’ve come to realize the importance of expressing myself in writing or speaking in my daily research activities so as to deepen mutual understanding.

When we first arrived, I found it a bit difficult to establish ordinary lives for myself and my family in this country. But after a half year here, I’ve come to see the positive things about Japan I hadn’t seen when I actually lived there. I’ve also come to realize some things we can learn from other countries.

My goal is to gain as many valuable experiences as I can in both my research and daily life. This will give me what I need to do my work from a different perspective when I return to Japan.

Research at the University of Southampton, United Kingdom

VOICE

Kanjiro SakoCorporate R&D Center, Research & Development Headquarters

(Toke Group 1)

Studying at the University of Southampton


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*1 Career-planning: Career-planning refers to plans intended to visualize and help achieve employee’s

own goals and ideals for the future

Recruiting and fostering globally competitive personnel

Recruiting and fostering globally competitive personnel is central to creating a chemical company with a distinctive presence in the global market.

Showa Denko has pursued recruiting activities on a global scale in recent years to provide an environment in which outstanding human resources can make full use of their abilities and capabilities, regardless of nationality. To that end, we hire not just foreign students graduating from universities in Japan, but university graduates in China and Thailand on a regular basis. These employees receive Japanese language training after entering the company and apply their advanced and specialized knowledge and skills in their work.

Showa Denko offers study-abroad programs as a human resource development support policy. Through short-term programs for learning foreign languages (e.g., English and Chinese), as well as two-year programs for research, investigation, and acquisition of advanced management knowledge, the company sends employees overseas based on specific planning.

Last year the company i n i t i a t e d a p e r s o n n e l development policy for full-time employees at subsidiary companies in China, with g roup t r a i n i ng sess ions for local employees at the management level.

Offering opportunities for diverse individuals to make full use of their abilities

Hiring and developing female employees

Showa Denko provides all employees, regardless of gender, age, or nationality, with opportunities to demonstrate their competence. It promotes a management policy emphasizing respect for employee diversity, with the goal of further vitalizing corporate organizations.

As part of these efforts, during the period from 2008 to 2012, Showa Denko intensively seeks to create opportunities for female employees in Japan on a non-consolidated basis to actively demonstrate their competence.

During 2010, the company continued to implement policies to actively employ and assign female employees to various positions, with the goal of supporting career/ability development, raising

awareness, and creating an environment that furthers diverse work styles.

Consequently, in Japan, the percentage of female employees at Showa Denko as of the end of 2010 rose to 8.1% (an increase of 0.8 percentage points from the previous year) on a non-consolidated basis and to 9.3% (an increase of 0.4 percentage points from the previous year) on a consolidated basis. On a globally consolidated basis, female employees accounted for 19.0% (unchanged from the previous year). The percentage of female managers continued to show a gradual upward trend, at 1.6% (an increase of 0.4 percentage points from the previous year) on a non-consolidated basis, 1.8% (unchanged from the previous year) on a consolidated basis in Japan, and 4.0% (an increase of 0.3 percentage points from the previous year) on a globally consolidated basis.

Showa Denko continues to foster a corporate culture that allows a diverse workforce, including women, to demonstrate their competence and capabilities.

Employing handicapped persons

In a bid to create workplaces where a wide range of individuals can work side-by-side, Showa Denko consistently employs handicapped persons and provides them with career advancement opportunities. Since 2006, the ratio of handicapped employees has consistently met the legal requirement.

By working with Public Employment Security Offices and special-needs schools, Showa Denko continues to address the development of job opportunities so that handicapped persons can make the most of their own individual abilities.

Change in the number of employees on consolidated basis (from 2007 to 2010)

17000

18000

19000

20000

21000

17000

18000

19000

20000

21000

17000

17800

18600

19400

20200

21000

17000

17800

18600

19400

20200

21000

17000

17800

18600

19400

20200

21000

6,025 6,246 6,4496,101

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

(persons)

07 08 09 10 (year)

5,304 5,5105,115

5,496

414

1,792

496

1,695

575

1,625

566

1,638

Total number of employees in Japan on consolidated basis

Number of female employees in Japan on consolidated basis

Total number of all overseas employees on consolidated basis

Number of overseas female employees on consolidated basis

Percentage of handicapped employees

(%)

0

1.5

2.5

2.0

06/6 07/6 08/6 09/6 10/3 (Year/month)

Showa Denko Legal requirement

10/6 11/3

Training session held in China for local employees at the management level



Creating a comfortable workplace

Showa Denko believes that it is essential for its future

prospects to respect a work-life balance, encouraging employees

to work with vigor and enthusiasm, and in harmony with society.

As the first step to this end, Showa Denko is working to reduce

working hours. While the percentage of annual paid holidays taken

by employees is increasing from year to year, we will take various

measures, including a reexamination of work modes, to link these

efforts to further reductions in total working hours.

Change in working hours (per employee per year)

2,070.02,055.6 2,076.0

2,048.4

1,922.4

1,700

1,800

1,900

2,000

2,100

0

(hours)

05 06 07 08 09 10 (year)

2,055.6 2,080.2 2,063.2 2,054.4 1,969.3 2,019.2

Manufacturing industry average*Showa Denko (actual working hours)

* Based on data in the "Annual report on the monthly labour survey" published by the Ministry of Health, Labour and Welfare (by manufacturing industry, national survey, companies of 30 persons or more, and general labourers) Encouragement to use various available systems has

increased employee willingness to use them. In 2010, all eligible

female employees took childcare leave. More than 20 male

employees also took advantage of childcare leave.

These systems win high marks from municipalit ies. In

December 2010, in recognition of support for employees

seeking to work and raise children at the same time and other

achievements, the Showa Denko Chichibu Plant (Chichibu City,

Saitama Prefecture) won the incentive award in The 4th Warm

Childrearing Support Company Awards.

The company will continue to improve work conditions to give

all employees the opportunity to achieve harmony between life and

work.

Promoting a sound work-life balance

To support ways of working suited to diverse employee

lifestyles, Showa Denko has established the support systems

described below for both work and home life.

Main systems Description

Childcare leave

Eligible: Employees with one or more years of continuous service who live with dependent children of less than two years of age. Available through the day preceding the child's second birthday.

Family care leave

Eligible: Employees with one or more years of continuous service who have a family member requiring nursing care. Both short-term leave (30 days in total over a three-month period) and long-term leave (12 consecutive months or 12 months in total over a two-year period) are offered.

Shortened working hours for childcare/family care

Eligible: Employees with one or more years of continuous service and who have a child of preschool age or who are eligible for family-care leave. Eligible employees may choose to reduce standard working hours by up to two hours/day.

Cumulative leave

Eligible: Employees who have accumulated leave time (annual paid holidays carried over from year to year). Eligible employees may take leave to attend school events at day nursery, kindergarten, or elementary school until their child graduates elementary school, or to care for a child until the child graduates elementary school.

Child nursing care leave

Eligible: Employees with six or more months of continuous service who have a child who has yet to graduate elementary school. Eligible employees may be absent for up to eight days of work per eligible child per year.

(Portions in blue represent systems that exceed legal requirements in Japan.)

"The 4th Warm Childrearing Support Company Awards" ceremony

Kurumin certification mark granted by the Tokyo Labour Bureau in 2008

Annual paid holidays taken (per employee per year)

0

15.0

10.0

5.0

(days)

05 06 07 08 09 10 (year)

9.9 10.29.6 10.0 10.0

13.1 12.8 13.3

9.9

13.113.9 14.2

Manufacturing industry average*Showa Denko (actual working hours)

* The data of manufacturing industry average is extracted from the “General survey on working conditions” published by the Ministry of Health, Labour and Welfare.


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In April 2011, I took childcare leave for 23 days, from the sixth day after the birth of my second son up to the 28th day.

When my wife had our first son in September 2001, I tried to help as much as I could. I ended up getting in the way.

I learned from that experience and decided to take childcare leave so that I could share some of the physical and mental burdens assumed by my wife.

Since I work on rotating shifts, I consulted with my superior and colleagues about caring for my oldest son while my wife was in the hospital. All of them encouraged me to take childcare leave. I decided to do so.

During childcare leave, I saw a whole range of expressions on my son's face throughout the day in circumstances other than meal times: when I changed his diaper, when I tapped him on the back to make him burp after drinking milk, when I held him in my arms until he fell asleep, when he cried.

He wailed the first time I gave him a bath, but he eventually grew accustomed to this and appeared content. That made me proud and happy to be a father.

The leave seemed so shor t. St i l l , i t was incredibly valuable.

Taking childcare leaveVOICE

Hideki AbeCarbons Division, Inorganics Sector

Manufacturing Department (LNG), Omachi Plant

government and scheduled to end in fiscal 2010 has been

extended for two years (to 2012). Likewise, the Showa Denko

Group has decided to extend the Showa Denko Group Health 21

Plan for two years.

The following three items are set as the Group's common

priority targets:

(1) Preventing or improving conditions related to lifestyle-related

diseases (BMI, blood pressure, fat, blood glucose)

(2) Enhancing mental healthcare efforts

(3) Reducing smoking rates

Relations with the labor union

Showa Denko and the Showa Denko Labor Union have built

relations of mutual trust through years of dialogue. For both parties,

the fundamental policies of labor agreements are: (1) solving

problems through dialogue; (2) pursuing employment stability and

rewarding work; and, (3) improving working conditions by achieving

together both company growth and improvements in profitability.

Joint labor-management Responsible Care training (held in Sakai Plant in June 2011)

Mental health seminar for managers (head-office district)

Health class (Oyama Plant)

Gum disease prevention class (Higashinagahara Plant)

Mental and physical health

The Showa Denko Group encourages employees to maintain

and promote their own health and the health of their families

throughout their lives. This approach will help maintain a lifelong

capacity to work energetically.

Since 2005, the Group has promoted the Showa Denko

Group Health 21 Plan with a focus on safeguarding the physical

health of its employees.

To implement this plan, each site has set forth health targets

and promoted specific measures to improve employee health.

Based on the results of health checkups, each employee

has received health guidance and encouragement to prevent

or improve factors related to lifestyle-related diseases, such as

metabolic syndrome. Exercise and healthy diet seminars have also

been held to motivate employees to better take care of their health.

To ensure mental health and prevent mental health problems,

the Showa Denko Group has provided mental health seminars and

had employees perform self-reviews using a stress check chart.

