"Providing the care. Supporting you with care."

CSR Report 2007 English Digest Version

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C O N T E N T SPublication of CSR Report 2007English Digest Version

The English digest version of CSR Report 2007 has been published to

foster understanding of Unicharm's business operations in all involved in

the company's activities, not only in Japan but also in other countries, by

presenting the company's business philosophy and operations in summary

form, based on CSR Report 2007 published in June 2007.

We intend to offer accurate and useful information to as many

people as possible and look forward to receiving your honest opinions and

suggestions.

Please note that this Digest Version is based on CSR Report 2007

(Japanese version) which is available at the following URL:

http://www.unicharm.co.jp/csr/download.html

Publication of CSR Report 2007 English Digest Version/Company Profile

Message fromthe President & CEO

Corporate Ideals andthe Direction of CSR

CSR Expanding andPervading Globally

CSR Activities Lead OverseasOperations ofthe Unicharm Group

Promoting CSR to meetthe Expectations ofOur Stakeholders

Continuing to Be the Brand of Choice for Customers

Motivating Employees to Workto Achieve an Affluent Lifestyle

Thinking about What Should Do for the Earth andWhat Can Do for Society

Company ProfileCompany Name: UNICHARM CORPORATION

Date of Establishment: February 10, 1961

Paid-in Capital: ¥15,992 million (As of March 31, 2007)

Issued Common Stock: 68,981,591 (As of March 31, 2007)

Head Office: 182 Shimobun Kinsei-cho, Shikokuchuo-City, Ehime 799-0111, Japan

Number of Associates:1,007 [6,265 on a consolidated basis] (As of March 31, 2007)

Stock Exchange Listing:First Section, Tokyo Stock Exchange

Major Operations:Manufacture and sales of baby care products, feminine care products, health care products, cosmetic puffs, and household products, industrial materials, and food packaging materials

URL: http://www.unicharm.co.jp/

Subsidiaries and Affiliated CompaniesJapan Unicharm Product Co., Ltd. Unicharm Material Co., Ltd. Kokko Paper Mfg. Co., Ltd. Cosmotec Corporation Unicharm PetCare Corporation Uni Care Co., Ltd. Unicharm Mölnlycke K.K.

Overseas United Charm Co., Ltd. (Taiwan) Uni-Charm (Thailand) Co., Ltd. (Thailand) Shanghai Unicharm Co., Ltd. (China) Unicharm Consumer Products (China) Co., LTD. Unicharm Consumer Products Service (Shanghai) Co., Ltd. (China) LG Uni-Charm Co., Ltd. (Korea) PT Uni-Charm Indonesia (Indonesia) Uni-Charm Corporation Sdn. Bhd.(Malaysia) Uni-Charm(Vietnam) Co., Ltd. (Vietnam) Uni-Charm Mölnlycke B.V. (Netherlands) Unicharm Gulf Hygienic Industries Ltd. (Saudi Arabia)

Others 9 companies (As of March 31, 2007)

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Message from the President & CEO

Pursuing the Correct Corporate Management to Bring Valueto All Stakeholders

Awareness of the Importance of "Interaction" with Stakeholders

At the beginning of every year, I announce a keyword - a

single kanji character - to all employees. It contains a message

which employees should focus on during that year. Past keywords

are Zen ("all") in 2003, Ritsu ("lead") in 2004, Ai ("love") in 2005

and Yume ("dream") in 2006. For 2007, the character Kou, which

means "interaction," has been selected. In pursuing our corporate

goals, interaction is the key to success. Under this keyword, we

will consolidate all our intellectual knowledge and know-how at all

levels both inside and outside the organization, and all of us are

required to communicate effectively throughout the organization.

This will be achieved not only by exchange of words but also by

good interaction between minds. I hope that all members of our

group will put true communication into practice. The concept of

Kou is also important for our CSR activities. We must all recognize

that true communication with our stakeholders - our customers,

shareholders, business partners and affiliates, employees, and

the whole of society, is vital for the success of our CSR activities.

As the company operates worldwide, we will continue to

pursue correct corporate management, with strong awareness of the

importance of communication across the full spectrum of interaction

with society, and to bring added value to our stakeholders.

Achieving CSR in the Unicharm Way

Our lifestyles are constantly changing, and customers

become more sophisticated, and their needs constantly grow and

diversify. Unicharm has captured these changes in a positive and

timely manner, and has always developed new products to meet

their expectations. We will continue to do this and to develop

environment-friendly products that respond to the changing global

environment, in a way which only Unicharm is able to dedicate

to. I urge each employee of our group companies to embrace the

responsibility that we bear toward society and to act accordingly.

We will not be able to take one step closer to our goals in CSR unless

we manage to share our ideals and dreams among all our members.

In 2005, we introduced our medium-term vision "Global 10"

which clarified Unicharm's goals to become No. 1 in Asia in nonwoven

fabric and absorbent materials and to acquire a 10% global market

share, and aimed to position us among the industry's top three

companies. We currently develop products and technologies in more

than 24 countries in Asia, the Middle East and Northern Africa. To

solidify this progress, we are committed to constant achievement

using our unique business model, SAPS (Schedule-Action-

Performance-Schedule). This encourages us to pursues what we

believe is right for humankind, and this surely relates to CSR activities.

All of us will continue to work on to share greater understanding and

implement our CSR activities under the model. I am certain that our

efforts will bring solid results for our CSR activities.

The Basic Concept behind Our CSR Activities Comes from Our Corporate Ideals

In our corporate ideals, established in 1974, Unicharm declares

"to pursue correct corporate management principles that bring

together corporate growth, well-being among our associates, and

to fulfill our social responsibilities." This is the concept behind our

CSR activities. To achieve this, we focus on issues relating to the

environment and natural resources. We also set our mission to enrich

people's daily lives by "seeking and providing effective solutions for

use of disposable products."

