SHOWA DENKO CSR Report 2015 - sdk.co.jp · Web [Full Report] (PDF), is issued in PDF as an annual report. We take into consideration the readability, such as the layout at the time

SHOWA DENKO CSR Report2015

［ Full Report ］

0204060810161820

23

2426

50

CONTENTSEditorial policiesThis Report has been edited as an annual report on non-financial information, presenting efforts by the Showa Denko Group to contribute to the environment and society.

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

As for disclosure items, we analyzed our stakeholders' opinions and requests and covered priority topics, focusing on action policies and performance in 2013 and giving specific examples.

Report scopePeriod covered by this ReportThis Report covers information for the period January 1 to December 31, 2014, with some information also provided for 2015.

Organization covered“Showa Denko” as used in the text of this Report refers to Showa Denko K.K., while “Showa Denko Group” refers mainly to Showa Denko and its consolidated subsidiaries in Japan. The financial performance data provided herein are consolidated figures for the Showa Denko Group; environmental performance data are for Showa Denko K.K.

Publication dateOctober 2015(The next edition is scheduled for publication in September 2016)

Guidelines/guidance referencedISO 26000 (2010)

Sustainability Reporting Guidelines (Version 3.1) from the Global Reporting Initiative (GRI)

Environmental Reporting Guidelines 2012 from the Ministry of the Environment of Japan

Prepared by Public Relation Office, Showa Denko K.K.13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, JapanTEL 03-5470-3235Website http://www.sdk.co.jp/index.htmlE.Mail [email protected]

About the media to report our CSR informationFor the purpose of gaining the stakeholders’ understanding about the CSR measures of the Showa Denko Group, we designed the reports so that the disclosed information is easier to read and intelligible as much as possible, based on the opinions and requests of the stakeholders. We provide information through the following e-reports so that the media can be selected by the purpose of reading.

SHOWA DENKO CSR Report 2015on the Web [Full Report] (HTML)

The CSR measures of the Showa Denko Group are disclosed on our Web site. As well as focusing on the comprehensibility referring to various guidelines, we disseminate information with an improved quickness on the activities performed during the period.

SHOWA DENKO Report 2015This report covers main topics during the year. This report can be read as a digest of the report on the Web[Full Report] (HTML).

This Report

The information comprehensively disclosed on the Web [Full Report] (PDF), is issued in PDF as an annual report. We take into consideration the readability, such as the layout at the time of printing, and each chapter can also be printed individually.

SHOWA DENKO CSR Report 2015on the Web [Full Report] (PDF)

76788283Third-party Verification

List of Data Collection Boundaries

GRI Sustainability Reporting Guidelines, Version 4

Performance Data Collection

5456585859606264666768707274Quality Assurance

Chemical Substances Safety

Occupational Health and Safety

Safety and Disaster Prevention

Biodiversity Efforts

Environmental considerations ; Atmosphere, water and soil

Reducing Chemical Substance Discharge

Reducing Industrial Waste / Environmental accounting

Global Warming Prevention Measures

Resource use and environmental impact

Environment-friendly products

Environmental Conservation

Responsible Care Action Plan

Responsible Care Management

Responsible Care

Local Community and Social Contribution Local Community and Social Contribution

Materiality assessment・CSR plans and achievements CSR policy and stakeholders

CSR Policies of Showa Denko

2015 CSR Activities

Financial/Non-Financial HighlightsProgress report on PEGASUS PhaseⅡHistory of the GroupIntroduction of Businesses of the GroupAn Overview of the Showa Denko GroupOur VisionMessage from CEOEditorial Policies / Report Scope

2830323438Information Disclosure and IR

Fair Business Practice and Customer CareCorporate Ethics and ComplianceRisk ManagementCorporate Governance

Management

4042424548Improvement of personnel system and human resource training

Creating a comfortable workplace

Diversity

Labor Practices

Human Rights

Human Rights and Labor Practices

SHOWA DENKO CSR Report 201502

0204060810161820

23

2426

50

CONTENTSEditorial policiesThis Report has been edited as an annual report on non-financial information, presenting efforts by the Showa Denko Group to contribute to the environment and society.

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

As for disclosure items, we analyzed our stakeholders' opinions and requests and covered priority topics, focusing on action policies and performance in 2013 and giving specific examples.

Report scopePeriod covered by this ReportThis Report covers information for the period January 1 to December 31, 2014, with some information also provided for 2015.

Organization covered“Showa Denko” as used in the text of this Report refers to Showa Denko K.K., while “Showa Denko Group” refers mainly to Showa Denko and its consolidated subsidiaries in Japan. The financial performance data provided herein are consolidated figures for the Showa Denko Group; environmental performance data are for Showa Denko K.K.

Publication dateOctober 2015(The next edition is scheduled for publication in September 2016)

Guidelines/guidance referencedISO 26000 (2010)

Sustainability Reporting Guidelines (Version 3.1) from the Global Reporting Initiative (GRI)

Environmental Reporting Guidelines 2012 from the Ministry of the Environment of Japan

Prepared by Public Relation Office, Showa Denko K.K.13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, JapanTEL 03-5470-3235Website http://www.sdk.co.jp/index.htmlE.Mail [email protected]

About the media to report our CSR informationFor the purpose of gaining the stakeholders’ understanding about the CSR measures of the Showa Denko Group, we designed the reports so that the disclosed information is easier to read and intelligible as much as possible, based on the opinions and requests of the stakeholders. We provide information through the following e-reports so that the media can be selected by the purpose of reading.

SHOWA DENKO CSR Report 2015on the Web [Full Report] (HTML)

The CSR measures of the Showa Denko Group are disclosed on our Web site. As well as focusing on the comprehensibility referring to various guidelines, we disseminate information with an improved quickness on the activities performed during the period.

SHOWA DENKO Report 2015This report covers main topics during the year. This report can be read as a digest of the report on the Web[Full Report] (HTML).

This Report

The information comprehensively disclosed on the Web [Full Report] (PDF), is issued in PDF as an annual report. We take into consideration the readability, such as the layout at the time of printing, and each chapter can also be printed individually.

SHOWA DENKO CSR Report 2015on the Web [Full Report] (PDF)

76788283Third-party Verification


GRI Sustainability Reporting Guidelines, Version 4


5456585859606264666768707274Quality Assurance














Responsible Care

Local Community and Social Contribution Local Community and Social Contribution

Materiality assessment・CSR plans and achievements CSR policy and stakeholders


2015 CSR Activities

Financial/Non-Financial HighlightsProgress report on PEGASUS PhaseⅡHistory of the GroupIntroduction of Businesses of the GroupAn Overview of the Showa Denko GroupOur VisionMessage from CEOEditorial Policies / Report Scope

2830323438Information Disclosure and IR

Fair Business Practice and Customer CareCorporate Ethics and ComplianceRisk ManagementCorporate Governance

Management

4042424548Improvement of personnel system and human resource training


Diversity

Labor Practices

Human Rights


SHOWA DENKO CSR Report 2015 03

Message from CEO

Toward a company contributingto the sound growth of society

President and Chief ExecutiveOfficer of Showa Denko K.K.

Aiming to become a company contributing to the sound growth

of society, the Showa Denko Group has been conducting business

activities placing CSR (Corporate Social Responsibility) as the

basis of all activities since the establishment of its CSR conscious

management system in 2005 including the foundation of the CSR

Committee. With the belief that "providing products and services

that are useful and safe and exceed our customers' expectations,

thereby enhancing the value of the Group" and "contributing to the

sound growth of international society as a responsible corporate

citizen" are the major social responsibilities that our Group shall

fulfill, every employee acts both sincerely and according to Our

Code of Conduct.

Completion of our medium term consolidated business plan “PEGASUS Phase II”

In 2014, the Showa Denko Group launched “PEGASUS Phase

II” business plan for the 2014-2015 period as the second half of

the ongoing five year consolidated business plan “PEGASUS.” To

strengthen its presence on the global market as an individualized

chemical company, the group is promoting its growth strategies in

which the hard disk (HD) media and graphite electrode businesses

serve as its “Wings.” Furthermore, positioning the four businesses

of aluminum cans, high-purity aluminum foil, semiconductor-

processing high-purity gases, and functional chemicals as

“Growth” businesses, the Group will continue accelerating business

expansions in the growing Asian market and further strengthening

its business structure.

The Group recorded consolidated net sales of ¥876,580 million

in 2014, up 3.4% from the previous year. While sales in the

Petrochemicals segment decreased due to the fall in shipment

volumes resulting from the periodic large-scale shutdown

maintenance of ethylene plant that takes place once in every four

years, sales in the five other segments increased, due mainly to

higher shipment volumes. Operating income decreased 19.4%, to

¥20,915 million. While the Chemicals, Electronics, and Inorganics

segments recorded higher income than the previous year, the

Petrochemicals segment recorded lower income due to the sharp

drop in naphtha prices at the end of the year, in addition to the

influence of shutdown maintenance. The Aluminum segment

also recorded lower income due to the rise in prices of aluminum

ingots, and the Others segment recorded a slightly larger operating

loss. The group posted a net income of ¥3,500 million, down

61.4%, due partly to the increase in loss on sales and retirement of

noncurrent assets and loss on valuation of investment securities.

The global economy is in the midst of a large trend of market

restructuring. Faced with a fiercer international competition in the

general-purpose article business against companies of emerging

countries, as well as drastic changes in our business environment,

we shall work to enhance the performance of our Group and

complete our medium term consolidated business plan by

promptly identifying the signs of changes and the needs of our

customers.

Environment-friendly business activities

The Showa Denko Group uses resources as oil and minerals

to produce and provide customers with various products that

contribute to the sustainable development of society. We consider

it our important mission to lower the burden on the environment in

conducting these business activities. Therefore, we established the

“Responsible Care Action Guidelines” stipulating our management

policies on environment, safety, and health in 1995. Furthermore,

we signed the “Responsible Care Global Charter (RC Charter)” once

in 2005, and for the second time in 2014 following an amendment

of the charter.

Responsible Care refers to “activities by companies that handle

chemical substances to voluntarily secure the environment,

safety and health, as well as to increase trust from society and

engage in communications in all processes from development to

manufacturing, use and disposal of chemical products.” Chemical


Toward a company contributingto the sound growth of society

companies worldwide are engaged in these activities. The Showa

Denko Group also places the Responsible Care program at the

core of its business activities, taking all possible measures to ensure

safety, promoting resource and energy conservation, working to

reduce industrial wastes and chemical substance discharge, and

proactively addressing conservation of the global environment.

Identifying priority tasks (Materiality)

The Showa Denko Group owns many lines of business and business

bases both at home and abroad. Trust from the local community

is essential in advancing business activities on a global scale, and

we believe that this trust can only be won through environment-

friendly business activities as well as products and services that

meet the expectations of our customers and the needs of society.

Factors to be addressed within our group include reinforcement of

systems for corporate governance and compliance, promotion of

diversity, and creation of working environment that is comfortable

for all group employees.

We will continue to proactively tackle tasks that are considered

highly important by our stakeholders.

We will aim to remain a business Group that is trusted by all

stakeholders by providing products and services that exceed

customer expectation and conducting business activities that

contribute to the sustainability of international society. This report

describes all activities of our Group including those related to CSR

in a manner that is as easy to understand as possible. We hope

that you will read this report and provide us with your honest,

straightforward opinions.

Hideo IchikawaPresident and Chief Executive

Officer of Showa Denko K.K.

05SHOWA DENKO CSR Report 2015

An Overview of the Showa Denko Group

There is an increasing need for products and technologies that will help resolve such issues as the global warming and depletion of fossil fuels and support the progress of information technology. This reflects the drastically changing social conditions in t21erms of the global environment, security of energy supply, globalization and the progress in communication. We believe the Showa Denko Group's mission is to bring the dreams of humankind into reality through innovation in chemical technology. This belief is summarized into the simple and strong words of “Shaping Ideas.”

Showa Denko Group, under its Vision, has strived to realize “a company contributing to the sound growth of society” that contributes toward creating a society where affluence and sustainability are harmonized.We have established our slogan as a declaration to firmly “promise” our stakeholders this policy.Also, in order to realize our Vision and develop the Group sustainably, we have defined what we should do as the “Our Code of Conduct.”

In order to be trusted and evaluated by society through the continuous improvement of the corporate value, it is important to maintain and develop appropriate relations with stakeholders such as shareholders, customers, business partners, local communities and employees. We clarify this as "Our Vision" and promote the management for its realization.

Our Vision

Our Slogan “Shaping Ideas”

Our Vision

Background

Pencil as the symbol of “Shaping Ideas”“Writing with a pencil” symbolizes the work of shaping ideas so as to realize dreams and wishes. Furthermore, as one can immediately start writing with a pencil whenever a good idea occurs, this drawing symbolizes our firm intention to carry out business activities with great speed.

We at the Showa Denko Group will provide products and services that are useful and safe and exceed our customers' expectations,

thereby enhancing the value of the Group, giving satisfaction to our shareholders, and contributing to the sound growth of

international society as a responsible corporate citizen.


Our Vision

Our Code of Conduct and Its Practical Guide

Our Code of Conduct

1. We will act with integrity as a responsible citizen of the international society.

1)We will act in strict compliance with laws and regulations and according to high ethical standards.

2)We will promote Responsible Care programs.

3)We will conduct business based on the principle of fair and free competition.

4)We will respect human rights.

5)We will work to prevent bribery and other forms of corruption.

2. We will provide our customers with satisfaction and safety.

1)We will develop and provide “individualized” products, technologies, and services that satisfy our customers and promote the sound growth of international society.

2)We will ensure stable supply of products that meet customers' expectations, in cooperation with our business partners.

3. We will develop corporate culture that helps every member of the Group to fully display his/her ability.

1)We will create new values based on mutual respect for personality, free thinking, and constructive discussions.

2)We will give the highest priority to safety, and strive to maintain and improve the working environment.

4. We will meet the expectations of local communities.

1)We will disclose accurate information on our activities in a timely manner to the countries and local communities in which we operate, so as to maintain good communication and promote mutual understanding.

2)We will grow with the countries and local communities in which we operate, and contribute to their social and economic growth.

5. We will make vigorous efforts to maintain and improve the global environment.

1)We will reduce environmental impact of our business activities, and contribute toward the mitigation of climate change and the conservation of biological diversity.

2)We will develop and provide environment-friendly products and technologies.

In order to define what each and every employee should be aware of for our Group to fulfill its social responsibilities, we established “Our Code of Conduct” in 1998, as well as “Our Action Guidelines” in 1999. Then, in January 2012, as a revised version of the above, we established “Our Code of Conduct and Its Practical Guide” based on the social trends and the changes in our Group.We referred to ISO26000 in order to examine the contents, and summarized the contents based on what value should be provided to each stakeholder.The booklet distributed to the Group employees contains “Commentaries”, “Relevant laws and regulations, and internal rules” and “Points for discussion” for each item, which is intended to be used as a tool to “understand, discuss and put into practice”.

( Our Code of Conduct is applicable to each Group company in the world, while Practical Guide is applicable to each Group company located in Japan. )


A

B

For information on main Group companiesin Japan, please go to the followinghttp://www.sdk.co.jp/english/about/network/group.html

Kitakata PlantHigashinagahara PlantOyama PlantOyama Plant (Nasu)

Omachi PlantShiojiri Plant

Isesaki PlantChichibu PlantChiba PlantKawasaki PlantYokohama Plant

Tatsuno PlantSakai PlantHikone Plant

　　

Tokuyama Plant

Oita Complex

1

5

A

23

4

Process Solutions CenterBusiness Development Center

Institute for Polymers and Chemicals

B

Europe

F2 Chemicals LimitedSHOTIC Europa Industria de Aluminio Lda.Showa Denko Europe GmbH

North America

Showa Denko Carbon, Inc.Showa Aluminum Corporation of AmericaShowa Denko America, Inc.

East Asia

Shanghai Showa Chemicals Co., Ltd.Shanghai Showa Highpolymer Co., Ltd.Shanghai Showa Electronics Materials Co., Ltd.Shodex China Co., Ltd.Shanghai Showa Highpolymer Trading Co., Ltd.Zhejiag Quzhou JuhuaShowa Electoronic Chemical Materials Co., Ltd.Lianyungang Zaoling Abrasives Co., Ltd.Showa Denko Sichuan Carbon Inc.Showa Denko (Dalian) Co., Ltd.