The "Healthy Japan 21" project initiated by the Japanese



Ensuring product safety

Observance of relevant lows and internal rules

To make it possible for customers to use Showa Denko Group

products in full confidence, product safety must remain a top-

priority issue.

With this in mind, we have established the Quality Assurance

and Quality Control Rules (see illustration below) as company rules.

The Rules are periodically reviewed and revised to bring them up

to date with current conditions. We abide by them in the same way

as we do laws and regulations pertaining to products.

These rules have been established to ensure the rational,

systematic implementation of product-safety activities through all

stages, including product design and development, commercial

introduction and manufacture, and sales, as well as after-sales

information management.

For products and ingredients that might be absorbed directly

or indirectly into or that come into contact with the human body,

such as raw materials for pharmaceuticals and cosmetics, we’ve

established effective systems to ensure the products we provide to

our customers are always safe. These include rigorous screenings

of products brought to market and mechanisms that require strict

compliance with specified procedures in the event of any change

in manufacturing conditions. These procedures thoroughly account

for the possible effects of changes on product quality.

The screening process does more than simply verifying

product safety: Screening committees and other organizations

also undertake thorough studies of potential risks associated

with each item and ways to avoid such risks. Corresponding to

various stages of product life cycle from design and development

to after-sales, these studies examine various aspects, including

the properties of each product, intended use, usage patterns, and

user characteristics and issues related to disposal.

Customer relations

Quality Assurance and Quality Control Rules

Product safety screeningProduct risk assessmentSafety tests

New-product launch proceduresQuality assurance capability screeningProcedures for changes in manufacturing conditions

Screening before concluding contracts and specificationsScreening of sales and PR materials

Management of after sale information

SalesAfter-sale

Design and development

Marketing and manufacture

Efforts to meet environmental and social demands

There is growing sentiment worldwide, particularly among

customers in the information technology, electronics and

automotive industries, to select and procure products with the

lowest possible environmental impact, based on the philosophy of

caring for the Earth through all stages of a product's life cycle, from

production, through use, and all the way to disposal.

The Showa Denko Group responds appropriately and in

good faith to meet customer requests to reduce the use of

harmful substances and to

reassure customers that the

Group's products do not

use or incorporate harmful

chemical substances subject

to regulations in the EU or

other regions. The Group

also responds in good faith to

CSR-related inquiries and surveys from customers.

Analysis & physical properties center


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*1 ISO (International Organization for Standardization) : A private-sector international specialist

organization established in 1947 to promote international standardization of products and services.

In 1987, it established the ISO 9000 series of standards on quality control and assurance; in 1996,

it began establishing the ISO 14000 series of environmental standards. The ISO 26000 standard for

social responsibility was announced in 2010.

Improving quality assurance and quality control levels

Quality management system (Quality control scheme)

Rather than a defensive approach to quality assurance that

seeks to prevent defects from occurring, the Showa Denko Group

implements a proactive approach in which customer satisfaction

constitutes the key to the Group's own satisfaction. The Group

does this by developing and supplying products that will satisfy our

customers.

Nearly all Group member companies have undergone

inspection and registration of quality management systems under

applicable international standards, including ISO*1 9001 and

ISO/TS 16949. These Group companies constantly strive to

improve the quality of their products and services by applying and

improving the effectiveness of their quality management systems.

Reducing complaints

To minimize problems for our customers, the entire Showa

Denko Group works to reduce the number of complaints received.

In 2010, we reduced customer complaints by an even greater

margin than we did in 2009.

We intend to promote the implementation of the quality

management system in order to achieve even greater reductions

in the number of complaints and maintain zero product-related

accidents for preventing any threats or damage to customers'

lives/health or their properties. We plan to seek to earn even higher

levels of trust from our customers and to further increase corporate

value.

Activities targeting improved quality management levels

The Showa Denko Group performs periodic audits groupwide

across business divisions and worksites to raise quality

management levels.

In 2010, we implemented vigorous audits at 53 sites,

identifying issues and providing advice on improvements. This

year's audits will continue to focus on increasing the effectiveness

of the quality management system.

In addition to annual periodic events such as training seminars

for internal auditors, presentations on quality assurance and

quality-control rules, and product risk seminars, we undertake a

wide range of other educational and training activities throughout

the year, including field seminars to improve the skills of internal

auditors.

Trends in annual numbers of complaints (With a score of 100 representing the number of claims in 2006)

0

20

40

60

80

100

Index (%)

06 07 08 09 10 Year (Covering Showa Denko K.K. only)



Basic policy on information disclosure

Showa Denko believes disclosure and investor relations play a

vital role in deepening shareholder and investor understanding of

our approach to various issues, including corporate management,

business activities, and strategy, helping these stakeholders

accurately assess our corporate value. Our information disclosure

measures are based on the following policies:

1. We seek to communicate proactively with shareholders and

investors and to improve management transparency.

2. We strive to disclose information concerning Showa Denko in a

clear, fair, timely, and accurate manner to deepen understanding

of and trust in our company.

Communicating with shareholders and investors

Communicating with institutional investors and shareholders

We keep domestic institutional investors, analysts, and other

market participants informed in various ways, including meetings

to explain annual and semiannual financial results, net-conferences

for results announced for the first and third quarters, and meetings

to outline progress with management plans.

Overseas institutional investors and shareholders receive

English-language versions of our annual results and transcripts of

net-conferences, and other materials. In addition, several times

each year, the President and/or members of the management

team visit Europe, North America and Southeast Asia to report in

person on various issues, including Group business results and

management plans.

The company takes every

opportunity to participate in

individual interviews, small

group meetings and other

forums for interacting with

institut ional investors and

shareholders.

Communicating with individual shareholders and investors

Individual shareholders and investors receive Interim Reports

and Business Reports as well as announcements of semiannual

and annual results. Via our website, they also have access to

materials used in meetings in which results are announced, as well

as video and audio footage of such meetings. This information is

made available soon after the actual meetings. In another effort to

improve dialogue with individual shareholders and investors, we

have set aside an area of our website to respond to their IR-related

inquiries.

Nume rous i n i t i a t i v es

i n v o l v i n g d i a l o gu e w i t h

s t a k e h o l d e r s i n c l u d e

participation in seminars for

private investors hosted by

securit ies f irms and other

organizations.

Shareholder meetings

Showa Denko holds a regular general meeting of shareholders

each year at the end of March. In addition to invitations issued

around four weeks before these meetings, we post related

information on our website to ensure shareholders have enough

time to consider various proposals. We have adopted a system

whereby shareholders can exercise voting rights via the Internet,

allowing even greater numbers of shareholders to participate.

At the venue of the shareholder meetings, reports are

presented on a giant screen to make the proceedings as easy

to follow as possible. Issues discussed include progress on the

medium-term management plan and other business issues. Venue

space is also set aside to introduce some Showa Denko Group

products and technologies.

Shareholder and investor relations

Presentation on medium-term business plan for institutional investors and securities analysts

Presentation for private investors


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Partner relations

CSR procurement activities

The Showa Denko Group places great emphasis on

undertaking business activities based on a consideration of

society and the environment throughout the supply chain. In

2009, purchasing and procurement sections undertook CSR

procurement activities in compliance with the Showa Denko Group

CSR Procurement Guidelines in collaboration with our supplier

partners, a major stakeholder constituency.

Described below are some of our activities in 2010.

* New target partners to whom self-assessment forms were sent

in 2010

Forms sent to approx. 220 companies

Forms returned by approx. 150 companies

* Self-assessment forms returned in 2009 were compiled

and analyzed. The results were provided as feedback to

approximately 540 companies.

* After the start of the CSR visit program, Showa Denko personnel

visited 38 partners each year to confirm the state of mutual CSR

efforts through discussions.

The partner sites visited by our personnel reported on voluntary

improvement activities, indicating the steady expansion of CSR

procurement activities.

No follow-up activities were required to resolve CSR issues with

any of our partners, a feat in which we can take great pride.

Activities for 2011

We suspended business operations in the wake of the Great

East Japan Earthquake of March 11. In May, we resumed self-

assessments, CSR visits, and feedback activities after assessing

conditions at individual regions and companies.

With the support of our partners, we will continue to promote

the steady pursuit of CSR procurement activities.

Example of feedback information

20××年　○月　△日

Ａ工業株式会社様昭和電工株式会社

購　　買　　室　

ご回答いただきました『自己診断』の結果を送付申し上げます。

今後の貴社のＣＳＲ活動の参考にしていただければ幸いです。

　【全体の傾向】

・業種毎に集計いたしましたが、業種間に特筆すべき差異は見受けられませんでした。

・Ｃ.公正取引　と　Ｄ.環境安全　は平均が低く、Ｆ.人権・労働　と　Ｇ.情報セキュリティ

は平均が高くなっておりますが、設問および配点の特性によるものと思われます。

・Ｈ.社会貢献　につきましては、記述がある場合のみ加点しています。

　

　【貴社の状況】

　　（※当欄では、各パートナーの状況についてコメントしております。）

　

　ご協力ありがとうございました

『自己診断』の結果

0102030405060708090100

Ａ．企業倫理・コンプライアンス

Ｂ．品質・製品安全

Ｃ．公正取引

D．環境保全

Ｅ．職場の安全･衛生

Ｆ．人権・労働

Ｇ．情報セキュリティ

Ｈ．社会貢献

全体平均

業種平均

貴社結果



Class-on-demand at a local elementary school (Higashinagahara plant)

In November 2010, the Higashinagahara Plant held a class-

on-demand for the first time at a local elementary school. With the

cooperation of the Oita Complex and Office, the members of the

plant designed safe and enjoyable experiments to stimulate interest

in chemistry for 77 fifth-graders at the school and to deepen their

understanding of the Higashinagahara Plant.

The 18 employees, mainly personnel in charge of R&D and

analysis, held four morning classes, performing two experiments

for each of two topics: Gel Formation and The Three States of

Matter.

In the experiment on gel formation, a material called PAS, taken

from a paper diaper, was used to demonstrate water absorption

and discharge. For the talk on the three states of matter, the

instructor performed various demonstrations: striking a nail with a

banana exposed to liquid nitrogen; varying the size of a balloon

using liquid nitrogen; keeping soap bubbles afloat using dry ice;

and demonstrating how a reagent changes colors continually as a

result of chemical reactions.

The written descriptions of

their impressions of the class

later submitted by the children

indicate the exper iments

helped inspire an interest

in chemistry among many

children. The Higashinagahara

Plant will continue to hold the

class-on-demand as part of

activities to contribute to the

local community and to inspire

children.

