CSR Book 2012 - · PDF fileThis separate CSR Book provides a more detailed account of the Company’s non ... Company’s unshakable footing. Showa Shell Sekiyu K.K. can only achieve

CSR Book 2012

From 2012, the Showa Shell Group has combined its Annual Report and Sustainability Report into a single publication, “the Corporate Report”. This move was designed to present information about the Group’s management and overall corporate activities to stakeholders in an easy-to-understand format. This separate CSR Book provides a more detailed account of the Company’s non-financial CSR initiatives, and has been re-edited with reference to various guidelines.

About the CSR Book

Reference Guidelines • ISO 26000, International Organization for Standardization—International guidance directives related to social responsibility• Global Reporting Initiative (GRI) Sustainability Reporting Guidelines Version 3 (G3)—International guidelines on corporate sustainability reporting• Environmental Reporting Guidelines (2007 version), Ministry of the Environment of Japan

Scope of ReportingIn principle, this report covers the 34 consolidated subsidiaries and 13 equity-method affiliates that constituted the Showa Shell Group as of December 31, 2011. In the event that reporting is outside this scope, this fact is indicated.

Reporting PeriodIn addition to reporting based on performance during fiscal 2011 (January 1, 2011, to December 31, 2011), some content covers activities in 2012.

FTSE4GoodShowa Shell Sekiyu has been selected for the FTSE4Good Index (a socially responsible investment index) for eight consecutive years, starting in 2004.

Review of Operations AT A GLANCE Page 2

Page 16ISO 26000 Comparison Table

Page 3Our CSR Activities in 2011 and Targets for the Future

In line with its objective “Becoming the Energy Solution Provider Society and Our Customers Require,” The Showa Shell

Group has stipulated a Management Philosophy as well as a Code of Conduct based on its corporate creed. On this

basis, we strive to fulfill our CSR, thereby sustaining growth in step with that of society and our stakeholders.

Showa Shell’s CSR Activities

Management Philosophy 1. We will always endeavor for a breakthrough or technological innovation with a spirit of

customer first, and for continual growth of the Company, discharging our social responsibilities, including environmental preservation, a stable supply of energy, and operational safety.

2. We will implement Japanese-style management adaptable to changes at our own discretion and on our own responsibility, while maintaining close relationships with Shell Group companies and cultivating our international business sense.

3. We will aim to achieve our corporate goals and form a group of positive people full of vitality associated with each other through a noble ideal and trust.

4. We will endeavor to improve productivity through an effort calling for everybody’s participa-tion for thinking and sweating together and construct an affluent future on the base of the Company’s unshakable footing.

Showa Shell Sekiyu K.K. can only achieve a further leap

and perpetual growth by constantly making its contribution to

society, while securing reasonable profits and constructing a

strong management base and sound corporate constitution.

With this in mind, we set our corporate creed as follows:

Code of Conduct 1. Sustainable Development

2. Responsibilities 1) Responsibility to customers

2) Responsibility to shareholders

3) Responsibility to employees

4) Responsibility to contractors

5) Responsibility to society

3. Business Integrity

4. Compliance

5. Health, Safety, Security, and the Environment

6. Economic Principles

7. Competition

8. The Community

9. Communication

10. Political Activities

We share a set of core values—honesty, integrity, and re-

spect for people. We also firmly believe in the fundamental

importance of trust, openness, teamwork, and professional-

ism, and pride in what we do.

With the foundation of the core values above, we hereby set

out the Code of Conduct applicable to all business activities

we do.

http://www.showa-shell.co.jp/english/profile/mp/action.html

See

Please see our website for the text explaining each of the categories described in our Code of Conduct

HSSE (Health, Safety, Security, and Environment)We have established a Basic Policy on Health, Safety, Security, and Environment (HSSE) as the basis for ongoing management and improvement activities related to HSSE. As these initiatives are of topmost

importance to us in fulfilling our social responsibility as an energy company, top management is taking the lead in promoting these activities.

HSSE Management System Organizational Governance / Labour Practices /Consumer Issues / The Environment

Page 6

Safety Labour Practices / Consumer IssuesPage 7Security Organizational Governance

The EnvironmentEnvironmentPage 8CSR-Related DataPage 10

To further enhance management transparency and efficiency, we are taking a proactive approach to introduce objective third-party viewpoints into our management. At the same time, we are creating a

governance system optimized to meet our corporate goals and characteris-tics, as well as to respond to changes in the social and legal environment.

Corporate GovernanceCorporate Governance StructurePage 4Status of Outside Directors and AuditorsExecutive Remuneration

Organizational Governance / Fair Operating PracticesOrganizational Governance / Fair Operating PracticesOrganizational Governance / Fair Operating Practices

Page 5 Internal Control System Organizational Governance / Fair Operating Practices

We believe that it is important for a company to take a proactive stance on community involvement andcontribute to the sustainable development of commu-nities and society. Accordingly, we are involved in a

host of social contribution activities, such as those that support education for the next generation, contribute to the local community, make interna-tional contributions, and conserve the environment.

Contributions to CommunitiesIntroducing Our Social Contribution Activities Page 13 Community Involvement and DevelopmentSupporting Post-Disaster Recovery and Strengthening Emergency Response Measures Community Involvement and Development

To recruit and cultivate the diverse human resources that are needed for the development of our oil busi-ness and energy solution businesses, we are devel-oping a personnel system and operating training

systems designed to maximize individual employees’ strengths. In line with our corporate responsibility of respecting human rights, we are enhancing our systems to ensure adaptability to a variety of lifestyles and working styles, and ensuring occupational safety and hygiene to create a worker-friendly environment.

Human ResourcesTalent Vision Labour PracticesPage 11

Creating a Worker-friendly Environment Labour PracticesOccupational Health and Safety Labour Practices

Achieving Diversity and Inclusiveness Labour Practices / Human RightsPage 12

Comparison with ISO 26000*

1

In order to continue providing customers with products and services that are valuable from all perspectives—the environment, price, quality, and safety—we create opportunities for dialogue with

our customers and take part in numerous activities designed to enhance customer satisfaction.

Improvements in Customer Satisfaction Initiatives at Service Stations Consumer IssuesPage 14Solar Business Initiatives Consumer IssuesCustomer Communications Consumer Issues

We strive to forge strong trust-based relationships with contract dealers, retailers, business partners, and affiliated companies, and we cultivate our hu-man resources through internal certification and train-

ing. We collaborate with partners on services and in efforts to enhance customer satisfaction, as we aim for sustained mutual growth.

Communications with Business PartnersPartner Communications Fair Operating PracticesPage 15Human Resource Cultivation Fair Operating Practices / Labour Practices

* ISO 26000: This is an international guideline published by the International Organization for Standardization that relates to social responsibility. CSR Book 2012, located on our website, contains a table reviewing our CSR activities in comparison with ISO 26000.

Review of Operations AT A GLANCE Our CSR Activities in 2011 and Targets for the Future Corporate Governance HSSE (Health, Safety, Security, and Environment)

Human Resources Contributions to Communities Improvements in Customer Satisfaction Communications with Business Partners ISO 26000 Comparison Table

CSR Snapshot

http://www.showa-shell.co.jp/english/profile/mp/action.html

With operations centering on the oil and energy solutions business, the Showa Shell Group

aims to be an energy solution company that provides a stable supply of sustainable energy.

2

We distribute our petroleum products throughout Japan on ships, tank trucks, and other modes of transportation.

Electric Power BusinessWe sell electric power to customers who are special high-voltage power users or conventional high-voltage power users, which use 50kW or more.

We procure crude oil from oil-producing countries in the Middle East, as well as other regions.

Crude Oil ProcurementOur refineries refine crude oil into such products as LPG, naphtha, gasoline, kerosene, diesel oil, and heavy fuel oil.

RefiningOur petroleum products are stored in product tanks and oil depots. Our plants produce lubricants.

Oil Depots and PlantsService stations operated by our contract dealers and retailers sell our gasoline, kerosene, diesel oil, and other products to customers. We also sell industrial fuels, jet and marine fuels, lubricants, and asphalt to corporate customers.

Sales

We continuously develop and provide new services.

Development andCultivation ofNext-GenerationServices

Transport Distribution

ManufacturingOur plants manufacture CIS thin-film solar panels.

Distribution

We deliver our products to the regions that require them, in Japan as well as overseas.

Raw MaterialsWe procure raw materials for the production of CIS thin-film solar panels.

Customers

GeneralHouseholds

Industrial andOther Customers

Procured crude oil is imported by oil tankers.

We sell CIS thin-film solar panels through networks including oil and LPG contract dealers, new sales agents, housing manufacturers, electrical material and appliance retailers, and local building contractors.

Sales

We procure crude oil from oil-producing countries, refine it to

such various kinds of products as gasoline and kerosene at our

group refineries, and offer these products to customers through-

out Japan via service stations and other sales channels.

Oil Business

Our energy solution businesses comprise the solar business and

the electric power business.

In our solar business, under the brand name Solar Fron-

tier, we conduct research and development on CIS thin-film

solar modules, produce, and sell them to customers in Japan

and overseas.

In the electric power business, in cooperation with Tokyo

Gas Co., Ltd., we operate the Ohgishima Power Station, a natu-

ral gas-fired thermal power plant, and sell power to customers.

Energy Solution Businesses

Research andDevelopmentShowa Shell conducts verification projects for supplying electric-

ity to electric vehicles (EVs) and energy for fuel cell vehicles.

The Company is also conducting research and development

on eco-friendly products, such as biofuel and fuel cells, and is

developing and offering new services.

Domestic Retailers

Overseas Subsidiaries

We sell CIS thin-film solar panels in countries around the world from our subsidiaries in the United States and Germany, as well as under agreement with business partners.

AT A GLANCE



CSR Snapshot

Field of Activity 2011 Objectives Rating Summary of Achievements in 2011 Future Objectives

Corporate Governance and Internal Control Systems

Continue to strengthen the Group’s systems to promote the speedy achievement of the growth strategy for the solar business. ★★★ • In the solar business, which continues to expand, segmented risk management more thoroughly than we had done in the past, drafted more specific responses, and identified points for improvements. • Revised our Code of Conduct to further meet society’s expectations and conducted an employee

questionnaire to enhance understanding and determine its degree of penetration. We also strove to create a more detailed structure Rules of the Group Companies’ Help Line “Voice of People (VOP)”.

• Work to complete the Plan-Do-Check-Act (PDCA) cycle for business improvement by applying risk management, and aim for an internal structure that resolves problems more quickly. • To further promote compliance, use questionnaires and other means to determine what

issues exist, and conduct Web-based learning to address them.Develop internal control systems and promote their improved use. ★★★

Continue to conduct education and outreach activities aimed at raising awareness of compliance issues and internal controls among employees, engage in risk management, create a more appropriate structure of information disclosure, improve the Group Companies’ Help Line “Voice of People (VOP)” services, improve the risk management cycle for Group companies, and strengthen follow-up activi-ties conducted by the Group Auditors Office.

★★★

HSSE Management System Practices

H: Continue to conduct preventive measures for influenza pandemics and mental health disorders. ★★★ H: Conducted training related to mental health at 30 headquarters offices, 10 branch and office loca-tions and six affiliate companies, as well as other new employee training.

S: Implemented Goal Zero activities, raised a safety declaration at all work sites, and undertook efforts to prevent accidents.

S: Revised crisis management system based on lessons learned through the March 11 Great East Japan Earthquake.

E: Achieved zero emissions (final industrial waste ratio of less than 1%) at refineries.

H: Conduct mental health training by holding HSSE-related and other seminars.S: In addition to safety assurance and quality preservation activities through the Safety and

Quality First 2012 Campaign, through the Goal Zero campaign make a Companywide effort to achieve zero accidents.

S: Through comprehensive crisis management drills and other activities, confirm the effective-ness of the crisis management system and make improvements.

E: Maintain zero emissions at refineries and promote ECO TRY 21 activities, which include the conservation of energy in offices and the reduction of resources.

S: Continue to implement safety assurance and quality preservation activities through the Safety & Quality First (SQF) 2011 Campaign, to achieve “Goal Zero,” the name of the Shell Group’s zero-accident campaign. ★★★

S: Enhance the crisis management and business continuity systems to prepare for a disaster such as an earthquake directly hitting the Tokyo metropolitan area. ★★★

E: Continue achieving zero waste emissions (waste output of less than 1%) at refineries. Promote biodiversity preservation activities, such as CO2 reduction efforts, through ECO TRY 21 activities and energy-saving efforts, as well as other environmental preservation activities.

★★★

Human Resource Cultivation and Worker-Friendly Environment

Continue to support for work-life balance by implementing the Third Action Plan for General Business Owners, and strive to further activate workplaces by encouraging employees to use the systems on offer. ★★ • Based on the Act on Advancement of Measures to Support Raising Next-Generation Children, for-

mulated the Third Action Plan for General Business Owners in April 2010 and supported employee efforts to balance work and family life. In the second half of 2011, launched improvement activities targeting all departments in an effort to revise working styles.• To adapt to the global environment and promote diversity, selected four international students to

participate in summer internship program and employed overseas exchange students. • To realize our growth strategies, defined what we require of our employees in the Talent Vision, and

reconfigured our educational system based on this vision. Rolled out the new program steadily from September 2011, providing employees with opportunities to grow.• Based on the new education system, cultivated global human resources by providing opportunities

to improve English-language skills and continued to provide opportunities for international experience through overseas exchange student programs. • Achieved highest response rate to date (95.3%) in 8th Shell People Survey. Held labor–management

discussions to address issues elicited through survey, linking the survey to action toward improving the workplace culture.