Showa Denko Aluminum (Nantong) Co., Ltd.Ganzhou Zhaori Rare Earth New Materials Co., Ltd.Showa Denko (Shanghai) Co., Ltd.Showa Specialty Gas (Taiwan) Co., Ltd.Taiwan Showa Chemicals Manufacturing Co., Ltd.Showa Denko HD Trace corp.Taiwan Showa Denko Electronics Co., Ltd.Korea Showa Chemicals Co.

Southeast Asia

Showa Specialty Gas Singapore (Pte.) Ltd.SHOTIC (Singapore) Pte Ltd.Showa Denko HD Singapore Pte Ltd.Showa Denko Singapore (Pte)Ltd.P.T. Indonesia Chemical AluminaEternal Showa Highpolymer Co., Ltd.Showa Denko Rare-Earth Vietnam Co., Ltd.Hanacans JSCShowa Aluminum Manufacturing Philippines CorporationShowa Denko HD (Malaysia) Sdn.Bhd.SHOTIC MALAYSIA SDN. BHD.

HeadOffice

1 2 NagoyaBranch

3 OsakaBranch

4 FukuokaBranch

5 KawasakiOffice

Europe

Korea

ChinaTaiwan

SE.Asia

America

Overseas SitesSites in Japan

Business Sites

Business Development Center Institute for Advanced and Core TechnologyAnalysis & Physical Properties CenterSafety Evaluation Center

A



( as of December 2014 )

Petrochemicals Chemicals Inorganics

Segments

Company name Showa Denko K.K.

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

Number of consolidated subsidiaries 45

Total number of employee 10,577

Consolidated business results Sales 876.6 billion yen

Operating income 20.9 billion yen

Net income 3.5 billion yen


A

B

For information on main Group companiesin Japan, please go to the followinghttp://www.sdk.co.jp/english/about/network/group.html

Kitakata PlantHigashinagahara PlantOyama PlantOyama Plant (Nasu)

Omachi PlantShiojiri Plant

Isesaki PlantChichibu PlantChiba PlantKawasaki PlantYokohama Plant

Tatsuno PlantSakai PlantHikone Plant

　　

Tokuyama Plant

Oita Complex

1

5

A

23

4

Process Solutions CenterBusiness Development Center

Institute for Polymers and Chemicals

B

Europe

F2 Chemicals LimitedSHOTIC Europa Industria de Aluminio Lda.Showa Denko Europe GmbH

North America

Showa Denko Carbon, Inc.Showa Aluminum Corporation of AmericaShowa Denko America, Inc.

East Asia

Shanghai Showa Chemicals Co., Ltd.Shanghai Showa Highpolymer Co., Ltd.Shanghai Showa Electronics Materials Co., Ltd.Shodex China Co., Ltd.Shanghai Showa Highpolymer Trading Co., Ltd.Zhejiag Quzhou JuhuaShowa Electoronic Chemical Materials Co., Ltd.Lianyungang Zaoling Abrasives Co., Ltd.Showa Denko Sichuan Carbon Inc.Showa Denko (Dalian) Co., Ltd.

Showa Denko Aluminum (Nantong) Co., Ltd.Ganzhou Zhaori Rare Earth New Materials Co., Ltd.Showa Denko (Shanghai) Co., Ltd.Showa Specialty Gas (Taiwan) Co., Ltd.Taiwan Showa Chemicals Manufacturing Co., Ltd.Showa Denko HD Trace corp.Taiwan Showa Denko Electronics Co., Ltd.Korea Showa Chemicals Co.

Southeast Asia

Showa Specialty Gas Singapore (Pte.) Ltd.SHOTIC (Singapore) Pte Ltd.Showa Denko HD Singapore Pte Ltd.Showa Denko Singapore (Pte)Ltd.P.T. Indonesia Chemical AluminaEternal Showa Highpolymer Co., Ltd.Showa Denko Rare-Earth Vietnam Co., Ltd.Hanacans JSCShowa Aluminum Manufacturing Philippines CorporationShowa Denko HD (Malaysia) Sdn.Bhd.SHOTIC MALAYSIA SDN. BHD.

HeadOffice

1 2 NagoyaBranch

3 OsakaBranch

4 FukuokaBranch

5 KawasakiOffice

Europe

Korea

ChinaTaiwan

SE.Asia

America

Overseas SitesSites in Japan

Business Sites

Business Development Center Institute for Advanced and Core TechnologyAnalysis & Physical Properties CenterSafety Evaluation Center

A

Aluminum Electronics Advanced Battery Materials Department


Due to its light, strong, and corrosion-resistant characteristics, unsaturated polyester resin "RigolacTM" is used in wide-ranging applications, including automotive parts, home electric appliances, and ocean development.

Unsaturated polyester resinElectronic specialty gases are used in production processes for electronic components such as semiconductors, LCD panels, LEDs, and solar cells. Showa Denko manufactures dozens of these high-purity gases including hydrogen, ammonia, chlorine, and fluorine-containing gases.

Electronic specialty gases

Showa Denko Gas Products Co., Ltd. contributes to securing safety and stable supply of food resources by supplying carbon dioxide mainly for carbonated beverages and dry ice for cooling.

Carbon dioxide and dry ice"BionolleTM," a biodegradable plastic, is environment-friendly plastic that can be degraded into water and carbon dioxide by microorganisms after use. We are aiming to make this product even more environment-friendly by switching over to plant derived ingredients.

BionolleTM

Demand for NPAC, which is used as a solvent for special gravure printing ink, has been increasing as an environment-friendly substitute for the currently popular toluene.

n-Propyl acetate (NPAC)We contribute to effective use of resources and high cost competitiveness by not relying solely on naphtha (raw material diversification) to produce ethylene, which is widely used to produce various petrochemicals.

Ethylene

Allyl alcohol is used as raw material for wide-ranging products such as allyl ester used for eyeglass lenses, epichlorohydrin, surfactants, and aroma chemicals.

Allyl alcoholShowa Denko has developed SHORAYALTM film, achieving both high transparency and heat resistance. It is being marketed as glass-substitute product for use in displays such as touch screens and LCDs.

Heat-resistant transparent film

Ethyl acetate plant in OitaUsing original technology, we produce ethyl acetate, which is widely used as printing ink for food packaging and paint solvents.

Petrochemicals Division (Olefins Department, Organic Chemicals Department)PetrochemicalsThe Petrochemicals segment provides basic petrochemicals including ethylene and propylene, and organic chemicals derived from them, including acetyls and allyl alcohol derivatives.

ChemicalsThe Chemicals segment provides wide-ranging products, from industrial gases, industrial chemicals, high-performance chemicals, and elastomers, to electronic specialty gases and chemicals for the semiconductor industry, resins for reinforced plastics, and biodegradable resins.

Industrial Gases Division, Basic Chemicals Division (Ammonia & Derivatives Department, Soda & Derivatives Department), Electronic Chemicals Division, Functional Chemicals Division (Functional Polymers Department, Specialty Chemicals Department)

KPR (Kawasaki Plastic Recycle Plant)We produce ammonia from used plastic. Ammonia is used for denitration at thermal power plants, contributing to emission control.


Introduction of businesses of the Group

Due to its light, strong, and corrosion-resistant characteristics, unsaturated polyester resin "RigolacTM" is used in wide-ranging applications, including automotive parts, home electric appliances, and ocean development.

Unsaturated polyester resinElectronic specialty gases are used in production processes for electronic components such as semiconductors, LCD panels, LEDs, and solar cells. Showa Denko manufactures dozens of these high-purity gases including hydrogen, ammonia, chlorine, and fluorine-containing gases.

Electronic specialty gases

Showa Denko Gas Products Co., Ltd. contributes to securing safety and stable supply of food resources by supplying carbon dioxide mainly for carbonated beverages and dry ice for cooling.

Carbon dioxide and dry ice"BionolleTM," a biodegradable plastic, is environment-friendly plastic that can be degraded into water and carbon dioxide by microorganisms after use. We are aiming to make this product even more environment-friendly by switching over to plant derived ingredients.

BionolleTM

Demand for NPAC, which is used as a solvent for special gravure printing ink, has been increasing as an environment-friendly substitute for the currently popular toluene.

n-Propyl acetate (NPAC)We contribute to effective use of resources and high cost competitiveness by not relying solely on naphtha (raw material diversification) to produce ethylene, which is widely used to produce various petrochemicals.

Ethylene

Allyl alcohol is used as raw material for wide-ranging products such as allyl ester used for eyeglass lenses, epichlorohydrin, surfactants, and aroma chemicals.

Allyl alcoholShowa Denko has developed SHORAYALTM film, achieving both high transparency and heat resistance. It is being marketed as glass-substitute product for use in displays such as touch screens and LCDs.

Heat-resistant transparent film

Ethyl acetate plant in OitaUsing original technology, we produce ethyl acetate, which is widely used as printing ink for food packaging and paint solvents.

Petrochemicals Division (Olefins Department, Organic Chemicals Department)PetrochemicalsThe Petrochemicals segment provides basic petrochemicals including ethylene and propylene, and organic chemicals derived from them, including acetyls and allyl alcohol derivatives.

ChemicalsThe Chemicals segment provides wide-ranging products, from industrial gases, industrial chemicals, high-performance chemicals, and elastomers, to electronic specialty gases and chemicals for the semiconductor industry, resins for reinforced plastics, and biodegradable resins.

Industrial Gases Division, Basic Chemicals Division (Ammonia & Derivatives Department, Soda & Derivatives Department), Electronic Chemicals Division, Functional Chemicals Division (Functional Polymers Department, Specialty Chemicals Department)

KPR (Kawasaki Plastic Recycle Plant)We produce ammonia from used plastic. Ammonia is used for denitration at thermal power plants, contributing to emission control.


We produce "SHOTIC™" continuously-cast aluminum-alloy rods having fine metallurgical structure and their forgings for use including automotive compressor components and engine pistons.

Continuously-cast aluminum-alloyrods and their forgingsWe provide oil coolers, heat sinks and

other heat exchangers for industrial equipment, as well as cooling devices for hybrid car power control units.

Cooling devices

Showa Aluminum Can Corp. manufactured the first aluminum can in Japan. As aluminum cans are light and easily recyclable, we are operating the business not only at home but also abroad.

Aluminum cans

Aluminum cylinders with excellent surface quality for use as photoconductor drums of laser beam printers. Their demand has been growing due to evolution of color printing.

Aluminum cylindersfor laser beam printers

With a hardness coming secondonly to diamond, CBN is used fortools to cut automotive and othercomponents.

CBN (cubic boron nitride)Alumina is widely used among various industries, for purposes such as ceramics, fillers for plastics, refractories, and abrasives.

Alumina

In addition to conventional outdoor types, we have developed new types of photocatalysts whose effect is maintained even under indoor lighting. Due to their excellent antibacterial and antiviral characteristics in particular, demand is expected to increase in the future.

PhotocatalystsSUPER-TITANIATM high-purity titanium oxide is used as one of the main materials in ceramic capacitors installed in familiar electronic and electrical devices.

Ceramics for capacitors

Graphite electrodesGraphite electrodes contribute to iron and steel recycling as a component to melt iron and steel scraps in electric steel furnaces. Our graphite electrodes are rated very highly by customers throughout the world due to their excellent quality.

Ceramics Division, Carbons DivisionInorganicsThe Inorganics segment provides ceramic products such as alumina, polishing materials, abrasives, and refractories; photocatalysts; graphite electrodes for electric steel-making furnaces; and high-performance carbon products.

Aluminum Rolled Products Division, Aluminum Specialty Components Division, Aluminum Can DivisionAluminum

The Aluminum segment provides aluminum materials including rolled, extruded and forged products; and various high-value-added fabricated aluminum products such as high-purity aluminum foil for capacitors, aluminum cylinders for laser beam printers, radiators for power devices installed in hybrid cars and other vehicles, and aluminum cans for beverages.

High-purity aluminum foilHigh-purity aluminum foil is a key material in electronic components essential to IT devices, home electric appliances, and automobiles. High-purity aluminum foil for electrolytic capacitors is produced through precise control of purity and manufacturing processes.



We produce "SHOTIC™" continuously-cast aluminum-alloy rods having fine metallurgical structure and their forgings for use including automotive compressor components and engine pistons.

Continuously-cast aluminum-alloyrods and their forgingsWe provide oil coolers, heat sinks and

other heat exchangers for industrial equipment, as well as cooling devices for hybrid car power control units.

Cooling devices

Showa Aluminum Can Corp. manufactured the first aluminum can in Japan. As aluminum cans are light and easily recyclable, we are operating the business not only at home but also abroad.

Aluminum cans

Aluminum cylinders with excellent surface quality for use as photoconductor drums of laser beam printers. Their demand has been growing due to evolution of color printing.

Aluminum cylindersfor laser beam printers

With a hardness coming secondonly to diamond, CBN is used fortools to cut automotive and othercomponents.

CBN (cubic boron nitride)Alumina is widely used among various industries, for purposes such as ceramics, fillers for plastics, refractories, and abrasives.

Alumina

In addition to conventional outdoor types, we have developed new types of photocatalysts whose effect is maintained even under indoor lighting. Due to their excellent antibacterial and antiviral characteristics in particular, demand is expected to increase in the future.

PhotocatalystsSUPER-TITANIATM high-purity titanium oxide is used as one of the main materials in ceramic capacitors installed in familiar electronic and electrical devices.

Ceramics for capacitors

Graphite electrodesGraphite electrodes contribute to iron and steel recycling as a component to melt iron and steel scraps in electric steel furnaces. Our graphite electrodes are rated very highly by customers throughout the world due to their excellent quality.

Ceramics Division, Carbons DivisionInorganicsThe Inorganics segment provides ceramic products such as alumina, polishing materials, abrasives, and refractories; photocatalysts; graphite electrodes for electric steel-making furnaces; and high-performance carbon products.

Aluminum Rolled Products Division, Aluminum Specialty Components Division, Aluminum Can DivisionAluminum

The Aluminum segment provides aluminum materials including rolled, extruded and forged products; and various high-value-added fabricated aluminum products such as high-purity aluminum foil for capacitors, aluminum cylinders for laser beam printers, radiators for power devices installed in hybrid cars and other vehicles, and aluminum cans for beverages.

High-purity aluminum foilHigh-purity aluminum foil is a key material in electronic components essential to IT devices, home electric appliances, and automobiles. High-purity aluminum foil for electrolytic capacitors is produced through precise control of purity and manufacturing processes.


"Showa Sound Insulating FDP," produced and sold by Showa Denko Kenzai K.K., is a high-value-added drain riser adopted by numerous condominiums, hotels and hospitals, featuring superior sound insulation, compact size, fire resistance and ease of construction.

Sound-insulating fireproofdual-layer pipeMolecular sieve (synthetic zeolite) of

Union Showa K.K. is widely used for drying of coolant for car air conditioners, elimination of moisture, impurities and harmful substances during production processes at plants, and as solutions for environmental issues (such as elimination of VOCs and treatment of contaminated water at the nuclear power plant in Fukushima).

Molecular sieve

Showa Denko Packaging Co., Ltd. succeeded in developing technology to impart conductivity to aluminum laminated film, which is used for casing laminated lithium-ion batteries, thereby reducing the size and weight of lithium-ion batteries.

New LIB-packaging laminatesWe are further developing alternative catalysts as substitutes for platinum and carbonaceous resin mold separators for polymer electrolyte fuel cells (PEFC), which we developed by making full use of our graphitization, molding and surface treatment technologies.

Fuel-cell components

Obsidian perlite produced by Fuyo Perlite Co., Ltd. is a natural material made of burned obsidian, used as lightweight aggregate (specific gravity: 0.1) to construct a comfortable living environment. It is also utilized as a soil conditioner for rooftop gardening and landscaping, as well as material for responding to environment-related issues such as industrial-wastewa-ter/oil-spill accidents.

Obsidian perlite Shoko Agri Co., Ltd. of the Shoko Group contributes to the expansion of domestic agricultural businesses by developing fertilizers to produce high-quality agriproducts, providing advice on their application, and offering a variety of agricultural equipment to support efficient production.