Participation in "Chemistry Makes Our Dreams Come True," a summer chemistry experiment event for children

Showa Denko's Head Office and Analysis & Physical Properties

Center participated jointly in the "Chemistry Makes Our Dreams

Come True" chemistry experiment event for elementary school

and junior high school students held in the National Museum of

Emerging Science and Innovation ("Miraikan") in Odaiba, Tokyo, on

August 21 and 22, 2010.

Our company gave demonstrations based on the theme of

"Making candles from soap."

The participating children listened attentively to instructions

from staff members who served as teachers, then performed the

experiments in a spirit of great

earnestness. Staff members

were delighted to see the

happy faces of the children

when they had f i n i shed

making their candles.

This summer event was

initiated in 1993 as a joint

effort involving the chemicals

indust r y, academia, and

government. Showa Denko

participates as part of its CSR

activities.

Community relationsThe Showa Denko Group contributes to society by providing products and services and by making the most of the Group's

unique resources (technologies, human resources, facilities).

The Group participates aggressively in educational programs for children, who will assume leading roles in our future society. It

also contributes to local communities through demonstrations and lectures on chemistry and the environment, as well as guided

tours of the plants.

Chemistry Makes Our Dreams Come True: A summer chemistry experiment event for children

Class-on-demand provided by Higashinagahara Plant


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A new contest for the Hachiman Waterfront Festival helps generate a festive atmosphere (Chiba Plant)

The Chiba Plant participated in the annual Hachiman Waterfront

Festival held in May 2010 in Ichihara City, Chiba Prefecture. This

festival is planned and managed jointly by the town association

and companies to deepen exchange between local residents and

local companies and to revitalize the local community.

The Showa Denko Group established a children's booth. This

year, we set up an original LED roulette machine made by the

LED factory. Various prizes

were awarded to children,

based on the number of

"Win" tickets they collected.

Despite pour ing rain, the

booth attracted many children,

probably marking a record

high attendance.

The Ch iba P l an t w i l l

continue to promote active

dialogue in various ways with

the local community and

residents.

Offering the use of grounds to a Gunma baseball team composed of handicapped players (Isesaki Plant)

Gunma Atom is a baseball team based in Isesaki City

composed of handicapped players. From some six years ago, this

team has practiced every Sunday on the grounds located at the

Isesaki Plant site, a tradition that started with a person associated

with Gunma Atom who worked at the Isesaki Plant.

Gunma Atom captured the victory in the Kanto district

tournament in 2010 and went on to the national tournament.

Some team members were selected as members of the Japanese

team to participate in the Baseball World Series for the Physically

Challenged held in Kobe,

Japan, in November 2010.

L as t y ea r, l o ca l med i a ,

including Jomo Newspaper

and TV Asahi, v isi ted the

grounds to cover the team.

Players practicing on the grounds at Isesaki Plant

Showa Denko Group's booth at Hachiman Waterfront Festival



Participating in RC (Responsible Care)

community dialogues in Toyama and Takaoka districts (Showa Titanium)

The fifth Responsible Care (RC) community dialogues for the Toyama and Takaoka districts organized by Japan Responsible Care Council (JRCC) were held in Toyama City in March 2010. This event was attended by 96 representatives from local governments, community associations, citizens' groups, and companies.

The RC community dialogues sought to promote an understanding of efforts for the environment, safety, and health and to respond to the concerns and questions of local residents. Showa Titanium Co., Ltd. announced it had achieved zero waste emissions in the process of becoming an eco-friendly company.

During the Q&A session, people inquired about the public relations activities of participating companies in the event of an emergency. The results of the questionnaire survey also indicated growing demand for information disclosure.

Showa Titanium plans to expand its annual factory tour program and hands-on learning events for elementary school children in the local area. It will also take active part in local events to achieve closer ties to the local community.

Fourth Niigata Minamata disease lawsuit settlement

In March 2011, a settlement was reached with plaintiffs in the fourth Niigata Minamata disease lawsuit filed in 2009.For other Niigata Minamata disease victims, Showa Denko is promoting response in accordance with the Law Concerning Special Measures for Compensation of Minamata Disease Victims and Resolution of Minamata Disease Problems, enacted in 2009.According to a court decision in response to the first lawsuit in 1971, Niigata Minamata disease (first revealed in 1965) was due to the release of methyl mercury in industrial wastewater from Showa Denko's then Kase Plant. This chemical bioaccumulated in shellfish and fish in the Agano River, which were then eaten by residents, resulting in mercury poisoning.

Outflow of organic compound from the Isesaki Plant

On July 1, 2010, an incident at the Showa Denko Isesaki Plant resulted in an outflow of phenol, an organic compound.We extend our heartfelt apologies and wish to acknowledge the concerns of local residents and other individuals.Due to a power outage caused by thunderstorms, the content of a reactor vessel used for synthesizing phenol resin leaked from the safety valve.Immediately after the incident, we notified local residents and took action to contain the outflow. We also undertook good-faith actions to aid residents affected by the outflow.In light of this incident, we have strengthened measures to prevent recurrence, including reviewing the equipment and operating manuals.

The president of Showa Titanium giving an opening address


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Aluminum can recycling activities

As part of its CSR (Corporate Social Responsibility) efforts, the Showa Denko Group asks employees and cooperative companies to collect aluminum cans for recycling. In fiscal 2010 (from April 1, 2010, to March 31, 2011), these efforts resulted in the collection of 6.2 million cans, equivalent to approximately 100 t of aluminum.* The revenue generated was donated to local councils active in social welfare, associations for the physically challenged, and other organizations and used to promote welfare activities in local communities.(* Calculations assume 1 can = 16.2 grams)

The raw aluminum used to manufacture aluminum cans can be obtained by melting and refining raw ore. Using aluminum

obtained from recycled cans cuts the electrical power required for production to as low as 3% of the power required for raw ore. The Showa Denko Group aggressively promotes aluminum can recycling not just to contribute to regional communities, but to help conserve energy and resources. As of the end of 2010, the employee participation rate was 94.3%.

Showa Aluminum Can Corp., a subsidiary, manufactured aluminum beer cans for the first time in Japan in 1971. The company initiated voluntary aluminum can recycling activities by employees ahead of others industry-wide in 1972. These activities have gradually expanded to involve the entire Showa Denko Group. These activities marked their 40th anniversary in 2011. We will continue to energetically pursue these efforts to contribute to the environment and to our local communities.

Higashinagahara PlantLightweight wheelchair donated to the Kawahigashi branch office of the Council of Social Welfare

Oyama PlantDonation of revenue to the Donguri Fund of the Oyama City Council of Social Welfare

Poster commemorating the 40th year of aluminum can recycling efforts


Recognizing environmental conservation as a high-priority management issue, the Showa Denko Group is committed to cutting emissions of chemical substances and reducing industrial waste generation to prevent global warming and other environmental problems. The Showa Denko management policy also includes safe, stable operations and thorough Responsible Care activities. All members of the Group work hand-in-hand to eliminate accidents and disasters.

Environmental efforts

CSR Activity Report: Environmental efforts

Typical environmental impact index at Group companies*5

2006 2007 2008 2009 2010

GHG emissions (kt-CO2) 494 456 429 406 435

Final landfill disposal (t)*6 1,715 1,540 1,341 1,120 201

Emissions of JCIA PRTR-listed substances (t) 76 68 90 69 62

Resource use and environmental impactThe diagram below summarizes the resource use and environmental impact associated with the operations of Showa Denko

and its Group companies.

To reduce our impact on the environment, the Group is currently pursuing the efforts described below.

*1 Greenhouse gases (GHGs): This term refers to atmospheric gases that have greenhouse effects. GHGs emitted in large volumes by human activity cause global warming. GHGs include carbon dioxide, methane, nitrous oxide, and chlorofluorocarbons. Infrared light radiated from the earth’s surface releaes heat brought by sunlight into outer space. GHGs trap this infrared light, resulting in higher atmospheric temperature.

*2 Emissions of toxic atmospheric pollutants are included in emissions of PRTR-listed substances.

*3 Waste water volume from designated facilities: Wastewater volume from business facilities designated under the Water Pollution Control Act.

*4 Reductions: This term refers to reducing the volume of waste by dewatering, drying, burning, and other means.

I N P U T (Showa Denko K.K. only)

The figures in parentheses represent increases or decreases relative to the previous year.

Note: In principle, the data provided on this page represent total calendar year values. Data that must be reported to authorities represent total fiscal year values.

Energy

1.05Mkl(crude oil equivalent)

(+30,000Kl)

Water

67.21Mm3(-2.24Mm3)

Raw materials

Plants operated by

Showa Denko

Waste reductions*4 inside Showa Denko

61,744t(+16,261t)

Internal Utilization 5,558t(-2,283t)

Products

Emissions of air pollutants

Emissions of water pollutants

Waste discharge

O U T P U T

Greenhouse gases*1 2,306kt-CO2

(-117kt-CO2)

SOx 464t (-30t)

NOx 1,285t (-104t)

Soot and dust 132t (+38t)

JCIA PRTR-listed substances 273t (+19t)

JCIA Toxic atmospheric pollutants*2 33t (-14t)

36,195t (-17,708t)

Landfill disposal 2,390t (+ 758t)

Use outside Showa Denko 11,742t (- 13,577t)

Reductions*4 in volume outside Showa Denko 22,063t (- 4,888t)

COD 444t (+11t)

Total nitrogen 574t (0t)

Total phosphorus 12t (+2t)

JCIA PRTR-listed substances 43t (+13t)

Wastewater volume from

designated facilities*330,117 Mt (-2,050 Mt)


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2010 results

Showa Denko is committed to ongoing environmental investment designed to reduce energy consumption and minimize environmental impact of our operations. Since 2000, environmental investment and associated expenses as well as their effects have been subject to evaluation in the form of

environmental accounting*7

In 2010, the Oita Complex renovated the ethylene cracking furnace to improve efficiency. The Kawasaki Plant invested in maintaining the dust collector. The Omachi Plant and the Higashinagahara Plant invested in facilities related to hydroelectric power generation. The Chiba Regional Office strengthened its wastewater monitoring systems.