Unicharm shares the understanding with society that the

company product lines - disposable diapers for babies, children

and adults, feminine hygiene products, household cleaners, wet

wipes and disposable masks - has social meaning in light of

people's lives and the environment. With this understanding, we

integrate our corporate ideals into our business motto aimed at

"turning discomfort into comfort". Our employees take pride in their

work when they bring solutions to people to enjoy their health and

to experience the joy of living, and contribute health, hygiene and

sanitation to people at home, in Asia and in the rest of the world.

In fiscal 2006, Unicharm disseminated its CSR activities

and since that time, has expanded its activities to the overseas

businesses, under the slogan "Group-wide and Global". The

company continues to improve its domestic activities in Japan as

well and holds CSR Report Reading Sessions every year. These

assist employees to study the environmental issues raised in our

environmental reports and further to learn about our stakeholders.

These activities focus the company's efforts on our stakeholders,

and make us determined to meet their expectations.

Strengthening CSR in China is the Core for Our Business Globalization

While our business continues to grow worldwide, it is important

to integrate ideas about CSR in group companies into one concept.

This is why we participated in the United Nations Global Compact

in May 2006 and created unity across our domestic and overseas

operations. Participation certainly helped Unicharm to implement

its CSR activities at overseas subsidiaries effectively.

In 2007, we set up a new CSR Office at our Chinese subsidiary,

Shanghai Uni-Charm Co., Ltd. In view of the huge market potential

in China, it is important to take an effective approach to our CSR

activities there, including reinforcing our corporate ethics and

compliance in local operations. The Office will be the center of our

overseas CSR activities. Forthcoming year, we will introduce our

CSR activities from Japan to our Chinese operation, and then to the

other overseas subsidiaries in the following years.

President & CEO Takahisa Takahara

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Corporate Ideals and the Direction of CSRIn its corporate ideals Unicharm promises to deliver top-class products and services around the world and pledges to its stakeholders to

practice correct corporate management through cooperation and collaboration among all its employees.

Unicharm's CSR activities are now being expanded on a global scale under the goals established in Global 10 (see page 3) and this is

evolving to include not only Unicharm's own employees, but also its suppliers and society at large.

Unicharm's goals in CSR

“ Providing the care. Supporting you with care.”

The fundamental concept behind CSR at Unicharm is that each employee examines what their responsibilities to society are and puts them into practice on a personal basis.

Unicharm ideals &corporate policy

Expectations ofstakeholders

Developmentsin the industry

Regional trendsGlobal trends

We take pride in being a manufacturer and marketer of products that are valuable to society – products

that are used from the moment of birth and onward throughout our lives.

In conducting our business activities we are determined to bring safety and security both in quality and

environmental protection focusing on people in Asian countries.

In addition, we place importance on ethical values in maintaining pride in what we do.

Unicharm promotes CSR based on this fundamental concept.

The Global Compact's ten principles

Unicharm Ideals

• WE contribute to creating a better life for humankind by offering only the finest products and services to the customer, both at home and abroad.

• WE strive to pursue correct corporate management principles which bring together corporate growth, well-being among associates and fulfill our social responsibilities.

• WE bring forth the fruits of cooperation based on integrity and harmony, by respecting the independence of the individual, and striving to promote the Five Great Pillars.

• Pledge to the Customers • Pledge to Our Shareholders• Pledge to Business Partners • Pledge to the Associates• Pledge to Society

Beliefs and Pledges

• Creativity & Innovation • Ownership• Spirit of Challenge • Leadership • Fair Play

Five Great Pillars

Principle1 : Businesses should support and respect the protection of internationally proclaimed human rights; andPrinciple2 : make sure that they are not complicit in human rights abuses. Principle3 : Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;Principle4 : the elimination of all forms of forced and compulsory labour;Principle5 : the effective abolition of child labour; andPrinciple6 : the elimination of discrimination in respect of employment and occupation.

HumanRights

Labour Standards

Principle7 : Businesses should support a precautionary approach to environmental challenges;Principle8 : undertake initiatives to promote greater environmental responsibility; andPrinciple9 : encourage the development and dif fusion of environmentally friendly technologiesPrinciple10 : Businesses should work against corruption in all its forms, including extortion and bribery.

Environment

Anti-Corruption

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Business DataCompany names : Shanghai Unicharm Co., Ltd. (established 1995)Unicharm Consumer Products (China) Co., LTD. (established 2001)Unicharm Consumer Products Service (Shanghai) Co., Ltd. (established 2002)

Location : Shanghai

Number of associates :703 (including Plants No. 1 & No. 2, as of March 2007)

The Chinese economy has undergone spectacular

growth and change over the past decade, with

both the Sofy and Mamy Poko brands gaining wide

consumer acceptance.

In the years ahead, it is important for us to grasp the

major expectations and demands from consumers

and take appropriate action.

CSR is a concept that covers a broad range of

areas, including corporate principles and governance,

compliance with laws, environmental management

and employee welfare. We place our foremost priority

in CSR in becoming a company that reaches beyond

the safety of its products and on to bring a sense of

security. We are taking action under the CSR Office

initiative, focusing on the safety of our products and

their raw materials.

Unicharm CSR in China

Major products : Baby care products (paper diapers); feminine care products (sanitary napkins and panty liners)

Sales offices : Shanghai, Beijing, Guangzhou, Wuhan, Shenyang, Jinan and Chengdu(Marketed in four direct-controlled municipalities & 147 cities in 22 provinces)

Manufacturing plants : Shanghai No. 1 Plant (opened in 1996) & Shanghai No. 2 Plant (opened in 2004)

CSR Expanding and Pervading Globally

CSR Office Established in Chinese Subsidiary forms the Basis for Promoting CSR in East Asia

Director, Senior Executive OfficerUnicharm CorporationPresidentUni-Charm Consumer Product Service (Shanghai) Co., Ltd.