• By implementing the Third Action Plan for General Business Owners, aim to invigorate the workplace by increasing the percentage of people supporting systems to promote a work-life balance.• Continue to attract diverse human resources (new graduates, mid-career professionals,

foreign workers, workers with disabilities) in order to realize objectives of Management Philosophy and medium-term business vision.• Increase employee awareness and realize objectives of Talent Vision through training and

measures outlined in newly formulated educational system.• Cultivate global human resources by promoting exchanges of personnel within the Shell

Group and providing opportunities for overseas training and English-language improvement.• Conduct 9th Shell People Survey, define actions on the issues that the Group needs to work

together to surmount, and strive to realize a worker-friendly environment.

To achieve the growth strategy pursued in EPOCH 2010, continue to recruit diverse employees without regard for nationality or gender (new graduates, mid-career professionals, foreign workers, workers with disabilities). ★★★

Develop a new education system to further strengthen the competitiveness of the Company’s human resources, and provide opportuni-ties whereby individual employees can demonstrate their full range of skills and tackle new challenges that will help them grow. ★★★

Develop businesses outside of Japan, promote exchanges of personnel within the Shell Group, and develop and properly utilize personnel who demonstrate leadership in the global arena. ★★★

Conduct the 8th Shell People Survey, create workplaces in which employees are highly motivated to work, and promote harmony between labor and management. ★★★

Contribution to Regional Communities

Promote environmental education through the environmental photo contest. ★★★ • Held the 7th Environmental Photo Contest, “Things to Preserve and Correct around Our Town,” which received 4,738 entries. Contest was used in numerous schools as a tool of environmental education when their summer vacationtime.• Held Shell Art Award 2011, which received 1,291 entries. • Continued to participate in the Project for the Reforestation of Mt. Fuji, with employee volunteers

installing netting to protect saplings planted in 2007 from deer.• Jointly sponsored the 7th Energy Sustainability Forum with the Integrated Research System for Sustain-

ability Science (IR3S). • Conducted environmental education activities for a total of 399 students, from elementary, junior high,

and high schools in Niigata Prefecture and from elementary schools near our headquarters in Daiba.

• Open entry to Environmental Photo Contest to students from the first year of elementary school, providing the opportunity for more children to think about the environment.• Create plan to renew the Shell Art Award, revising entry criteria and number of entries

selected in order to support more young artists.• Continue jointly sponsoring research with IR3S.• Expand number of opportunities for supporting education of the next generation.

Continue to encourage young artists by holding the Shell Art Award competition. ★★

Strengthen biodiversity protection through the Project for the Reforestation of Mt. Fuji. ★★

Promote joint research with the Integrated Reserch System for Sustainability Science (IR3S). ★★★

To cultivate the next generation, strive further to implement, environmental education and enrich support tools. ★★★

Improvements in Customer Satisfaction

To enhance customer satisfaction, strengthen existing tools, such as the Ponta card system, add new tools, and materialize policies for further survice improvement. ★★★ • Aggressively developed the Ponta campaign.

• Began introducing tablet PCs, introducing them at service stations at the end of 2011.• Continued increasing the number of disaster-proof service stations, raising the number to 40 by the

end of 2011.• Installed solar panels at service stations, prioritizing those in the Tohoku and Tokyo Electric Power

Company service areas, having faced tight electricity supply/demand conditions in 2011, increasing the number of service stations with installed panels to 214—more than half the total.• Met customers’ needs by enhancing the homemaker menu/homemaker peripheral service menu. Also

developed Shell LinkLife campaign using Web advertising.

• Clearly develop various measures raised by contract dealers at the “Dealers Meeting 2012” in January 2012, in order to enhance customer satisfaction.• Leverage the Company’s strength in both the oil and energy solution businesses by increas-

ing the installation of solar panels at Company-owned service stations outside the Tohoku and Tokyo Electric Power Company service areas.• Through Michell Home Service, expand service menus to meet customers’ needs and raise

service quality through staff education for higher customer satisfaction.

Further increase disaster-proof service stations and service stations equipped with solar panels, promote the development of service stations, possible to provide stable supplies of energy and serve as community bases during emergencies. ★★★

Strive to expand the service menus of Michell Home Service and Shell Link Life, and propose the best solutions to more customers.★★★

Partner Communications

Strive to promote close communication with contract dealers through quality assurance activities and meetings for specific fields of busi-ness. Promote staff training and improve services to customers by implementing human resource development programs and holding competitions for contract dealer employees.

★★★• Supported staff training through certification systems and training programs. • Operated a Showa Shell Dealer’s Association in each region, further deepening relations between the

Company and contract dealers.• All executives separated into groups and visited 64 workplaces, talking with staff about the goal of

achieving zero accidents.

• Continue to operate and proactively certification and training systems to build staff expertise and technical skills. Also provide new manuals this year on supporting human resource culti-vation, and contribute to enhancing customer satisfaction through solid human resources.• Have executives visit business partners’ workplaces, continue to promote SQF throughout the

Group, and thoroughly eliminate occupational accidents and quality failures.Work to prevent occupational accidents and quality failures by continuing to arrange visits by executives to business partner sites and to raise employee awareness of their role in these efforts, and strive to eliminate workplace accidents and quality failures. ★★★

Partnership with Shareholders

Further strengthen communications with stakeholders in the market as the medium-term business Vision EPOCH 2010 becomes more fully implemented, particularly with the establishment of the Third Miyazaki Plant (the Kunitomi Plant). Also strive to approach overseas investors. ★★

• In line with expansion of the solar business, enhanced reporting to shareholders and other investors on the content of these operations and their state of progress via the Annual Report, business report booklet, and financial documents. For overseas investors that we used to communicate less, strived to send more information from our side.

• Strive to report to shareholders and other investors in a timely and easy-to-understand manner on the state of the business environment and the Company’s businesses and strategies.

Stak

ehol

der

Com

mun

icatio

nsCo

mplia

nce

and

HSS

E

Listed below is the 2011 sustainability achievement and future objec-

tives, separately shown in the headings of “HSSE and Compliance” and

“Stakeholder Communications.” Showa Shell will continue to report on its

performance and work toward achieving its objectives.

Our CSR Activities in 2011 and Targets for the Future

★★★ Excellent　　★★ Satisfactory　　★ Not Satisfactory

3



CSR Snapshot

4

Showa Shell strives to fulfill its social responsibilities to shareholders, customers, business partners, employees, local communities,

and other stakeholders. At the same time, we aim to enhance corporate value through sustained growth. To achieve these goals,

we have raised our management transparency and efficiency even further, by establishing a governance structure that better re-

flects our corporate objectives and characteristics, responding promptly and agilely to changes in social and legal environments,

and incorporating objective third-party views into our management.

Fundamental Approach to Corporate Governance

To enhance its management efficiency in response to ongoing changes in

the business environment, since 1997 Showa Shell has reduced its number

of internal directors, introduced an executive officer system, increased the

number of outside directors, and conducted corporate governance reforms.

Through these initiatives, the Company has clarified responsibilities and au-

thority, strengthened the business execution oversight function, accelerated

decision-making, and raised the efficiency of business execution.

Corporate Governance Structure

The Company’s Board of Directors comprises eight directors, four of whom

are outside directors. The Board is charged with making important deci-

sions, including those of business strategy, and supervising the execution

of business.

The Chairman and Representative Director chairs the Board of Direc-

tors, which makes decisions promptly with its few members. To encourage

big-picture, objective management that incorporates diverse viewpoints,

half of the directors are outside directors. To provide outside directors with

ample time for deliberation at Board of Directors’ meetings, meeting materi-

als are distributed and explained ahead of time, enabling spirited delibera-

tion at each meeting.

Board of Directors and Directors

The Company has introduced an auditor system. The Board of Auditors is

composed of two standing auditors and two highly independent outside

auditors. Outside auditors in particular are selected for their broad-based

knowledge and independence, as well as the objectivity, neutrality, and

specialized expertise that the auditing process requires. Auditors perform a

supervisory function for the management team.

Auditors formulate auditing standards and audit plans, attend Board

of Directors’ and other important meetings, receive the status of operations

from directors and executive officers, and audit divisions, offices, subsidiar-

ies, and other organizations. In this manner, they conduct business audits

related to the execution of business by the Board of Directors, as well

as accounting audits. The auditors also receive reports on internal audits

conducted by the Audit Division and receive reports on audit results and

information on items for consideration by the accounting auditors.

To ensure the viability of audits by auditors, an audit support

structure is in place in which dedicated audit staff are assigned to

assist the auditors. Furthermore, the Audit Division, accounting auditors,

and management departments in charge of internal control support auditors

through communication. To support outside auditors, Board of Directors’

meeting materials and materials pertaining to important issues at other

important meetings are distributed ahead of time to outside auditors. If

necessary, such materials are explained to these auditors before and after

such meetings.

Board of Auditors and Auditors

The Company employs an executive officer system to speed decision-

making and improve the efficiency of business execution by clearly defining

the authority and responsibilities of directors and executive officers. The

Management Executive Committee acts as the decision-making body for

important items of business execution related to the oil business and other

areas, while the Solar Strategy Committee handles such tasks in relation

to the solar business, which is core to the Company’s energy solution busi-

nesses. Each of these committees meets twice each month.

Various other committees, such as the Investment Committee and the

Ordering Committee, are in place to provide advice on important deci-

sions. This structure is designed to incorporate specialized points of view

into decision-making.

Executive Officer System, Management Executive Commit-tee, and Solar Strategy Committee

The Company has appointed PricewaterhouseCoopers Aarata as its ac-

counting auditor, which performs audits and is paid compensation for

these audits.

Accounting Audits

1997 Number of directors reduced from 26 to 22Code of Conduct was established

1999 Number of directors reduced from 18 to 11Executive officer system adopted

2003 Executive officer system revised, Management Executive Committee establishedOutside directors increased by 1Voice of People (VOP) established

2005 Outside directors increased by 1

2006 Internal Control Promotion Committee established

2007 Information Disclosure Sub-Committee establishedExecutive retirement allowance system abolished

2009 Outside directors increased by 1(4 of 8 directors now outside directors)

2010 Establishment of the Solar Strategy Committee

Efforts to Build a Corporate Governance System

Showa Shell (Yen million)

Consolidated subsidiaries(Yen million)

Compensation based on audit certification activities

121 53

Compensation based on non-audit activities

1 —

Audit Compensation (Year Ended December 31, 2011)

To ensure management transparency, half of the Company’s directors

and auditors are outside officers. The outside officers provide big-picture,

objective, and diverse viewpoints and require explanations from manage-

ment. In this way, the outside officers encourage active deliberation at

meetings of the Board of Directors and Board of Auditors.

Status of Outside Directors and Auditors In 2011, the outside directors attended approximately 90% of the

Board of Directors’ meetings. Also, the outside auditors attended ap-

proximately 90% of the Board of Directors’ and the Board of Auditors’

meetings.

* The above includes remuneration paid to six executives: two directors who retired and one auditor who resigned at the close of the 99th General Shareholders’ Meeting held on March 30, 2011; one outside director who resigned on August 31, 2011; and one director who resigned and one auditor who retired at the close of the 100th General Shareholders’ Meeting held on March 29, 2012. The number of directors and auditors as of December 31, 2011, was seven and four, respectively.

Director and Auditor Remuneration (Year Ended December 31, 2011)Executive category Total remuneration

(Yen million)Total remuneration by category

(Yen million)Number of executives subject

to bonuses (People)

Base remuneration Bonuses

Directors (excluding outside directors) 408 387 21 5

Auditors (excluding outside auditors) 76 75 1 3

Outside directors and auditors 57 53 3 7

The total remuneration to all directors decided by the resolution of the

General Shareholders’ Meeting held on March 30, 1994, is ¥65 mil-

lion or less per month. Within the limit of the total amount, monthly base

remuneration to each director is determined using a remuneration table by

rank, except for Richard A. Carruth (who resigned effective March 29,

2012) and Douglas Wood (who was appointed on March 29, 2012),

for whom base remuneration is determined by a secondment contract with

the Shell Group.

Executive Remuneration The total remuneration to all auditors decided by the resolution of the

General Shareholders’ Meeting held on March 28, 2008, is ¥10 million

or less per month. Within the limit of the total amount, remuneration to each

auditor is determined by the mutual agreement among all auditors.

The amount of bonus to directors and auditors is based on the consid-

eration of economic circumstances and business performance during the

period, and determined each year by the resolution of a General Share-

holders’ Meeting.

Retirement allowances to directors and auditors were abolished as of

the General Shareholders’ Meeting held on March 29, 2007.



CSR Snapshot

The Showa Shell Group recognizes that compliance among the Group and

its employees is paramount to fulfilling its social responsibility as it goes

about its business activities. Accordingly, the Group continues pursuing

compliance initiatives.

Compliance

The Group has formulated a variety of compliance-related regulations,

including Compliance Rules for the Antitrust Law, Government Anti-corruption

Rules, Insider Trading Control Rule, Environmental Preservation Guidelines,

and Export Control Rule. We have also established General Rule for Procure-

ment to ensure that our procurement activities are fair and transparent, and

out of consideration for social and environmental facets, including compli-

ance with laws and corporate ethics, resource protection, and environmental

preservation. We also offer Procurement Guidelines to business partners to

facilitate their understanding of our considerations regarding procurement.