Investment in the environment (cumulative total from 1990) Investment in safety and disaster prevention (cumulative total from 1990)

08 09 100706050402 03010099989796959493929190 (year)0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000(million yen) (million yen)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

08 09 10070605040302010099989796959493929190 (year)(Showa Denko K.K. only)

（（（（（（（（

(million yen)

（（（（（（（（

(Showa Denko K.K. only)


Cost

Reducing environmental impact Economic benefits

Environmental accounting

*5 Scope of the Showa Denko Group: Total for the ten consolidated manufacturing subsidiaries in Japan: Showa Tansan K.K., Showa Titanium Co., Ltd., Showa Aluminum Can Corp., Showa Denko Packaging Co. Ltd., Showa Denko Kenzai K.K., Niigata Showa K.K., Nippon Polytech Corp., Showa Denko Kenso Co., Ltd., Tohoku Metal Chemical Co., Ltd., and Showa Denko HD Yamagata K.K. GHG emissions include those for Showa Denko Electronics K.K. and Tsurusaki Kyodo Doryoku Co., Ltd. and exclude those for Niigata Showa K.K., Nippon Polytech Corp., and Showa Denko Kenso Co., Ltd., which are not required to report emissions as emitters designated under the Act on Promotion of Global Warming Countermeasures.

*6 The figures given for final landfill disposal cover only waste generated by production activities in the respective years.

*7 Environmental accounting: A method whereby companies and other organizations measure and manage their effects on the environment in monetary terms as accurately as possible and report the results.

Detail Capital investment Expenses

Cost within business site

Pollution preventionCapital investments and expenses associated with prevention of atmospheric/water/soil pollution, noise, vibration, odor, etc.

905 364

Global environmental protectionCapital investments and expenses associated with energy conservation and combating global warming and ozone-layer depletion

17,911 787

Resource recyclingCapital investments and expenses associated with resource conservation and waste treatment

118 2,033

Upstream and downstream costsCosts associated with reducing environmental impact in business operations upstream and downstream, including green purchasing and recycling of products and packaging

1 19

Administrative costsAdministrative costs relating to environmental conservation, including environmental issues training, introduction of environmental management systems, and environmental impact evaluations

43 607

R & D costsCosts associated with research and development of environment friendly products and technologies

43 270

Community outreach costsEnvironmental conservation costs for local community outreach activities not directly linked to business operations, such as environmental conservation projects in communities, dialogue with residents, and plant tours

0 8

Other Compensation for health damages resulting from environmental pollution, etc. 208 242

Total 19,229 4,330

1990 2010

SOx 3,698 464

NOx 3,522 1,285

Soot and dust 283 132

COD 786 444

Total nitrogen 607 574

Total phosphorus 51 12

Landfill disposal 19,723 2,390

Unit energy consumption 100% 91.8%


Energy conservation 1,282

Resource recycling 741

Waste reduction 20

Other 0

Total 2,043


(million yen / year)(t)



Promoting energy conservation

Regarding energy conservation as a major issue both for pre-

venting global warming and protecting resources, the Group is

currently advancing various measures to conserve energy, includ-

ing reviewing and optimizing production processes and modifying

facilities.

In 2010, new cracking furnaces began operating at the Oita

Complex, improving the energy efficiency of the ethylene plant by

6%. However, this gain was offset by other factors, including the

suspension of plant operations for quadrennial inspections and

unit energy consumption inflated by the closure of the Tokuyama

Plant and Hikone Plant. Thus, energy conservation results for

Showa Denko remained roughly equal to the previous year.

Showa Denko also operates hydraulic power plants near its

inland sites. These clean energy sources supply approximately

24% of Showa Denko’s total electricity use. In addition, the in-

house thermal power plants, located mainly in coastal areas, sup-

ply approximately 13% of our total electricity use. Together, they

contribute to the stability of facility operations.

Reducing greenhouse gas emissions

The Showa Denko Group reduced its greenhouse gas (GHG)

emissions*2 13% from the reference year (1990), based on the av-

erage figure for the commitment period (2008 to 2010). We have

set a goal of 6% reductions from the reference year specified in

the Kyoto Protocol by itself and are pursuing further reductions in

greenhouse gas emissions. We have also set reduction targets for

the emission intensity of greenhouse gases in our manufacturing

and filling processes, including carbon dioxide, nitrous oxide, and

CFC substitutes (e.g., HFC and PFC). To achieve these targets,

we are systematically promoting various emissions control mea-

sures, including the recovery of gases emitted during filling pro-

cesses and the installation of GHG decomposition and treatment

units.

*1 Unit energy consumption: This term refers to unit energy consumption for Showa Denko K.K. only, based on voluntary targets set by the Japan Chemical Industry Association. This is the energy required for production divided by the amount produced. A lower figure means more efficient production and lower environmental impact.

*2 Greenhouse gas emissions: This term refers to the volume of emitted greenhouse gases under Japan’s Act on Promotion of Global Warming Countermeasures. Up to fiscal 2008, this law applied only to major facilities. It has since been amended to apply to all facilities. Figures for fiscal 2009 and beyond in this report cover even small facilities lacking manufacturing functions, including the Head Office and branch offices. These figures exclude emissions generated by transport.

Trends in unit energy consumption (Showa Denko K.K. only)

Change in discharged amounts of greenhouse gases and target figures (Showa Denko Group*)

Index (%)

60

70

80

90

100

90 99 00 01 02 0403 06 07 08 0905 100

(FY)

+1%-1%

-5%

-16% -19%

-6%

2,000

0

2,500

3,000

3,500

Amount discharged

(kt-CO2)

90 06 07 08 09 10 08～ 12 Group's target (FY)(Reference year)

2010 plans

[Policy]● Achieving unit energy consumption target

of 80% or better

● Achieving Kyoto Protocol targets for the Showa Denko Group (6% GHG reductions compared to 1990 levels) by itself

[Plans]● Creating energy conservation measures

● Implementing reduction plans at each site

2010 achievements

● Unit energy consumption*1: 91.8% (compared to 1990 levels), down 0.3% from 2009

● Implementing regular reporting● Greenhouse gas emissions: 20% reductions at

Showa Denko, 19% reductions across entire Showa Denko Group (compared to 1990 levels)

● Implementing the plan to achieve Kyoto Protocol targets in promise period (by Showa Denko)

● 2009 unit energy consumption as designated shippers and reduction plans for 2010 reported to authorities

2011 plans

[Policy]● Continuously reducing unit energy

consumption● Achieving Kyoto Protocol targets for the

Showa Denko Group by itself; preparing for post-Kyoto Protocol

[Plans]● Creating energy conservation measures● Implementing reduction plans at each site● Thoroughgoing power consumption reductions

Climate change efforts

Note: Scope of the Showa Denko Group: See *5 at the bottom of page 33. Data for the reference year includes data for Showa Light Alloy Co., Ltd. (Plant No. 1) and Shunan Denko K.K. but excludes data for Showa Denko Electronics K.K., Tohoku Metal Chemical Co., Ltd., and Showa Denko HD Yamagata K.K.


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Reducing environmental impact through supply chain management (SCM)*3

Lessening environmental impact in transportation

Showa Denko K.K. is working to reduce its environmental

impact by improving transportation efficiency and by promoting a

modal shift throughout its supply chain, from the procurement of

materials, through production and sales, to delivery.

Unfortunately, the unit energy consumption in fiscal 2010 in-

creased by approximately 7% from the previous fiscal year, due

mainly to the following factors: The recent merger added a new

business whose main line of business involves truck transport,

which consumes significant amounts of energy. Additionally, the

method for calculating energy consumed for certain products shift-

ed from the ton-kilometer method to the fuel consumption method.

Effects of the Great East Japan Earthquake

Since total values are calculated over the period from April

2010 to March 2011, the fiscal 2010 results show no conspicu-

ous effects from the Great East Japan Earthquake.

However, the tsunami destroyed our distribution center at

Soma Port, used for sea transport of liquid ammonia. We have

shifted entirely to transport by tanker trucks to transport products

from the Kawasaki Plant to customers in the Tohoku area. This

measure will likely degrade unit energy consumption figures in fis-

cal 2011.

Promoting a modal shift *4

To reduce the environmental impact associated with product

transport, Showa Denko K.K. is promoting a modal shift from truck

transport to sea and rail transport, since the latter modes generate

lower CO2 emissions. In 2010, we switched from truck transport

for shipments from Oita Prefecture to Aomori Prefecture to rail

transport.

In fiscal 2010, the freight ton-km by rail and ship transport

in Japan was approximately 363 million ton-km. This value cor-

responds to approximately two-thirds of our total freight ton-km in

Japan.

In addition to the modal shift, we are improving transporta-

tion efficiency by increasing the size of delivery lots, improving the

loading ratio of trucks and containers, and reducing transport dis-

tances. In cooperation with transport companies, we are striving to

reduce energy consumption by adopting low-emission vehicles,

digital tachographs,*5 and eco-friendly tires, in addition to encour-

aging eco-friendly driving.

*3 SCM (Supply Chain Management): SCM refers to company activities to comprehensively control the entire flows of articles and information using information systems, covering all stages from purchase of raw materials through product manufacture, inventory control, distribution, and sales.

*4 Modal shift: Switching the primary means of transporting goods from trucks and airplanes to rail and sea transport to reduce environmental impact and to increase efficiency.

*5 Digital tachograph: A tachograph is a device installed in a motor vehicle to record driving behavior. Tachographs help drivers and managers achieve safe, economical driving by recording driving speeds

and times and logging related data. A digital tachograph makes possible more detailed and precise recording and analysis than traditional tachographs, which record data on paper.

*6 Freight ton-km: Cargo weight (t) x Transportation distance (km)

*7 Designated shipper: A shipper shipping cargo of 30 million ton-kilometers or more per fiscal year.

Transportation sector's CO2 emissions and energy consumption rate

FY2010 ratios for use of various modes of transport

Amendments to Energy Conservation Law

The amended Energy Conservation Law, which went into ef-

fect in April 2006, requires shippers to reduce the environmental

impact of distribution activities. In particular, the law requires des-

ignated shippers*7 with large volumes transported to report energy

consumption and CO2 emissions results and to submit plans

for reducing unit energy consumption. As a designated shipper,

Showa Denko K.K. will steadily implement measures to reduce the

environmental impact of its transport activities, in this way reducing

CO2 emissions and meeting its social responsibilities.