Kennosuke Nakano

Vice President

Eiji Tominaga

Offering Products That Are Most Gentle to Consumers

Unicharm established its subsidiary in China in

1995, with its core business operations in feminine

hygiene and baby care products. Presently, the

company has gained wide customer support in both

product categories.

In Shanghai, women have emerged as a rapidly

growing workforce as in Japan, and an increasing

number of women are leading lifestyles focused

around their work. In feminine care, Unicharm has

gained broad support for its products, which deliver

security in difficult working situations, with products

such as Sofy Nighttime Protection. In the baby care

category, consumer demand for quality is rising,

and we are planning to develop the high-priced

products under the Mamy Poko brand name.

The number of feminine hygiene product users

is estimated at roughly 400 million across the whole

of China, and the number of diaper users at around

40 million. We are planning to achieve our goal of

being seen as a manufacturer that is gentle and kind

to consumers with products that deliver both safety

and security, as well as by communicating our goals

and products.

Global Application of CSR

In fiscal 2006, we opened the first CSR office in the

Unicharm Group's overseas operations in China.

Consumer incentive in China is on the rise

with the development of distribution systems and a

rise in the GDP. In pace with this growth, consumer

interest in products has increased, with inquiries

to our customer service office increasing every

year. In view of these developments, we believe

that organization-wide action to establish quality

assurance and product safety will lead to greater

customer satisfaction and ultimately to development

of the corporate brand.

Moreover, China is the key market in East

Asia in the Unicharm Group's overseas business

operations. We have established the CSR office

also to increase awareness of CSR in the country,

to establish the concept firmly at the center of

business activities, to use the success of the

business model to apply it to other operations, and

ultimately to achieve the Global 10.

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The CSR Office is organized under the following three groups, classified by function.

CSR Organization

• Pharmaceuticals GroupPrincipal activities are management of administrative procedures in gathering facts for meeting national standards on products and monitoring labeling on packages, advertising and store sales promotion items. We represent the position of vice president of the Household Paper Committee of the China Paper Association, participating in the development and revision of national standards for the industry.

• Materials & Product Safety GroupThe group is engaged not only in verifying product safety but also in the analysis and confirmation of materials safety, working to prevent the release of hazardous chemicals into the environment and their effects on the human body. In addition, it is responsible for managing material safety data sheets (MSDS) for the company's material suppliers in order to inspect materials safety.

• ISO Promotion GroupThe group works constantly to promote quality management based on ISO 9001 certification acquired mainly by our manufacturing plants. In 2007, environmental management activities are underway for ISO 14001 certification.

Public sector-related organizationfor the first half of fiscal 2007

Public sector-related divisions

PharmaceuticalsGroup

ISO PromotionGroup

Materials & ProductSafety Group

Intellectual Property& Legal Affairs Office

CustomerService Office

GeneralAffairs Office CSR Office

CSR Office

Approach to Human Resources DevelopmentAt Unicharm, our long-term goal in human resources development is to have each employee think and plan their own careers and to achieve their own goals. Under the leadership of the Human Resources Development Group in Japan, we are in the process of building a manpower development organization for all local business operations, including group training for local marketing personnel in Japan and specialized technical assistance from Unicharm Product and United Charm Co., Ltd. (Taiwan).

Creating a Workplace for Workers

There are many programs that provide opportunities for employees to advance their careers, from

financial assistance to workers for voluntary education schemes, voluntary job relocation, and the Unicharm Management School for young managers aimed at finding solutions to business management issues. In addition, careful attention is given to

employee welfare, including employee counseling and semiannual interviews with department heads, in order to enable workers to dedicate themselves to their jobs. Employee satisfaction was 63.5% in 2005, and this rose to 83% in 2006.

Personnel Affairs

Senior employees act as instructors for new workers

Assurance of Safety in Development

For product safety inspections, in contrast to the legal standards, industry standards and internal standards that apply in Japan, product safety is ensured in China by the need to satisfy national standards. At Unicharm, our product development satisfies national standards and at the same time is designed to further boost customer satisfaction. Based on this understanding, the Public Sector Department and Development Department have joined forces to establish the Materials & Product Safety Group and the CSR Office at the same time. Its first step was to develop guidelines for product safety. The guidelines for safety and environmental protection were developed by comparing materials safety inspection and evaluation standards implemented in China with those in Japan. Af ter modifications to reflect conditions in China, the first version was completed. Starting in April 2007, Unicharm is seeking the understanding of and cooperation from materials suppliers with meeting these guidelines. The guidelines are scheduled to be upgraded in phases, with publication of the second and third versions scheduled. However, improving

materials and product safety requires not only the development of schemes and rules, but also training for the employees who implement these regulations. Action will be taken to promote greater voluntary efforts for quality assurance.

Collaboration between Chinaand JapanDue to the differences between the two countries and consumer preferences for sanitation and cleanliness, values regarding comfortableness and the priority given to different features, product needs are different in China. For instance, the needs of Chinese women differ in the thinness and absorbency of f e m i n i n e h y g i e n e p r o d u c t s , b a s e d o n r e p l a c e m e n t frequency and skin condition. As a result, the main product line is an ultrathin type that is thinner than those marketed in Japan. For this reason, the material used for the napkin sur face

differs from that in Japan, requiring development of product specifications exclusive to China. In testing baby care products, paper diapers are being tested on as many Chinese babies as possible to check the absorbency, ease of application, impact on the skin, etc., in order to adapt the product performance for Chinese consumers. Development is moving forward through collaboration between Japanese and Chinese representatives, with the basic product being developed in Japan using Japan's advanced technology and subsequently customized to satisfy consumer needs at the Development Center in Shanghai.