We conduct compliance training to ensure that employees understand

the importance of compliance put into practice. We distribute our Compli-

ance Book, which explains policies on specific actions, and conduct web-

based learning on these policies once or more each year. We also conduct

training and web-based learning that incorporate concrete case studies of le-

gal and other types of compliance. In particular, we conduct regular training

at each division with respect to Antitrust Law, using specific examples from

each division and responding to issues raised by working-level employees.

As a whistle-blowing system, we have introduced an employee consul-

tation service, Voice of People (VOP), that encourages employees to raise

corporate ethics concerns and to offer constructive proposals to the Com-

pany, and have created routes to receive employee input both within and

outside the Company. We have formulated Rules of the Group Companies’

Help Line, "Voice of People (VOP),” covering the system’s operation, and

The Company has stipulated its Code of Conduct to provide general and

universally applicable guidelines for the development of corporate activities.

In addition to legal compliance, this code specifies responsibilities toward

society, including the observance of high corporate ethical standards. The

Code of Conduct was formulated in 1997 and updated in 2011. The back-

ground for this update was the Company’s recognition that diversified fields

of business, such as developing the solar business in addition to the oil busi-

ness, would necessarily engage human resources from diverse backgrounds

into broad-ranging activities all over the world. The code was also intended

to enhance the awareness of basic ethics that a business must abide by.

To ensure operational appropriateness, the Company has formulated a

Basic Policy on Internal Control and established an internal control system

to provide autonomous monitoring as the Company pursues its business.

To create a more effective internal control system for the entire Showa

Shell Group, the Company has encouraged the formulation and thorough

understanding of internal control regulations at affiliated companies and

confirms their operational status.

Internal Control System

General Shareholders’ Meeting

Board of Directors

[Management and Control]

[Business Execution]

HSSE CommitteeInternal Control

Promotion Committee

Information DisclosureSub-Committee

Harassmentconsulting

service

ComplianceCommittee

ComplianceSub-Committee

ManagementExecutiveCommittee

Solar StrategyCommittee

Chaiman andRepresentative

Director

President andRepresentative

Director

VOPinternal

consultingservice

VOPexternal

consultingservice

Committee Audit

Audit Office

AccountingAuditorsChairman and Representative Director

Business Divisions and Affiliated Companies

Board ofAuditors

ExecutiveDirectors/ExecutiveOfficers

ExecutiveDirectors/ExecutiveOfficers

Directors Auditors

Nominations Nominations NominationsReports

ReportsReports

Reports Reports Reports Reports Instructions Instructions

Reports

Notice

Notice Notice

Reports

Reports

Reports

Reports

Reports

Reports

ReportsMonitoring

Monitoring

Reports Reports

Coordination

Coordination

Planningapproval

Auditing

Auditing

Auditing

Auditing

Monitoring

Corporate Governance System and Internal Control System

systems are in place to protect the confidentiality of people undergoing

consultation and to prevent them from adverse impacts. We have extended

the application of these systems beyond our own employees to include

employees at the Company’s subsidiaries.

Showa Shell’s policy with regard to criminal organizations is to handle

them in accordance with the law, with the view that organizations of this

kind represent a threat to the order and safety of civil society. The depart-

ments in charge of related matters have been designated, and contact is

maintained with the police and other external specialist institutions.

Risk Management

To manage risks related to health, safety, security, and the environment

(HSSE), in line with its basic policies the Company has formulated Regula-

tions for Disaster Control Headquarters and other related regulations and

drawn up a business continuity plan (BCP). In addition, the Company

updates its Emergency Communication Flow Chart, which is prepared for

in case of an accident or disaster, and conducts drills on a constant basis.

When accidents and disasters do occur, the underlying causes are investi-

gated and the findings are utilized for recurrence prevention measures that

are disseminated throughout the Company.

As lessons in particular from the Great East Japan Earthquake, which

struck on March 11, 2011, the Company has updated its crisis manage-

ment plan (CMP) and its Code of Conduct for Emergency. The Company

has also reviewed its BCP in anticipation of an earthquake striking directly

below the Tokyo metropolitan area and is undertaking initiatives to further

promote its crisis management.

Based on the HSSE-MS, the Health, Safety, Security and Environment

(HSSE) Division monitors execution of the PDCA process throughout the

Company and regularly audits the status of HSSE management. Moreover,

the HSSE Committee conducts management reviews and works continu-

ously to make improvements.

Among the non-HSSE risks that have the potential to affect corporate

value and business, each year Showa Shell prepares a Companywide busi-

ness control matrix. We use this matrix to identify the risks associated with

business targets, ascertain the level of impact and control status of these risks,

and formulate measures. With regard to risks that need to be checked from

a Companywide perspective, such as the compliance and HSSE promo-

tion structures and the business control structure, we also determine items for

which the overall management status must be understood in a Companywide

context. Directors and department managers then conduct annual reviews of

the control structure for their divisions, introduce improvements, and report the

results of these reviews to the Internal Control Promotion Committee.

Accuracy of Financial Reporting

Based on the internal control reporting systems stipulated by the Financial

Instruments and Exchange Act, Showa Shell has submitted a report on

Information Management and Disclosure

We have established rules for appropriately managing the Company’s

information assets. These regulations assign to department managers the

responsibility for managing information and spell out the control method

that is required at each level of confidentiality, including “secret” and “re-

stricted to internal use only.”

We have also formulated a Basic Policy for Information Disclosure.

Based on this policy, to promote an understanding and fair evaluation of

the Group among various stakeholders, we work to ensure that important

information is disclosed equitably, accurately, and in a timely manner. We

have set up the Information Disclosure Sub-Committee as the institution in

charge of managing this process and making judgments on the handling of

information to be disclosed. To comply with timely disclosure regulations,

we publicize information via the system for transmitting disclosure informa-

tion in a timely manner provided by the Tokyo Stock Exchange (TDnet), as

well as on our website. We also work to disclose other information quickly

and proactively, based on the judgment of the Information Disclosure Sub-

Committee.

Our investor relations (IR) activities targeting shareholders and other in-

vestors include presentation meetings for securities analysts and institutional

investors in Japan every quarterly performance announcement. We distrib-

ute these presentation materials on our website. In addition to maintaining

communication with institutional investors in Japan and overseas through

investor visits and conferences, we disseminate information for individual

investors, chiefly via our website.

Furthermore, we distribute annual shareholder meeting convocation

notices at an early date and have in place a system whereby sharehold-

ers can exercise their voting rights over the Internet. These activities are

designed to promote participation in shareholder meetings. Furthermore,

we publish a business report booklet for shareholders (in Japanese only),

and seek to enhance communication through shareholder questionnaires.

internal controls since 2009. Before this system was applied, the Company

had reconfirmed the flow of operations in each division, identified potential

risks, and encouraged the creation of rules to prevent risks, with the aim of

ensuring operational accuracy as well as the reliability of financial report-

ing. We are continuously improving these activities even after establishment

of the current system, with specialized units being primarily responsible for

conducting appropriate evaluations and monitoring.

In 2011, we evaluated the effectiveness of the Group’s internal con-

trols on financial reporting. The report on internal controls that the Company

submitted contains the results of our evaluations.

The Showa Shell Group’s initiatives go beyond merely responding to

legal requirements. We seek to ensure further improvements in operational

transparency, effectiveness, and efficiency.

5



CSR Snapshot

In accordance with its Management Philosophy, Showa Shell has formulated a Basic Policy for Health, Safety, Secu-

rity, and Environment (HSSE), and the Company strives toward ongoing performance improvements in line with this

policy. We consider HSSE initiatives of foremost importance in fulfilling our social responsibility as an energy company.

Accordingly, we are promoting these activities throughout the Company, with direction from top management.

Fundamental Approach to HSSE

•Health Provide a working environment that ensures workplaces and businesses are safe, healthy, and comfortable for employees.•Safety Ensure the personal and physical safety of sites and other locations, and maintain product quality. •Security Prevent threats due to crimes, disaster, and other emergencies, and respond appropriately in emergency situations. •Environment Preserve regional and global environments.

HSSE Definitions

Overview of the HSSE Management System (HSSE-MS)The Shell Group has developed the HSSE-MS as a voluntary system to track

and continuously improve HSSE performance. The HSSE-MS employs the

Hazard and Effects Management Process (HEMP)*1 to determine the likeli-

hood and impact of risks materializing and to prioritize countermeasures.

A continuous Plan-Do-Check-Act (PDCA) cycle is also in place. To check the

status of operations, HSSE audits are regularly performed and reviewed by

the HSSE Committee.

The HSSE Committee verifies performance during the previous fiscal

year and establishes an HSSE Priority Strategy for the current fiscal year.

Based on this new strategy, priority objectives are established for each

division, site, and affiliated company, and this information is incorporated

into individual HSSE Action Plans that develop the HSSE-MS PDCA proc-

ess. The aim is to achieve ongoing inprovement in performance. We

operate and maintain the system in this manner to reach strategy HSSE

objectives.

Promotion of the HSSE Management System

discussion to the HSSE Conference and Safety and Hygiene Committees

at individual sites.

Linked with the HSSE Committee are four subcommittees, as well as

site-level teams. This organization is designed to ensure efficient HSSE-MS

operation.

The HSSE Committee, chaired by the president, has been established

as the highest HSSE decision-making body. This committee approves

HSSE-related plans, supervises progress, and conducts performance

reviews. In addition, four times each year the committee reports

to the Board of Directors in order to convey important matters for

HSSE Teams

*1 Hazard and Effects Management Process (HEMP): A process used to confirm the disaster potential (hazards) related to tasks and equipment, and to envision the damage those hazards might cause. The risks of a hypothetical disaster are then assessed using a Risk Assessment Matrix (RAM), and the highest risks are analyzed using a HEMP Worksheet. Once an area for improvement is confirmed, a corrective measures plan is formulated.

*2 Risk Assessment Matrix (RAM): A management table for assessing the effects and incidence probability of risks by person, capital, environment, and popularity categories.

*3 TRIPOD: An accident analysis technique used by the Shell Group.

Causal Analysis(TRIPOD*3)

Hazard and Effects Man-agement Process (HEMP)

Risk Assessment Matrix (RAM)*2

HSSE Priority StrategyHSSE Committee (October)

Correction Plan/Recurrent Prevention Policy

Each Division/Companywide (on a Case-by-Case Basis)

Follow-upHSSE (Self) Audit

HSSE Action PlanEach Division (December)

Review(Periodic)

Act Plan

Do

Check

Accident

Company level Workplace level

As the person in charge of HSSE, the head of each division and site selects

“HSSE focal points.” HSSE focal points serve to enhance communications

among division/site heads, top management, local management, and

employees, as well as to encourage HSSE activities at the workplace level.

In 2011, we held a Companywide seminar on focal points to raise aware-

ness of such HSSE aspects as the status of performance and emergency

response methods, as well as group learning. Since 2006, Showa Shell has had all of its executives participate in site vis-

its to its refineries, oil depots, and other work sites to observe and talk with

on-site staff about activities aimed at preventing work-related and facility

accidents. In 2011, executives visited 64 workplaces, where they focused

on the theme of “confirming the safety of facilities and workplaces and

legal compliance,” and worked to instill a safety culture in the workplace.

HSSE Focal Points

HSSE Site Visits by Executives

HSSE audits are conducted to address all elements of the HSSE-MS

Companywide, document them, provide an objective basis for verifying

efficient implementation, and recommend improvements in the event of a

deficiency.

HSSE Audits

Activities to Instill HSSE within the Company

Priority Strategies and Initiatives

2011 •Rechecked HSSE-MS risk evaluations (reconfirmed sources of disaster, evaluated risks using RAM).

•In addition to new businesses (solar business, Enessance Holdings Co., Ltd., and Wakamatsu Gas K.K.), supported MS operation at dealers in which the Company has a stake, with the aim of reducing HSSE risk by confirming PDCA functions.

•Enhanced self -safety checks and self-audits at each division.

2012 • Perform HSSE audits at sites and dealer locations, and promote the horizontal deployment of responses to suggestions.

• Enhance self -safety checks and self-audits at each division.

Chair: Overseeing directorMembers: Heads of departments and officesSecretariat: Research and Development Division

Product Safety Sub-Committee

Discusses the overall safety of products, from development to disposal, to ensure that the Company’s products do not have a negative impact on users, their property, or the environment, either in their handling, use, or after use.

Chair: HSSE DirectorDeputy Chair: Director of the General Affairs DepartmentSecretariat: HSSE Division

Security Liaison Committee Meeting (SLCM)

Discusses guidelines, policies, and proposals regarding security (crisis management).

(Attendees) All departments of Showa Shell K.K. Refining companies Related departments (implementing HSSE-MS)

Showa Shell Group HSSE Conference

Strives to share HSSE activity information to improve the HSSE perform-ance of each Showa Shell Group company.

Chair: Site head, General Manager of the Human Resources Division (head office)Members: Company, union representativesSecretariat: Department overseeing HSSE

Established at the head office and each work site, these committees discuss matters regarding safety, such as the causes of occupational accidents and recurrence pre-vention plans, as well as matters regarding hygiene, such as the prevention of health problems among employees, and efforts to maintain and improve their health.

Safety andHygiene Committees(At All Work Sites)

Chair: Site headMembers: Managers, employeesSecretariat: Department overseeing HSSE

Investigates various matters related to HSSE at all work sites.