Freight ton-km*6

(million ton-km)

0

100

200

300

400

500

600

(FY)

550

08

470

09

551

10

2022242628303234363840CO

2 emissions by transport sector

Unit energy consumption for transport

(thousand tons)

㎘/kl per million ton-km (crude oil equivalent)

(FY)08

20.2

29.826.2

33.1

20.9

22.5

09 100

24

23

0

17

18

19

20

21

22

(%)

CO2 emissions Freight ton-km Freight ton0

20

40

60

80

61%

34%

64%

38% 63% 35%

1%

100RailRoad Sea

3%

1%


95 96 97 98 99 00 01 02 03 04 05 06 07 08 09(FY)

0

200

400

600

800

1,000 （t）

10

PRTR

As a member of the Japan Chemical Industry Association (JCIA), Showa Denko since 1996 has voluntarily undertaken sur-veys of the volumes of chemical substances it has discharged and transported. In 2010, the Company performed a survey of 590 substances, including substances subjected to the PRTR Law, submitting a report to the JCIA on 160 substances (of which 103 were subject to the PRTR law). Total emissions of PRTR-listed substances were approximately 316 tons, approximately 35

Reducing chemical substance discharge

2010 plans

[Policy]● Reducing chemical emissions[Plans]● Developing and implementing reduction

plans for each worksite

2010 achievements

● Total emissions of PRTR-listed substances: 316 t, up 35 t from 2009

2011 plans

[Policy]● Reducing chemical emissions[Plans]● Thoroughly disseminating information on

PRTR revisions● Developing and implementing reduction


tons higher than the previous fiscal year. This is attributable to the merger with Showa Highpolymer Co., Ltd., and the effects of fis-cal 2010 revisions in PRTR-listed substances. Showa Denko will continue to make focused efforts to reduce discharge volumes by preparing reduction plans for each site for PRTR-listed substances and for substances with high annual dis-charge volumes. The Company is currently seeking to ascertain and assess potential impact in areas surrounding its sites and improve communication with local communities and governments concerning risks as it works to reduce discharge volumes.

PRTR-listed substances released and transferred (Showa Denko K.K. only)transferred (Showa Denko K.K. only)

Volume transferred 1,870t

Total volume released 316t

Into soil 0t

Into air 273t

Into water 43t

Volume released/tansferred


Release of PRTR-listed substances (Showa Denko K.K. only)

OthersWater-soluble salts of peroxodisulfuric acid

1,3-butadieneToluene

Kawasaki Plant (Total emissions: 43.9 t)

47.5%

25.6%

8.9%

18.0%

Isesaki Plant (Total emissions: 8.6 t)

OthersPhenol

FormaldehydeToluene

46.1%

18.7%

20.7%

14.5%

25.6％

Tatsuno Plant (Total emissions: 15.1 t)

OthersVinyl acetateStyrene

73.8%

11.8%

14.4%Oita Complex (Total emissions: 13.1 t)

OthersBenzene

Vinyl acetateNormal-hexane

27.6%

32.2%24.0%

16.2%

Shiojiri Plant (Total emissions: 2.1 t)

Hydrogen fluoride and its water-soluble salts

Boron compounds

88.0%

12.0%

Yokohama Plant (Total emissions: 1.3 t)

OthersBoron compounds

100%

Chichibu Regional Office (Total emissions: 4.1 t)

Others

Methyl (S)-7-chloro-2, 3, 4a, 5-tetrahydro-2-[methoxycarbonyl (4-trifluoromethoxyphenyl) carbamoyl] indeno [1, 2-e] [1, 3, 4] oxadiazine-4a-carboxylate

85.5%

14.5%

27.6％

Omachi Plant (Total emissions: 64.5 t)

OthersPhenol

BenzeneAcenaphtheneNaphthalene

37.5%

23.2%17.3%

14.3%

9.5%

Oyama Regional Office (Total emissions: 2.9 t)

OthersNickel

TolueneXylene

31.5%

27.0%

19.1%

22.5%

Higashinagahara Plant (Total emissions: 4.3 t)

OthersTolueneDichloromethane

97.8%

2.0% 0.2%

Emissions of PRTR-listed substances at respective sites (Showa Denko K.K. only)

Note: The sum of the emission fractions for each site is not always 100% due to rounding.


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FY 2010 List of PRTR-listed substances released and transferredSubstances subject to the PRTR Law, other than dioxin: 103 substances (Substances with 1 t or less emissions or transfer volumes are excluded.) (Showa Denko K.K.only)

JCIA No.PRTR No.

CAS No Substances

FY2010 Release (t/y)FY2009

Total release

(t/y)

The amount of increase or decrease for FY2009

(t/y)

FY2010 Total amount of transfer

(t/y)

FY2009 Amount of transfer

(t/y)To Air To Water To Soil Total

150 300 108-88-3 Toluene 31 0 0 31 35 -4 91 286

151 302 91-20-3 Naphthalene* 23 0 0 23 14 9 0 0

15 83-32-9 Acenaphthene* 15 0 0 15 − 15 0 −

199 400 71-43-2 Benzene 13 0 0 13 10 3 47 334

139 240 100-42-5 Styrene 12 0 0 12 12 0 56 72

177 351 106-99-0 1, 3-Butadiene 12 0 0 12 10 1 0 0

176 349 108-95-2 Phenol 7 0 0 7 6 2 4 5

115 134 108-05-4 Vinyl acetate 5 0 0 5 2 3 5 5

167 392 110-54-3 Normal-hexane* 5 0 0 5 5 -1 0 0

21 186 75-09-2 Dichloromethane 4 0 0 4 21 -17 113 64

251 405 - Boron compounds 0 4 0 4 3 1 7 4

395 - Water-soluble salts of peroxodisulfuric acid* 0 4 0 4 − 4 0 −

430 173584-44-6

Methyl(S)-7-chloro-2,3,4a,5-tetrahydro-2-

[methoxycarbonyl(4-trifluoromethoxyphenyl)

carbamoyl]indeno[1,2-e][1,3,4]oxadiazine-4a-

carboxylate*

3 0 0 3 − 3 4 −

102 80 1330-20-7 Xylene 3 0 0 3 2 1 10 0

30 -Linear alkylbenzene sulfonate and its salt (limited to those whose alkyl group carbon number ranges from 10 to 14)

0 2 0 2 2 0 0 1

202 411 50-00-0 Formaldehyde 0 1 0 2 1 0 1 2

225 1 - Zinc compounds (water-soluble) 0 2 0 2 1 1 10 13

32 120-12-7 Anthracene* 1 0 0 1 − 1 0 −

86 53 100-41-4 Ethylbenzene 1 0 0 1 1 0 0 0

73 12 75-07-0 Acetaldehyde 1 0 0 1 1 0 94 147

104 75-45-6 Chlorodifluoromethane 1 0 0 1 1 0 0 1

1096 374 - Hydrogen fluoride and its water-soluble salts 0 1 0 1 1 0 9 12

244 308 7440-02-0 Nickel 0 1 0 1 0 1 6 0

378 12071-83-9Polymer of N,N'-propylenebis(dithiocarbamic acid) and zinc

1 0 0 1 0 1 1 0

82 20 141-43-5 2-Aminoethanol 0 0 0 0 0 0 38 2

64 4 - Acrylic acid and its water-soluble salts 0 0 0 0 0 0 10 6

11 127 67-66-3 Chloroform 0 0 0 0 0 0 4 2

263 436 98-83-9 Alpha-methylstyrene 0 0 0 0 0 0 4 10

137 232 68-12-2 N, N-Dimethylformamide 0 0 0 0 0 0 119 298

231 75 - Cadmium and its compounds 0 0 0 0 0 0 16 0

1068 272 -Copper salts (water-soluble, except complex salts)

0 0 0 0 0 0 12 13

1117 28 107-18-6 Allyl alcohol 0 0 0 0 0 0 8 5

246 321 - Vanadium compounds 0 0 0 0 0 0 3 3

373 88-60-8 2-2-tert-butyl-5-methylphenol* 0 0 0 0 − 0 1 −

280 207 128-37-0 2,6-di-tert-butyl-4-cresol* 0 0 0 0 0 0 1 2

Total of the PRTR-listed substances 141 14 0 155 130 25 671 1,286

Total of the other substances (including JCIA PRTR-listed substances) 132 30 0 161 152 10 1,199 1,306

Total 273 43 0 316 281 35 1,870 2,593

* Substance newly listed in the PRTR Law at the revision of 2010.Among these,for each of those substances not subject to JCIA's voluntary reporting program,the amount of release in 2009 is indicated as "－" and the increase or decrease of release is calculated on the presumption of zero release in 2009.

Note: The numerical sum of each column or raw and the grand total may not agree due to rounding.



2010 plans

[policy]● Reducing chemical emissions[Plans]● Developing and implementing reduction


2010 achievements

● Emissions of toxic atmospheric pollutants: 33 t, down 28% from 2009; target achieved

2011 plans

[policy]● Reducing chemical emissions[Plans]● Developing and implementing reduction


Environmental considerations: Atmosphere, water and soil

■Oita　■Tokuyama　■Kawasaki　■Higashinagahara　■Omachi　■Oyama　■Isesaki　■Tatsuno

(FY)

（ｔ）

0 01 02 03 04 05 06 07 08 09 10

50

100

150

200

250

300

350

400

(FY)

（ｔ）

0

50

100

150

200

250

300

350

400

01 02 03 04 05 06 07 08 09 10

OyamaHigashinagahara

（ｔ）

0

5

10

15

20

25

30

(FY)01 02 03 04 05 06 07 08 09 10

Kawasaki

Oita

(FY)

（ｔ）

0

5

10

15

01 02 03 04 05 06 07 08 09 10

Kawasaki

(FY)

（ｔ）

Omachi

0

5

10

15

01 02 03 04 05 06 07 08 09 10

OitaKawasaki

(FY)01 02 03 04 05 06 07 08 09 10

（ｔ）

0

1

2

3

4

Kawasaki Isesaki

（ｔ）

0

1

2

3

4

(FY)01 02 03 04 05 06 07 08 09 10

Oita

Tokuyama Tatsuno

（ｔ）

0

1

2

3

4

(FY)01 02 03 04 05 06 07 08 09 10

Omachi Kawasaki

Oyama

（ｔ）

0

1

2

3

4

(FY)01 02 03 04 05 06 07 08 09 10

(FY)01 02 03 04 05 06 07 08 09 10

Tokuyama

（ｔ）

0

1

2

Kawasaki

Total amounts released of harmful atmospheric pollutants

Acrylonitrile

Acetaldehyde

Trichloroethylene

Dichloromethane

Benzene

Tetrachloroethylene

1,3-Butadiene

Formaldehyde

Chloroform

Reducing emissions of toxic atmospheric pollutants

On completing the JCIA Phase 2 Voluntary program for reducing discharged volumes of 12 harmful atmospheric pollutants*1, the Showa Denko Group is now working to achieve a new target: a 10% year-on-year reduction in pollutants released in relatively large volumes. In 2010, the total amount discharged of nine substances handled by the Company was 33 tons, a decrease of 13 tons from the previous year. This result is mostly due to reduced use of dichloromethane at the Higashinagahara Plant. The Group remains committed to achieving steady reductions in the discharge of toxic atmospheric pollutants through a combination of various measures, including switching to substitute materials and boosting recovery and recycling rates.(All graphs apply to Showa Denko alone.)