Product Development

Diaper training in a diaper wearing test

Employee Welfare, Manpower & Materials Department

YILI SHENManager, Manpower & Materials Department

GUOPING WANG

Senior Manager, Development Department

Yoshihisa Fujioka

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ISO Certification and Management at Subsidiaries in China

Unicharm's Chinese subsidiaries have

been working on ISO certification in the

area of quality management since their

establishment. ISO 9002 certification was

acquired in 1999, followed by ISO 9001

certification in 2002. No. 2 Plant acquired

ISO 9001 certification in 2005.

With ISO 9001 certification,

quality control officer Hazen Liu took

the initiative in introducing activities,

starting with fostering an understanding

of what is involved among the leader-

class members. General employees

across the entire plant were educated

through work procedure manuals and

documents. Based on this experience

and the expertise gained, the Shanghai

plant is now working on ISO 14001

certification, the international standard

for environmental management.

ISO certification and management

bring the benefits of risk reduction

through cost cutting in compliance with

laws and regulations. At the same time,

growing consumer awareness of quality

is leading more consumers to choose

and purchase products of high quality.

ISO certification proves that Unicharm's

environment management is on an

international level, delivering products

that are safe and reliable for consumers.

(From left)

HEZEN LIUISO 9001 & ISO 14001 Promotion, CSR Office

JIANJUN BOAccounting administration

JING YING DING ISO 9001 & 14001, CSR Office

Products Manufactured to Bring Customer SatisfactionQuality control in China is being implemented based on the same management standards and quality standards used in Japan. Likewise, facilities at the plants are generally identical to those used in plants in Japan. However, there are differences in the experience and expertise of the employees who carry out the operations. For this reason, technical assistance is being provided by quality control instructors send from Japan on a regular basis. Materials audits and management training are also being conducted regularly in cooperation with Unicharm Product. Among the activities underway at the Shanghai plants, CP control (dispersion management) is

being implemented for the manufacture of feminine hygiene product as in Japan, starting in the first half of 2006. Products are being sampled every day at a fixed time, in order to inspect rated values and standards and to examine improvements based on the data. This way, improvements can be made without waiting for customer c o m p l a i n t s b y identifying aspects that require improvement in the production process and addressing them accordingly.

The Unicharm Group's s tance on "manufacturing products that bring customer satisfaction" remains the same in its overseas operations.

Quality

Visual inspection conducted after passing through inspection equipment

Greater environmental awareness must be fostered throughout the entire workforce. Both No. 1 and No. 2 plants in Shanghai are presently preparing for ISO 14001 certification at the end of 2007. The first step is to develop rules and schemes from the top down. Applying this framework, we will work to improve the environmental awareness of every employee. On the production floor level, waste is collected and sorted into a variety of categories. Diligent action to reduce material waste, including recycling coiled material cores and trim loss*, is underway by the entire workforce. Environmental awareness is growing steadily.

Also, environmental awareness in materials purchasing is also being fostered by asking suppliers to conduct materials audits and to simplify packaging. With the Olympic Games in Beijing and the international exposition to be held in Shanghai in the near future, environmental awareness is growing gradually among the Chinese population. In order to protect and maintain the Unicharm brand in China, environmental activities and improvement of employee awareness are always being promoted with consciousness of the fact that we are manufacturing disposable products.

Environment

Disparity in standards is being verified with CP control, thus identifying points that require improvement

* trim loss: material offcuts

Senior Manager & Plant Manager, Production Department

Masato Ishikawa

Dissemination of Environmental Awareness

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Korea

China

Vietnam

Philippines

Malaysia

Singapore

Taiwan

Thailand

Indonesia

Saudi Arabia

Netherlands

CSR Activities Lead Overseas Operations of the Unicharm GroupUnicharm Group aims that each operation promotes independently its

CSR activities along with our company ideal.

Here, we introduce CSR activities of our main overseas operations, in

Thailand, Taiwan, and Indonesia.

Thailand

Personnel Affairs

Reinforcement of manpower development & promotion of localizationMuch effort is being directed to the manager training by each class, in order to build management based on local manpower. The board of directors includes a Thai national, and two of the four business divisions are headed by Thai directors. Also, the Personnel Committee, which is the decision-making body for personnel management and employment regulations, consists of three Thai nationals and three Japanese members.

Location: Bangkok Established: 1987 Number of associates : 803Major products: Baby care, feminine care and healthcare products

In May 2007, the company became the fi rst overseas operation to acquire GMP certifi cation for sanitary napkins and panty liners.* Good Manufacturing Practice (GMP): Production and quality management standards for pharmaceuticals and quasi-drugs

Quality assurance organization strengthened by GMP* certifi cationTOPICS

Quality Assurance

Changes in package labeling brings assurance to customersLabeling on Mamy Poko is written in English, Thai, Chinese, Malay and Indonesian, resulting in a reduction in information for individual consumers. In order to prevent this problem, improvements have been made to increase the information on labels in order to bring a greater sense of security and trust to consumers. In addition, a Customer Care Center and Customer Service Offi ce have been opened to allow more feedback of customer opinions.

Product Development

Localizing products to meet local customer needsThe Research Center in Thailand is in charge of product development for all of Southeast Asia. Although the basic functions and specifi cations are identical to those of Japanese products, greater effort is being put into localization in order to adapt to local customer needs.

Environment

Extending ISO 14001 certifi cation to a higher levelSince acquiring ISO 14001 certifi cation in 2003, the company continues to extend its certifi cation to a higher level. Presently, interest in environmental issues is growing in Thailand, in the face of threats from air and water pollution and smoke hazard from slash-and-burn farming.

Uni-Charm (Thailand) Co., Ltd.

Korea

China

Vietnam

Philippines

Malaysia

Singapore

Taiwan

Thailand

Indonesia

Saudi Arabia

Netherlands

Korea

China

Vietnam

Philippines

Malaysia

Singapore

Taiwan

Thailand

Indonesia

Saudi Arabia

Netherlands

Manufacturing pants-type disposable diapers for infants and adults with a technology tie-up in the Netherlands

： Baby care

： Health care

： Feminine care

： C&F

： Manufacturing

： Sales

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Taiwan

Personnel Affairs

Employee training to avoid labor hazardsIn order to create a safe work environment, a hazard prediction training (KYT) program is underway to boost safety in the workplace.