HSSE Conference(At All Work Sites)

HSSE CommitteeChair: PresidentMembers: Directors and executive officersSecretariat: HSSE Division

Auditors Board of Directors

Chair: HSSE DirectorMembers: Heads of departments and officesSecretariat: HSSE Division

HSSE Sub-Committee

Follows the fundamental policies regarding HSSE and discusses matters pertaining to the formulation of HSSE plans, progress monitoring, and performance reviews.

6



CSR Snapshot

COLUMN

One of the goals of the Safety & Quality First (SQF) 2011 Campaign is to

reduce to zero the number of major accidents involving people that result

in lost work time. To this end, we are raising awareness and working to-

gether Groupwide to achieve the objectives of the Goal Zero movement.

Goal Zero Initiatives (July–December 2011)

Management Distribution of “Goal Zero Movement Newsletter”

This newsletter, which is distributed to Group employees, is designed to raise and promote awareness of the Group Zero movement. A column in this newsletter features the thoughts of the 21 directors, including the chairman and the president, related to achieving Goal Zero objectives and other as-pects of HSSE.

Declarations of Goal Zero Activities by individual Workplace

Referring to accidents that have occurred in the past, as well as workplace accidents involving people that took place between 2010 and the first half

of 2011, we have issued declarations of actions and initiatives to prevent accidents on a workplace-by-workplace basis. By describing the content and calling attention to these efforts, we have raised awareness of Goal Zero for individual workplaces.

Conducting Surveys to Prevent Similar Accidents and Relaying Survey Re-

sults Across Departments

Each time an accident occurs that results in lost work time, we survey the situ-ation with a view toward preventing similar incidents. We convey the results of these surveys, as well as prevention measures, for horizontal deployment across related departments.

SafetyShowa Shell works to enhance safety awareness through the ongoing operation of its HSSE-MS. In addition to having in place the

Safety Rule, we have defined ways of responding quickly in the event of an accident, prescribing ways to determine the causes

of accidents and preventing recurrence, and have put in place a safety recognition system. In particular, we conduct the Safety &

Quality First (SQF) Campaign with our contract dealers and business partners to ensure safety and quality assurance measures,

with the aim of achieving zero accidents.

See Page 10For ISO 9001 certifications, “CSR-Related Data”


2011 •To follow up on the root causes of accidents and effect improvements, we conducted TRIPOD* analysis on all disasters resulting in lost work time.

2012 •Use TRIPOD to analyze major accidents and other incidents that result in lost work time, and broadly inform employees about safety measures to prevent similar accidents.

* TRIPOD: An accident analysis technique used by the Shell Group

Manufacturing Division Initiatives

Group refineries employ a safety-related Plan-Do-Check-Act (PDCA) cycle

to ensure ongoing improvement of the HSSE-MS. We actively pursue “ac-

tivities to share information about near-misses” to raise safety awareness

concerning employees’ immediate surroundings, and augment measures

from a safety perspective as necessary. With regard to quality, we have

created various types of flows and ensure thorough management of product

quality, and have acquired certification from third-party institutions. These

include the JIS mark and certification under the ISO 9001 international

quality management standard.

Transportation Division Initiatives

Maritime Transportation

Showa Shell periodically undergoes a Shell Maritime Business Review

(SMBR) by the Shell Group to improve its shipping and transport operations.

This is a Shell Group methodology to improve the transportation business,

which involves inspections of the safety levels of the vessels and the piers

used for loading and unloading product. The Company receives useful

Shipments by Tank Truck

Tank trucks are equipped with leak prevention devices and global position-

ing systems (GPS) to prevent shipment errors. Rules that must be followed to

prevent accidents while in service are compiled in the Driving Standards,

and efforts are made to ensure that drivers are well trained, that vehicles

are well maintained, and that the rules are carefully followed by drivers.

Through ongoing, careful compliance with safety and quality confirma-

tion activities under the SQF Campaign, we are working to reduce the

number of accidents involving tank trucks.

Fuel Sales Division Initiatives

To deliver reliable products and services to service stations, we have de-

fined six service station priority activities as points of focus for safety and

quality management by on-site staff, which are being carried out.

information from the Shell Group regarding industrywide best practices,

and strives to improve its operations and strengthen its maritime transporta-

tion business by adopting similar improvements.

•Conduct inventory checks on underground storage tanks.•Have a station attendant present when tank trucks are being unloaded.•Repeat orders and confirm orders at the time of payment.•Confirm the use of pointing-and-calling and voice alerts during operations.•Be sure that hazard lamps are lit when vehicles are in motion.•Mutually confirm work results with the customer.

Six Service Station Priority Activities

Total Recordable Case Frequency

2009 2010 2011Entire Showa Shell Group*2 2.1 1.8 1.7

*1 Incidence rates (%) are per 1 million labor hours. *2 Figures include Showa Shell Group companies and business partners.

Total Recordable Case Frequency*1

Each time an accident occurs that results in lost work time, we survey the situ-

ation with a view toward preventing similar incidents. We convey the results

of these surveys, as well as prevention measures, for horizontal deployment

across related departments. In these ways, we have taken steps throughout

the Company to introduce recurrence prevention measures. As a result, in

2011 we succeeded in curtailing total recordable case frequency.

SecurityAs a company that handles the energy that is essential to our way of life, our social mission is to provide a stable supply of

products and services even in the event of disaster or other emergency. Accordingly, we have in place structures to ensure business

continuity; have drafted emergency response plans; and conduct regular drills as part of our efforts to strengthen our Group crisis

management system.


2011 •We enhanced our crisis management plan (CMP)*1 and business continuity plan (BCP)*2 in preparation for a new strain of influenza or an earth-quake that occurs directly below the Tokyo metropolitan area.

2012 •Revise and enhance our CMP and BCP to take into account lessons learned from the Great East Japan Earthquake of March 11, 2011.

•Prepare for disaster through disaster information service operation drills and general lifesaving drills.

•Conduct emergency response drills at individual departments and workplaces.

*1 Crisis management plan (CMP): A document outlining the Group’s crisis management system, including the definition of a Companywide crisis, the structure of the Disaster Control Headquar-ters, and the timing and methods by which that headquarters should be established. It has been created so that, in the event of a Companywide crisis, the individuals who are to be involved in crisis management know how to respond based on their specific roles and responsibilities and based on the level of crisis, and are always prepared to respond when necessary.

*2 Business continuity plan (BCP): A plan that establishes the methods and means for continuing to conduct business so as to minimize damage and facilitate the continuation and early restoration of core business operations in the event of a natural disaster or other emergency situation.

In 2011, to make all employees fully aware of these activities, we

established the priorities of ensuring the product quality of fuel sales and

preventing vehicle accidents resulting from staff operations. To this end, we

implemented nationwide plans for such efforts as having a station attendant

present to conduct a survey when tank trucks are being unloaded.

Formulation of the Business Continuity Plan (BCP)

We have drafted a BCP to prepare ourselves for various types of potential

disaster, including an earthquake directly below the Tokyo metropolitan

area and an outbreak of a new strain of influenza. We revise this plan

as needed to ensure its viability when needed, and conduct regular drills

based on the content of this plan.

Disaster Drills at Refineries and Other Workplaces

We hold comprehensive disaster drills in cooperation with business part-

ners and government bodies that anticipate a large-scale earthquake at

our refineries and other workplaces. Conducting such drills on an ongoing

basis enhances employees’ response skills, and we revise and improve our

systems to assure the safety of refineries and other workplaces.

Emergency Preparedness Structure

We have in place an emergency preparedness structure based on our CMP

to enable a swift Groupwide disaster response in the event of an earthquake

or other natural disaster. When the Great East Japan Earthquake struck on

Fire-Fighting Drills

In the event of fire, a quick response is essential to prevent the fire from

turning into a major disaster.

Employees learn basic skills for fighting various types of fires at the Nii-

gata Disaster Control Training Center by putting out real fires. The center,

which opened in 1993, serves as a site for fire drills for company employ-

ees, as well as people from affiliated companies and service stations. In

recent years, we have also been working to fulfill our responsibility as a

company that contributes to local communities by opening the center for use

as a site for companies in and outside Niigata Prefecture, and as a drill site

for a fire-fighting school. In the 18 years since the center first opened, some

4,700 people have undergone training there.

March 11, 2011, within two hours we had established a Disaster Control

Headquarters at the Showa Shell head office. Based on the direction of the

HSSE Committee, which is chaired by the president, we set up a 24-hour

system to confirm the safety of Group employees and supervise emergency

distribution of oil products and emergency supplies.

7



CSR Snapshot

Environmental PreservationWe believe that such efforts as creating environmental management systems and seeking to reduce environmental impact through

business activities are essential to companies that seek to realize global environmental sustainability. The Showa Shell Group

works to reduce its environmental impact throughout the supply chain, from procurement through to product sales. We develop

and sell eco-friendly products, including petroleum products that have high energy-conserving effects, and encourage the spread

of renewable energy through solar panels.

Structure for Promoting Environmental Preservation

Our Environmental Preservation Guidelines spell out our basic policy for

protecting the environment in the course of our business. Based on these

guidelines, we operate an HSSE-MS to determine, evaluate, and manage

environmental risks, to improve our environmental performance on a con-

tinuous basis. With regard to environmental initiatives, we have formulated

a Medium-Term Environmental Action Plan out of recognition for the need

to manage such activities in a focused and systematic manner. We review

the plan’s medium-term objectives on an annual basis. Our refineries and

other principal work sites have acquired certification under the ISO 14001

international environmental management standard, and we create system-

atic environmental preservation measures.

Activity theme Medium-term objectives 2011 achievements

Promoting energy conservation and global warming prevention

Reduce unit energy consumption at refineries (Achieve an average reduction of 13% for fiscal years 2008–2012 against 1990 levels)

• Took the industry lead in consolidated refining facilities, which raised efficiency, and promoted energy conservation activities. As a result, achieved unit energy consumption of 7.67 (down 19% from 1990 levels), greatly surpassing our target.

Conserve energy and reduce consumption of resources in offices under the ECO TRY 21 campaign

•Stepped up energy and resource conservation efforts following the Great East Japan Earthquake, thoroughly managing room temperatures and lighting levels at workplaces and reducing the use of office automation (OA) equipment and elevators. We also continued with Cool Biz initiatives from 2011, encouraged double-sided printing and paperless meetings to reduce paper use, and strove to sort trash appropriately.

Preventing environmental pollution and reducing waste

Continue achieving zero emissions (an industrial waste output rate of 1% or less) at refineries

• Promoted the recycling of such industrial waste as sludge and disposable catalysts, achieving a waste output rate of 0.3% for industrial waste, substantially surpassing our target of 1% or less.

Continue soil contamination countermeasures

• Through efforts such as soil contamination countermeasures at the time of land modification, thoroughly managed the risk of soil and groundwater pollution.•Cooperated with the Ministry of the Environment, applying our expertise on the preparation of soil and groundwater contamination countermeasures, including

preventive measures.

Reinforce chemical substance management system

•Consolidated chemical substance information management, which had previously been handled by individual divisions, into the Research and Development Division. This move enhanced our chemical substance management system for responding to various laws and regulations concerning the safety of the products and chemicals we use, and enabled us to respond appropriately to customers.

Offering eco-friendly products and services

Promote the use of bio-fuels fuels containing bio-ethyl tert-butyl ether (bio-ETBE)

•Strove to provide a stable supply of ETBE fuel and worked to popularize bio-fuels toward the realization of a low-carbon society.

Expand use and sales of CIS thin-film solar modules

•Constructed our Third Miyazaki Plant, creating a production structure capable of 1 gigawatt per year, and buttressed our sales structure accordingly.• Installed solar panels at Group facilities and undertook other measures to encourage the proliferation of renewable energy.

Disseminate residential fuel cell systems •Configured a sales system, centered on the dealer marketing channel, in preparation for the full-fledged popularization of eco-friendly liquefied petroleum gas-polymer electrolyte membrane (LPG-PEM) residential fuel cell systems.

Investigate the feasibility of widespread hydrogen fuel use

• In preparation for the widespread adoption of fuel cell vehicles that use hydrogen fuel, which is heralded as a next-generation energy source, participated in efforts to rationalize regulations and verified a technology designed for rapid fueling (filling in three minutes).

Find practical applications for GTL fuels •Ahead of full-scale sales of “Shell Heat Clean” for kerosene fan heaters fueled by natural gas, configured a sales system, expanded our shop sales area, and undertook efforts to boost product awareness.

Environmental preservation activities and environmental communication

Present opportunities for stakeholders to think about the environment

• Held the 7th Environmental Photo Contest, “Things to Preserve and Correct around Our Town,” which received 4,738 entries. In 2011, began accepting team entries to encourage joint participation from adults and children focused on their environments, thereby endeavoring to increase opportunities for participation.

Implement environmental preservation projects launched cooperatively with local communities and employees

• Installed deer netting on a 1 hectare segment of a forest planted in 2007 under the sponsorship of the Project for the Reforestation of Mt. Fuji, an NGO.• Performed area clean-up activities at various work sites.

Promote the environmental sciences •Continued with Environmental Problems and New Energy classes begun in 2004 to provide face-to-face environmental education to the children who will be the next generation of environmental stewards. Held Energy Classrooms for elementary through high school students in Niigata Prefecture and students of elementary schools nearby our headquarters in Daiba, thereby encouraging communication about energy-related topics around us.

•Contributed to the popularization and promoted understanding of solar energy by giving tours of the Niigata Yukigunigata Megasolar Power Plant to a total of 163 groups comprising 2,422 individuals.

• Jointly sponsored the 7th Energy Sustainability Forum with the Integrated Research System for Sustainability Science (IR3S), participated in panel discussions, and offered recommendations.