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*1 12 harmful atmospheric pollutants : The 12 substances are the hazardous air pollutants selected by the JCIA for voluntary control, which include acrylonitrile, acetaldehyde, vinyl chloride monomer, chloroform, 1, 2-dichloroethane, dichloromethane, tetrachloroethylene, trichloroethylene, 1, 3-butadiene, benzene, formaldehyde, and ethylene oxide.

*2 SOx : SOx is generated through the combustion of sulfurcontaining fuel. This pollutant affects the respiratory organs.

*3 NOx : NOx generally occurs as a result of oxidation of nitrogen in the air where fuels and wastes are burned. This pollutant is said to contribute to photochemical smog.

*4 Soot : Soot and solid particles generated from the burning of fuels and other materials.

*5 COD : Chemical oxygen demand, a common index of water quality, is the amount of oxygen required to fully oxidize chemicals in water.

*6 Total nitrogen : Total nitrogen is the sum of inorganic nitrogen (e.g., nitrite, nitrate, and ammonium ions) and organic nitrogen (nitrogen in protein and various other organic compounds).

*7 Total phosphorus : Total phosphorus is the collective term for inorganic and organic phosphorous compounds. Phosphorus is an essential element for all living things, but excessive phosphorus concentrations can, for example, lead to algae blooms.

Reducing atmospheric impact

The Showa Denko Group is working to reduce emissions of

pollutants such as sulfur oxides (SOx)*2, nitrogen oxides (NOx)*3,

and soot*4 through the following measures:

• Shift in fuel

• Modifying combustion processes (e.g., using low-NOx burners)

• Appropriate operation and management of desulphurization and

denitration systems

• Reductions in fuel consumption through exhaust heat recovery

systems

• Strengthening monitoring systems

Amounts of SOx and NOx declined from 2009 levels. The

Group will continue to seek to reduce its environmental impact on

the atmosphere.

Reducing water quality impact

The Showa Denko Group continues in efforts to reduce its im-

pact on water quality in areas such as chemical oxygen demand

(COD*5), total nitrogen*6 , and total phosphorus*7 through the fol-

lowing measures:

• Improvements in manufacturing processes

• Improvements in wastewater processing equipment and opera-

tion and control factors

• Promoting water reuse

• Strengthening monitoring systems

COD and total phosphorus increased slightly from 2009 lev-

els. The Group will continue in efforts to reduce its impact on wa-

ter quality.

Measures to prevent soil and groundwater pollution

On occasions such as changes in the uses of plant sites or

soil removal, the Showa Denko Group undertakes surveys and

other measures in line with the Soil Contamination Countermea-

sures Law and local government regulations.

Change in discharged amounts of substances with atmospheric impact (Showa Denko K.K. only)

Change in discharged amounts of substances with water quality impact (Showa Denko K.K. only)

SOX NOX Soot and dust

009 10

(year)08070605040302010099989796959493929190

500

1,000

1,500

2,000

2,500

3,000

4,000

3,500

（ｔ）

0

200

400

600

800

1,000

COD and total

nitrogen( t )

0

20

40

60

80

100

Total phosphorus( t )

COD Total nitrogen Total phosphorus

100908070605040302010099989796959493929190(year)



Reducing industrial waste and encouraging recycling

To reduce the volume of industrial waste generated and

disposed of, the Showa Denko Group seeks to curb waste gen-

eration, encourage reuse, and identify ways for effective use of

wastes.

• Reuse of waste acids and waste alkalis

• Use of waste oil and waste plastics as fuels (heat recovery)

• Effective use of inorganic sludge (e.g., in cement)

The final landfill waste volume for fiscal 2010 was 2,390 tons

for Showa Denko K.K. (including 823 tons from the former Showa

Highpolymer Co., Ltd.) and 201 tons for Group companies, for a

grand total of 2,591 tons for the Showa Denko Group. Although

the increased production raised the amount of waste actually dis-

posed of, lower construction waste, efforts to promote effective

use (Kawasaki), and special factors applying during the previous

year (regular maintenance in Oita) offset this increase and resulted

in net final landfill waste reductions of 161 tons compared to the

previous year. We achieved the Group target value of 3,100 tons.

We plan to continue to make progress in reducing waste, setting

a fiscal 2011 target of 2,500 tons for the Group. Fifteen sites—

roughly half of all sites—achieved zero emissions*1 (final landfill

waste corresponding to no more than 1% of all waste). We plan

to continue striving to expand the number of zero-emissions sites

this year. In addition, Showa Denko is currently assessing contrac-

tors for intermediate processing and final disposal to ensure ap-

propriate processing and disposal of generated waste.

PCB control

Based on its PCB control checklist, Showa Denko K.K. regu-

larly checks the status of stored polychlorinated biphenyl (PCB)*3

waste. This waste is appropriately stored in suitable facilities to

prevent leaks. Additionally, each worksite submits an annual report

on the status of stored PCB waste and related matters to the pre-

fectural governor, as required under the Law Concerning Special

Measures Against PCB Waste.

Taking full advantage of the waste processing facilities of Ja-

pan Environmental Safety Corporation, we are continuing system-

atic disposal of PCB waste.

*1 Zero emissions : A concept, now a goal throughout society, to eliminate the generation of various waste substances by reusing materials rather than processing them as waste. Proposed by the United Nations University in 1994, this concept seeks to realize a recycling-based society by reducing to zero the level of emissions into the environment through the most efficient resource and energy use possible.

*2 Bauxite residue : Unwanted substance remaining after alumina is extracted from bauxite ore during the alumina production process.

*3 PCB (Polychlorinated biphenyl) : PCB is a material with high electrical insulation and chemical resistance. It was used in wide-ranging applications, including insulating oil for electrical appliances, paints, and carbonless copy paper. Due to its carcinogenicity and other problems, however, the manufacture, import, and use of PCB are now prohibited.

2010 plans

[Policy]● Achieving zero emissions

● Contributing to a recycling-based society[Plans]● Eliminating landfill waste through efforts such as

more effective use of sludge Target: Showa Denko: 1,900 t or less Group companies: 3,100t or less

● Promoting recycling

2010 achievements

● Landfill waste: 2,591 t in the Showa Denko Group (down 161 t from 2009); target achieved

● Chemical-recycling production: up 4% from 2009

2011 plans

[Policy]● Achieving zero emissions

● Contributing to a recycling-based society[Plans]● Eliminating landfill waste through efforts such as

more effective use of sludge Target: Showa Denko: 2,200t or less (The number of business sites increased by two.) Showa Denko Group: 2,500 t or less

● Promoting recycling

Changes in final landfill volume

5,000

10,000

15,000

20,000

25,000

0

（t）

(year)90 98 99 00 01 02 03 04 05 06 07 08 09 10

■Showa Denko K.K. ■Group companies

0

5000

10000

15000

20000

25000

Data for 2007 and earlier years represent total values for January through December. Data for 2008 and later years represent total values for April through March of the next year. (January through December for the Kawasaki Plant)

Reducing waste and encouraging recycling

With respect to the discharge of bauxite residue*2 into the

sea, the Company in fiscal 2010 maintained the volume of this

discharge at 20% below fiscal 2000 levels. The Company plans to

completely eliminate the discharge of bauxite residue into the sea

by 2015 and will continue to work to reduce discharge volumes.


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The Showa Denko Group has aggressively pursued various

Responsible Care efforts in its business activities, including activi-

ties that reduce greenhouse gas emissions or address other en-

vironmental considerations. In 2011, we have begun to organize

the use of ecosystem services to better understand the impact on

ecosystems in our business activities from a broader perspective.

Based on the following perspectives, we are investigating the

relationship between biodiversity and the Group’s business sites

and supply chain for products and services:

Use of ecosystem services

Materials:

Use of living organisms or raw materials of biological origin

Energy:

Use of hydroelectric power and biomass fuel

Water:

Use of natural fresh water

Wastewater, exhaust gas:

Wastewater purification andair protection using ecosystem

services

Waste:

Discharge of organic (biodegradable) waste out of worksites

Process:

Processes using ecosystem services

Transport:

Use of rivers and canals

Ground:

Use of ecosystem services to prevent natural disasters

Others:

Welfare measures and facilities using natural environment

Controlling impact on ecosystems

Raw fuel:

Use of mineral resources and fossil fuel

Use of materials derived from plantation crops

Wastewater:

Gathering information on discharge into closed water systems

such as lakes and swamps

Exhaust gas:

Effects of discharge on ecosystems

Product:

Products and services intended to preserve ecosystems

Products and services intended to reduce impact on ecosys-

tems

Transport:

Environmental loads imposed by transport activities

Ground:

Gathering information on relationships with endangered spe-

cies

Based on the results of these investigations, we will determine

the items to be addressed in our biodiversity efforts and the ur-

gency and priority of the various items.

Biodiversity efforts


“We can prevent labor accidents, equipment accidents and environmental problems by learning from past accidents, by sharing information throughout the Group, and by implementing proactive countermeasures.” Based on the approach articulated in this way, Showa Denko launched its “active safety” initiative in 2008. Under the policy of “zero labor accidents, zero equipment incidents, and zero environmental problems,” each worksite has implemented this initiative in its own way, generally focusing on risk assessment activities based on checklists. The efforts are beginning to yield results.

Safety Efforts

CSR Activity Report: Safety Efforts

*1 Maintenance Prevention (MP) information: The Showa Denko Group has accumulated a database of accidents, troubles, significant near-misses and countermeasures in and out of the Group, and now shares information on approximately 4,800 cases among all employees.