Location: Taipei Established: 1984 Number of associates : 252Major products: Baby care, feminine care, healthcare and C&F products

Activities have been underway from May 2007 to acquire OHSAS 18001 certification, the international standard for labor safety management systems. Certifi cation is scheduled for November 2007.

OHSAS 18001 certifi cation activities bring greater workplace safetyTOPICS

Quality Assurance

Quality management organization based on ISO and national standardsTaiwan National Standard (CNS) certifi cation has been acquired for baby diapers and sanitary napkins. In addition, ISO 9002 certification was acquired in 1996 and ISO 9001 certifi cation in 2002.

Product Development

Pursuit of safety in raw materials to meet social needsIn recent years, environmental pollution from fluorescent compounds

has attracted public attention in Taiwan. In the face of this concern, use

of materials containing fluorescent compounds and the launch of new

products containing these chemicals have become diffi cult.

In response to customer needs, studies will be conducted on safe

materials and new product development free of fl uorescent compounds.

United Charm Co., Ltd.

Environment

Strict compliance with laws and regulations for plant employeesISO 14001 certifi cation has already been acquired in 2003. Efforts are underway among employees working at the manufacturing plant on a daily basis, in day-to-day job routines and action plans, in order to foster environmental actions without violating regulations on refuse-derived fuels (RDF), waste treatment, recycling and energy conservation.

Indonesia

Personnel Affairs

Management training for growth for both the company and its employeesStable and swift business growth depends on manpower. Top priority has been placed on human resources development for both employees and managers, with long-term training programs in Japan and other overseas locations, aimed at acquiring specialized knowledge. Within the company, study sessions are being organized for middle-level employees with the company president and personnel administration director acting as instructors, as well as divisional study groups held on a weekly basis. In the area of work safety and environment improvement activities, labor safety and health committee meetings and safety patrols are conducted every month. In safety, emphasis is placed on the 3S's, exhaustive use of safety covers for equipment, and training of plant workers.

Location: Jakarta Established: 1997 Number of associates : 380Major products: Baby care and feminine care products

In addition to ISO 9001 certifi cation acquired in 2003, action this year focuses on GMP certifi cation in order to build quality assurance at a higher level. Plant renovation and employee training and guidance are being implemented systematically.

GMP certifi cation bring higher levels of product quality maintenanceTOPICS

Quality Assurance

Quality improvement is the theme in monthly meetingsTo maintain product quality, quality improvement activities are underway at monthly quality meetings organized on selected quality-related themes. In terms of operational quality, worker skill management and training is being conducted systematically, with work procedure manuals for each work process, documentation of product inspection standards, etc. In production quality, activities to build quality into the manufacturing process are underway by managing production requirements.

Product Development

Activity with emphasis on customer opinionsCustomer requests and complaints received at the customer service offi ce

are being fed back for improvements. In addition, consumer assessment

checks are being held at new product launches by organizing discussion

meetings between consumer monitors. Product use tests are also being

conducted before launch to emphasize the voice of the consumer on

practical product features.

PT Uni-Charm Indonesia

Environment

Fair waste processing practicesWaste disposal and processing for the plant are contracted to enterprises

certified by public organizations, In the future, procedures practiced

at Japan headquarters are expected to be introduced to reinforce

environmental management.

(All statistics given are at March 31, 2007)

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Promoting Unicharm's Own CSR ActivitiesAs every single employee at Unicharm fulfils their duties, they are committing to making our consumers' lifestyles more comfortable by delivering "care" through our products and services. Unicharm recognizes that it has a corporate social responsibility to help its employees uphold this spirit and conducts it CSR activities accordingly. In fiscal 2006, we implemented a range of programs across all our employees at Group companies to raise employee awareness of CSR, including in our overseas subsidiaries. In

addition, we hosted our second stakeholders' meeting on our belief that it is important to listen to the voices of our stakeholders. It was the opportunity for us to learn what their expectations are, and listen to their valuable comments, which helped us identify problems we had not recognized before. Although there are many issues that cannot be addressed immediately, we are committed to promoting our own CSR activities through taking advantage of every opportunity to communicate with our stakeholders.

Director, Senior Executive Officer, General Manager of CSR Department

Eiji Ishikawa

The Group realizes how important it is to enhance corporate value in

a sustainable way and to fulfill its corporate social responsibilities at

the same time. We achieve this through business activities in which

management and operating divisions work in unison, guided always by

the correct corporate management principles stipulated in the Unicharm

Ideals. Based on this recognition, the Company maintains a management

structure that comprises directors and corporate auditors. The structure

has enabled us to bolster the decision-making and supervisory functions

of the directors as well as the executive functions of the executive officers.

In addition, the number of board members was reduced and the term of

office was shortened to one year. Unicharm holds Business Plan Advisory

Meetings every six months attended by all directors, corporate auditors

and executive officers, at which we determine the business plans for

each operating division. Chaired by the President and CEO, the Business

Execution Board meets on a monthly basis. The Board strives to ensure

the appropriate and prompt resolution of important issues tabled by the

Board Chairman based on the execution status of the business plan.

For a detailed data on the number of directors and directors' remuneration,

please refer to the Annual Security Report.

Corporate Governance is the Backbone of CSR Activities

http://www.unicharm.co.jp/ir/index.html

Unicharm's basic policy in promoting CSR is that each employee is responsible for deciding what corporate social responsibilities the Company

should fulfill to create a better life for humankind, as stated "how to fulfill those responsibilities" in the Unicharm Ideals.

In fiscal 2006, we used the CSR promotion slogan "Group & Global" in expanding our activities to our foreign Group companies.