Medium-Term Environmental Action Plan (2010–2012)

* Unit energy consumption: Energy consumption (kiloliters of crude oil equivalent) / Equivalent feedstock volume (megaliters)

Preventing Environmental Pollution and Reducing Waste

Sulfur oxides (SOx) and nitrogen oxides (NOx) are produced by fuel oils

and gases in refinery furnaces and boilers. The Group strictly maintains

SOx emissions below regulated levels by using low-sulfur fuel oil and

sulfur-free fuel gas treated with gas-cleaning equipment. Efforts to prevent

atmospheric pollution by NOx emissions also include improved combus-

tion methods achieved through the introduction of low NOx burners, and

the installation of flue gas denitration equipment.

Atmospheric Pollution Prevention

Soil Contamination Countermeasures

Chemical Substance Management System

The Showa Shell Group conducts soil contamination surveys and imple-

ments countermeasures at approximately 1,000 service station sites. We

continue to conduct these surveys when facilities are closed or remodeled.

We also participate in a committee for reviewing the application of the

Water Pollution Control Act and the Soil Contamination Countermeasures

Act, and provide feedback based on the knowledge and experience

gained from our own countermeasures.

In accordance with laws and regulations and HSSE management rules,

Showa Shell has drawn up regulations on the management of chemical sub-

stances, chemical substance management regulations related to products,

and regulations on the management of toxic and poisonous substances.

These regulations are aimed at preventing negative effects on people, prop-

erty and the environment of products that the Company uses, as well as

their containers, packaging and chemical products used. In addition, we

are reinforcing our overall management system, spanning development to

use and disposal. In 2011, we conducted an HSSE regulatory compliance

Water Pollution Prevention

The water used at oil refineries is strictly managed so that it meets envi-

ronmental regulations related to chemical oxygen demand (COD)* and

oil content. Coolant water is confirmed to have no oil content before it is

discharged into the ocean. Water quality is managed through wastewater

purification, either through oil separators, chemical treatment using floccu-

lating agents, or through the use of activated sludge treatment equipment.

* Chemical oxygen demand (COD): An indicator of the degree of water pollution. Higher COD values indicate higher levels of water pollution.


2011 •As part of our measures to reduce environmental and business risks, strengthened soil contamination countermeasures and chemical substance management.

2012 •Promote efforts among individual divisions to reduce unit energy consumption* and lower CO2 further.•Create a Medium-Term Action Plan for 2013–2015 based on our medium-term environmental strategy.

Preventing Environmental Pollution andProtecting Biodiversity during Crude Oil TransportShowa Shell imports crude oil using very large crude carriers (VLCCs), all of which are double-hulled tankers, reducing the risk of crude oil leakage even in the unlikely event of hull damage due to running aground or a collision. The hull coating has been replaced with one that does not contain organic tin, a harmful substance, thereby further preventing environmental pollution. Also, to curtail the movement of microorganisms that might cause environmental or human health problems and to preserve biodiversity, the ballast water that is loaded when the vessel is empty is replaced in the open ocean before the vessel arrives at its destination.

COLUMN

Reducing Waste and Promoting Recycling in the Solar Business

Group company Solar Frontier K.K. is a member of PV Cycle, a European

organization established to promote the collection and recycling of end-of-

life solar panels. The company is also participating in the joint development

of Japan’s first technology for solar power system recycling, a project being

promoted by the Kitakyushu Foundation for the Advancement of Industry,

Science and Technology. The company also was aggressive in promoting

waste reduction and recycling efforts, winning the Logistics Environmental

Special Award from the Japan Federation of Freight Industries for its reuse

of pallets employed in product transport.

Amount and Rate of Final Industrial Waste Output from Group Refineries

Waste output rate (%)(Tonnes/year)

5,000 5.0

0

3.0

4.0

2.0

1.00.3 92

3,000

4,000

2,000

1,000

004 05 06 07 08 09 10 11

Waste output amount Waste output rate

Zero emissions achieved at refineries

industrywide(Waste output rate of

1% or less)

Reducing Industrial Waste

The petroleum refining process generates industrial waste, including sludge

and disposable catalysts. The Group is building a Companywide waste

management system to ensure the optimum disposal of waste and reuse of

resources. As a result of ongoing efforts to promote the recycling of industrial

waste, in 2011 final waste output by refineries amounted to 0.3% of the to-

tal amount generated, or 92 tonnes. Accordingly, the Group has continued

to meet its zero-emissions goal (emissions of 1% or less) since 2008.

seminar for approximately 60 employees at sites that use toxic substances,

providing an overview of laws and regulations related to toxic substances

and sharing information about appropriate methods for handling them.

Workplaces Receiving ISO 14001 Environmental Management Certification See Page 10 “CSR-Related Data”

8



CSR Snapshot

Yokkaichi Refinery

Third Miyazaki Plant

Promoting Energy Conservation and Global Warming Prevention

Showa Shell Group’s Business Model for

Preventing Global Warming

As a comprehensive energy solution provider, the Showa Shell Group

strives to efficiently produce the petroleum products that are essential to

our way of life. We also practice energy conservation during distribution

and sale, and develop and market high-value-added products that feature

a reduced environmental impact, and to popularize solar power genera-

tion through the production and sale of solar panels. Through our business

activities, we are working to reduce CO2 emissions and taking part in

ongoing initiatives to prevent global warming.

Efforts during Crude Oil Procurement

Production Initiatives

When the VLCCs that we use when procuring crude oil pass through a strait

or enter the ports they serve, they travel at reduced speeds to reduce both

fuel consumption and CO2 emissions.

Solar Module Plants

CIS thin-film solar modules are designed and manufactured with a high degree

of environmental awareness, from the materials they use to their recycling proc-

esses. Compared with modules made of crystalline silicon, the generation layer

of these modules is only 1/100th as thick, which saves raw materials. Also, the

production process is simple and short, and they can be produced with relatively

little energy. Particularly at our Third Miyazaki Plant, we have employed leading-

edge energy-conservation technologies and boosted production efficiency still

further. On the operations front as well, we are reducing environmental impact

through such measures as adjusting freezer temperatures and exhaust fans to

achieve efficient operations. We have installed a total of three megawatts of

generating capacity on the site of our Second Miyazaki Plant and the roof of our

Third Miyazaki Plant. This large-scale solar (“megasolar”) installation enables our

plants to operate partially on renewable energy.

Refineries

To promote energy conservation by maximizing the effective use of energy

generated during oil refining processes, we invest in equipment such as

heat exchangers, waste heat recovery boilers, and exhaust gas recycling

equipment. The Petroleum Association of Japan (PAJ) is promoting its Low-

Carbon Society Implementation Plan, which calls for energy-saving meas-

ures to be taken to replace a total of 53 megaliters of crude oil per year

by fiscal 2020. Showa Shell is actively promoting energy-saving measures

at its refineries, and is striving to reduce its CO2 emissions, using “unit

energy consumption” as its indictor. In 2011, the Company’s unit energy

consumption was 7.67 (kiloliters/megaliter), down 19% from 1990 levels.

This surpasses the level that the PAJ has introduced (average reduction of

13% for fiscal years 2008–2012 against 1990 levels), as well as the

average industry value.

CO2 Emissions and Unit Energy Consumption at Group Refineries

(Kilotonnes/year) (Unit)

15,000 12.00

10.00

8.00

6.00

4.00

12,000

9,000

6,000

3,000

090 04 05 06 07 08 09 10 11

CO2 emissionsUnit energy consumption (Showa Shell) Unit energy consumption (Industrywide)

Refinery industry average reduction of 13% for fiscal years 2008–2012 against 1990 levels

Target value: 8.8710.19

3,9655,872

9.45 7.67

8.58

Reduction of CO2 Emissions

Proliferation of solar energyInitiative (2)

CO2 reduction effect

Ongoing initiatives

Initiative (1) Centered on the oil business, improve efficiency, conserve energy, and sell high-value-added products to reduce environmental impact

Tank truck

Sales Initiatives

When faced with severe electric power shortages in the aftermath of the

Great East Japan Earthquake, we immediately called on all of our service

stations to curtail their electricity consumption. We initiated and carried out

measures to reduce electricity use by 15% or more, such as by cutting back

on the use of lighting and air conditioning that use large quantities of electric-

ity. During the summer months, we installed CIS thin-film solar modules on

214 Company-owned service stations—more than half—in the Tohoku and

Tokyo Electric Power Company service areas, and achieved a savings of

more than 15% by generating our own daytime power. Furthermore, we

have increased solar power installations at Company-owned service stations

in regions affected by the Kansai and Kyushu electric power shortages,

which are expected to face tight electrical supply–demand conditions. As

of May 2012, we had completed installation at a total of around 300

Logistics Initiatives

Ground Shipments

We are working to curtail CO2 emissions by avoiding sudden acceleration—

which also has safety implications—as well as stopping engines when vehicles

are idling and making distribution routes more efficient. In response to the electric

power shortages in the summer of 2011, we restricted the hours of operation of

tank truck delivery pumps to cut peak time power use.

Maritime Shipments

In marine transportation, we promote the use of larger domestic vessels and

endeavor to reduce CO2 emissions by improving transportation efficiency and

reducing fuel consumption. We keep two fuel-efficient electrical propulsion ves-

sels in continuous operation, and have raised energy efficiency on all vessels

by using a fuel-saving supplement. We are also keeping fuel consumption low

by monitoring transport speeds.

9

Sell Tellus Oil S4 ME

Service station

CIS thin-film solar panels

New Melophalt at Dazaifu Tenman-gu Shrine

Shell HELIX

We are developing and providing products that have a lower environmental

impact at the customer-use stage. These include high-octane fuels that contrib-

ute to lower emissions of harmful gases, lubricating oil that has high energy-

conserving effects, and asphalt that ameliorates the summer rise in road surface

temperatures. Through the manufacture and sale of CIS thin-film solar panels,

we are also encouraging the spread of renewable energy.

Developing and Marketing High-Value-Added

Products with Reduced Environmental Impact

Showa Shell has drawn up Green Procurement Guidelines based on Japanese

laws such as the Basic Environmental Act and the Law Concerning the Promo-

tion of Eco-Friendly Goods and Services, as well as international treaties. We

provide these guidelines to suppliers to ensure that they understand and adhere

to the Company’s policy of prioritizing procurement of eco-friendly products.

Green Procurement Initiatives

locations in these areas. Going forward, we plan to extend these energy-

conservation initiatives into other regions of Japan.

Global Warming Prevention Effect of Solar PanelsSolar energy is a growing focus as a renewable energy that is essential for preventing global warming, as it emits no CO2, regardless of the amount of power generated. For example, installing a 4.25 kilowatt solar power generation system in a home has the same CO2 reduction effect over the course of a year as the CO2 absorbed by a 4,135-square-meter forest area (64m x 64m).

*1 From Voluntary Industry Rules Related to Indication (Fiscal 2006 edition), Japan Photovoltaic Energy Association*2 From Solar Power Generation Introduction Guidebook, updated in 2000, NEDO

Calculation method: Expected generation during one year (kilowatt-hours) x 0.334kg- CO2/kilowatt-hour*1, with 0.974t-C*2 absorbed by 1 hectare of forest over the course of a year

64ｍ 64ｍ

CO2 reduction

COLUMN



CSR Snapshot

Environmental Accounting

Environmental AccountingThe Showa Shell Group performs environmental accounting to quantitatively measure the costs and effects of environmental preservation initiatives related to its business activities. In general, the majority of investment and expenditures in the oil industry go toward producing and supplying products that have reduced environmental impact or toward reducing the environmental impact of production and supply. These areas also constitute a high percentage of investment and expenditures in environmental accounting at Showa Shell Sekiyu.

Scope of Data The scope of data includes Group companies that have introduced HSSE-MS as of December 31, 2011, including three petroleum refining companies. The costs of contract dealers (sales companies, primarily service stations) are outside the scope of data.

PeriodThe period covered is from January 1 to December 31, 2011. For those com-panies whose fiscal years end on March 31, the period covered is from April 1, 2011, to March 31, 2012.

Calculation MethodCalculation was performed by referring to the Environmental Accounting Guide-lines 2005 and the Environmental Preservation Cost Classification Handbook 2003, by the Ministry of the Environment of Japan. An overview of these items is provided below.

Environmental Preservation CostsThe portion of investments and capital expenditures that goes toward environ-mental preservation is counted as environmental preservation costs, and amounts are recognized during the periods in which they are incurred.

1. Costs within the Business Area These costs are incurred to reduce environmental impact at refineries and

lubricant production sites. Specific investments and expenditures are calculated in relation to the preven-

tion of atmospheric pollution and water pollution, the prevention of global warm-ing, energy conservation, and the recycling and processing of waste materials.

2. Upstream and Downstream Costs These costs are those incurred to curtail the environmental impact of primary

upstream and downstream business activities. These include such items as investments in new installations or upgrades of

equipment to reduce the sulfur content of fuel oils, operation and maintenance expenditures, and the expenditures needed to reduce the percentage of ben-zene contained in fuel oils. These investments and expenditures constitute a major portion of the Showa Shell Group’s environmental preservation costs.

3. Cost of Management Activities These include the costs of creating and operating an HSSE-MS, as well as

the costs of operating an ISO 14001 system. They also include expenses incurred to monitor environmental impact and train employees, as well as the cost of producing the Sustainability Report 2011.