Fertilizers

The demand for rare earth magnet alloy is growing in fields such as drive motors for hybrid cars and energy efficient home electric appliances. We are not only diversifying procurement sources of rare earths and expanding production of rare earth magnet alloys, but also strengthening development of next-generation magnet alloys with decreased rare-earth content

Rare earthsIn addition to LEDs used for image displays and lighting, we manufacture proprietary red LED chips that emit red light with wavelength of 660 nm which is optimum for plant growth.

LED

ESPACER™ is a material to form charge-up-resistant film, consisting mostly of electroconductive polymer. The electron-conducting coating film contributes to solution of issues resulting from charge accumulation during charged particle radiation processes such as electron beam lithography.

ESPACER™ SiC epitaxial wafers are materials used for next-generation power devices, which are expected to attain further energy conservation. They have already been introduced to power supplies for servers in datacenters and power devices for railway vehicles.

SiC epitaxial wafers

Hard diskAs the world's largest independent hard disk media supplier, the Showa Denko Group has been developing products with ever-increasing storage capacities by making full use of cutting-edge technologies, while ensuring optimal production and supply systems in order to respond to customer needs smoothly.

In the rapidly growing lithium-ion battery market, the Showa Denko Group offers products such as long-life anode material "SCMGTM," aluminum laminate film "SPALFTM" that boasts large market share, and unique anode/cathode additive "VGCFTM" that features stability and high quality.

Electronics Materials Division, HD DivisionElectronicsThe Electronics segment provides compound semiconductor materials for ultrabright and high-output LEDs; rare earth magnetic alloys for high-performance motors; and HD media with high storage capacity for use in PCs, consumer electronics such as DVD recorders and game machines, and servers for data centers.

Advanced Battery Materials Department ABM Department provides lithium-ion battery materials including anode materials, aluminum laminate film, and conductive additives; and fuel-cell components such as carbon-based separators. The Department develops new materials for battery applications, where technological innovation is going on.

Related BusinessesWe manufacture and sell a wide variety of chemicals, light metals, and construction/engineering materials.

Lithium-ionbattery materials

SHOWA DENKO CSR Report 201514 SHOWA DENKO CSR Report 201514


"Showa Sound Insulating FDP," produced and sold by Showa Denko Kenzai K.K., is a high-value-added drain riser adopted by numerous condominiums, hotels and hospitals, featuring superior sound insulation, compact size, fire resistance and ease of construction.

Sound-insulating fireproofdual-layer pipeMolecular sieve (synthetic zeolite) of

Union Showa K.K. is widely used for drying of coolant for car air conditioners, elimination of moisture, impurities and harmful substances during production processes at plants, and as solutions for environmental issues (such as elimination of VOCs and treatment of contaminated water at the nuclear power plant in Fukushima).

Molecular sieve

Showa Denko Packaging Co., Ltd. succeeded in developing technology to impart conductivity to aluminum laminated film, which is used for casing laminated lithium-ion batteries, thereby reducing the size and weight of lithium-ion batteries.

New LIB-packaging laminatesWe are further developing alternative catalysts as substitutes for platinum and carbonaceous resin mold separators for polymer electrolyte fuel cells (PEFC), which we developed by making full use of our graphitization, molding and surface treatment technologies.

Fuel-cell components

Obsidian perlite produced by Fuyo Perlite Co., Ltd. is a natural material made of burned obsidian, used as lightweight aggregate (specific gravity: 0.1) to construct a comfortable living environment. It is also utilized as a soil conditioner for rooftop gardening and landscaping, as well as material for responding to environment-related issues such as industrial-wastewa-ter/oil-spill accidents.

Obsidian perlite Shoko Agri Co., Ltd. of the Shoko Group contributes to the expansion of domestic agricultural businesses by developing fertilizers to produce high-quality agriproducts, providing advice on their application, and offering a variety of agricultural equipment to support efficient production.

Fertilizers

The demand for rare earth magnet alloy is growing in fields such as drive motors for hybrid cars and energy efficient home electric appliances. We are not only diversifying procurement sources of rare earths and expanding production of rare earth magnet alloys, but also strengthening development of next-generation magnet alloys with decreased rare-earth content

Rare earthsIn addition to LEDs used for image displays and lighting, we manufacture proprietary red LED chips that emit red light with wavelength of 660 nm which is optimum for plant growth.

LED

ESPACER™ is a material to form charge-up-resistant film, consisting mostly of electroconductive polymer. The electron-conducting coating film contributes to solution of issues resulting from charge accumulation during charged particle radiation processes such as electron beam lithography.

ESPACER™ SiC epitaxial wafers are materials used for next-generation power devices, which are expected to attain further energy conservation. They have already been introduced to power supplies for servers in datacenters and power devices for railway vehicles.

SiC epitaxial wafers

Hard diskAs the world's largest independent hard disk media supplier, the Showa Denko Group has been developing products with ever-increasing storage capacities by making full use of cutting-edge technologies, while ensuring optimal production and supply systems in order to respond to customer needs smoothly.

In the rapidly growing lithium-ion battery market, the Showa Denko Group offers products such as long-life anode material "SCMGTM," aluminum laminate film "SPALFTM" that boasts large market share, and unique anode/cathode additive "VGCFTM" that features stability and high quality.

Electronics Materials Division, HD DivisionElectronicsThe Electronics segment provides compound semiconductor materials for ultrabright and high-output LEDs; rare earth magnetic alloys for high-performance motors; and HD media with high storage capacity for use in PCs, consumer electronics such as DVD recorders and game machines, and servers for data centers.

Advanced Battery Materials Department ABM Department provides lithium-ion battery materials including anode materials, aluminum laminate film, and conductive additives; and fuel-cell components such as carbon-based separators. The Department develops new materials for battery applications, where technological innovation is going on.

Related BusinessesWe manufacture and sell a wide variety of chemicals, light metals, and construction/engineering materials.

Lithium-ionbattery materials


★1931 Started manufacturingammonium sulfate using domestic technology(Showa Fertilizers K.K.)

★1934 Industrialized domesticallyproduced aluminum(Nihon Iodine K.K.)

★1908 Established Sobo MarineProducts K.K.

◆1921 Established Takada AluminumEquipment Manufacturing K.K.

★1926 Established Nihon Iodine K.K.★1928 Established Showa Fertilizers K.K.●1937 Established Riken Kohaku Kogyo K.K. ★1939 Established Showa Denko K.K.

1908～ 1945～ 1986～ 2001～ 2011～ 2015～

Technology and productsEvent

CSR

With the business on trackunder the spirit of “tenacity

and indomitability”, established the foundation of

the Showa Denko Group.

Deepened and furtherdeveloped business,

taking advantage of postwarreconstruction and rapid growth

Switched toenergy-saving products

afterovercoming oil crises

Expanded into the energy-saving andhigh value-adding business in full-scale, through the fusion of organic/inorganic

and aluminum technologies.

Engaged inShaping Ideas in pursuit of evolving chemical company with individualized products

through the fusion of organic / inorganic and aluminum technologies

★1945 Resumed production of ammonium sulfate fertilizer

●1951 Achieved domestic production of synthetic resin emulsion

●1953 Achieved domestic production of unsaturated polyester resin

●1965 Achieved domestic production of vinyl ester resin

◆1969 Showa Aluminum Can Corporation produced the �rst aluminum can in Japan

◆1981 Developed the “Cojunal Method”, a high-purity aluminum re�ning method

◆1986 Started manufacture and sale of aluminum cylinders

★1988 Expanded into the hard disk business

◆1981 Started aluminum can collection activities at certain plants

★1969 Oita Petrochemical Complex started commercial operation

◆1990 Started company-wide aluminum can recycling activities

★1995 Formulated “Responsible Care Action Guidelines”

★1997 Published Responsible Care Report

★1998 Established “Our Code of Conduct”

★1986 Acquired a graphite electrode business in the United States, and established Showa Denko Carbon, Inc.

★2003 Started the business to recycl used plastic as material for ammonia at Kawasaki Plant

★2005 Started mass production of perpendicular magnetic recording hard disks �rst in the world

★2009 Started production of cooling devices for power control units

★◆2001 With the merger with Showa Aluminum Corporation as the trigger, expanded aluminum can recycling activities to Showa Denko’s plants, o�ces and group companies

★ 2005 Issued a CSR Report★ 2005 Signed the “RC Charter”

★◆2001 Merged Showa Aluminum Corporation

★ 2009 Established Advanced Battery Materials Department

★●2010 Merged Showa Highpolymer Co., Ltd.

★2011 Received the 43rd Ichimura Industrial Award for the “development of cooling devices for power control units”

★2013 Our LED lighting equipment for plant growth received the “Nikkei Business Daily Merit Award” of the 2012 Nikkei Superior Products & Services Award

◯ SiC epitaxial wafers◯ Plant factory units◯ LIB materials(packaging materials, anode material)◯ Fuel cell catalysts◯ Full lineup nano-carbons (CNT, Fullerene)◯ Printed electronics

★2012 Established “Our Code of Conduct and Its Practical Guide”

★2013 Our long history of aluminum can recycling activities received the “Minister of Economy, Trade and Industry's Prize” of the 3Rs (Reduce, Reuse, and Recycle) Promotion Merit Awards in FY 2013

★2014 Resigned the amended Responsible Care Charter

★2014 Received the Special Incentive Award of the “Ikumen Company Award 2014” sponsored by the Ministry of Health, Labour and Welfare

★ Showa Denko K.K.

◆ Showa Aluminum Corporation

● Showa Highpolymer Co., Ltd.

Under the medium-term consolidated business plan “PEGASUS,” the Showa Denko Group has focused its research and development resources on two business domains, “Energy/Environment” and “Electronics”, while promoting research and development that emphasizes marketing and strategic fusion of organic/inorganic and aluminum technologies.

As for our research organization, while reinforcing existing lines of business, we also concentrated e n gi n e e r s i n s p e c i � c � e l d s a t t h e B u s i n e s s Development Center to establish research centers managing everything from application �elds of existing businesses to next-generation themes (Institute for Polymers and Chemicals, Institute for Advanced and Core Technology), common support centers (Analysis & Physical Properties Center, Safety Evaluation Center), and commercialization projects.

Research and development

In response to various demands from the society, the Showa Denko Group has been engaged in “’Shaping ideas in pursuit of evolving chemical company with individualized products” by providing unique, one-of-a-kind products and solutions through the fusion of our organic/inorganic and aluminum technologies.

Main topics of research

Evolving chemicalcompany withindividualized products

7/1に解像度を眼伸ばししました。

History of the Group

History of the GroupThe Showa Denko Group started its operations by focusing on the future possibilities of the electrochemical industry, which utilized one of Japan’s important resources: abundant water energy. Originating from electrochemistry, our Group’s technology further expanded to the fields of inorganic chemistry, organic chemistry and metal materials. Today, the technology is being passed on to materials and components used in the information/communication industry and automotive industry, as well as a wide variety of products that are essential in everyday life.


★1931 Started manufacturingammonium sulfate using domestic technology(Showa Fertilizers K.K.)

★1934 Industrialized domesticallyproduced aluminum(Nihon Iodine K.K.)

★1908 Established Sobo MarineProducts K.K.

◆1921 Established Takada AluminumEquipment Manufacturing K.K.

★1926 Established Nihon Iodine K.K.★1928 Established Showa Fertilizers K.K.●1937 Established Riken Kohaku Kogyo K.K. ★1939 Established Showa Denko K.K.

1908～ 1945～ 1986～ 2001～ 2011～ 2015～

Technology and productsEvent

CSR

With the business on trackunder the spirit of “tenacity

and indomitability”, established the foundation of

the Showa Denko Group.

Deepened and furtherdeveloped business,

taking advantage of postwarreconstruction and rapid growth

Switched toenergy-saving products

afterovercoming oil crises

Expanded into the energy-saving andhigh value-adding business in full-scale, through the fusion of organic/inorganic

and aluminum technologies.

Engaged inShaping Ideas in pursuit of evolving chemical company with individualized products

through the fusion of organic / inorganic and aluminum technologies

★1945 Resumed production of ammonium sulfate fertilizer

●1951 Achieved domestic production of synthetic resin emulsion

●1953 Achieved domestic production of unsaturated polyester resin

●1965 Achieved domestic production of vinyl ester resin

◆1969 Showa Aluminum Can Corporation produced the �rst aluminum can in Japan

◆1981 Developed the “Cojunal Method”, a high-purity aluminum re�ning method

◆1986 Started manufacture and sale of aluminum cylinders

★1988 Expanded into the hard disk business

◆1981 Started aluminum can collection activities at certain plants

★1969 Oita Petrochemical Complex started commercial operation

◆1990 Started company-wide aluminum can recycling activities

★1995 Formulated “Responsible Care Action Guidelines”

★1997 Published Responsible Care Report

★1998 Established “Our Code of Conduct”

★1986 Acquired a graphite electrode business in the United States, and established Showa Denko Carbon, Inc.

★2003 Started the business to recycl used plastic as material for ammonia at Kawasaki Plant

★2005 Started mass production of perpendicular magnetic recording hard disks �rst in the world

★2009 Started production of cooling devices for power control units

★◆2001 With the merger with Showa Aluminum Corporation as the trigger, expanded aluminum can recycling activities to Showa Denko’s plants, o�ces and group companies

★ 2005 Issued a CSR Report★ 2005 Signed the “RC Charter”

★◆2001 Merged Showa Aluminum Corporation

★ 2009 Established Advanced Battery Materials Department

★●2010 Merged Showa Highpolymer Co., Ltd.

★2011 Received the 43rd Ichimura Industrial Award for the “development of cooling devices for power control units”

★2013 Our LED lighting equipment for plant growth received the “Nikkei Business Daily Merit Award” of the 2012 Nikkei Superior Products & Services Award

◯ SiC epitaxial wafers◯ Plant factory units◯ LIB materials(packaging materials, anode material)◯ Fuel cell catalysts◯ Full lineup nano-carbons (CNT, Fullerene)◯ Printed electronics

★2012 Established “Our Code of Conduct and Its Practical Guide”

★2013 Our long history of aluminum can recycling activities received the “Minister of Economy, Trade and Industry's Prize” of the 3Rs (Reduce, Reuse, and Recycle) Promotion Merit Awards in FY 2013

★2014 Resigned the amended Responsible Care Charter

★2014 Received the Special Incentive Award of the “Ikumen Company Award 2014” sponsored by the Ministry of Health, Labour and Welfare

★ Showa Denko K.K.

◆ Showa Aluminum Corporation

● Showa Highpolymer Co., Ltd.

Under the medium-term consolidated business plan “PEGASUS,” the Showa Denko Group has focused its research and development resources on two business domains, “Energy/Environment” and “Electronics”, while promoting research and development that emphasizes marketing and strategic fusion of organic/inorganic and aluminum technologies.

As for our research organization, while reinforcing existing lines of business, we also concentrated e n gi n e e r s i n s p e c i � c � e l d s a t t h e B u s i n e s s Development Center to establish research centers managing everything from application �elds of existing businesses to next-generation themes (Institute for Polymers and Chemicals, Institute for Advanced and Core Technology), common support centers (Analysis & Physical Properties Center, Safety Evaluation Center), and commercialization projects.

Research and development

In response to various demands from the society, the Showa Denko Group has been engaged in “’Shaping ideas in pursuit of evolving chemical company with individualized products” by providing unique, one-of-a-kind products and solutions through the fusion of our organic/inorganic and aluminum technologies.

Main topics of research

Evolving chemicalcompany withindividualized products

7/1に解像度を眼伸ばししました。


Progress in the Medium-Term

As for the four Growth businesses, we have executed the plan for expanding those businesses mainly overseas.In particular, supply chain capabilities for semiconductor-processing high-purity gases were improved, with manufacturing and logistics bases located in Japan, China, Taiwan, Korea and Singapore.Accomplishments made in the other growth businesses include acquisition of Vietnamese aluminum can

Progress in the four growth businesses

manufacturer Hanacans, and the establishment and commercial operation of a new high-purity aluminum foil plant in Nantong, China. As for our two overseas bases for functional chemicals (one in Shanghai, China and the other in Thailand), full-scale production has been maintained at the Shanghai base, therefore leading to the decision in February 2015 to construct the second base in Zhuhai, China.