To instill the concept of CSR into its

employees, Unicharm held its fifth CSR

Report Reading Session this year. In

order to raise our employees' awareness

of contacting with society, we arranged

them to see the stakeholders' meeting

video.

To achieve effective procurement

focused around CSR, we carried out

benchmarking at leading suppliers,

unified in-house procurement policies,

and held a preliminary open hearing.

Our social contribution activities in

fiscal 2006 centered on disaster relief.

We provided suppor t for disasters

resulting from the earthquake in Jakarta

and the prolonged rainy season in Japan

in cooperation with organizations with

whom we had made new contacts, to

increase our points of contact with

society.

Unicharm's Groupwide CSR Promotion Structure

The CSR Committee is chaired by the President and CEO and meets four times a year to advance groupwide CSR activities.

Planning Headquarters/Global Marketing Headquarters/Global Development Headquarters/Global SAPS Human Resource Development Department/Intellectual Property & Legal Department/Customer Service Office/Internal Auditing Office/ Unicharm Product Co., Ltd.

CSR CommitteeChairman: President and CEO

Environmental Promotion Task Force

Quality Assurance Task Force

CSR PromotionTask Force

To maintain the quality assurance systemTo ensure safetyTo improve quality controlTo manage proper labelingTo respond to complaintsTo ensure a common understanding of regulations

To maintain the environmental management systemTo promote energy conservationTo promote recycling of wasteTo promote the development of environmentally conscious productsTo manage environmental risksTo ensure a common understanding of regulations

To disseminate corporate ethics and complianceRisk management and information securityTo create an employee-friendly workplaceCorporate governanceStakeholder communicationContribution to society

Secretariat:CSR Department

Promoting CSR to meet the Expectations of Our Stakeholders

10

In April 2006, Unicharm launched an internal control system

development project within the Company to comply with J-SOX and to

improve business operations. The system is based on the Corporation

Law and the Corporations Law Enforcement Regulations in May

2006. Pursuant to the Law and regulations, Unicharm formulated

its basic policy on the implementation of an internal control system

and is developing the system to ensure the suitability of its business

operations.

Developing an Internal Control System for Reliable Management

The Unicharm Group aims to ensure that every employee abides by

laws and regulations, has high ethical standards and acts in line with

the corporate philosophy. Unicharm has formulated its Corporate

Behavior Guidelines to govern the conduct of its employees. The

Guidelines are communicated to employees through corporate

ethics and compliance training courses.

Corporate ethics and compliance training is offered on a

continuous basis in the form of group training and e-learning

courses. Two group training courses for general managers deal

with sexual and power harassment issues. Managers learn how

to respond to their subordinates when they ask for advice. They

also study harassment cases outside the Company. The courses

provide managers with an opportunity to reaffirm the importance of

day-to-day communication.

The training course for new

employees is comprised of

lectures and group discussion

on CSR and corporate ethics.

New employees are given

the opportunity to learn how

they are expected to conduct

t h e m s e l v e s a s w o r k i n g

people.

Unicharm expanded the scope of its e-learning courses to

Group company employees and has held three such courses. The

course is conducted regularly and deals with all possible situations

in the workplace, including sexual harassment, power harassment,

personal information management and accounting issues.

Employees request these courses on a continuous basis, saying

"studying actual cases helps us increase our awareness and gives

us confidence."

Awareness of Corporate Ethics and Compliance Shared Groupwide

Training course for new employees

at Unicharm Product Co., Ltd

By appointing persons responsible for information management in

each division, Unicharm enforces overall management of information,

based on its information security policy and the information security

rules.

The Company has also formulated personal information protection

rules for managing personal information entrusted to us by our

customers and complies with the Ministry of Economy, Trade and

Industry guideline to prevent information leaks. We will continue to

manage this information appropriately by ensuring absolute adherence

to the rules by our employees through training and education.

Reinforcing Information Security

The help desk for employees Rin-rin Hotline operated by Corporate

Ethics Office of CSR Department has maintained a system to allow

employees to take counsel immediately when they have questions

about corporate ethics and laws and regulations. The Hotline is

available to all Group company employees in Japan and accepts the

average of 5 counseling requests a month. We take great pains to

protect the privacy of employees who bring up issues so as not to

put the employee at a disadvantage.

When the Whistleblower Protection Act was enacted, Unicharm

helped its general managers to understand the content of the law

through the training session, issued a document that explained the

law to employees and reminded them of the existence of the Hotline.

Unicharm will maintain this system so that all Company

employees can seek counsel without worrying about any adverse

consequences.

Promoting Coherent Judgment and Behavior through the Employee Hotline

The intellectual property of the Unicharm Group both in Japan

and overseas is administered unilaterally by the Intellectual

Property Legal Department that develops and executes intellectual

property strategies, in conjunction with business and development

strategies.

Unicharm maintains an integrated system to protect

intellectual property rights on all of the products and technologies

held by the Group. Products of development, i.e. inventions and

design, are protected by patents and design rights, while products

of business, brand names, are protected by trademark rights. As

a result, Unicharm was commended as "one of the top companies

in the patent strategy index" by the Patent Office of Japan in fiscal

2006. Unicharm will not only take advantage of intellectual property

rights in products and technologies, but also promote activities to

protect its brands throughout the Group companies both in Japan

and overseas, thereby boosting its competitive edge. At the same

time, Unicharm will raise the level of its employees' knowledge and

activities to enable the Company to conduct business in a way that

gives due respect to other companies' intellectual property rights.

To this end, in addition to conventional study courses, the Company

has introduced e-learning courses as a means to strengthen its

educational programs on intellectual property (patents, trademarks,

representation, etc.). This was to increase learning opportunities

and expand the scope of participants and to reinforce its drive to

build a company that respects and utilizes intellectual property

rights.