*2 Earthquake Motion Prediction System : A system developed by National Research Institute for Earth Science and Disaster Prevention.Japan Seismic Hazard Information Station J-SHIS

Disaster Prevention

2010 plans

[Policy]● Zero equipment incidents[Plans]● Holding and utilizing Active Safety study

meetings

● Enhancing the engineering change management system

● Promoting voluntary safety initiatives

2010 achievements

● Accidents: Four leaks, two fires, and one breakage in the entire Showa Denko Group

● Active Safety activities expanded to and implemented by affiliated companies and research facilities

● Function-specific personnel meetings (electric, instrumentation, machinery, process) planned

● Oita Complex: Certification as continuous high-pressure gas opertation site renewed for fourth consecutive year

2011 plans

[Policy]● Realizing zero equipment incidents[Plans]● Thoroughly implementing Active Safety activities● Organizing and applying function-specific personnel

meetings● Thoroughly implementing HRM examination● Promoting voluntary safety initiatives

Equipment safety

Based on the policy goal of completely eliminating equipment

incidents, the Showa Denko Group has proceeded with its Active

Safety initiative since 2008 by analyzing past accidents and other

problems to prevent their recurrence. In 2010, four equipment

incidents occurred at business sites operated by Showa Denko

K.K. Three equipment incidents occurred at business sites oper-

ated by affiliates. All these incidents were discovered in their early

stages and did not cause any human damage or external effects.

All cases were thoroughly investigated and countermeasures were

implemented to prevent any recurrence. Including these cases,

past cases are systematized with the active safety checklists in

the Active Safety initiative, and are used in all business sites to

prevent future accidents.

In 2010, to incorporate studies of potential accidents and of

the essential nature of safety and to extend the activities thor-

oughly across all facilities of our Group including R&D centers and

those of the affiliates, we classified and analyzed the corporate

MP information*1 according to technical elements and further reor-

ganized it in view of specialized fields (machinery, electricity, instru-

mentation, and process). In the future, we will hold study meetings

combining members in the Head Office and business sites to pro-

mote standardization of inherently safe design, prepare guidelines,

cultivate next generation key persons, and improve the skills of the

workers.

Safety measures for earthquakes

By assuming worst-case risks such as fire and leakage of chemical substances, the Showa Denko Group has systemati-cally promoted seismic performance evaluations of equipment and buildings, along with the corresponding countermeasures. In 2010, at our 16 worksites, including affiliates, we used the existing earthquake motion prediction system*2 to estimate the scale of the ground motion expected at each location in the event of an earth-quake. We evaluated the seismic performance of equipment and buildings based on the ground motion predicted, inspected safety equipment and safety shutdown systems, and implemented any necessary countermeasures. Our precautions bore fruit during the Great East Japan Earth-quake of March 11, 2011. Showa Denko Group worksites in the Kanto and Tohoku areas escaped significant damage. However, the tsunami that followed the earthquake damaged the facilities of the ammonia distribution center of our group company in Soma Port in Fukushima Prefecture. In 2011, we will continue to evaluate the performance of conventional seismic safety measures; evaluate seismic performance at business sites where evaluations remain incomplete; and formulate appropriate new measures. In addition, we will revise our worst-case scenarios for major earthquakes to encom-pass tsunami damage.

Showa Denko Group Emergency Civil Engineering and Building Personnel Meeting (at the Head Office on May 20, 2011)Using the Great East Japan Earthquake as a lesson, we held a group-wide meeting to discuss and share information on the possible worst-case damage at each business site in the event of large-scale earthquakes and tsunamis and related countermeasures.


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To p i c s Seismic safety measures for phosgene production facility (the Higashinagahara Plant)

Approximately three years have passed since the 2008 phosgene leaks. At the Higashinagahara Plant in Aizuwakamatsu-shi, Fukushima Prefecture, production, engineering and construction staff have undertaken ceaseless efforts to ensure thorough control of operations; to identify potential issues; and to ensure essential safety. These efforts include thorough countermeasures to prevent the recurrence of leaks. The countermeasures also take into account the possibility of major earthquakes. We have performed seismic diagnosis for all related facilities, including buildings, bases, and main units of equipment, piping, and abatement systems. We have also implemented all necessary seismic strengthening.

The automatic shutdown system installed as a seismic safety measure was designed to generate and issue a comprehensive system emergency shutdown* command to the production plant when the seismometer installed in the worksite detects seismic acceleration exceeding a specified threshold value.

On March 11, the day of the earthquake, the seismometer in the worksite detected seismic acceleration (intensity of 5+) exceeding the specified threshold value during normal operations. The automatic shutdown system activated, and the entire system at the phosgene production plant automatically proceeded to emergency shutdown, as designed. (The abatement system and cooling system continued to operate.) Later, those in charge from the facility management department visually inspected the external appearance of the facilities in the areas in their charge and confirmed that the facilities were free of leaks or damage.

* Comprehensive system emergency shutdown at the phosgene plant: The production facility halts production by shutting down the material feed system. The storage facility halts phosgene output by halting the feed pump and closing the shutoff valve. The abatement system and the cooling system continue to operate. Confirmation by pointing to and calling out the status of a

facility on a large display used to monitor operating status.

External appearance of phosgene production facility


Safety Efforts

Occupational health and safety

To eliminate workplace accidents, the Showa Denko Group

promotes active safety activities that draw on risk assessments*1

to identify and correct risk sources. This initiative was launched in

2008. Specifically, in addition to the active safety checklists we

prepared based on past accidents, our primary sites have begun

using the occupational health and safety management systems*2

that focus on risk assessments. As of June 2011, 12 worksites in

Japan and five worksites abroad have acquired the relevant certifi-

cation.

The number of lost-time injuries Groupwide totaled two (one

incident in Showa Denko K.K. and one incident in a Group com-

pany) in 2010. As of June 2011, the number of lost-time injuries

remains zero.

All worksites have already established activities to identify and

correct risk sources, and these activities will be made even more

thoroughgoing.

* Scope of Group companies (As of December 2010): Tsurusaki Kyodo Doryoku K.K., Tokyo Liquefied Oxygen Co., Ltd., Showa Titanium Co., Ltd., Shinshu Showa Co., Ltd., Showa Denko Packaging Co., Ltd., Showa Aluminum Can Corp., Showa Denko Sakai Aluminum Co., Ltd., Showa Denko Electronics K.K., Showa Engineering Co., Ltd., Showa Denko Kenzai K.K., Union Showa K.K., Niigata Showa K.K., Showa Aluminum Can Recycling Center, HI-PACK CO., LTD., Showa Tansan K.K., Clean-S Showa K.K.

Asbestos

Conditions related to asbestos were as follows.

■ Use of asbestos

The Group neither manufactures nor sells any products incor-

porating asbestos.

The Group uses sealing materials containing asbestos for certain

production facilities, including those for chemicals.

We are currently replacing these materials with materials that do

not contain asbestos.

■ Health damage

For employees who have directly or indirectly handled asbes-

tos, we perform periodic health checkups as required by relevant

laws. No incidents of health damage have been reported to date.

We also provide asbestos health checkups for former em-

ployees of the Showa Denko Group, in addition to responding to

various inquiries. In 2009, two cases (Latest edition announced

by Ministry of Health, Labour and Welfare) were recognized as

occupational accidents. We have received no reports of injury or

damage to health from families of employees, former employees,

or residents of local communities.

*1 Risk assessment: A series of processes intended to identify the risks and dangers inherent

in a workplace; to estimate the extent of damage and likelihood of occurrence based on such

identification; and to prioritize countermeasures and determine risk-reduction measures.

*2 Occupational health and safety management systems: They are intended to allow organizations

to reduce the likelihood of problems by identifying, establishing, and implementing countermeasures

against risks related to the occupational health and safety of employees.

Occupational health and safety

2010 plans

[Policy]● Zero lost-time and non-lost-time injuries[Plans]● Enhancing safety strength of worksites

and personnel

● Addressing equipment and process deficiencies

● Improving safety management levels (expanding attainment of Occupational Safety and Health Management System accreditation)

2010 achievements

● Two incidents resulting in lost-time injuries (three in 2009) and one non-lost-time injury (four in 2009) for the entire Showa Denko Group

● Rate of incidents resulting in lost-time injuries in Showa Denko Group: 0.14 (0.29 in 2009)

● Oita Complex, Shiojiri Plant, and Showa Denko Electronics K.K. win Accident-free Record Certification from the Ministry of Health, Labor and Welfare

● Oita Complex and the Ohmuta Plant of Showa Aluminum Can Corp. recognized by third-party safety awards

● Higashinagahara Plant, Shiojiri Plant, and Kitakata Plant certified under the Occupational Safety and Health Management System (total of 11 sites now certified)

2011 plans

[Policy]● Zero lost-time and non-lost-time injuries at

each site

● Establishing the chemical industry’s strongest safety management system

[Plans]● Enhancing safety strength of worksites and

personnel

● Addressing equipment and process deficiencies

● Improving safety management levels

● Following up on special safety activities and strengthening measures to prevent similar incidents

Changes in frequency rate of lost-time injuries*3

Year

All Industries Chemical Industries

Showa Denko K.K. Showa Denko Group company*

0

2.0

4.0

6.0

8.0

10.0

100806040200989694929088868482807876747270


*3 Frequency rate of lost-time injuries: Number of deaths and injuries occurring per one million

working hours, as calculated by the following formula:

Frequency rate of lost-time injuries = (Number of deaths and injuries) / (total working hours) x

1,000,000

2010-2011 List of RC-related awards

Name of award Recipient site and individual Year received

Disaster prevention

2011 Fire and Disaster Management Agency Commissioner award (for superior facility in the handling of hazardous substances)

Oyama Plant of Showa Aluminum Can Corp. 2011

Health and occupational safety

Accident-free record certificate from the Ministry of Health, Labour and Welfare (Manufacture of Electrical Machinery, Equipment and Supplies, Class II)

Showa Denko Electronics K.K. 2010

34th JCIA/JRCC Grand Prix Safety Award Oita Complex 2010

Award for Excellence, 2009 Japan Aluminum Association Occupational Safety Awards

Ohmuta Plant of Showa Aluminum Can Corp. 2010

Accident-free record certificate from the Ministry of Health, Labour and Welfare (Manufacture of Chemical and Allied Products, Class I)

Oita Complex 2010

Accident-free record certificate from the Ministry of Health, Labour and Welfare (Manufacture of Ceramic, Stone and Clay Products, Class I)

Shiojiri Plant 2010

Japan Industrial Safety & Health Association Green Cross Award Omachi Plant, Environment and Safety Section, Section Head, Mr. Watanabe 2010

Japan Industrial Safety & Health Association Green Cross AwardProduction Technology Headquarters, Environment and Safety Office, Staff Manager, Mr. Kimura

2010

2010 Minister of Health, Labour, and Welfare's Award for business-facility managers who place priority on safety

Extrusion/Specialty Products Division, Production & Technology Control Department, Manufacturing Department, Extrusion Section, Mr. Keino

2011

Award for Special Excellence, 2010 Japan Aluminum Association Occupational Safety Awards

Ohmuta Plant of Showa Aluminum Can Corp. 2011

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The Oyama Plant of Showa Aluminum Can Corp. was awarded the Fire and Disaster Management Agency Commissioner award as a superior facility in the handling of hazardous substances in fiscal 2011. At the 2011 Safety of Hazardous Materials Conference on June 6, the awards ceremony was held and Mr. Moriguchi, the Plant Manager, received the award certificate.