2014 consolidated financial results

We have succeeded in operating the hard disk media business, which is the core of the Electronics segment, as a business capable of producing steady and high operating income. The year 2014 did not involve any large-scale projects such as capital investments, but we continued to implement measures to strengthen the business through projects such as joint development with our client and organizational integration of HD substrates and media.After suffering through sluggish market worldwide since 2011, the graphite electrode business hit the bottom of stagnating demand in the third quarter of 2013, and market

Progress in the Base (Growth) businesses

conditions have started to improve mainly in the United States since 2014. Construction to enhance productive capacity that has been going on at Showa Denko Carbon in the United States was completed in October 2014. Despite the delay of one year behind schedule due to the addition of environment-related constructions in the middle, the expansion construction was completed in concert with the recovery of the US market. We plan to gradually raise the operating rate of the enhanced sections of the plant, while carefully monitoring future trends in demand.

Business portfolio in Phase II

Progress report on PEGASUS Phase IIHere we introduce the results of 2014, the first year of PEGASUS Phase II, as well as measures for 2015.

The Group recorded consolidated net sales of ¥876,580 million in 2014, up 3.4% from the previous year. While sales in the Petrochemicals segment decreased due to the fall in shipment volumes resulting from the periodic large-scale shutdown maintenance of ethylene plant that takes place once in every four years, sales in the five other segments increased, due mainly to higher shipment volumes. Operating income decreased 19.4%, to ¥20,915 million. While the Chemicals, Electronics, and Inorganics segments recorded higher income than the previous year,

the Petrochemicals segment recorded lower income due to the sharp drop in naphtha prices at the end of the year, in addition to the influence of shutdown maintenance. The Aluminum segment also recorded lower income due to the rise in prices of aluminum ingots, and the Others segment recorded a slightly larger operating loss. The group posted a net income of ¥3,500 million, down 61.4%, due partly to the increase in loss on sales and retirement of noncurrent assets and loss on valuation of investment securities.


We will reduce costs from the perspective of the ideal cost structure to acquire the required cost competitiveness.As for new capital investments such as high-purity aluminum foil in Nantong, China, and the Malaysian base for SHOTIC™ (continuously cast aluminum rods) completed in November 2014, we will increase their sales and profits as planned for accelerated investment recovery, so that these lines may contribute to businesses enhancement.In the existing businesses, we will make further effort regarding material switching, operating rate improvement,

Toward the achievement of the profit and cash flow targets

productivity enhancement, and restructuring of the product structure in order to enhance competitiveness. Despite facing unfavorable winds over the four years since 2011, the Showa Denko Group had made considerable progress in improving its business foundation during this period. With a concept of “go forward, upward and outward” in which we set ambitious targets and strive to achieve them, we will aim to make further profit and cash flow.

◆ Base (Stable) businessesWe expect that increased profits in the two segments of petrochemicals and chemicals will boost the overall profit in the Base (Stable) businesses.

◆ New Growth businessesIn 2014, the market for SiC epitaxial wafers began to take off at full-scale, with the automotive industry showing a positive attitude about the adoption of SiC power devices. We will place this line of business on track as early as possible by intensively devoting management resources.

◆ Base (Growth) businessesWe will work on the following measures for the businesses representing the two wings of PEGASUS:

HD mediaAccelerating development of technology to increase HD media capacityPromoting optimization of production bases of our Group

Graphite electrodesShowa Denko Carbon: Gradually starting operation of the enhanced facilities starting from the second half of the yearShowa Denko Sichuan Carbon: Organizing the system to prepare for the coming recovery in demandDomestic base: Streamlining cost structure based on the current operating rate

Measures for 2015 by business category

◆ Growth businessesThe following measures are planned for the four Growth businesses:

Aluminum cansPromoting sales expansion into the Vietnamese market in high gear

Semiconductor-processing high-purity gasesStrengthening business at overseas bases, and further improving the supply chain

Functional chemicalsIncreasing the supply capacity at overseas bases, and cultivating as well as creating new markets

High-purity aluminum foilImproving productivity and expanding sales to local clients in China

Results for 2014 Plan for 2015*

Sales 8,766 9,000

Operating

income209 400

Net income 35 150

Phase II Numerical Targets ( 100 million )

*Announced on February12,2015


Financial data

Financial / Non-Financial Highlights

Showa Denko K.K. and Consolidated Subsidiaries million yen

売上高、事業別売上高構成比率、営業利益・売上高営業利益率、当期純利益、(追加候補)総資産、研究開発費、設備投資額、自己資本比率、

848,071876,580

739,811

854,158797,189

2010 2011 2012 2013 2014

Net Sales Consolidated sales by segment

20,67021,597 20,63320,633 20,435

R&D expenditures

58,035

38,79442,503

44,370

Capital expenditures

29.7

47,318


20,362

924,484941,303

933,162985,771

1,011,083

Total assets

750,000

1,000,000

500,000

250,000

(million yen)

(million yen)(million yen)

(million yen)

0

15,000

10,000

5,000

20,000

25,000(million yen)

0

10

20

30

（%）

0

250,000

500,000

750,000

1,000,000

0

45,000

30,000

15,000

0

60,000

（%）

0

2

4

6

2.4

Operating income (loss)Ratio of operating incom to sales

■ Operating income● Ratio of operating incom to sales

15.1%

10.7%

Aluminum

Chemicals

30.6%21.2%

Others Petrochemistry

15.1%

Electronics7.3%

Inorganic

2010 2011 2012 2013 2014

2010 2011 2012 2013 20142010 2011 2012 2013 2014

2010 2011 2012 2013 2014 2010 2011 2012 2013 20142010 2011 2012 2013 2014

2014

20,000

15,000

10,000

5,000

0

12,706

16,980

9,368 9,065

3,500

Net income (loss)

20,915

38,723

47,357

28,10925,9533.1

3.8

5.54.9

26.1 26.829.2 30.6

For the year 2010 2011 2012 2013 2014

Net sales 797,189 854,158 739,811 848,071 876,580

Operating income ( loss ) 38,723 47,357 28,108 25,953 20,915

Ratio of Operating income to sales ( % ) 4.9 5.5 3.8 3.1 2.4

Net income ( loss ) 30,471 40,018 23,448 23,488 22,102

Ordinary income ( loss ) 12,706 16,980 9,368 9,065 3,500

Net cash provided by operating activities 66,293 69,437 53,310 63,565 65,996

Net cash provided by (used in) investing activities △ 49,074 △ 38,672 △ 40,209 △ 46,738 △ 47,225

Free cash flow 17,219 30,765 13,101 16,827 18,771

Net cash provided by (used in) financing activities △ 34,494 △ 17,295 △ 20,150 △ 6,805 △ 25,024

Shareholders’ equity ratio ( % ) 26.1 26.8 29.2 30.6 29.7

R&D expenditures 20,670 21,597 20,633 20,435 20,362

Capital expenditures 58,035 38,794 42,503 44,370 47,318

Depreciation and amortization 50,678 49,413 46,232 39,779 40,673

At year-end 2010 2011 2012 2013 2014

Total assets 924,484 941,303 933,162 985,771 1,011,083

Return on equity ( ROE ) ( % ) 5.2 6.9 3.6 3.2 1.2

Total net assets 284,965 295,745 314,966 345,811 320,504

Interest-bearing debt 351,034 347,308 342,262 353,686 383,124

Debt/equity ratio (Times) 1.23 1.17 1.09 1.02 1.20

Per share 2010 2011 2012 2013 2014

Net income—primary 8.49 11.35 6.26 6.06 2.38

Cash dividends (applicable to the period) 3 3 3 3 3


売上高、事業別売上高構成比率、営業利益・売上高営業利益率、当期純利益、(追加候補)総資産、研究開発費、設備投資額、自己資本比率、

848,071876,580

739,811

854,158797,189

2010 2011 2012 2013 2014

Net Sales Consolidated sales by segment

20,67021,597 20,63320,633 20,435

R&D expenditures

58,035

38,79442,503

44,370


29.7

47,318


20,362

924,484941,303

933,162985,771

1,011,083

Total assets

750,000

1,000,000

500,000

250,000

(million yen)

(million yen)(million yen)

(million yen)

0

15,000

10,000

5,000

20,000

25,000(million yen)

0

10

20

30

（%）

0

250,000

500,000

750,000

1,000,000

0

45,000

30,000

15,000

0

60,000

（%）

0

2

4

6

2.4

Operating income (loss)Ratio of operating incom to sales

■ Operating income● Ratio of operating incom to sales

15.1%

10.7%

Aluminum

Chemicals

30.6%21.2%

Others Petrochemistry

15.1%

Electronics7.3%

Inorganic

2010 2011 2012 2013 2014

2010 2011 2012 2013 20142010 2011 2012 2013 2014

2010 2011 2012 2013 2014 2010 2011 2012 2013 20142010 2011 2012 2013 2014

2014

20,000

15,000

10,000

5,000

0

12,706

16,980

9,368 9,065

3,500

Net income (loss)

20,915

38,723

47,357

28,10925,9533.1

3.8

5.54.9

26.1 26.829.2 30.6


Financial / Non-Financial Highlights

Non-Financial data

*1 Aggregate calculation in each fiscal year

*2 For the range of the Showa Denko Group, see page 59.

*3 For the range of the Showa Denko Group, see page 70.

2010 2011 2012 2013 2014

Environmental data

Discharged amounts of greenhouse gases (kt-CO2)*1 (Showa Denko Group) *2 2,728 2,695 2,509 2,702 2,678

Final landfill volumes of industrial waste (t)*1 (Showa Denko Group) *2 2,591 2,144 2,085 1,360 1,158

Social data

Number of employees on consolidated basis 11,597 11,542 9,890 10,234 10,577

Frequency rate of lost-time injuries (Showa Denko Group) *3 0.14 0.13 0.14 0.22 0.43

Final landfill volumes of industrial waste

Frequency rate of lost-time injuries

3,000

2,000

1,000

0

(kt-CO₂)

2,728 2,6952,509

2,702 2,678

Discharged amounts of greenhouse gases

Number of employees

3,000

2,000

1,000

0

（t）

2,390

1,932

201 212 235 273

1,850

1,087912

246

0.14

0.13

0.14

0.22

0.43

0.24

0.14

00.1

0.21

■ Showa Denko　　■ Showa Denko Group (Japan)

■ Overseas

■ Japan

（Persons）15,000

10,000

5,000

0

10,234 10,577

4,329

5,905

4,645

5,932

9,890

4,088

5,802

11,542

5,511

6,031

5,496

6,101

11,597

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45Showa Denko

Showa Denko Group

2010 2011 2012 2013 2014

2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

2010 2011 2012 2013 2014

Showa Denko K.K. and Consolidated Subsidiaries


CSR Activities2015

Stakeholders

Local comm

unities

Environment

Shareholders

Employees

Business partners

Customers

Relations of contents and the main stakeholders

CSR Activities, Contents

page

Responsible Care

Local Community and Social Contribution

Human Rights andLabor Practices

Management


Quality Assurance







Human Rights

Information Disclosure and IR

Fair Business Practice and Customer Care

Corporate Ethics and Compliance

Risk Management

Corporate Governance

Materiality assessment・CSR plans and achievements

CSR policy and stakeholders

Human resource development


Diversity

Biodiversity E�orts



Reducing Industrial Waste

Environmental accounting





Labor Practices

24-25

26-27

28-29

30-31

32-33

34-37

38-39

40-41

42-44

45-47

48-49

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54-55

56-57

58

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60-61

62

63

64-65

66

67

68-69

70-71

72-73

74-75


CSR policy

Given our currently promoted medium-term consolidated business plan PEGASUS (2011 - 2015), the Showa Denko Group aims to “contribute toward creating a society where affluence and sustainability are harmonized” while conducting business in such a way that our products and technologies contribute to solving social issues including the topics of global environment, energy, and resources.We are also making effective use of “Our Code of Conduct and Its Practical Guidelines” (established in 2012) to aim for “CSR that takes root in the mind of each employee.” Particularly during the PEGASUS period, we make it a rule to place emphasis on addressing “corporate ethics and compliance,” “risk management,” and “stakeholder

engagement” on the basis of ISO26000 social responsibility guidelines.

Stakeholders around the Showa Denko Group

The Showa Denko Group wants to be a company that fulfills our social responsibilities for all stakeholders and a company that is trusted and appreciated by them. We will clarify our responsibilities for all stakeholders, understand their expectations and issues regarding our group through communication, and reflect the results in our corporate activities.


CSR policy and stakeholders

CSR promotion Framework

List of stakeholder communications

Basic concept Communication tool Communication opportunity

Customers• We strive to ensure satisfaction with Group products

and services, thereby securing our customers' patronage.

• Website• News releases• CSR reports• Product brochures• SDS(Safety Data Sheet)• Advertisements• Company brochure

• Sales activities• Trade shows• Service center• Plant tours and other opportunities

Shareholders and

investors• We strive to ensure satisfaction with Group

performance and continued shareholding.

• Website• News releases• Financial results(summary)• Financial statements• Financial results presentation materials• Company brochure• CSR reports• Annual reports• Reports to shareholders

• Financial results and business briefings

• Shareholders’ meetings• Plant tours• Online conferences• Seminars• Other IR activities and other

opportunities

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

• Website• News releases• CSR reports• Company brochure

• Purchasing activities• CSR visits• Self-evaluation and other

opportunities

Local communities

and authorities

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

• Website• Press releases• CSR reports• CSR site reports• Plant newsletters

• Plant tours

• RC community dialogues

• Environmental monitoring

• Experiment classes and other opportunities

Employees and

their families• We strive to provide rewarding worksites in which

employees and their families can take pride.

• Group news (paper and web)• CSR reports• Portal site on the intranet

• MBO (management by objective)

• Labor management consultations

• Family tours

Comments from stakeholders

“I want to introduce recycling into my daily life.” (Elementary school student from our class-on-demand)

“Experiments were harder than expected, but turned out to be a good experience.” (Senior high school student from our internship program)

“Designing a program while giving consideration to safety and imagining the actual tasks was a difficult experience where extensive knowledge was required, but seeing the hydraulic press work at the very end was a rewarding experience.” (University student from our internship program)

“It was good to see and know what is being produced here.” (Local resident touring our plant)

“It was good to know that water treatment facilities and odor control were continuously monitored.” (Local resident touring our plant)

“Everything is much cleaner than the last time I visited this plant.” (Local resident touring our plant)

“Showa Denko’s activities would be good references for us in aiming for the Special Award for TPM* Achievement.” (Client visiting from abroad)

* TPM : Total Productive maintenance


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Our group has established the CSR Committee composed of the members of the Management Council, which serves as a framework to associate business measures with CSR. Under the CSR Committee, we established the Responsible Care Promotion Council, Risk Management Promotion Council, Human Rights/Corporate Ethics Promotion Council, and the IR Promotion Council. These councils plan and propose individual topics related to CSR as well as discuss matters to be presented to the CSR Committee.In addition, the Group has a framework where the CSR Department, Environment & Safety Office of CSR Department, Quality Assurance Office of CSR Department, General Affairs & Human Resources Department, and the Public Relations Office of General Affairs & Human Resources Department assist each business division and workplace perform various CSR activities such as those for human rights, corporate ethics and compliance, risk management, Responsible Care and other matters as staff departments. The CSR Department functions as the secretariat of the CSR Committee, plans and summarizes basic policies and comprehensive measures regarding CSR. The department also collects CSR related information and supervises risk management in our group. We have established the Environment & Safety Office and the Quality Assurance Office under the CSR Department in order to promote Responsible Care activities such as those for the environment, safety, and quality assurance. The General Affairs & Human Resources Department is

Selecting Materiality

Significance to stakeholdersHigh

Significance to our company High

● The Environment ● Safety and disaster prevention ● Labor practices/Human rights● Fair operating practices ● Provide products and services ● Customer issues● Organizational Governance ● Community involvement and development ● Others　　

responsible for human rights, corporate ethics and compliance, while the Public Relations Office in the General Affairs & Human Resources Department is responsible for CSR communications and is engaged in proposing and implementing individual policies and measures.

Determining Materiality

The current process for determining Materiality consists of the following four steps:

Step1 Listing issues to

be investigated /examined

Step2IdentifyingMateriality

Step3Prioritizing

Step4Con�rmingadequacy

Items demanded by our stakeholders were selected out from the core issues of ISO26000 and indexes set forth by GRI guidelines. Items required in conducting business activities as a manufacturing and chemical enterprise, as well as issues to be discussed were also listed.