Protecting Intellectual Property

11

Continuing to Be the Brand of Choice for Customers

Unicharm�s customer-first policy is a

basic concept that is applied to all its

business operations. It is essential for us,

not only as a manufacturer but also as

the high brand value which is able to win

the support of customers.

In product development, we have

been faster in listening attentively to the

voices of our customers than any other

manufacturer in the world, and this gives

us insight into the problems customers

have in their daily living,. Some customers

pinpoint hidden needs that are not

completely clear, even to the customers

themselves. To know such needs leads

us to "seeds" for new products.

Executive Officer, General Manager of Global Marketing Headquarters

Yukihiro Kimura

Quality Assurance

Unicharm has adopted a quality management system (QMS) based

on ISO 9001 standards to cover processes from marketing through

delivery, and we have established a groupwide quality assurance

system.

In the complaints processing process, customer complaints,

opinions and other feedback are shared. Unicharm then takes steps

to correct and revise problems through the plan-do-check-action

cycle.

Quality Assurance Policy and Structure

　Safety assessment structure

In materials procurement, Unicharm has stipulated guidelines

on material ingredients and guideline on hazardous chemical

substances. A dedicated organization (Quality Assurance Office of

the CSR Department) conducts preliminary checks on materials to

assure safety, in order to eliminate chemical substances that exhibit

apparent harmful effects on the human body from infiltrating into

the environment.

System to Secure Product Safety

To convey accurate information to customers in a readi ly

understandable format, Unicharm has incorporated a representation

check system in the product design process. A dedicated section

confirms whether our representation of quality conforms to relevant

laws and regulations as well as voluntary standards, and whether

the representation gives misleading information or gives cause

for customers to misuse products. For new and significantly

redesigned products, the Global Marketing Headquarters, Customer

Service Office, Intellectual Property & Legal Department and CSR

Department hold a Communication Assurance Conference. By

utilizing each section's expertise, Unicharm is striving for user-

friendly representation through day-to-day improvements.

Appropriate Quality Representation from the Customer's Perspective

The Customer Service Office receives inquiries about product

performance, requests for consultation on purchasing judgments,

questions on product use and various other feedback from

customers. Unicharm has committed itself to prompt and sincere

response to this valuable customer feedback to enhance customer

satisfaction. In July 2006, Unicharm declared its compliance with

the ISO 10002* standard and has promoted prompt and appropriate

customer service companywide, in compliance to the ISO standard.

The Company also stipulated a complaints processing policy in its

complaints processing document, in which Unicharm makes the

pledge to always respond to customer input sincerely and promptly.

This policy has been communicated to all employees.

Customer Service Office that Gives Optimal and Prompt Response to Customers

Customer Service Office

12

Motivating Employees to Work to Achieve an Affluent Lifestyle

Since 2004, Unicharm has followed

a management method called SAPS

management. Fiscal 2006 was the year that

witnessed the consolidation of the Human

Resources Development Depar tment

and the SAPS Promotion Of f ice and

the establishment of the new Global

SAPS Human Resources Development

Department. The year was marked by

aggressive promotion of SAPS management

in human resources development.

Unicharm enter tains a human

resources policy in which personnel must

fulfill the three roles of planner, executant

and manager at the same time. To develop

human resources equipped with self-

initiative and executive ability, Unicharm

has also focused its efforts on restructuring

educational programs based on SAPS

management.

Executive Officer, General Manager of the Global SAPS Human Resources Development Department (from April 1, 2007)

Yasushi Akita

Human Resources Development

Sharing successful cases at the global levelPranee Sitthiyanun Global Marketing Headquarters

In Japan, I was able to have opportunities to learn about a

market I had never experienced before and to communicate

with people of various backgrounds and experiences. When

I return to my home country, I would like to make use of this

experience.

In the future, I would like to share my experience in my

home country with employees in Japan.

Workplace that brings out latent facultiesYoshihito Sato UBS Management Service Center

I am working in an excellent environment where requests

from the disabled, such as a request for a barrier-free

workplace, are quickly met.

I find it fulfilling to work in my office, because I

have the opportunity to challenge new skills, in addition

to opportunities to develop capabilities and skills in my

areas of aptitude.

Making good use of my willingness to work and experienceYutaka Morita Corporate Sales, Healthcare, Home Care Promotion Department, Sales Headquarters

I am serving in the same department and continuing the same duties as before my retirement, and therefore I would like to transform my experience into resources for my job. Because senior expert employees are also subject to performance evaluations, I expect the Company to reflect

the evaluation of my work in my remuneration without differentiating me from regular employees. In my private life, I was able to attend a reunion held in my hometown for the first time in 42 years. I am leading a full life, enjoying both my work and personal life.

long-term objectives and concrete plans. Unicharm is creating an

environment where all

Group employees can

exhibit their abil i t ies

and persona l i t ies in

the right positions, by

establishing common

global s tandards for

recruiting and education.

　Human resources development initiatives

Amid the fierce global competition of recent years, in order to be

a truly global company that can be highly valued and trusted by

the people of the world, it is necessary to procure capable human

resources from the world, and train and position them appropriately

regardless of race, nationality, gender or age. In fiscal 2006, the

Company held a conference with human resource personnel of its

subsidiaries in China, Taiwan, Thailand and Indonesia to examine

common human resources programs that can be utilized globally.

We shared current issues in recruiting and training, mid- and

Developing Global-Standard Human Resources

Members of human resource development departmentsof participating countries

13

Thinking aboutWhat We Should Do for the Earth and What We Can Do for SocietyAs a manufacturer of disposable products,

we position environmental activities as a

priority in Unicharm's CSR initiative.

" W h a t do you t h ink a b ou t

consuming large amount of resources

for paper diapers and other disposable

products?" This is the question we are

frequently asked by our factory visitors.

I always answer that we acknowledge

that we use a lot of resources, however,

we try our best to make quality products

in a spirit of conserving resources and

minimize such usage.