4. Research and Development Costs These costs include those incurred to operate the hydrogen stations that supply

hydrogen used as fuel for fuel cell-powered vehicles, as well as costs for the development of related technologies. They also include the costs of develop-ing lubricants and other products that conserve on the use of resources.

5. Costs of Social Activities These costs are incurred to conduct environmental activities, such as the Envi-

ronmental Photo Contest.

6. Costs of Addressing Environmental Damage The costs of addressing environmental damage include such costs as oil pol-

lution liability insurance premiums and the costs of addressing soil contamina-tion.

Economic EffectThe economic effect refers to the benefit gained as a result of environmental pres-ervation measures, as measured in currency units. For the Showa Shell Group, whose capital expenditures and efforts to improve operations and practices span many years, measuring economic effect is difficult. Here, we present only the effect of activities conducted during the preceding fiscal year for which effect could be calculated. Income from the sale of disposable catalysts generated at refineries: ¥487 million.

CategoryInvestment

AmountYear on

YearExpense Amount

Year on Year

Costs within the Business Area

・Pollution Prevention Costs

70.3 -265.3 9,520.4 1,337.6・Environmental Preservation Costs

・Resource Environmental Costs

Upstream and Downstream Costs 3,600.0 -485.7 86,830.0 16,477.4

Cost of Management Activities 0.0 0.0 871.9 96.9

Research and Development Costs 0.0 0.0 47.0 -121.6

Costs of Social Activities 0.0 0.0 45.2 5.6

Costs of AddressingEnvironmental Damage 0.0 0.0 458.3 -182.5

Total 3,670.3 -751.0 97,772.8 17,613.4

Costs Related to Environmental Preservation(January–December 2011) (Millions of yen)

Showa Shell Total Adverse Environmental Impact for 2011

*Fuel calculations are in petajoules (1 PJ = 1015 J)

•Fuel (crude oil equivalent) 213 megaliters•Energy 8.15 petajoules

•Fuel (crude oil equivalent) 2,024 megaliters•Energy 77.32 petajoules•Electric power 281,290 megawatts•Water 34,119 megaliters•Seawater 151,000 megaliters

•Fuel (crude oil equivalent) 30 megaliters•Energy 1.14 petajoules•Electric power 234,344 megawatts•Water 2,518 megaliters

•Fuel (crude oil equivalent) 116 megaliters•Energy 4.42 petajoules

•Gasoline 9,494 megaliters•Jet fuel 2,077 megaliters•Heating oil 2,816 megaliters•Diesel oil 4,952 megaliters•Heavy fuel oil 3,379 megaliters•Other petroleum products 7,743 megaliters

•CO2 emissions 591 kilotonnes

•CO2 emissions 5,872 kilotonnes•Total waste 35,389 tonnes•Sulfur oxides (SOx) 2,555 tonnes•Nitrogen oxides (NOx) 2,547 tonnes•Soot dust 72 tonnes

•CO2 emissions 143 kilotonnes•Total waste 19,615 tonnes•Wastewater 539,220 tonnes

•CO2 emissions 274 kilotonnes

•CO2 emissions 76,195 kilotonnes

Crude oil procurement •Verylargecrudecarriers(VLCCs)

Customers (consumption)

Manufacturing plants (refineries) •ToaOilCo.,Ltd.•ShowaYokkaichiSekiyuCo.,Ltd.•SeibuOilCo.,Ltd.

Other manufacturing plants•Solarmoduleplants•Importdepots•Lubricantbases•LPGbases•Asphaltbasesandothers

Distribution and marketing•Groundandmarineshipments•Oildepots•Servicestations(approx.3,800stations)

Input Output

As of May 14, 2012 As of May 14, 2012Status of ISO 9001 (Product Quality) Certification Status of ISO 14001 (Environmental) Certification

Yokohama Plant of Showa Shell December 15, 1995

Nippon Grease Co., Ltd. December 15, 1995

Showa Shell Kobe Plant January 10, 1996

Yokkaichi Refinery of Showa Yokkaichi Sekiyu Co., Ltd. February 2, 1997

Yamaguchi Refinery of Seibu Oil Co., Ltd. August 1, 1997

Shosei Kako K.K. May 12, 2000

Shoseki Engineering & Construction Co., Ltd. December 11, 2002

SVC Tokyo Co., Ltd. April 2, 2006

Sodegaura Plant of Rekisei Kagaku Co., Ltd. December 7, 2006

Mie Plant of Rekisei Kagaku Co., Ltd. March 1, 2009

First Miyazaki Plant of Solar Frontier K.K. June 12, 2009

Atsugi Research Center of Solar Frontier K.K. June 12, 2009

Second Miyazaki Plant of Solar Frontier K.K. December 22, 2009

Keihin Refinery of Toa Oil Co., Ltd. December 1, 2011

Third Miyazaki Plant (Kunitomi Plant) of Solar Frontier K.K. March 9, 2012

Yamaguchi Refinery of Seibu Oil Co., Ltd. December 10, 1998

Yokkaichi Refinery of Showa Yokkaichi Sekiyu Co., Ltd. July 29, 1999

Toyotsu Petrotex Corporation December 1, 2000

Japan Oil Network Co., Ltd. December 15, 2000

SVC Tokyo Co., Ltd. January 23, 2001

Hekinan LPG Terminal of Showa Shell December 21, 2001

Nippon Grease Co., Ltd. March 14, 2005

Yokoyama Plant of Showa Shell June 28, 2005

Kobe Plant of Showa Shell September 30, 2005

Central Research Laboratory of Showa Shell October 27, 2006

Wakamatsu Gas K.K. July 26, 2010

Keihin Refinery of Toa Oil Co., Ltd. July 1, 2011

Atsugi Research Center of Solar Frontier K.K. November 7, 2011

Date of Initial Certification Date of Initial CertificationCompany / Site Company / Site

10



CSR Snapshot

Talent Vision and New Educational System

Amid the ongoing changes in the environment in which it operates, Showa Shell aims to achieve sustainable growth and pros-

perity as a leader in the global energy business. We believe that strengthening the competiveness of our human resources is an

essential element to attain this goal. We have formulated a Talent Vision in order to define what we require of our employees and

have in place educational programs and personnel systems flowing from this vision. Through these systems, we provide employees

with opportunities to envisage their careers on their own and to further maximize their potential. Furthermore, in keeping with our

corporate social responsibility we take part in initiatives to create worker-friendly workplaces. These efforts cover such categories

as respecting human rights, augmenting systems to support working styles for employees at different stages of life, and ensuring

occupational health and safety.

Fundamental Approach to Human Resources

Talent VisionOur Talent Vision defines the credo and behavioral guidelines that we

expect employees to adhere to as we strive toward persistent growth and

development as an energy solution provider.

The three pillars of this vision are Initiative, Team Spirit, and Out-

bound. These are the characteristics we intend for our employees to share,

regardless of age, qualification, or position.

We have established a Total Personnel System, which includes a com-

pensation system that takes into consideration employee performance and

skills. We make assignments and transfers based on the Company’s career

development plan and the career plans of individual employees.

OutboundAlways attempting to understand clients’ needs, broadening one’s mind outward, making continuous originality and inge-nuity, and acting.

InitiativeTaking events and changes happening around seriously with a sense of ownership, setting the goal autonomously, and acting for better result.

Team SpiritValuing teamwork and contributing to the team by having an attitude of grow-ing together with the team members, for making better result than working individually.

Development Domains toRealize our Talent VisionExpansion of

professional talent

Process

Initiative

Team SpiritOutbound

* Management by objectives (MBO) and fair evaluations Showa Shell set out target objectives for each employee, using MBO to help them achieve their own goals. We conduct employee reviews to discuss the skills and actions required to attain

their objectives, and confirm their level of achievement on a regular basis. We have adopted a “multifaceted assessment” system, which is a framework in which an individual’s performance and actions are fairly assessed by multiple evaluators.

•Performance evaluation (management by objectives*, individual results)•Recognition for team performance

•Assessment of personal qualities (potential, drive) • Assessment of behaviors (competencies) • Assessment of potential (growth potential)

Total Personnel System

RetirementRecruitment Assignments,transfers

Compensation

Rating Promotion

Performance orientation

Performance evaluation

Skills orientation

Skills development

Human Resources Portfolio

Permanent employees

Line managers

Ordinary employees

Experts Short-term contract

employees

Temporarystaff

Management

•ExpertsApply a wealth of experience and proven high-level expertise in a specific field, contributing to the improvement of business performance through the achievement of recognized results.

•Short-termcontractemployeesSpecialist personnel•These personnel are seconded to Group companies as managers and executives, and contrib-

ute to the improved performance of these companies.•Special employees possess expertise that ranks them with the leading experts in a specific

field, and are employed for a defined period or for a specific job or project. These employees contribute to performance through their high level of achievement.

Reemployed personnel over 60 years of age

•LinemanagersDirect team performance, train subordinates, and motivate workers through an all-around team approach.

Showa Shell offers a combination of human resource training, such as

on-the-job training (OJT), offering opportunities at worksites recognizing that

employees grow through their work; off-the-job training (Off JT), which is

group training driven by employees’ desire to grow; and self-development

support, as a means of fulfilling our Talent Vision. We offer multiple types

of training and educational support, targeting development of competency

and way of thinking, development of professional talent, and improvement

of adaptability to global business environment. Through a combination of

Training Systems

these opportunities, we attempt to encourage the necessary mindsets as

well as encourage skills development.

Showa Shell believes that the role played by companies is to create

an environment in which individual employees can fully exhibit their skills,

and where individuals can grow by challenging themselves along with

environmental change. Showa Shell will continue to offer its employees

various educational opportunities as investments in their ongoing growth.

Learning Program to Realize Talent Vision

部長層

課長層

中堅社員

入社前

入社1～3年社員

プロフェッショナル人材の育成行動特性・思考特性の開発その他グローバル環境へのアダプタビリティの向上

各部門主催研修

人事主催研修自己啓発支援海外研修試験

部室長研修

管理職研修

アドバンスセミナー

ベーシックセミナー

新任管理職MBO研修

修研催主門部

援支得取格資・習講外社

開公社全・別層階

TOEIC

トステ

修研遣派内国型抜選

室教話会英制校通・育教信通

新任管理職研修

マネジメントベーシック研修

リーダーシップ研修

リーダーシップベーシック研修

3年目研修

2年目研修

1年目研修

新入社員研修

異動・配置（ジョブ・ローテーション、部門横断プロジェクトのリーダー経験、関係会社のマネジメント経験、海外勤務など）

修研遣派外海型抜選

度制生学留外海

Development of Competency andWay of Thinking Development of Professional Talent Improvement of Adaptability to

Global Business Environment Others

Business Segments Support forSelf-Education

GM

Manager

Solid employees

Pre- employment

Junior employees

(1～3 years)

General Managers

Managers

New Managers Training（MBO)

New Managers Training

F1 Grade

F2/F3 Grade

J Grade

3rd Year Employees

2nd Year Employees

1st Year Employees

New Grads training

AdvancedCourses by

BusinessSegment

Basic Courses byHR Division

Training before entering (English skills (TOEIC) / Accounting (Boki) / PC skills (Word , Excel , Power Point))

Transfers, assignments (job rotation, inter-departmental project leadership experience, management experience at Group companies, overseas work assignments, etc.)

HR Division HR Division & Business Segments

ElectiveDomesticOff-SiteTraining

SpecializedSkill Dev.

Courses byBusinessSegments

Support forSpecializedSkill Dev.Courses

Outside ofthe Company

ShellOverseasTraining

OverseasEMP,

LanguageSchool

OverseasStudying

Test ofEnglish for

InternationalCommunication

(TOEIC)Testing by

Level(Offered

Companywide)

CorrespondenceEducation(Including

EnglishTrainings by

Web andSchooling)

New Educational System (Three Development Domains)

Development of competency and way of thinking

Process

Improvement in ability to adapt to a global business

environment

Process

11



CSR Snapshot

Showa Shell recognizes that its employees are the source of its corporate

power. Accordingly, we place top priority on creating a workplace envi-

ronment that focuses on our employees. To this end, we conduct the Shell

People Survey, which is used throughout the Shell Group.

Since introducing it in 2001, we have regularly performed this survey

on management issues that the Company faces and issues in individual

departments, as well as invigoration of work climate. We have used the

results in dialogue between management and employees and for specific

actions in individual workplaces.

The survey was conducted for the eighth time in 2011 and contained

60 questions in 11 categories, such as employee satisfaction level, com-

pensation and welfare, and growth and opportunities. The response rate,

at 95.3%, was the highest to date. Based on the results of this survey, the

heads of departments took a leadership role in improving the issues faced

in individual departments by holding dialogue between management and

employees at individual workplaces.

Based on the Labor Standards Act, the Occupational Health and Safety

Act, and such internal rules as HSSE, we have formulated the Safety and

Hygiene Management Rules to ensure the safety of our workplaces and the

mental and physical health of our employees. We endeavor to create an

appropriate working environment in accordance with these regulations.

On the health front, we conduct employee health exams twice each

year. We have conducted Japan Productivity Center Mental Health Inven-

tory (JMI) every other year since 2001 to assess employees’ mental health,

and provide employees with other opportunities to check their own health

status. In 2011, medical staff (industrial counselors and health nurses) held

individual interviews with employees in all divisions of Showa Shell, as well

as some affiliated companies, and we conducted mental health training a

total of 65 times.

We have set up a Health Counseling Desk on Heart and Body Health

Plaza, an intranet site dedicated to sharing information on health-related

topics. This desk enables employees to seek counseling regarding their

physical or mental health with full privacy.