Higher-priority items were selected in the light of our Group’s management policies, medium-term consolidated business plan, annual plan, business operation system, corporate code of conduct, and guideline. Consistency between our activities so far and the core issues of ISO26000 were also con�rmed.

Priority was determined by analyzing the signi�cance from both our stakeholders' perspective and that of our own. Signi�cance from stakeholders' perspective was evaluated based on questionnaires, and signi�cance from our own perspective was evaluated giving consideration to factors such as the impact our company makes on society as well as in�uence on our �nancial information.

After conducting interviews to the relevant divisions and departments, items that are approved at the CSR Committee meeting that will be held in the �rst half of 2015 will be formally adopted as the company’s Materiality.


Materiality assessment ・ CSR plans and achievements


◎ : Fully achieved (100%) ○ : Achieved 80% or more △ : Achieved less than 80%

Plans for 2014 Achievements in 2014 Evaluation Plans for 2015

Human rights

• Ensuring promotion of Human rights enlightenment activity

• Further expansion of human rights education

• Provision of training tools and sharing of educational packages

• Increased variation in educational contents

• Educational programs totaling 9,500 hours were provided at domestic workplaces and group companies. “Group Training for All Members” was frequently offered for educational items so that a wide range of applicable members can attend the program.

• Original training materials were prepared and provided to regions and group companies.

• Established “Educational Themes to Be Covered Securely, ”consisting of “Overview of Human Rights Education,” “Human Rights in the Workplace,” and “Antidiscrimination.” Formulated and implemented training plans at each region/group company so that trainings covering one or more of the themes were conducted each year. All employees are expected to attend the training for any one theme within 3 years. Furthermore, “Educational Themes of Deep Concern to the Public in Recent Years” (“Handicapped Persons,” “Children,” “Human Rights Violations over the Internet,” “Elderly People” and “Human Rights Issues Caused by the Great East Japan Earthquake”) were also arranged, and training plans were formulated and implemented at each region/group company.

◯


• Further expansion of human rights education • Provision of training tools and sharing of

educational packages• Provision of a wide range of training

opportunities• Increasing variation in educational contents

Corporate ethics and compliance

• Establishment of compliance and corporate ethics

• Discussions in each office using "Our Code of Conduct and Its Practical Guide"

• Implementation of employee attitude surveys and examination of issues and measures

• Support for putting "Our Code of Conduct and Its Practical Guide" into practice in overseas subsidiaries

• In addition to domestic workplaces and group companies, management employees of overseas subsidiaries pledged to conform to the Code of Conduct. Group discussions were also conducted at each worksite.

• Monitored the situation of our group in the areas of corporate ethics and compliance through employee surveys, to analyze and examine the issues of our Group.

• Advanced wide awareness of “Our Code of Conduct and Its Practical Guide.”

◯

• Preparing written oaths and reports in other languages, and continued to implement Corporate Ethics Month activities at overseas subsidiaries.

• Defining our Group’s ideal “Corporate Ethics” based on the employee survey, and implementing measures to make them shared by all employees.

• Increasing opportunities for education on corporate ethics.

• Expanding the coverage of the internal reporting system (Corporate Ethics Hotline)

• Opened a whistle-blowing channel for suppliers on our website of procurement information (July 1). ◎

• Taking prompt and firm action with due considerations to the protection of whistle-blowers.

Risk management

• Executing risk inventory continuously • Executed risk inventory ◎ • Executing risk inventory continuously

• Continuation of earthquake resistance measures

• Review of the earthquake resistance measures plan for 2015

• Reviewed and implemented of earthquake resistance measures

• Completed the earthquake resistance plan for 2015◎


• Formulating the earthquake resistance plan for 2016

• Tackling important common risks • Tackled earthquake risks, information security risks, general affairs risks and others ◎ • Continuously tackling important common risks

Labor practices

• Promotion of diversity• Setting of a target number (ratio) of

female managers as well as promoting employment and training of female employees to achieve this target

• Employment of foreign employees• Employment of foreign employees

Environment improvements in order to accept intellectually or mentally handicapped people

• Support for affiliated companies that have failed to reach the legal employment rate of handicapped people

• Increased the number of female managers (18 for Showa Denko K.K. domestic)

• Continued hiring of new foreign employees• Maintained an employment rate of handicapped people

that is at or higher than the legal rate (Showa Denko K.K.: 2.57%, Showa Denko Group: 2.53%)

• Participated in the 2014 Model Project to Promote Employment of People with Mental Disorders hosted by the Ministry of Health, Labour and Welfare, and accepted mentally handicapped persons as interns in four regions/group companies.

◎

• Promotion of diversity• Setting of a target number (ratio) of female

managers as well as promoting employment and training of female employees to achieve this target

• Employment of foreign employees • Environment improvements in order to accept

intellectually or mentally handicapped people

Fair business practice and customer care

• Expanding the target scope of CSR procurement Self-evaluations and CSR visits targeting the partners of group companies

• Continued self-evaluation and CSR visits; Number of received self-evaluation responses: 351 companies; Number of actual CSR visits: 54 cases.

• Expanded CSR procurement activities to domestic group companies (self-evaluation performed by the business partners of four group companies)

• Number of delivered self-evaluations: 45 cases; CSR visits: None.

◯

• Expanding the target scope of CSR procurement

• Expanding CSR procurement activities to domestic group companies (Having business partners of group companies conduct self-evaluations and conducting CSR visits).

• Expanding CSR procurement activities to overseas partners (Preparimg self-evaluation criteria for overseas).

Information disclosure and IR Promoting IR

• Held a variety of seminars, individual briefing sessions and other events in Japan and abroad

◎ Promoting IR• Timely information disclosure through the website

Local community and social contribution

• Contribution to local communities using internal resources

• Implemented Classes-on-demand, environmental education, plant tours, intern acceptance and other activities at each plant

◎• Contribution to local communities using

internal resources• Promotion of next-generation development

and contribution activities

Responsible Care activities • P56-57

CSR plans & achievements for 2014, and plans for 2015


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Basic policy on Corporate Governance

In order to secure sound, effective, transparent management and become a trusted and esteemed "company that contributes to society through continuous improvement in our corporate value," Showa Denko considers the enhancement of corporate governance as an important business challenge. We will achieve this enhancement from the following perspectives: ① Strengthening compliance ② Strengthening management monitoring and supervisory

functions ③ Clarifying management responsibilities ④ Rapid, effective decision-making and business execution ⑤ Strengthening the information disclosure system

In addition, proper relationships with our shareholders, customers, business partners, community residents, employees, and other stakeholders must also be maintained as well as developed further in order to gain social trust and esteem through continuous enhancement of our corporate value. We plan to achieve this by clarifying it as “Our Vision of Our Group,” and conduct business accordingly.

Implementation status of corporate governance measures

We introduced the corporate officer system to draw a clear line between the two functions of management supervision and business execution. The top management team, consisting of the President and corporate officers in charge of respective operations, has been working for prompt and dynamic decision-making in the areas of management. While drastically reducing the size of the Board of Directors, we have been reinforcing its supervision capacity by appointing outside directors.

Board of Directors

The Board of Directors decides basic policies of the Company. It also thoroughly discusses and makes decisions

regarding matters specified in the Companies Act or the Company's Articles of Incorporation as well as important issues in executing business operations, while promoting prompt and dynamic decision making on management.We appoint directors with emphasis on the viewpoint of corporate governance, aiming to strengthen the Board of Directors' monitoring and supervisory functions and ensure the propriety of decision making process. We have adopted a management system in which corporate officers dedicate themselves to business execution, which is their primary duty, but do not concurrently serve as directors, in principle. Furthermore, we have abolished the system of officer directors except the Chairman and the President, while strengthening monitoring by Auditors including outside Auditors and mutual supervision among directors.The term of office of directors is set to one year to ensure a quick and flexible formation of management team corresponding to changes in the business environment.

AccountingO�ce

Board ofAuditors

Auditors

Sta� Sections

BusinessDivisions

Rapid, e�ective decision-making and business

Board of Directors

Auditing

Management Committee

R&D Committee

Execution of Duty

Internal Audit Department

Top Management PresidentCorporate O�cers in Charge

CSR Comm

ittee

Shareholder’s meeting

Internal Audits

links

JobAudits

AccountingAuditAccountingAudit

Corporate governance structure

Responsible Care Promotion Council

Risk Management Promotion Council

Human Rights / Corporate EthicsPromotion Council

IR Promotion Council

Security Export Control Committee

Safety Measures Committee

Showa Denko endeavors to enhance corporate governance in order to become a "company that contributes to society," which is trusted and esteemed by society.


Management


Management Committee and R&D Committee

The Management Committee, which is chaired by the President, deliberates and decides on matters to be referred to the Board of Directors' meetings and important matters pertaining to overall management of the Company. The decisions are made after deliberations on two occasions. As for the investment issues to be submitted to the Management Committee, risk analysis as well as achievement/progress management are conducted in advance, through preliminary risk reviews and examinations by a relevant task team.The basic business policies including Company's medium-term business plans are decided not only through the deliberation of the Management Committee but also through sufficient examination by all corporate officers. The R&D Committee deliberates and makes decisions on important issues related to research and development.

CSR Committee

Showa Denko positions CSR Committee at the tp level of our corporate governance system to check all management measures from the CSR perspective. We also established the Security Export Control Committee and Safety Measures Committee under the CSR Committee. Moreover, we set up Responsible Care Promotion Council, Risk Management Promotion Council, Human Rights/Corporate Ethics Promotion Council and IR Promotion Council to deliberate on the respective matters.

Board of Auditors

Showa Denko employs an auditor system. The Auditors attend the Board of Directors’ meetings and other important internal meetings, offering opinions as necessary. They conduct audits on execution of business operations through on-site investigations, interviews with responsible persons, and reference to important documents so as to provide suggestions, advice, and recommendations for securing soundness in management.They also audit group companies in cooperation with auditors of major affiliated companies.

Overview of Governing Bodies/Committees/Councils

Governing Body Members Meeting frequency

Board of Directors

• 8 members (Three of them are outside directors.) (As of July 2015)

• Chairperson: Chairman of the Board

• Once or twice a month• (The board had 15 meetings

in 2014. The average rate of attendance was 97%.)

CSRCommittee

• President, Corporate Officers in Charge, and other Corporate Officers and General Managers of Staff Departments as deemed necessary by the President

• Chairperson: President

• Twice a year in principle

Management Committee • Same as above • Once a week in principle

Board of Auditors

5 Auditors (Three of them are outside Auditors. (One is female.))

Internal Audit Department

We have the Internal Audit Department reporting directly to the President. The Internal Audit Department investigates the overall execution of business including group　companies and verifies its accuracy, validity and efficiency. It also investigates and verifies the functional state of management policies, business plans and internal control systems. The results of internal auditing are also reported to the Auditors for mutual cooperation with Auditors’ auditing.

Accounting audits

Showa Denko concluded an auditing contract with KPMG AZSA, and this audit corporation performs accounting audits for the Company.The Accounting Auditor confirms the annual audit plan with the Auditors and reports the audit results to them. The Accounting Auditor and the Auditors also exchange information and views as required, to promote their cooperation.

Remuneration, etc., to Directors and Auditors, and how it is determined

The annual salary system is used for remuneration to directors. In this system, in addition to the basic remuneration amount determined by each director's position, the annual salary is determined by considering the business performance of both the company and individual and other factors in the relevant fiscal year based on the business performance evaluation system. The remuneration to the Auditors is determined through deliberation at the Board of Auditors.

Remuneration, etc., to Directors and Auditors

Paid amountNumber of applicable

persons

Directors

(excluding outside Directors)¥278 million 9

Auditors

(excluding outside Auditors)¥54 million 2

Outside Directors

and Auditors¥55 million 5

* Corporate governance : In the narrow sense, this term refers to the relationship between the shareholders and the managers of a company and the mechanism or structure of decision making and business operations in the company. In the broad sense, it refers to the relationship between the company and its stakeholders and is also related to the question. “For whom dose the company exit?”


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Risk management system

We have established a risk management system around the CRO (Chief Risk Officer). Important risk-related matters are deliberated by the Risk Management Promotion Council and determined by the CSR Committee.

Risk management activities

We manage risks concerning company activities, including environmental preservation, security and disaster prevention, product quality, export control, agreements, etc., through preliminary reviews and an approval system based on internal rules and regulations. In addition, offices engage in efforts on a daily basis to minimize risks such as fires, explosions, leakages, work-related accidents, occupational diseases, poor quality products, and environmental contamination and keep their impacts to a minimum even if they should occur.

Risk inventory

Since 2007, our Group has been conducting risk inventory every year, including its overseas bases. Risk inventory is conducted in the order of (1) extraction of risks, (2) assessment of potential impact, (3) planning of countermeasures, and (4) implementation and confirmation of countermeasures. We plan and implement company-wide measures against common risks chosen from the risks extracted by each section. In 2013, we addressed common risks such as earthquake risks, information security risks, and general affairs risks.

Various risks, including earthquakes, fires, explosions, work-related accidents, quality defects, environmental contamination, etc. are actualizing in society. The Showa Denko Group is performing risk management in order to minimize these risks, and minimize the impact at the time of actualization.

Risk inventory �ow chart

Extractionof risks

Implementation &con�rmation of

countermeasures

Extraction &revision of

common risks

Company-widesummary

Company-wideactivities

Planningcountermeasuresagainst common risks

Activities ofeach section

Planning ofcountermeasures

Assessment ofpotential impact




Risk management

• Executing risk inventory continuously • Executed risk inventory ◎ • Executing risk inventory continuously


• Review of the earthquake resistance measures plan for 2015

• Reviewed and implemented of earthquake resistance measures• Completed the earthquake resistance plan for 2015 ◎


• Formulating the earthquake resistance plan for 2016

• Tackling important common risks • Tackled earthquake risks, information security risks, general affairs risks and others ◎ • Continuously tackling important common risks


Management

Risk Management

Earthquake risks

We consider factors such as the estimated frequency of earthquakes and earthquake motion in the regions where our offices are located in order to determine priority for each building and facility. We then perform seismic diagnoses and earthquake reinforcement. Moreover, since 2007, we have been working on Business Continuity Plans (BCP)* as provision against earthquakes. We create a BCP promotion framework, establish basic policies, determine important operations at each business division, worksite, and major affiliated companies, and find bottlenecks related to these important operations. We also establish plans, document them, and then work to embed these efforts through education and training. All of these efforts are conducted while referring to the business continuity guidelines from the Cabinet Office. The Business Continuity Plans (BCP) that are created are reviewed as needed.

General affairs risks

Since 2009, our Group has been continuing efforts to enhance risk management of general affairs operations. Specific examples are: (1) identification of administration risks by using the “Guidelines,” which cover operations related to general affairs from the perspective of risk management, as well as planning of countermeasures; (2) sharing of advanced cases and responses as well as enhancement of the database for better understanding of applicable laws; (3) conducting periodic manager meetings and general meetings (trainings) for general affairs personnel to reinforce cooperation among themselves; and (4) exchange of opinions at offices and plants. In 2014, we exchanged opinions on “Passing on Knowledge and Nurturing Successors” at nine bases while sharing experiences and best practices in the area of “Interactions with Communities and Stakeholders.”

Information security risks

While the development of information technology has dramatically improved the quality, volume and speed of information being handled, there have also been information-related crimes and accidents such as the leaking of confidential information or personal data, and tampering of websites. We have established Basic Guidelines for Information Security, Information Security Regulations and Personal Information Protection Guidelines to minimize damage to our business by properly addressing information-related risks. In addition, we have also built a framework to ensure business continuity. We also take every opportunity to provide information through E-learning, and educational activities during the Cyber Security Month as well as other activities to spread policies, rules and other information related to information security.As part of our effort to strengthen systematic countermeasures against new threats to our information systems, we are continuing to strengthen countermeasures against targeted attacks and information security governance at each overseas group company. We are also taking measures to enhance data security for our PCs.

Efforts to enhance the security of manufacturing control systemsShowa Denko had voluntarily established safety guidelines on manufacturing control systems in order to reduce the risk of computer virus infections. Given the issuance of the “Safety Criteria” by the Japan Petrochemical Industry Association with the purpose of ensuring information security of key infrastructure, we have begun to review and enhance our safety guidelines against this Safety Criteria.