At the factory level, we have

been continuously spending our time

implementing efforts to eliminate waste

at the startup of a manufacturing line and

when switching over rolls of material. We

are also working on energy conservation,

by monitoring energy consumption in each

process. We have requested that suppliers

use the bare minimum of packaging and

have encouraged logistics companies to

cooperate in practicing "idling stop" for

trucks on standby.

At foreign subsidiaries, environmental

initiatives are implemented according to

the situation in each country. In the first

place, we work on consciousness-building

for our employees to ensure that Unicharm

manufactures good products without

generating losses. We are developing

environmentally-conscious plants, similar

to those in Japan.

Unicharm recognizes the importance

of communicating with local communities

in promoting environmental activities,

expanding business globally. We cooperate

with local governments and nearby

companies, and continue to work on social

contribution and assistance activities, and

enhance the Company's existence value.

Executive OfficerPresident and CEO of Unicharm Product Co., Ltd.

Masakatsu Takai

ECO CHARMING mark

Unicharm’s Eco-Label

* Through environmentally friendly products and

activities (=eco),

* Unicharm aims to become a company that comes up

with attractive new values (=charm) for consumers

Let’s beECO-CHARMING Unicharm!

　Eco-label Vision (Unicharm in the future through its eco-label activities)

　Eco-Label

Unicharm has developed its own eco-label called the

"ECO CHARMING" mark.

Eco-labels refer collectively to labels indicating

that products carrying the labels are environmentally

c o n s c iou s p r o du c t s . T he l a b e l s c a n s e r ve a s

selection criteria when consumers make decisions

on purchasing. At the same time, they represent

manufacturers'commitment to reducing environmental

impact.

The ECO CHARMING mark will be attached

to product packaging and used for public relations

activities and in-house awareness-raising activities as

the symbol of Unicharm's environmentally conscious

activities.

Product Development with a View to Reducing Environmental Impact from the Design Phase

14

Environmental Conservation

Facilities Accredited with ISO 14001 CertificationFacility Initial Certification

Oct. 17, 1997May 2, 2000Mar. 9, 2001Jul. 6, 2001Feb. 15, 2002May 10, 2002May 16, 2003Nov. 14, 2003

Kakegawa Business FacilityShikoku Central District FacilityFukushima FactoryKawanoe FactoryUnicharm Material Co., Ltd.Ohnohara FactoryKinsei FactoryThailand Factory

JQAJQAJQAJQAJQAJQAJQAJQA

FacilityDec. 1, 2003Mar. 5, 2004Mar. 12, 2004Apr. 9, 2004Sep. 3, 2004Mar. 4, 2005May 20, 2005Jun. 3, 2005

Mie FactoryItami Facility

Initial CertificationSGSJQAJQAJQAJQAJQAJQAJQA

Certified byCertified byTaiwan FactoryToyohama FactoryDevelopment District FacilityHead Office District FacilityUnicharm PetCareCorporationKokko Paper Mfg. Co., Ltd.Uni Care Co., Ltd.

Chaired by President and CEO of Unicharm

Environmental Task Force, CSR Committee

Environmental Management Structure

Office : Environmental Promotion Office, CSR Department

EnvironmentalProduct

Working Group

EnergyConservation

Working Group

WasteRecycling

Working Group

Reducing environmental impactWe will endeavor to conserve resources and energy, reduce waste and promote recycling for the future of the global environment.

1

Compliance with laws, regulations and voluntary standards2

3 Establishing environmental behavior guidelines

Developing environmentally conscious products and servicesWe will promote R&D and technological development initiatives in the cause of both environmental preservation and the creation of new values and offer products and services that have lower impact on the global environment.

4

Disclosing environmental informationWe will communicate our environmental policies and environmental management efforts appropriately to society.

5

Enhancing environmental awarenessAs a member of society, we will take an active part in, and support, environmental protection activities and strive to raise peopleﾕs awareness of environmental protection through public relations and awareness-raising activities.

6

Environmental Policy of the Unicharm Group

We will determine the impact of our operation on the environment, establish environmental behavior guidelines and implement the guidelines efficiently.

We will abide by the relevant environmental laws, regulations and agreed-upon requirements and strive to support safe lifestyles for the human race through our business operations.

Unicharm hopes that the people of the world can enjoy health and experience the joy of living through the products and services we offer.

At the same time, by being sincere in taking responsibility as a company that supplies disposable products, Unicharm is dedicated to building an environmentally friendly, recycling-oriented society with a view to creating new values and the sustainable development of society; in this it aims at a good balance between a comfortable lifestyle and protecting the global environment.

Behavior Guidelines. While the Company is sincere in accepting

responsibility for supplying disposable products, the Policies codify

our awareness and actions for achieving a recycling-based society.

Unicharm has formulated the Unicharm Group Environmental Policies,

consisting of environmental policies and environmental behavior

guidelines, in accordance with the Unicharm Ideals and the Corporate

Unicharm's Environmental Policy

was required to redress its previous waste disposal practice. We

have taken the appropriate remedial measures, while seeking advice

from the competent administrative authorities. To confirm that waste

is properly treated, Unicharm has audited all of its manufacturing

contractors.

Led by the Environmental Task Force, the Unicharm Group endeavors

to reduce the impact of the business operations of the Group on the

environment and to prevent environmental risks based on ISO 14001.

In fiscal 2006, Unicharm received one administrative

recommendation and one notification. In one case the Company

Risk Management Based on ISO 14001

Unicharm has positioned environmental activities as a priority CSR

issue.

The Company has established its Environmental Task Force

under the CSR Committee in charge of groupwide CSR initiatives

and implements activities through a top-down approach. In line

with its action plans, Unicharm implements those environmental

activities. For critical issues such as product environment, energy

conservation, and waste recycling, theme-specific working groups

have been established.

Top-Down Structure for Promoting Environmental Activities

15

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