Conducting the Shell People Survey Employee Health Management and Mental Health

Key Results of the Shell People Survey

Diversity and Innovation

EmployeeSatisfaction Level

Growth and Opportunities

Favorable Neutral Unfavorable

Respect for Human Rights

Efforts to Ensure Fair, Impartial and Diverse Hiring

Reemployment of People Retiring at Retirement Age

Employment of Women

Systems to Promote a Work-Life Balance

* As of December 31, 2011

Number of employees 1,007

Average age 44.9 years old

Average length of employment 20.8 years

Female employment ratio 20.7%

Number of new graduates hired in 2011 23

Women among new graduates hired over past five

years, 2007–201145.1%

Number of mid-career personnel hired in 2011 3

Employment Situation (Showa Shell on a non-consolidated basis)

Achieving Diversity and Inclusiveness

Creating a Worker-Friendly Environment Occupational Health and Safety

We foster a workplace culture in which employees respect their colleagues’

thoughts and actions, have ample access to diverse ideas and values, and

learn and grow through this awareness. We pursue a culture of diversity

and inclusiveness designed to attain the mutual growth of the Company

and the individual. Showa Shell formulated a Policy for Diversity and In-

clusiveness in 2004, and conducts initiatives to promote an understanding

of the policy and its penetration throughout the Company and the Group

as a whole. On the diversity front, we have appointed a Fair Hiring and

Human Rights Director. We protect and respect human rights and make

fair and impartial hiring decisions without regard to nationality, gender, or

disability status.

We comply with international labor standards and respect each of our

employees. Showa Shell Sekiyu’s Code of Conduct requires the Company

to conduct business as a responsible member of society, observe laws, and

respect fundamental human rights. With regard to ensuring the human rights

of workers, the Company promotes initiatives to create opportunities for fair

and impartial treatment eliminating discrimination, on many fronts: from

hiring, transfers, treatment, and educational opportunities to retirement.

Specific efforts include the appointment of a Fair Hiring and Human Rights

Director. We have in place a structure to make fair and impartial hiring

decisions without regard to nationality, gender, or disability status, and we

adhere to the Japan Business Federation (Nippon Keidanren)’s Corporate

Charter for Screening and Employing New Graduates.

The Company has in place a reemployment system for reemploying ambitious

and capable people aged 60 and over, putting the knowledge and expertise

they have accumulated over the course of their careers to good use. In 2011,

60.9% of people nearing retirement took advantage of this system.

We have in place welfare systems to correspond to women’s life events,

and we strive to create an environment in which women can maximize their

capabilities with high motivation. As of December 31, 2011, women ac-

counted for 20.7% of the workforce, and we continue to promote women

in the workplace.

We have in place a number of programs that enable individual employees to

choose their own working style, based on their individual situation and stage of

life. In this manner, we aim to create worker-friendly workplaces where individu-

als can take advantage of their skills and find their work fulfilling.

We have provided a full range of systems that enable women to work

flexibly surrounding such life events as pregnancy and maternity, while enabling

them to make full use of their skills. We have a maternity leave system, as well

as flexible working systems to accommodate their needs when they return to

the workplace. For these efforts, the Company has held the next-generation

certification mark known as “Kurumin” from Japan’s Ministry of Health, Labour

and Welfare each year since 2007.

We also have various programs that encourage a work-life balance. Em-

ployees can take advantage of these systems to accommodate flexible working

styles and voluntary activities. Going forward, to further encourage the use of

these programs we will continue improving their operation in response to the

needs of employees wishing to take part and from feedback gathered from those

who have done so.

Employees Making Use of System

System 2009 2010 2011Childcare or nursing care leave 8 (1) 9 (1) 5 (1)

Shortened working hours for childcare or nursing care 1 4 (1) 4 (1)

Leave to care for a sick child 15 26 (15) 27 (17)

Telecommuting 5 6 (1) 4 (1)

Self-development leave of absence 0 0 1 (1)

Community service leave 0 1 (1) 2 (2)

Systems and the Status of Their Use

* Figures in parentheses indicate number of men

Key Systems that Promote Work-Life Balance

All employeesAnnual paid vacation Employees are awarded paid vacation every year, based on their length of service (max. 21 days/year). Paid vacation can be taken in half-day

increments.

Annual carried over paid vacation Employees can carry over the unused portion of their annual paid vacation to the following year (max. 31 days/year).

Flex-time Employees are allowed to flexibly determine the number of hours they will work each day.

Self-development leave of absence Employees can take a maximum of two years off to develop their professional skills.

Community service leave of absence Employees can take a maximum of two years off to engage in volunteer activities.

Community service leave Employees can take special paid leave to engage in volunteer activities (max. 3 days/year).

Citizen judge leave Employees are given as many days of paid leave as necessary to perform citizen judge duty.

Employees giving birth or caring for childrenMaternity leave Employees can take special leave to give birth starting six weeks prior to their due date (14 weeks in the case of multiple births) and continuing until

eight weeks after delivery.

Paternity leave Employees can take two days of special paid leave when their spouse gives birth.

Childcare leave Employees can take childcare leave until their child’s second birthday.

Shortened-work hour Employees can shorten their daily work hours by a maximum of two hours per day (until their child starts elementary school).

Telecommuting Employees can work from home one day per week (until their child starts 4th grade).

Leave to care for a sick child Employees can take 10 days per year of special paid leave to care for a sick child (until the child starts elementary school). The leave can be taken in full-day, half-day, or one-hour increments.

Employees caring for family membersFamily care leave of absence Employees can take leave for a maximum of one year per family member requiring care (can be taken in separate blocks of time).

Family care leave Employees can take 10 days per year of special paid leave to care for a family member. The leave can be taken in full-day, half-day, or one-hour increments.

Shortened-work hour Employees can shorten their daily work hours by a maximum of two hours per day (for a maximum of three years).

Telecommuting Employees can work from home one day per week (while providing care for a family member).

12



CSR Snapshot

13

We believe that companies should work proactively to maintain relations with local communities and contribute to their sustainable

development as well as society as a whole. Accordingly, the Showa Shell Group takes part in a host of initiatives designed to

support education for the next generation, contribute to local and international communities, and conserve the environment.

Fundamental Approach to Contributions to Communities

Hosting Tours ofthe Niigata Yukigunigata Megasolar Power PlantWe worked with authorities in Niigata Prefecture to foster a deeper knowl-edge of new energy at the Niigata Yukigunigata Megasolar Power Plant in 2011 by hosting tours for 163 groups comprising 2,422 people. We showed how solar power could be generated in a stable manner even in a region that is frequently covered with snow.

Support for Refugees International JapanShowa Shell Sekiyu K.K. and Shell Chemicals Japan have been providing support in the form of free office space to Refugees International Japan (RIJ), an NPO dedicated to raising funds to assist refugees, since its inception in 1979. RIJ raises money through the sales of greeting cards and crafts and through other fundraising campaigns, and provides emergency food and medical support and education support for refugees to find a path toward self-sufficiency.

The Project for the Reforestation of Mt. Fuji

In 2006, Showa Shell formulated its Basic Policy on Biodiversity, related to the preservation of biodiversity, in accordance with the Shell Group’s Bio-diversity Standard. As part of these efforts, the Company is participating in the Project for the Reforestation of Mt. Fuji, launched by an NGO in 2007, and is working to restore forests that have been harmed by deer, as well as disease and pests. In particular, deer can damage young saplings by eating their young buds. To protect the saplings from deer, in 2011, the fifth year for this activity, employees and their families volunteered to install netting around a 1-hectare segment of forest planted in 2007.

Environmental Education

To promote the education of children that are responsible for next generation, we hold courses for them to deepen their interest and cultivate understanding about environmental issues and new energy. In 2011, we held such courses for a total of 399 students, from elementary, junior high, and high schools in Niigata Prefecture and from elementary schools near our headquar-ters in Daiba, Tokyo.

Joint Research with External Research InstitutesWe collaborated with the Integrated Research System for Sustainability Science (IR3S) at the 7th Energy Sustainability Forum. The theme of this year’s symposium was “Energy use and community-based developments in a transition phase.” In accordance with the theme, specialists on urban engineering and social sciences, as well as local government leaders, held lectures on the future use of energy in communities. We also arranged panel dis-cussions based on the lecture and offered suggestions on how communities can use energy during this stage of transition.

Shell Art AwardTo cultivate talented young artists, for more than a half-century since our founding in 1956, we have continued to offer this award through a fully open recruitment system. This effort has become the linchpin of our efforts to support the arts and culture. In 2011, we en-couraged the submission of artworks conveying the message of “Works of Art that Touch Your Heart,” accepting 1,291 works by 903 artists. Winning works were exhibited at the Daikanyama Hillside Forum, offering many people the opportunity to ap-preciate them.

The winner of the grand prize, the artwork neutral

Environmental Photo Contest “Things to Preserve andCorrect around Our Town”As one aspect of our initiatives to help resolve environmental issues, in 2005 we inaugurated an environmental photo contest to encourage attention to these issues by ourselves as a company, as well as among communities, organizations, and individuals. Entrants are asked to sub-mit two photos, one that indicates things that entrants wish to preserve and one that shows things they believe should be corrected, along with comments. We held the 7th contest in 2011, attracting 4,738 entries (4,340 in the junior category and 398 in the general category). Currently, schools around Japan make efforts for environment education, and the contest is sometimes being incorporated into a component of school curriculums. As a result of these moves, in many cases, a whole class or an entire school participated in this contest, placing it as environmental coursework and as summer vacation homework.

COLUMNParticipating in Local Communities: Enabling Students fromSpecial-Needs Schools to Experience our WorkplacesShowa Shell sponsored a workplace experience program for special-needs students at a high school in Osaka from February 13–24, 2012. Experiential learning focused on administrative activities and inputting information into PCs, and students took to their tasks with high enthusiasm. In addition to deskwork, we gave participants the opportunity to see the dynamic aspects of activities that an oil company undertakes; at our Kobe Plant they observed processes for producing lubricants, unloading from tankers, and loading product onto trucks. Although their time with us was brief, we believe that this experience provided a good opportunity for employees to see how we fulfill our corporate social responsibility. We expect to continue with this activity.

The Showa Shell Group supported efforts to help the communities in the region affected by the Great East Japan Earthquake overcome the disaster they had

suffered. Learning lessons from this disaster, we also reviewed and reinforced Groupwide emergency response measures.

Supporting Post-Disaster Recovery and Strengthening Emergency Response Measures

Ensuring a Stable Supply of Petroleum Products and Enhancing Emergency Countermeasures Using Solar Power Generation to Support Recovery

Following the earthquake, Showa Shell worked swiftly to restore the Group’s facilities and supply network to meet the urgent need for energy to support lifelines to the stricken region. In response to requests from Japan’s Cabinet and the Agency for Natural Resources and Energy, the Group provided drum cans of kerosene and other fuel to the region. In April 2011, we began providing fuel to the city of Rikuzentakata in Iwate Prefecture, where damage to service stations had resulted in fuel outages. Through our dealers in the area and working in cooperation with the fire-fighting authori-ties, we set up temporary service stations, making use of small tank trucks and drum cans, building a timely and stable supply system. Based on our experience in responding to this crisis, we revised our business continuity plan (BCP), adding tsunami response measures for service stations, refiner-ies, and storage depots and strengthening our system for supplying energy in emergencies in other ways. We carried out voluntary surveys and began preparing to introduce measures at Company facilities in the region feared to have been contami-nated by radioactive substances, based on the prescriptions of the Act on Special Measures Concerning the Handling of Pollution by Radioactive Materials. We plan to provide the results of our surveys to administrative authorities in the hope that this feedback will prove beneficial to people in the local community. We will continue increasing our number of disaster-proof service sta-tions*. These facilities have their own backup power generation equipment and water tanks, so that they can supply oil products and water for residen-tial use if infrastructure services are disabled by disaster.

Disaster-proof service station

* As of December 31, 2011, Showa Shell had disaster-proof service stations at 40 loca-tions throughout Japan.

Fuel-filled drum cans that we provided to the Japan Self-Defense Forces

Efforts to support the stricken region continue, through cooperation among Showa Shell Group contract dealers, NPOs, and other organizations. We have dispatched staff to affected communities to ascertain their needs, and have distributed—free of charge—solar panels to more than 200 loca-tions, including the evacuation centers and volunteer facilities in the city of Rikuzentakata in Iwate Prefecture and the city of Ishinomaki and the town of Minami Sanriku in Miyagi Prefecture. The solar power generation system that we have installed at a shipyard in Ishinomaki is helping to supply the power necessary for repairing the ships that are needed to resume fishing, as well as contributing to employment. We have also installed solar-powered streetlights to improve safety at key locations, such as along school routes and at bus stops and loading areas for commuter ferries. We have also provided free of charge solar power generation systems at 10 elementary and junior high schools in the city of Kesennuma in Miyagi Prefecture that have been designated as evacuation centers. These systems serve multiple purposes: encouraging environmental education, providing emergency electrical power, and helping to conserve electricity. We aim to continue providing solar panels to the affected region, thereby contributing to an early recovery.