* BCP(Business Continuity Plans) : A crisis management method for companies to prepare against natural disasters, large fires, etc. It enables companies to resume their business operations in relatively short period.


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Basic concept

The Showa Denko Group positions "compliance with social justice and corporate ethics" as the top management priority and operates the company based on compliance. We have established the Human Rights/Corporate Ethics Promotion Council under the CSR Committee which is chaired by the President, as a companywide infrastructure to promote and establish law-abiding business management. We have also placed compliance and corporate ethics in the first item of "Our Code of Conduct and Its Practical Guide" to promote thorough understanding of them.

Compliance promotion framework

We have appointed a Chief Risk Officer (CRO), who is in charge of risk and compliance management across the company, to ensure business management based on compliance. We set January every year as Corporate Ethics Month to review compliance across the company and promote further penetration of compliance through training organized by Staff Departments and compliance promotion frameworks in each organization. Furthermore, in addition to recurrence prevention measures and the proper punishment for compliance violations, there is a framework in place to prevent or find and properly address problems at an early stage through an internal check system and inside denunciation system.

We established and faithfully implement “Our Code of Conduct and Its Practical Guide,” which stipulates action guidelines for each employee to fulfill their responsibility as a member of our Groupand contribute to sustainable development of international society.





• Establishment of compliance and corporate ethics

• Discussions in each office using "Our Code of Conduct and Its Practical Guide"

• Implementation of employee attitude surveys and examination of issues and measures

• Support for putting "Our Code of Conduct and Its Practical Guide" into practice in overseas subsidiaries

• In addition to domestic workplaces and group companies, management employees of overseas subsidiaries pledged to conform to the Code of Conduct. Group discussions were also conducted at each worksite.

• Monitored the situation of our group in the areas of corporate ethics and compliance through employee surveys, to analyze and examine the issues of our Group.

• Advanced wide awareness of “Our Code of Conduct and Its Practical Guide.”

◯

• Preparing written oaths and reports in other languages, and continued to implement Corporate Ethics Month activities at overseas subsidiaries.

• Defining our Group’s ideal “Corporate Ethics” based on the employee survey, and implementing measures to make them shared by all employees.

• Increasing opportunities for education on corporate ethics.

• Expanding the coverage of the internal reporting system (Corporate Ethics Hotline)

• Opened a whistle-blowing channel for suppliers on our website of procurement information (July 1). ◎ • Taking prompt and firm action with due

considerations to the protection of whistle-blowers.


Management

Corporate Ethics and Compliance

Our Code of Conduct and Its Practical Guide

"Our Code of Conduct and Its Practical Guide" was established as a guideline for employees to think and act to substantiate the management philosophy. The following five items have been stipulated in order for each employee to fulfill their responsibility as a member of our group and contribute to the sustainable development of international society.


2. We will provide our customers with satisfaction and safety.

3. We will develop corporate culture that helps every member of the Group to fully display his/her ability.


5. We will make vigorous e�orts to maintain and improve the global environment.

We are also engaged in efforts to respect diversity, which includes the translating of these codes of conduct into nine languages to ensure that overseas group companies are also thoroughly aware of their content.

Corporate Ethics Month

The Showa Denko Group has set January every year as Corporate Ethics Month since 2004. We hold group discussions using "Our Code of Conduct and Its Practical Guide" in each workplace, including overseas group companies, as well as other efforts. In addition, all executives sign and submit "The Oath of Office," while all managers sign and submit "The Oath of Compliance with Our Code of Conduct and Its Practical Guide." Furthermore, we have introduced E-learning courses on corporate ethics and compliance that target managers. These courses are also continuously implemented as required learning items for those who have been promoted. E-learning programs on individual laws and regulations, and information security are also provided, with which we enhance the contents of the education.

Corporate Ethics Hotline

A "Corporate Ethics Hotline" has been established for group employees in Japan to prevent, or correct at an early stage, matters that conflict with various rules such as laws and internal regulations as well as violations of corporate ethics. We also added an external consultation desk to the existing internal consultation desk to enhance measures against power and sexual harassment to quickly resolve such problems including those at domestic group companies. In 2014, there were 44 reports or consultations, which the company addressed while focusing on providing feedback to the individual who made the report or consultation. This, coupled with spreading awareness of these desks and how to use them, are part of our efforts to create an environment that makes it easy for employees to use these services. Our four overseas group companies have also established internal reporting desks, and these activities will be further expanded in the future.

Number of requests for consultation received by the Corporate Ethics Hotline (Showa Denko Group)

2012 2013 2014

32 41 44Our Code of Conduct and Its Practical Guide


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Prevention of Corruption and Bribery

“Our Code of Conduct and Its Practical Guide” provides that effort must be made to prevent bribery and corruption as follows:


⑤ We will work to prevent bribery and other forms of corruption.

1) Preventing corruption We prohibit any act, leading to corruption, such as giv-ing, accepting or demanding bribes.

2) Prohibition on entertaining public officials We prohibit entertaining or gift-giving for national or similar public officials both in Japan and abroad in con-nection with their jobs. In Japan, we prohibit any form of entertaining and gift-giving altogether for national and similar public officials.

Private abuses of power, such as giving, accepting or demanding bribes, hinder the sound development of society. The Showa Denko Group will never encourage such acts. In addition to the establishment of legal guidelines on prohibition of bribery, our Group provides education on country-specific anti-bribery laws for related organizations concerned so as to reconfirm and ensure the prohibition of bribery in accordance with the laws of each country.

Conformance to the Antimonopoly Act

“Our Code of Conduct and Its Practical Guide” clearly states that we will conduct business based on fair and free competition as follows:


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

1) Compliance with the Anti-monopoly Act We observe Anti-monopoly Act And ensure fair trade.oly Act And ensure fair trade.

As fair and free competition is indispensable to the sustainable development of the international society, we position this as our Group’s fundamental policy and strictly adhere to competition laws of each country. Furthermore, our Group endeavors to achieve complete conformance to the Antimonopoly Act as well as to secure a free and fair completion, by not only establishing the Antimonopoly Act Compliance Manual and rules on contacting competitors in the same industry, but also providing educational opportunities for the Sales Department and other organizations concerned.

It goes without saying that we take measures to prevent corruption and bribery, as well as conform to the Antimonopoly Act. We also engage in CSR procurement based on our belief in the importance of socially and environmentally conscious business activities across the entire supply chain.


Management


Security export control

"Our Code of Conduct and Its Practical Guide" stipulates that we must appropriately follow the product export and cargo import procedures.


① We will act in strict compliance with laws and regulations and according to high ethical standard

21) Security export controlWe observe laws and regulations and internal rules regarding security export control, and follow proper procedures.

The year 2014 experienced issues jeopardizing global security, including the rise of the Islamic State (ISIS) as well as disputes in Ukraine which originated from Russia’s incorporation of Crimea.Besides, March 20, 2015 marks the 20th commemoration of the Tokyo subway sarin gas attack.Showa Denko conducts thorough and reliable reviews by placing the Security Export Control Committee under the CSR Committee and by establishing systems to determine compliance, screen customers and settle transactions in order to check whether government permission is required for all export products.As part of our social responsibilities, Showa Denko will engage in steady efforts to ensure that our products never threaten international peace and security.

Protection of intellectual property

Acquisition of intellectual property rights and establishment of patent networksAs the majority of Showa Denko's businesses are operated globally, we aggressively apply for patents in foreign countries with the aim of supporting those businesses from the intellectual property side.The chart shown in the right is a composition of data shown in "Japan Patent Office Annual Report 2015" and SDK's own data on the number of applications for patents. It illustrates that the Showa Denko's global application ratios were about 10% higher than those by all applicants.We also make every effort to secure our superiority based on intellectual property rights, especially in the principal businesses and newly developed important products by establishing patent networks.

20122008 2009 2010 2011

60

50

40

30

20

10

0

● Global application ratio (Showa Denko)● Global application ratio (all applicants)

■ Number of application in Japan (Showa Denko)■ Number of global application (Showa Denko)

（%）(Number of application)

Trend of patent application ratio in Japan and abroad

1,200

1,000

800

600

400

200

0(YEAR)

One of our Codes of Conduct is to respect the intellectual property rights of others. Starting in 1996, we have built a patent monitoring framework to constantly grasp trends in the intellectual property rights of other parties. In 2005, we started digitizing this framework in 2011, we introduced the Shareresearch a company-wide patent search system developed by Hitachi, and established a framework that allows us to monitor foreign patents as well.

System relating to employee inventionsAlthough we changed our system related to employee invention in 2005 following the revision of the Patent Act in 2004, we have also further changed the system in 2011 in order to improve fairness for inventors (enforced on July 1, 2011).We have never faced litigation by inventors regarding patent compensation for employee inventions calculated based on our Employee Invention Regulations.We have also revised the commendation system to promote the filing of more valuable patent applications. Conventionally, only the top 3 employees in numbers of patent applications filed the previous year were applicable for commendations. However, from 2013, we have also included the top 3 employees in numbers of patents registered the previous year as being applicable for commendations. As for the patents applied for by Showa Denko, we started the introduction of our patents pending in the in-house newsletter that the Japan Patent Office examiner quoted most frequently during the previous fiscal year in order to render a decision of final rejection of patents applied by other companies.


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Basic policy on purchasing

Showa Denko has established basic policies to promote CSR procurement and selects suppliers (partners) according to them.

Outline of the basic policies:

1) We will take a comprehensive approach in selecting most suitable supplier partners based upon economic rationality by taking into consideration quality, price, delivery period, credibility of management, safety, services, technological competence and attention to environment and society.

2) In selecting our supplier partners, we have an open-door policy for business opportunities with sincerity, fairness and honesty, disregarding the nationality, past records of transaction and the corporate group relationship of the candidate companies.

3) Our purchasing activities shall be in compliance with laws and regulations, as well as our internal rules.

CSR Procurement Activities

Showa Denko undertakes CSR procurement, attaching importance to the society- and environment-conscious business activities in the entire supply chains from the procurement of raw materials to manufacture and sale. Our CSR procurement aims to mutually improve corporate value of both supplier partners and Showa Denko by sharing and complying with the Showa Denko Group CSR Procurement Guidelines with supplier partners through communication to further enhance mutual trust.

The year 2014 was the sixth year since the start of our CSR procurement. It was also the final year of the second 3-year cycle. The goal of the second cycle we pursued was to expand the scope and depth of our activities. In addition, we have expanded these CSR procurement activities to domestic group companies, gained consent from four group companies, and conducted "self-assessments" of their partners. We will aim to make further "CSR visits" and expand these activities to other group companies.

We will continue to commit ourselves to the activities of CSR procurement, with the consent and cooperation of all our partners.



Examples of advice○ We got our business partners to work on increasing

awareness and establishing an educational system on compliance for their employees (Partners involved in packaging, etc.)

○ For business partners with insufficient understanding of the Subcontract Proceeds Act, we provided information that would be useful in deepening their understanding, such as seminars organized by the government. (Partners involved in raw materials, construction work, packaging, etc.)

○ We exchanged opinions with our business partners about their CSR activities (at stakeholder meetings), good practices presented at academic conferences, and our own CSR activities. (Partners involved in equipment and materials)

Self-assessmentsComparison of average scores of partners who responded to the self-assessment for two times

2ndcycle1st cycle

20406080

100

Social Contributions

Information Security

Human Rights & Labor

Safety & Health of Worksites

Environmental Preservation

Fair Trade

Quality & Product Safety

Corporate Ethics & Compliance

CSR visits● Number of visits● Cumulative numbers of visits

2010 2011 2012 2013 2014

（Visits）250

200

150

100

50

02009

11

3856 54 58 54

39

95

149

207

261

(YEAR)


Fair business practice and customer care

• Expanding the target scope of CSR procurement Self-evaluations and CSR visits targeting the partners of group companies

• Continued self-evaluation and CSR visits; Number of received self-evaluation responses: 351 companies; Number of actual CSR visits: 54 cases.

• Expanded CSR procurement activities to domestic group companies (self-evaluation performed by the business partners of four group companies)

• Number of delivered self-evaluations: 45 cases; CSR visits: None.

◯

• Expanding the target scope of CSR procurement• Expanding CSR procurement activities to domestic

group companies (Having business partners of group companies conduct self-evaluations and conducting CSR visits).

• Expanding CSR procurement activities to overseas partners (Preparimg self-evaluation criteria for overseas).


Management


Efforts to meet environmental and social demands

Efforts to select and procure products that have the lowest possible environmental impact based on the concept of being "earth friendly" throughout all cycles from material procurement to usage and disposal are rapidly spreading across the world. This movement can be seen mainly among customers in the information equipment, electrical and electronic products, and automobile fields. The Showa Denko Group responds appropriately and in good faith to meet customer requests to reduce the use of harmful substances and to reassure customers that the Group's products do not use or incorporate harmful chemical substances subject to regulations in the EU or other regions.

Showa Denko Group’s CSR Procurement Guidelines

The Showa Denko Group requests its partners to comply with the following:

Corporate governance・ Establish and implement management vision and policy.・ Establish and implement a scheme for making management

decisions. ・ Establish a scheme for corporate governance.

Corporate ethics and compliance・ Observe laws and regulations, social norms and internal rules

pertaining to overall corporate activities. ・ Stay away from antisocial organizations or individuals that threaten

the order and safety of civil society. ・ Establish an internal system of reporting a breach of laws and

regulations or corporate ethics, and protect the rights of whistleblowers.

・ Disclose corporate information in a timely and appropriate manner

Product quality and safety・ Establish and operate a quality assurance system pertaining to

products and services. ・ Meet quality speci�cations and delivery time, and ensure stable

supply of safe and appropriate products and services. ・ Properly control chemical substances contained in products.

Fair trade・ Refrain from taking advantage of a dominant position, explicitly/implicitly

forcing suppliers to accept unfavorable trade terms. ・ Refrain from restricting free competition on the market or conducting

transactions, unduly taking advantage of a dominant position. ・ Make an accurate representation and explanation of the contents

of products/services and their handling. ・ Respect intellectual property of others.

Environmental protection・ Establish an environmental protection setup. ・ De�ne tasks pertaining to environmental protection, promoting

proper control of chemical substances, reduction in environmental impact, and conservation of resources and energy.

・ Utilize information concerning accidents and complaints. ・ Clarify the de�nition of emergency, make plans for emergency

measures, and provide training.

Safety and health at workplace・ Establish a safety and health control system. ・ Identify risk/hazard factors and take appropriate measures. ・ Utilize information concerning accidents and disasters. ・ Clarify the de�nition of emergency, make plans for emergency

measures, and provide training.

Human rights and labor・ Respect employees’ fundamental human rights. ・ Avoid discrimination in employment and treatment of employees. ・ Secure proper working conditions. ・ Protect workers’ rights.

Information security・ Ensure safety of information assets so as not to cause damage to

your company and others. ・ Properly control and protect secret/personal information that you own.

Contribution to society・ Contribute to sound development of international society and

regional communities.


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P r e s e n t a t i o n m e e t i n g f o r i n s t i t u t i o n a l investors and secur i t ies analysts on the progress of the medium-term consolidated business plan.

We issue "Report to Shareholders" twice a year, in March and September. This report mainly targets individual shareholders and provides an overview of each business segment as well as introduction to business topics.

Basic policy on information disclosure

Showa Denko believes disclosure and investor relations play vital roles in deepening shareholder and investor understanding of our approach to various issues, including corporate management, business activities, and strategy, helping these stakeholders accurately assess our corporate value. Our information disclosure measures are based on the following policies:

Outline of the basic policies:

1. We seek to communicate proactively with shareholders and investors and to improve management transparency.

2. We strive to disclose information concerning Showa Denko in a clear, fair, timely, and accurate manner to deepen understanding of and trust in our company.

Communicating with shareholders and investors

Shareholder meetingsShowa Denko holds its regular general meeting of shareholders in late March every year. In addition to invitations mailed out about three weeks before the meeting, we publish related information on our website to ensure shareholders have enough time to consider various bills. In order for more shareholders to exercise their voting rights, we enable the shareholders who cannot attend the shareholders meeting to exercise their votes by means of mail or the Internet.In the shareholders meeting, as well as explaining the business outlook and the midterm business plan, we strive to intelligibly respond to the questions from shareholders.