This award is given to business sites that promote the safety management of hazardous materials, cooperate w i t h g o v e r n m e n t initiatives related to the safety of hazardous mater ia ls, and have m a d e o u t s t a n d i n g a c h i e v e m e n t s i n ma in ta in ing human safety.

Oyama Plant of Showa Aluminum Can Corp. wins 2011 Fire and Disaster Management Agency Commissioner award

Manager of the Oyama Plant (left) and Head of the Facility Section, holding the award certificate

On May 2011, the Ohmuta Plant of Showa Aluminum Can Corp. achieved a record of five continuous years free of lost-time injuries. This achievement was recognized by the Award for Special Excellence in the 2010 Japan Aluminum Association Occupational Safety Awards.

Ohmuta Plant of Showa Aluminum Can Corp. won the Award for Special Excellence, 2010 Japan Aluminum Association Occupational Safety Awards

Manager of the Ohmuta Plant holding the award certificate

Ohmuta Plant staff


Safety Efforts

International chemicals management activities

As it works to achieve the goal agreed to in the World Summit on Sustainable Development (WSSD) “to minimize the negative effects of chemical substances on people and the environment by 2020”. The Showa Denko Group is seeking to implement integrat-ed management of chemical substances under the International Council of Chemical Associations (ICCA). The Group is also taking part in Japan Initiative of Product Stewardship, the new voluntary chemical management initiative by JCIA to enhance risk assessment and risk management with consideration for supply chain. Through this initiative, the Group is strengthening product stewardship in various ways, including collection of information and safety assessment at each stage of manufacture, sales, and use/consumption.

Foreign laws and regulations

In response to the enforcement of EU Regulations on the Registration, Evaluation, Authorization and Restriction of Chemi-cals (REACH) and the Regulation on Classification, Labeling and Packaging of chemical substances and mixtures (CLP), we are participating in various activities as a member of the REACH sub-committee in the JCIA. We are ascertaining proper responses to the REACH and CLP regulations mainly through the activities of the REACH Promotion Group, which consists of members from various business divisions, Group companies as well as staff sec-tions at the head office and overseas companies. For products exported to the EU and subject to REACH regu-lations, we are carrying out our activities within the Substance Information Exchange Forum (SIEF) to prepare for the registration of each product before its deadline. We are also striving to collect relevant information from our supply chain. We have finished the registration of substances that must be registered by 2010. For products exported to the EU but not subject to REACH regula-tions, we are proceeding with hazard assessment and informa-tion sharing throughout the supply chain and have completed

*1 Yellow card : This refers to an emergency contact card briefly describing appropriate response by transportation company personnel, police, and fire-fighters in the event of accidents involving hazardous or toxic substances.

Chemical substances safety efforts

2010 plans

[Policy]● Zero accidents/incidents involving

chemical substances or violations of chemical substances legislation

[Plans]● Comprehensive implementat ion of

compliance, education, and management structures

● Collecting, assessing, and providing safety information (REACH compatibility, etc.)

2010 achievements

● Zero accidents/ incidents involv ing chemical

substances or violations of chemical substances legislation in the Showa Denko Group

● Revision to GHS-compatible MSDS promoted

(completed for substances for which notification is required by Industrial Safety and Health Law)

● Chemicals Management Officer provided information

on relevant legislation and follow-up training

● Completed registration of substances under the

REACH regulations before deadlines for substances that must be registered by 2010

● Completed notification under the CLP regulation

before deadlines and amended CLP compliant labels and MSDS

2011 plans

[Policy]● Appropriate response to revisions in

domestic and overseas laws[Plans]● Comprehens i ve imp lemen ta t i on o f

compliance, education, and management structures

● Collecting, assessing, and providing safety information

● Establishing comprehensive chemicals management database

all procedures of CLP notification for relevant products by their deadlines. Furthermore, we are responding carefully to new legal and regulatory trends in South Korea, Taiwan, China, Malaysia and elsewhere.

GHS-compatible MSDS

The Group provides its customers and consumers with in-formation on risks or hazards related to its products via labeling and MSDSs prepared for all products in Japan based on JIS standards. We are also in the process of revising all labels and MSDSs to include GHS information. For overseas products as well, we are making progress in including GHS information on labels and MSDSs in accordance with the relevant regulations in each country. Furthermore, the Group prepares yellow cards*1 to protect against accidents involving chemical substances during road transport. We enforce truck drivers to carry the cards at all times when transporting harmful substances.

In 2008, the General Assembly of the United Nations declared 2011 the "International Year of Chemistry" (IYC 2011). The year 2011 marks the 100th anniversary of the Nobel Prize in Chemistry awarded to Madame Marie Curie. The unifying theme of IYC 2011 is “Chemistry—our life, our future.” Goals include increasing public appreciation of chemistry in meeting world needs, encouraging interest in chemistry among young people, and giving support to scientists' enthusiastic contribution to the creative future. Showa Denko K.K. co-sponsors this activity as a member of the International Year of Chemistry Japan Committee.

International Year of Chemistry

To p i c s

IYC 2011 logo


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To help achieve goal of the 2020 World Summit on Sustainable Development (WSSD)—To use and produce chemicals in ways that minimize significant adverse effects on human health and the environment— the Showa Denko Group has introduced a comprehensive chemicals management system to provide the basic infrastructure for managing chemicals. The newly introduced comprehensive chemicals management system will integrate information management for all chemicals we use in and outside Japan and allow information sharing Groupwide. The system will also ensure response in compliance with EU/REACH regulations, CLP regulations, and various notifications required under the amended Chemical Substances Control Law.

<Intended effects>1) Sharing of information on chemicals throughout the Showa

Denko Group Integrated management of information, including information on

production, sales, the supply chain (SC) and use.2) Safeguarding against human error related to the enforcement or

revision of related laws and regulations Automatic updates of information on laws and regulations

concerning products, linked to the databases of Japanese and foreign laws and regulations

3) Streamlined procedures for chemicals management Automatic updating and output of MSDS information Improved data precision and transparency for each business

site for use in compiling various statistical reports

Introducing a comprehensive chemicals management system

The Showa Denko Group’s comprehensive chemicals management system

To p i c s

*2 CSA : Chemical Safety Assessment

First Step (2011)• Link to existing systems• Building the production and import

volume notification system in compliance with the amended Chemical Substances Control Law

Second Step (2012)• Multilingual support• Automatic MSDS output and labeling

system

Third Step (2013)• Risk assessments of chemicals, linked to

existing evaluation tools

Supplier

Showa Denko

Customers

Public organizations

Chemicals management system(Comprehensive EH&S management system)

Japanese laws and regulations

database

Chemicals management

database

Foreign laws and regulations

database

WEB API platform

Purchase and sales system

Purchase and sales information

Production system

Product and material information

MSDS

Notification of quantity

CSA*2

MSDS risk assessment reports


Third-party Verification/Assurance



We wish to express our heartfelt sympathy for the victims of the Great

East Japan Earthquake of March 11, 2011. We hope for the speediest

possible recovery. We would also like to express our heartfelt appreciation

for all the help and support to Japan given by the people all over the world.

The Great East Japan Earthquake occurred as this Report was being

edited. The disaster compelled the Showa Denko Group to briefly cease

production and business activities. We also suspended editing work of

this report to confirm the safety of our employees; to ensure adequate

communication with business sites; and to prepare to resume business

activities. As we tackled these tasks, we saw signs every day of the close

link between the businesses, products, and services provided by the Group

and our society.

In striving to resume our operations, we renewed our recognition

that each of the steady day-to-day CSR activities we undertake with many

stakeholders is the common treasure.

The activities we undertook to provide the materials needed for

the proper functioning of lifelines for disaster-stricken areas received

significant support from the supply chain and distribution companies,

as well as from members of the municipalities in the areas where our

business facilities are located.

In this year's CSR Report, we wanted to present information on the

meticulous, responsible restoration and recovery efforts undertaken by

our employees, efforts generally not visible to the public. We prepared two

editions: the Special Edition of CSR Report 2011 “Our CSR Efforts: Toward

Restoration from the Great East Japan Earthquake” and the CSR Report

2011 (full version).

Changes in our editorial policies in the middle of the editing process

resulted in some inconvenience to the assurance team who undertook

third-party verification/assurance of the full-version CSR Report, due to

CSR Report 2011 Response to Third-party Verification/Assurance

changes in the timetable for various steps of the process, including efforts

to confirm data. We want to take this opportunity to express our gratitude

for their flexibility, energy and commitment.

This year, we have launched our new medium-term CSR plan linked

to PEGASUS, our new medium-term consolidated business plan. The goal

of the new CSR plan is to ensure that each and every employee tackles

CSR activities responsibly, based on a consideration of the results of past

efforts.

With respect to the topic of Groupwide information disclosure

initiatives previously described and addressed in the Assurance, we

are now preparing the database that will serve as the key source for

information disclosure. We will expand the scope of the information

disclosed while taking steps to ensure consistent data handling for both

our international and regional operations.

We regard ISO26000, announced last year, as a guidepost for our

CSR activities. We are currently reviewing the Code of Conduct and the

corresponding Guidelines that serve as CSR cornerstones. Our hope is that

every employee will make effective use of the revised Code of Conduct

and the Guidelines.

At the Showa Denko Group, dialogue with our many stakeholders

represents the very foundations of our CSR activities. Your opinions

and comments are important Group assets. We welcome your candid

comments on this Report.

July 2011

Yasumichi Murata

Director and Managing Corporate Officer

Chief Risk Management Officer (CRO)

Showa Denko K.K.


Documents

2011 - sdk.co.jp · Period covered by this Report This Report covers information for the period January 1 to December 31, 2010, with some information also provided for 2011. The term