Streetlights installed near the coast Solar generation system installed at shipyard



CSR Snapshot

Efforts to Enhance Customer Satisfaction

Some 3,800 service stations (as of December 31, 2011) bearing the Shell

mark operate throughout Japan, providing a variety of services that meet

the needs and lifestyles of the customers in their regions, and participating

in a number of initiatives designed to enhance customer satisfaction. One

effort in 2011 was to conduct a monitor check of important points related

to repeat visits: whether they were greeted with enthusiastic smiles, whether

they were offered polite guidance about their vehicles, whether toilets were

clean, and so on. By sharing the results with and conducting measures to

improve the points at our contract dealers throughout Japan, we endeav-

ored to raise their level of service. In late 2012, we plan to gradually roll

out the Shell Group’s new design at service stations. Going forward, we

will endeavor to enhance customer satisfaction at service stations with the

cheerful and energetic new design.

14

Customer satisfaction is an important priority for Showa Shell, and the Company aims to consistently offer services that provide

value from all perspectives, including the environment, price, quality, and safety. We also place importance on customer dialogue,

and in line with our customer-oriented Management Philosophy, we endeavor to enhance customer satisfaction in a number of

ways. These include disseminating information via our website and establishing and operating a customer hotline.

Fundamental Approach to Enhancing Customer Satisfaction

Efforts at Service Stations

Introducing Long-Life Guarantees and Regular Checks of Solar Panels

Solar Frontier K.K., the Showa Shell Group company that handles our solar

business, has introduced a 20-year guarantee on the output of its CIS thin-

film solar panels for general residential customers to use them with reliability

for a long time. With this guarantee, in the event that the electricity output of

installed solar panels falls below a certain predetermined level, Solar Fron-

tier agrees to install additional panels, repair them or replace them—free

of charge—for 20 years. In addition, to encourage customers to use their

solar generation system for long periods, we have augmented our routine

inspections to include performance checks and maintenance by one, five,

and nine years after installation. We also provide a 10-year guarantee on

peripheral equipment, such as power conditioners and connection boxes.

Solar Business Initiatives

Establishing a Customer Hotline Providing Information and Collecting Opinions and Requests via Our WebsiteRecognizing the importance of promoting interactive communication with

customers, Showa Shell has established a customer hotline to respond to

queries involving service stations, fuel oils, cards and other topics. In 2011,

this hotline received more than 17,000 telephone queries, 80% of which

were related to cards. Disaster-related inquires accounted for 8% of the

total, and we responded by providing information about service stations

in operation and their business hours. We also have separate special-

ized hotlines in place to cover lubricants, solar panels and other fields.

In 2011, these hotlines received more than 23,000 calls. We perform

regular checks on response levels and conduct training to ensure that que-

ries are answered promptly and accurately, and to enhance the quality of

the specialized staff who work on these hotlines. To improve our business,

opinions and requests are shared internally.

In addition to augmenting the information content of our website, we have

arranged the text into an easy-to-read layout and introduced other changes

to enhance customer usability. We have also put in place internal systems

to ensure that we provide information quickly. Our website employs a

“feedback manager” system to ask for customer opinions, requests and

impressions about our website content. Through measures such as these,

we are working to understand the needs and requests of a broad range of

stakeholders, including customers, investors, business partners and employ-

ees. We incorporate this feedback into our products and services, aiming

to further enhance customer satisfaction.

Customer Communications

Service station bearing a new design being rolled out by the Shell Group in more than 100 countries around the world, with LED lighting

New “Shell EasyPay” payment system that employs a keyholder-like device containing a contactless IC chip

Shell Starlex Card

Ponta card

Flow of Information from Customers

Contact

Cust

omer

fe

edback

Rel

ate

ddep

art

men

ts

Improvement

Response

Customer hotline

Contact

Business partners

Analysis

Surveys

Development

Inqui

ries

Cust

omer

s

Opinions and requests

Reinforcing Service Tools

We provide the “Shell Starlex Card,” a credit card that provides cash

back for fueling at the rate determined by the past settlement amount. We

also provide Ponta, a joint point system accepted by some 17,000 stores

of participating companies throughout Japan, including LAWSON, INC..

Customers can select and use these cards in line with their needs. In July

2011, we also introduced tablet PCs to explain various services in an

easy-to-understand manner, with video and illustrations, and to simplify the

card application process. In addition, to raise the level of convenience to

customers, in April 2012 we launched “Shell EasyPay,” a service that uses

a device to read a customer’s IC-mounted keyholder and allows them to

select from predetermined ordering and payment menus. Through efforts

such as these, we are refining the service tools that we offer.



CSR Snapshot

Targeted Contract Dealers• National and regional Showa Shell Dealer’s Associations: Service station operators,

industrial fuel dealers

• National and regional Showa Shell GAS Dealer’s Association: Contract dealers of LPG

• National and regional Showa Shell Sekiyu Koujunkai: Contract dealers specializing in high-grade-Lubricants

• Showa Shell Sky Club: Aviation fuel contract dealers

• Kaiyoukai: Contract dealers of Showa Shell fuel for marine vessels

The real driving force behind the Showa Shell brand comes from the dealer employees who stand at the forefront of Showa Shell’s sales activities. These include service station staff who help keep customers remain safe and comfortable while they drive, and employees responsible for selling lubricating oils for factories and ships, as well as liquified petroleum gas (LPG). Showa Shell supports staff training by offering its own qualification and training programs, and strives to ensure customer satisfaction by developing bonds of “technological trust” with its customers.

Personnel Training Program for Staff at the Forefront of Sales Activities

• No. of managers certified in fiscal 2011: 1st class 13, 2nd class 95, 3rd class 481• Number of certificate holders as of December 31, 2011: 1st class 293, 2nd class 1,899, 3rd class 7,100

This certification program aims to develop storefronts to earn the trust of customers, and to cultivate leaders who will be able to manage Showa Shell’s SS network. With more than 30 years since it was launched in 1979, the first class of the Showa Shell Royal Manager (SRM) certification program is recognized as one of the toughest offered by Showa Shell, and has earned a strong reputation across the industry. In June 2010, SRM-certified managers came together at the National SRM Meeting, which is designed to help participants further develop their skills through the sharing of information and opinions.

Showa Shell Royal Manager Certification Program

• No. of individuals certified in fiscal 2011: 105 • Number of certificate holders as of December 31, 2011: 1,337

Nationally certified auto mechanics can become certified oil experts once they show they have acquired in-depth knowledge of automotive oils by completing Showa Shell’s internal training program and through their fore-count experience.

Showa Shell Oil Meister Certification Program

• No. of individuals certified in fiscal 2011: 63 • Number of certificate holders as of December 31, 2011: 331

This program offers additional certification to those who have already been certified as Oil Meisters and who also possess automotive knowledge and repair skills, as well as excellent customer communication skills.

Showa Shell Car Life Advisor Certification Program

• No. of individuals certified in fiscal 2011: 13• Number of certificate holders as of December 31, 2011: 93

Certificate holders are primarily staff who are involved in liquified petroleum gas (LPG) delivery, and who have excellent LPG knowledge, accurate safety knowledge, and strong customer service skills.

Service Driver Certification Program

• No. of individuals certified in fiscal 2011: 1st class 4, 2nd class 38• Number of certificate holders as of December 31, 2011: 1st class 153, 2nd class 621

Under this program, which is designed to promote the sales of lubricating oils and grease that meet customer needs, staff who have specialized knowledge and advanced skills in this area are certified based on their sales experience, training, and a certification exam. The National Lubricant Expert Training Meeting held in September 2011 included lectures by outside experts, as well as opportunities for participants to present information and share opinions.

Lubricant Expert Program

• No. of individuals certified in fiscal 2011: 1st Class 1, 2nd class 13• Number of certificate holders as of December 31, 2011: 1st class 17, 2nd class 122

This program certifies staff who have knowledge of the Energy and Home Solutions Business, including LPG, who are equipped with capabilities to present proposals that meet customer needs, and who demonstrate excellent leadership skills.

Sales Manager Certification Program

15

Showa Shell builds strong relationships with its contract dealers, retailers, business partners, and affiliate companies, and works with

those stakeholders to improve its services and levels of customer satisfaction. The Group strives to provide internal qualification and

training programs for all levels of partners who operate on the business front lines, and to offer high-quality services that satisfy

customers.

Fundamental Approach to Partner Communications

Communications with Partners

Human Resource Cultivation

Showa Shell works with its contract dealers, Group companies, and other

business partners to maintain a brand that will be forever supported by

its customers, and uses every opportunity, including various meetings, to

promote good communication and to build relationships of mutual trust.

Showa Shell’s contract dealers provide products and services to match

community needs and play an important role in customer communication. In

each business field, we have a “Showa Shell Dealer’s Association,” consist-

ing of the contract dealers. Through this association, we raise awareness

and insight about the business environment and share our business vision.

We also hold training sessions and competitions to help dealers learn and

share information from each other. In January 2012, we held the “Dealers

Meeting 2012,” inviting our contract dealers throughout Japan in order

to share with them our new strategies and plans. Going forward, we will

work together throughout the Group to elicit additional support from our

customers and continue providing services that they will appreciate.

Partnerships with Contract Dealers

Dealers Meeting 2012



CSR Snapshot

July 2012

Corporate Report 2012Please refer to the Corporate Report 2012 for information about the Showa Shell Group’s management directions,

strategies and review of operations.

See http://www.showa-shell.co.jp/english/ir/corporate/index.html

Daiba Frontier Bldg., 2-3-2, Daiba, Minato-ku,

Tokyo 135-8074, Japan

Tel: +81-3-5531-5793http://www.showa-shell.co.jp/english

Pages Addressing Issues Core to ISO 26000 Issue Page

Organizational Control Issue 1: Organizational Control and Corporate Governance

Corporate Governance• Fundamental Approach to Corporate Governance > Page 4•CorporateGovernanceStructure> Page 4•StatusofOutsideDirectorsandAuditors> Page 4•ExecutiveRemuneration> Page 4•InternalControlSystem> Page 5

HSSE•FundamentalApproachtoHSSE> Page 6•Overview of the HSSE Management System > Page 6•Promotion of the HSSE Management System > Page 6•ActivitiestoInstillHSSEwithintheCompany> Page 6•Security> Page 7

Human Rights Issue 1: Due DiligenceIssue 2: Crisis Conditions related to Human RightsIssue 3: Preventing ComplicityIssue 4: Resolving ComplaintsIssue 5: Discrimination and the Socially VulnerableIssue 6: Citizenship and Political RightsIssue 7: Economic, Social and Cultural RightsIssue 8: Fundamental Principals and Rights of Labor

Human Resources•FundamentalApproachtoHumanResources> Page 11•AchievingDiversityandInclusiveness> Page 12

Labour Practices Issue 1: Employment and Employment RelationshipIssue 2: Working Conditions and Social ProtectionIssue 3: Dialogue with SocietyIssue 4: Work and Labor PracticesIssue 5: Human Resource Cultivation and Training in

the Workplace

HSSE•Safety> Page 7

Human Resources•FundamentalApproachtoHumanResources> Page 11•TalentVision> Page 11•AchievingDiversityandInclusiveness> Page 12•CreatingaWorker-friendlyEnvironment> Page 12

Environment Issue 1: Preventing PollutionIssue 2: Using Sustainable ResourcesIssue 3: Mitigating and Responding to Climate

ChangeIssue 4: Environmental Conservation, Biodiversity, and

Restoring Natural Habitats

HSSE•EnvironmentalPreservation> Pages 8 and 9•Medium-TermEnvironmentalActionPlan(2010–2012)> Page 8•PreventingEnvironmentalPollutionandReducingWaste> Page 8•PromotingEnergyConservationandGlobalWarmingPrevention> Page 9•Green Procurement Initiatives > Page 9•ShowaShellTotalAdverseEnvironmentalImpactfor2011> Page 10•StatusofISO14001Certification> Page 10•EnvironmentalAccounting > Page 10

Fair Business Practices Issue 1: Preventing CorruptionIssue 2: Responsible Political ContributionsIssue 3: Fair CompetitionIssue 4: Promoting Social Responsibility throughout the

Value ChainIssue 5: Respecting Property Rights

Corporate Governance•InternalControlSystem > Page 5

Partner Communications > Page 15•FundamentalApproachtoPartnerCommunications> Page 15•HumanResourceCultivation> Page 15

Consumer Issues Issue 1: Fair Marketing, Unbiased Information and Fair Contractual Practices

Issue 2: Protecting Consumer Safety and HealthIssue 3: Sustainable ConsumptionIssue 4: Consumer Services, Support and Complaint

and Dispute ResolutionIssue 5: Protection of Consumer Data and PrivacyIssue 6: Access to Indispensible ServicesIssue 7: Education and Awareness Building

HSSE•Safety> Page 7•StatusofISO9001Certification> Page 10

Enhancing Customer Satisfaction•FundamentalApproachtoEnhancingCustomerSatisfaction> Page 14•EffortsatServiceStations> Page 14•SolarBusinessInitiatives> Page 14•CustomerCommunications> Page 14

Community Involvement and Development

Issue 1: Community InvolvementIssue 2: Education and CultureIssue 3: Creating Employment and Developing SkillsIssue 4: Technological Development and AccessIssue 5: Creating Prosperity and Income Issue 6: HealthIssue 7: Social Investment

Contributions to Communities•FundamentalApproachtoContributionstoCommunities> Page 13•SupportingPost-DisasterRecoveryandStrengtheningEmergencyResponse

Measures > Page 13

16



CSR Snapshot

http://www.showa-shell.co.jp/english/ir/corporate/index.html

http://www.showa-shell.co.jp/english

Documents

CSR Book 2012 - · PDF fileThis separate CSR Book provides a more detailed account of the Company’s non ... Company’s unshakable footing. Showa Shell Sekiyu K.K. can only achieve