Moreover, we provide a display space to introduce the products and technology of our Group.

Communicating with institutional investors and shareholdersWe keep domestic institutional investors, analysts, and other market participants informed in various ways, including meetings to explain annual and semiannual financial results, net-conferences for results announced for the first and third quarters, and meetings to outline progress with business plans.Overseas institutional investors and shareholders receive English-language versions of our annual results and transcripts of net-conferences, and other materials. In addition, several times each year, the President and/or members of the management team visit Europe, North America and Asia to report in person on various issues, including Group business results and future business plans.As for individual investors, we participate in seminars for individual investors, provide explanations on our business and management plans, and exhibit products.

Showa Denko strives to ensure that the shareholders and investors well understand the business activities of our company through our various IR activities, including intelligible, fair, timely and accurate disclosure of information on the performance results, financial conditions, future vision, business strategy, etc.

* IR : Investor relations




Information disclosure and IR Promoting IR

• Held a variety of seminars, individual briefing sessions and other events in Japan and abroad

◎ Promoting IR• Timely information disclosure through the website


Management

Information Disclosure and IR

Provision of IR information through our websiteShowa Denko timely discloses information through the IR site for shareholders and investors on our website, where we publish financial statements, various explanatory meeting materials, news releases, etc. We also strive to attain timely disclosure of information to overseas or foreign national investors through the publication of English version of financial statements, news releases, annual reports, etc., on our English website.Moreover, in order for everyone including shareholders and investors to understand the business activities of our Group, we also provide webpages to visually present the performance of our company, such as the highlights of financial results, the main performance and financial indicators, etc., including real time stock price of our company, on our IR information site.

IR Site

The Latest Financial Highlights

In the chemical and textile industry category, Showa Denko ranked second in the selection of Awards for Excellence in Corporate Disclosure (FY 2014) by securities analysts of the Securities Analysts Association of Japan. We also received a certi�cate of commendation as a “Company Continually Maintaining High Level of Disclosure” from the said association. In addition, our IR website was selected as an “Excellent Website in the Website Quality Ranking 2014” hosted by Nikko Investor Relations, and received the “Excellent Company Award of the Internet IR Commendation Award 2014” by Daiwa Investor Relations. and bronze prize in the “Gomez Internet IR Site Ranking” by Morningstar, Inc.

Valuation of our IR activities

Shareholders by sector

The component ratios of shareholders by sector are as follows: 34.84% for Japanese financial firms; 5.76% for Japanese corporate entities; 27.90% for foreign corporate entities and foreign individuals; 24.35% for Japanese individuals. (As of December 31, 2014)

SRI indexes adopting Showa Denko

Total number ofoutstanding shares

1,497million

Foreign corporateentities etc

24.35%

Japanese corporateentities5.76%

Japanese Individuals27.90%

Treasury shares4.60%

Security firms2.55%

Financial firms34.84%

Various risks, including earthquakes, fires, explosions, work-related accidents, quality defects, environmental contamination, etc. are actualizing in society. The Showa Denko Group is performing risk management in order to minimize these risks, and minimize the impact at the time of actualization.

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Policies of respect for human rights

The Showa Denko Group adopted "Compliance with Social Justice and Corporate Ethics" as its basic stance and is making efforts to position the respect for human rights as the core of this stance in order to become a company that contributes to the society as specified in our management philosophy. We believe that creating a culture where employees have correct awareness of human rights and respect each other leads to vitalization of our corporate culture, allows us to gain trust from customers and local communities, and contributes to the development of our company. We strive to act in manners that respect human rights both inside and outside the company. We do not permit any discriminatory action, harassment, child labor, forced labor or any other inappropriate behavior and encourage our business partners to improve their problems to actively promote the respect for human rights.

Promotion framework

We have established the Human Rights and Corporate Ethics Promotion Council under the CSR Committee which is chaired by the President. This Council determines human rights related activities for each year, the direction of long- and mid-term efforts as well as other matters to raise the Group-wide awareness of the respect for human rights.

Our efforts

"Our Code of Conduct" stipulates that each employee must not engage in any discriminatory conduct inside and outside the company. It also stipulates that they must make active efforts to ensure the respect for human rights such as encouraging the supply chain or related parties to resolve human rights issues, including ethnic discrimination, classism, child labor, forced labor and poverty problems. Based on these policies, in our workplaces and subsidiaries, we promote various programs to enhance human rights including enlightenment activities to raise employees' awareness of human rights, handling of harassment in workplaces, programs to help female employees and foreign employees play active roles, promotion of employment of handicapped persons, and promotion of CSR procurement.

Enlightening activities regarding human rightsWe are working to develop training tools for interactive employee education programs while providing educational opportunities on fundamental issues of discrimination and human rights at workplaces, as well as themes that are considered as having high social interest, such as “people with disabilities” “human right abuses via the Internet,” “elderly people,” and “human right issues caused by the Great East Japan Earthquake.”


We actively respect human rights in line with the progress of globalization through efforts including prohibition of all forms of discriminatory action, harassment, child labor, forced labor, and giving our business partners encouragement to improve human rights situation.



Human rights




• Increased variation in educational contents

• Educational programs totaling 9,500 hours were provided at domestic workplaces and group companies. “Group Training for All Members” was frequently offered for educational items so that a wide range of applicable members can attend the program.

• Original training materials were prepared and provided to regions and group companies.

• Established “Educational Themes to Be Covered Securely, ”consisting of “Overview of Human Rights Education,” “Human Rights in the Workplace,” and “Antidiscrimination.” Formulated and implemented training plans at each region/group company so that trainings covering one or more of the themes were conducted each year. All employees are expected to attend the training for any one theme within 3 years. Furthermore, “Educational Themes of Deep Concern to the Public in Recent Years” (“Handicapped Persons,” “Children,” “Human Rights Violations over the Internet,” “Elderly People” and “Human Rights Issues Caused by the Great East Japan Earthquake”) were also arranged, and training plans were formulated and implemented at each region/group company.

◯




• Provision of a wide range of training opportunities

• Increasing variation in educational contents


Human Rights

Handling harassmentWe distributed leaflets titled "The Showa Denko Group Does Not Tolerate Harassment" to all employees in order to ensure that our basic stance is shared by all, and we are also promoting anti-harassment education programs for managers and supervisors, and skill improvement programs for those in charge of harassment consultation desks.

Support programs to help female/foreign employees play active rolesWe listen directly to opinions from many female employees and enhance systems to support work-life balance, support career development through workshops and other opportunities, and organize meetings to exchange views to train female managers and leaders.We also organize cultural exchange gatherings with foreign employees to help them establish themselves in the company and play active roles.

Employment of handicapped personsWhile continuing to increase the number of physically handicapped employees, we are examining challenges and measures accompanying acceptance of intellectually/mentally handicapped persons as interns in order to help them find employment as well as those accompanying securing employment opportunities for intellectually/mentally handicapped persons.

Human rights in the supply chainIn order to conduct business that takes human rights throughout the supply chain into consideration, we ask our business partners to respect basic human rights, prohibit discrimination, ensure proper work conditions, and protect the rights of the workers through our CSR procurement program. We work together with our partners to comply with these matters.

Addressing Conflict Minerals

Purchasing minerals (tin, tantalum, tungsten, and gold) from Congo and its neighboring countries is considered as a large international problem because you fund local armed groups, consequently have a part in local conflicts, and cause violation of human rights and environmental destruction by purchasing them.The Showa Denko Group properly addresses the conflict minerals problem according to the following items in “Our Code of Conduct and Its Practical Guide.”


④ We will respect human rights.

6) Human rights in supply chains In selecting suppliers, we seriously consider how human rights are respected at each supplier and its own suppliers, and call for improvement if any problem is found.

7) Human rights due diligence We ensure that our corporate activities do not have an adverse impact on human rights.

2. We will provide our customers with satisfaction and safety.② We will ensure stable supply of products that meet

customers' expectations, in cooperation with our business partners.

5) CSR procurement We promote CSR procurement and contribute to sustainable growth of society in cooperation with our business partners.

Human rights training held in the Keihin region.

In January 2015, the Keihin Region Human Rights Issues Lecture Meeting was held with an attendance of about 300 employees,. This event is held every year and targets plants and affiliated companies in the Keihin region. This year marked the 21th time of the event.We invite external lecturers every year to provide employees with opportunities to think about the respect for human rights from various perspectives. This year, we invited Ms. Akemi Matsuno, a former Olympic athlete and a member of the Kumamoto City Assembly (at that time), to deliver a lecture titled, “You Don't Need to Be Number 1. -Thank You, for Simply Being Here, in This World-” We received comments from attendees such as, “I hope both can see what is good in each other, admit differences, learn from and well understand each other.”


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

The Showa Denko Group has been engaged in its diversity promotion strategy as one of its business strategies, under the key phrases of, “Make the most of the potential of yourself” and “Make the most of the potential of others.”In 2008, our Group set “Management Respecting Employee Diversity” as one of its key business strategies, and has been working to achieve and embody that ever since.The first phase, consisting of the period from 2008 to 2012, was positioned as a period to “recognize” the diversity in our employees, and efforts were made to promote active work of diversified employees, progression, with particular focus on female employees. The period was also considered as one to enhance diversify in our employees, and marked with proactive employment of “foreigners” and “handicapped persons.”The second phase, consisting of the period from 2013 to 2015, is regarded as a period of “understanding,” during which our Group further promotes its diversity promotion strategy while the third phase would be a period of “practice,” where each employee challenges himself/herself through repeated trial and error. Finally, in the 2020s, we aim for the entire Group to have become a company where employees “make the most of the potential of others” while also “making the most of the potential of oneself.”

Diversity leaflet (October 2013)



Labor practices

• Promotion of diversity• Setting of a target number (ratio) of

female managers as well as promoting employment and training of female employees to achieve this target

• Employment of foreign employees• Employment of foreign employees

Environment improvements in order to accept intellectually or mentally handicapped people

• Support for affiliated companies that have failed to reach the legal employment rate of handicapped people

• Increased the number of female managers (18 for Showa Denko K.K. domestic)

• Continued hiring of new foreign employees• Maintained an employment rate of handicapped people

that is at or higher than the legal rate (Showa Denko K.K.: 2.57%, Showa Denko Group: 2.53%)

• Participated in the 2014 Model Project to Promote Employment of People with Mental Disorders hosted by the Ministry of Health, Labour and Welfare, and accepted mentally handicapped persons as interns in four regions/group companies.

◎

• Promotion of diversity• Setting of a target number (ratio) of female

managers as well as promoting employment and training of female employees to achieve this target

• Employment of foreign employees • Environment improvements in order to accept

intellectually or mentally handicapped people


Labor Practices　Diversity

As one of its business strategies, the Showa Denko Group works on various programs to promote diversity.

The First Diversity CEO Award Was Granted

The Showa Denko Group started granting Diversity CEO Awards, where Group CEO Hideo Ichikawa directly commends employees who worked to “make the most of the potential of oneself” and/or “make the most of the potential of others”.Efforts that “make the most of your potential” and “make the most of others’ potential” mean “improving the creativity of organization and individuals by mutually leveraging the diversity” and “creating a flexible and active organization that creates new values.The Award is granted to groups or individuals who had improved the corporate value by implementing programs to change the way of management, communication, work style, or themselves.The first award ceremony was held on October 28, 2014 (at the Group’s integration Meeting of the Group), where the HD Division of Chiba Plant and Yokohama Plant received the Award for Excellence.

(YEAR)

Trends in the number of employees on consolidated basis

6,000

5,000

4,000

3,000

2,000

1,000

02010 2011 2012 2013 2014

6,101

1,638

6,031

1,663

5,802

1,239

5,905 5,9325,496 5,511

4,0884,329

4,645

1,287

2,003

■ Total number of employees in japan on consolidated basis■ Number of female employees in japan on consolidated basis

■ Total number of all overseas employees on consolidated basis■ Number of overseas female employees on consolidated basis

588566 599 618 642

Number of female managers and its ratio (Showa Denko K.K.)

2010 2011 2012 2013 2014

Number of female managers 13 11 14 14 18

Female managers ratio(%) 0.31 0.26 0.35 0.36 0.47


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Employment of the aged

The "Revised Law Concerning Stabilization of Employment of Older Persons" was enforced from April 2013, and it became mandatory to reemploy older persons up to 65 years of age.We started reemploying retired employees in 2006. They continue to use their skills and expertise for the company.It is very important to foster later generations and pass on skills. Many reemployed employees use their past careers and enjoy working as reliable seasoned employees, for example by working in the office while acting as instructors to teach skills in the field that they specialize in.

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(%)

2009 2010 2011 2012 2013 2014

8084

8683

8890

Ratio of reemployed employees( Showa Denko K.K.)

(YEAR)

Employing handicapped persons

In order to create a workplace where diverse people can make the most of themselves, we employ handicapped persons and encourage them to continuously play active roles.We will continue to create a workplace where each individual can make the most of him or herself by working with the Hello Work, job assistance organizations for handicapped people, special-needs schools and other organizations.

(Year/Month）

1.5

2.0

2.5

0

（%）

2010/6 2011/6 2012/6 2013/6 2014/6

● Legal requirement● Showa Denko

2.48

2.0

Percentage of handicapped employees

Showa Denko take part in "The Model Projects to Promote Employment of

Mentally Handicapped People in 2014"

From June 2014 to March 2015, Showa Denko took part in the “Model Project to Promote Employment of People with Mental Disorders for FY 2014”, under sponsorship of the Ministry of Health, Labour and Welfare.Moreover, we organized a “Model Workplace” for handicapped employeeswithin the General A�airs & Human Resources Department. In thatworkplace, we create various systems, aiming to enable handicappedemployees of the Showa Denko Group to “make the most of their ownpotential” and transform the Group companies into organizations that can“make the most of the potential of handicapped employees.”


Labor Practices　Diversity


It is important for the growth of our Group that it meets social needs through the lively work of employees being able to be in harmony with society.We will continue with our efforts to review work styles such as reducing the total number of work hours, increasing the use rate of annual paid holidays so that each employee can enjoy a fruitful social life.

2010 2011 2012 2013 2014 (YEAR)

(Hours)　2,500

2,000

1,500

1,000

500

0

2,017.2 2,010.0 2,040.0 2,031.6 2,047.2

2019.2 2019.5 2008.5 2009.1 2023.12019.2 2019.5 2008.5 2009.1 2023.1

*1…The manufacturing industry average was prepared using the data in the "Annual report

on the monthly labour survey" published by the Ministry of Health, Labour and Welfare

● Manufacturing industry average*1

■ Showa Denko

Trend in working hours (per employee per year)

2010 2011 2012 2013 2014 (YEAR)

（Days）15

5

10

0

13.1 12.8 12.7 12.8

9.9 9.8 10.310.3 10.310.310.29.9 9.8 10.310.3 10.310.310.2

13.1 13.213.212.8 12.7 12.8

● Manufacturing industry average*2

■ Showa Denko

*2…The manufacturing industry average was prepared using the data in the "General survey on working conditions" published by the Ministry of Health, Labour and Welfare.

Annual paid holidays taken (per employee per year)

Job separation rate (excluding retirement and permanent transfer)(Showa Denko K.K)

2010 2011 2012 2013 2014

0.6% 0.8% 1.0% 1.0% 1.3%

Number of job separation (excluding retirement and permanent transfer)(Showa Denko K.K.)

2010 2011 2012 2013 2014

41 45 42 49 49

The average age / The average length of continuous employment　/ The average overtime work per month (as of December, 2014)

The average age he average length of continuous employment

The average overtime work per month

40.0 years old 17.1years 18.7 hours / month

Various programs are being implemented to enable our employees can work both actively and in harmony with the society.


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Received a “Special Incentive Award” at the Ikumen Company AwardShowa Denko K.K. received a Special Incentive Award of the “Ikumen Company Award 2014”, which is sponsored

by the Ministry of Health, Labour and Welfare.

The “Ikumen Company Award” is a system to commend companies which aim to improve business operations

by proactively encouraging male participation in child-raising. The Ministry of Health, Labour and Welfare

established the system as part of the “Ikumen Project” so as to promote improvement of the working

environment so that employees may bear and raise children while continuing to work without much concern.

The fiscal year 2014 marks the second granting of this award.

This time, we received the award particularly as an appreciation for our efforts in diversity management which

has been lead by top-level management, reform of work styles through in-house organizations established for

diversity promotion, encouraging applicable employees to take parental leaves through their superiors, and

actual achievements of top-level percentage of top-level percentage of male employees taking paternal leaves.


Promoting sound work-life balance

Showa Denko provides a variety of work-life balance support programs suited to diverse life stages of employees. Furthermore, we promote the following measures to encourage both male and female employees to take advantage of the childcare and family care leave programs.

Main systems

Description

Childcare leave

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

Shortened working hours for childcare/family care

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

Cumulative leave

Eligible: Employees who have accumulated leave time (an-nual paid holidays carried over from year to year). Employees may take days off to participate in a school event (up to and including elementary school children), respond to tempo-rary closing of classes, or nurse a child or family member.

Family care leave

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

Number of employees who took the advantage of the work-life balance support systems (from January 1, 2014 to December 31, 2014)※ Showa Denko K.K. (including employees on loan)

Male Female Total

Childcare leave 50 35 85Family care leave 3 0 3Shortened working hours for childcare/family care 2 33 35

SDK was accredited again as asupporting company for child rearing

We acquired the "Kurumin" next-generation certi˜cation mark in 2008. 2013, we were again accredited as a general business that complies with standards based on the Act on Advancement of Measures to Support Raising Next-Generation Children by the Tokyo Labour Bureau of the Ministry of Health, Labour and Welfare.

Kurumin markSDK acquired


Labor Practices　Creating a comfortable workplace

A family tour was organized at the headquarter district for the first time!

On August 8, 2014, we organized a study tour for family members of the employees working at the headquarter district of Showa Denko K.K. with co-sponsorship from labor union branches in the headquarters and branch offices.This tour, in which 47 people of 21 families took part, aimed to form emotional attachment between Showa Denko and family members, while providing employees with an opportunity to reform their image of work style from a perspective of promoting work-life balance.We received the following comments from participating family members: “Now I understand how my father/mother works in the office” and “My interest toward Showa Denko increased.” Some employees also commented that “the visit of their families vitalized their worksites.”

Members of the Tour

Relations with the labor union

The company and the labor union has established a relationship of trust over many years by establishing (1) Solutions through discussions, (2) Pursuit of stable employment and job satisfaction, and (3) Working together to improve work conditions through company growth and higher profitability as the basis of the labor agreement. We confirm and share management policies, improve work conditions and make other efforts through regular dialogs in the Labor-Management Committee.

Labor-management Joint Responsible Care Training　(Showa Denko Ceramic Shiojiri Plant, June, 2015)

Number and percentage of unionized employees(Showa Denko K.K)

2010 2011 2012 2013 2014

Number of unionized Employees 3,014 3,281 3,106 3,092 2,987

Percentage of unionized Employees 71.5% 78.7% 78.6% 78.9% 78.4%


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Creating acomfortable workplace

Labor Practices


Example of a Program by Role

“Run-Up Program” is one of the Programs by Role, which is conducted at the headquarters. The first three years after an employee has joined the company are positioned as the intensive development period. During this period, the employee is provided with a mentor who will lead him/her through his/her OJT in addition to group trainings.The core of this Run-Up Program is the “Training Theme System,” where each new employee gives two presentations in front of executives over one year: once at the beginning, to explain the challenge theme on which he/she will work for an year, and once at the end to explain the results and what he/she had learned through the challenge.. The purpose of this system is to have an employee experience both the process and accomplishment of completing an entire task under his/her own responsibility at an early stage of his career at the company..

Training System

Our training system is roughly composed of “Programs by Role,” “Programs by Challenge,” and “Programs by Function.”

Programs by RolePrograms by role help employees who have just entered the company or assumed a new role to acquire the necessary “mindset” as well as “knowledge and skills” to perform their roles. These programs are implemented at each plant and the headquarter.

Programs by ChallengeEmployees who can “produce ideas and think” from a perspective different from their professional expertise, and make full use of their skills to “maximize force as an organization” Are essential for an organization to produce results. Programs by challenge help employees acquire such skills and build human networks.

Programs by FunctionPrograms by function help employees master professional expertise and skills. These programs are provided by each division/plant or by employee function, as the professional knowledge and skills to learn differ according to the business and occupational function in question. As a company-wide program, we also support those who take correspondence study courses.

We are working on developing human resources through various programs.


Labor Practices Improvement of personnel systemand human resource training

Communication-based personnel evaluation system

As one of the management tools for maximizing the achievements of the organization by increasing the participation of all employees in the deployment of management strategies, the Company has developed an MBO (Management by Objectives) system.Through candid discussions between a superior and a subordinate starting from setting objectives to evaluation, the mutual understanding and satisfaction is enhanced. Furthermore, a superior nurtures human resources by making his/her expectation known to the subordinate, providing assistance toward the attainment of objectives. We coined the term, “commu-cussion” which combines, “communication” and “discussion”, as the name for such face-to-face discussions.

Recruiting and fostering globally competitive personnel

In China, trans-base manager training programs and skill learning programs are being implemented with Showa Denko (Shanghai) Co., Ltd. taking the initiative. The manager training program is an one-year program where trainees participate in group trainings on topics such as, "problem solving", "leadership", "logical thinking", and "influencing others", and then move on to applying what they had learned at each base, and finally presenting the results. Additional programs include those that are targeted to newly-assigned managers and function-based skill trainings such as, "marketing skills", "site supervisor & 5S", and "HR training for non-HR managers".

▶ Showa Denko's training system


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Social contribution policies

“Our Code of Conduct and Its Practical Guide” prescribes the promotion of interacting with communities and contributing to society as follows:


1) We will disclose accurate information on our activities in a timely manner to the countries and local communities in which we operate, so as to maintain good communication and promote mutual understanding.

2) We will grow with the countries and local communities in which we operate, and contribute to their social and economic growth.

Details of the activities Number of sites Results

EducationDispatched employees as instructors 9 26 cases; Dispatched 705 man-hours

Accepted interns. 10 36 events implemented; Accepted 64 interns.

Improvement of the environment around the worksites Cleaning activities 17 125 cases; Conducted for 6,717 hours in total.

Promotion of arts, culture and sports Cooperation for and granting subsidies to arts, culture and sports 16 Spent 4,878,000 yen.

Exchange with local communities

Holding events 15 5,313 residents participated.

Facilities rented 14 Rented for10,573.1 hours in total.

Offering guided plant tours 16 9,351 residents visited plants.

Community development and social welfare

Harmonizing with local economy 12 Spent 1,662,020 yen.

Aluminum can recycling activities 20

Collaborating with NPOs and local organizations 3 Spent 121,000 yen

2014 Results of our local and social contribution activities (Showa Denko K.K.)

We communicate with local residents and contribute to communities by performing activities unique to our Group including visits to various locations to provide lectures on chemistry and environment, environmental conservation activities in collaboration with local residents, and aluminum can recycling activities.





• Contribution to local communities using internal resources

• Implemented Classes-on-demand, environmental education, plant tours, intern acceptance and other activities at each plant

◎• Contribution to local communities using internal

resources• Promotion of next-generation development and

contribution activities




Class-on-demand

Kawasaki PlantOn August 6 and 7, 2014, the KPR Promotion Office? of Kawasaki Plant participated in “METI Kids Day” jointly with the Plastic Waste Management Institute. We conducted experiments to make polystyrene foam by foaming plastic, and made key holders by using the property of plastic.

Institute for Advanced and Core Technology (Toke)On August 7, 2014, the Institute for Advanced and Core Technology (Toke) gave a science experiment class mainly for school children at the Ojidai Jichi Kaikan Hall.The goal of this experiment was to have children experience and understand the properties and mechanisms of polymers through familiar products such as water absorptive polymer used for paper diapers and laundry starch.

Chichibu PlantOn November 21, 2014, Chichibu Plant provided a class-on-demand for third graders of Kagemori Elementary School in Chichibu City.We introduced the products manufactured at Showa Denko and Chichibu Plant, and conducted experiments using magnets and mixing LED lights.

Acceptance of internships

Tokyo Liquefied OxygenFrom July 28 to July 30, 2014, we accepted four student interns from the Chemistry Department of Isogo Technical High School in Kanagawa Prefecture.

Showa Denko Gas ProductsFrom November 18 to November 20, 2014, we accepted two student interns from Yokkaichi Chuo Technical High School in Mie Prefecture as interns.The interns were given an opportunity to experience production sites of liquefied carbon dioxide and dry ice, as well as the site for filling high-purity carbon dioxide.

Isesaki PlantOn November 19 and 20, 2014, two students from Isesaki Technical High School in Gunma Prefecture interned at the Manufacturing Department, Development Department and Quality Assurance Group.

Education

In order to deepen people’s understanding and interest on chemistry, the Showa Denko Group is actively engaged in educational activities such as classes-on-demand at local elementary and junior high schools, plant visit open to students up to university and internship.


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Sakai PlantOn May 9, 2014, a plant tour was organized for 27 sophomores and 2 teachers (29 members in total) from the Machinery Department of Fuse Technical High School in Osaka Prefecture.

Higashinagahara PlantOn August 1, 2014, we hosted the annual summer night festival. The festival is organized every year, aiming to promote interaction with local community residents and show gratitude to our employees as well as business partner employees working at our plant.

Hikone PlantOn November 24, 2014, Hikone Regional Office invited 12 members from the two associations of neighboring municipalities to present a “Plant Tour for Neighboring Resident’s Association”. After explaining our CSR activities in the Hikone district, we toured the Hikone Plant of Showa Denko Packaging Co., Ltd. and wastewater treatment facilities inside the plant.

Chiba PlantOn May 25, 2014, the annual Yawata Rinkai Festival took place in Ichihara City, Chiba Prefecture. Chiba Regional Office and Showa Denko Electronics K.K. participated in the festival, and set up a booth for children to play games.

Showa Denko HD YamagataOn June 8, 2014, the 13th Fruit Kingdom Higashine Cherry Marathon took place. Showa Denko HD Yamagata co-sponsored this marathon as a local company. Twenty five employees of the company volunteered to show “hospitality” by providing icy cold towels to the runners.

Tatsuno PlantOn May 26, 2014, Tatsuno Plant implemented an all-out activity to clean the area in and around the plant. Every year before rice planting, practically all employees of the plant participate in mowing and cleaning not only inside the plant but also the irrigation channel in the vicinity.

Toyama plant of Showa Denko CeramicsIn July 2014, we participated in the “Mission of Minnade Kireini Senmaike (Cleanup in Chorus)” organized by the Toyama Prefectural Government. After one-hour worth of hard work starting as early as five in the morning, we were rewarded with the view of a beautiful and clean sandy beach.

Tokuyama PlantOn October 19, 2014, the 18th “Town, Forest and Water Gathering” sponsored by Shunan Regional Agriculture and Forestry Office was held at a forest owned by Shunan City, “Fureai Forest.” Employees of Tokuyama Plant joined the gathering as volunteers to thin and maintain the forest.

Oita ComplexOn August 23 and 24, 2014, the “Original Tsurusaki-Bon Dance” was held. The “Original Tsurusaki-Bon Dance,” which is designated as intangible folk cultural property by the national government, is Oita’s summer tradition. From Oita Complex, two teams totaling 40 employees joined the dance on the first day.

Shiojiri plant of Showa Denko CeramicsOn July 26, 2014, 28 people including employees and their family members joined in “GEMBA Festival,” an annual summer rite in Shiojiri City. GEMBA Festival originates from “Gemba no Jo”, a mischievous fox which used to live in the area a long time ago. Participants marched through shopping districts accompanied by fox-motif music and dance.

Improvement of the environment around the worksites

The Showa Denko Group cares about and cleans up the environment around our plants and offices in cooperation with local residents and local municipalities.

Promotion of arts, culture and sports

Our Group supports the promotion of arts, culture and sports.

Exchange with local communities

We issue local magazines to introduce our activities at worksites, organize plant visit events inviting neighbors and perform other activities for communication with local communities.




Showa Aluminum Manufacturing PhilippinesTyphoon Rammasun, left devastating impacts across the Philippines in July 2014. As numerous employees of the Showa Aluminum Manufacturing Philippines Corporation were among typhoon victims, the headquarters of Showa Denko K.K. showed its support by collaborating with aluminum-related departments to offer donations.

Omachi PlantOmachi Plant offered donations to Omachi City and Nagano Prefecture Branch of the Japan Red Cross Association for support of people who suffered from the Nagano Prefecture Kamishiro Fault Earthquake.


The Showa Denko Group strives to contribute to development of local economy, for example, by participating and assisting in events, urban planning and town planning activities, providing small and medium-sized companies with technical advice and support, employing local residents, and procuring local goods and materials. We also contribute to local community through welfare-related and other activities.

Head OfficeOn August 5, 2014, “Fukushima and Aizu Marché” was held in the first floor lobby of the head office, in collaboration with the Aizu Wakamatsu and Kitakata municipalities of Fukushima Prefecture.

Aluminum can recycling activitiesThe Showa Denko Group has been hosting aluminum can recycling activities

involving employees of not only the Group but also business partners. Sales pro�ts gainedthrough these activities are donated to various facilities and organizations in each area.

OyamaOn July 3, 2014, Oyama Plant donated the profit earned from the charity course of its aluminum can recycling activity to “Donguri (Acorn) Fund” of the Oyama City Council of Social Welfare.

KitakataOn November 8, 2014, Kitakata Plant donated the proceeds from two years of aluminum can recycling activities to three neighboring organizations.These organizations support people with disabilities from various aspects, and the donation will be used to fund facilities and student activities.

Yokkaichi Plant of UnionShowa K.K.Social welfare corporation i-project is a major contributor to Yokkaichi Plant’s aluminum can recycling activities.After going around local residents’ associations and stores, members of i-project crush the collected cans with a manual compactor, and then deliver the crushed cans to Union Showa. The collection volume is increasing year by year, because the crushing process is very simple and easy to learn, and brings clear, visual results with a sense of accomplishment. Part of the sales profit contributes to the operation of

i-project. Last year, Union Showa showed its gratitude to i-project’s support so far with a certificate of appreciation. It also chose to purchase confectionery produced by i-project as commemorative gifts when it achieved the milestone of 1.5 million hours of safety and 20 years of no-accident no-disaster record.

Niigata ShowaOn April 4, 2014, Niigata Showa K.K. donated Tosho Cards (gift certificates for books) to Aga Town from the profit earned through its aluminum can recycling activity.


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Global Responsible Care Verification Certificate

The Showa Denko Group sees e�orts to reduce the environmental load caused by our business as a critical mission and to this e�ect, we established the “Responsible Care Action Guidelines,” which are a set of guidelines for management policies on the environment , safety and health. Based on this, we are promoting Responsible Care activities.

Responsible Care Action Guidelines(Showa Denko Group Action Guidelines)

1. Throughout the entire life cycle of products, we shall make our best efforts to review and improve business activities continuously from the view points of ensuring safety & health and protecting the environment.

2. We shall make our best effor ts towards sustainable development by harmonizing our production activities with the global environment, not only through conventional approaches to environmental preservation, but also through promotion of changing raw materials, energy conservation, waste reduction and recycling, reductions in the release of chemical substances, etc.

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

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

5. We shall enrich risk assessments and risk management concerning the effects of the products and materials we handle on safety, health, and the environment, and we shall provide information on the safe use and handling of our products to our stakeholders as well.

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

7. We shall comply with international rules, domestic laws and regulations, and make our best efforts to cooperate with the relevant international organizations, domestic and foreign administrative bodies, etc.

8. We shall participate proactively in various activities related to the ensuring of safety & health and environmental protection, and make our best efforts to communicate with society to achieve better understanding and trust.

* Group Companies : Tsurusaki Kyodo Doryoku K.K. Showa Denko Ceramics Co., Ltd., Shiojiri Showa Co., LTD., Showa Denko Packaging Co., Ltd., Showa Aluminum Can Corp., Showa Denko Sakai Aluminum Co.,Lte., Showa Denko Electronics K.K. Showa Denko Kenzai K.K. Unio Showa K.K. Nigata Showa K.K. Showa aluminum Can Recycling Center, HI-PACK Co., LTD., Showa Denko Gas Products Co., Ltd., and Clean-S Showa Co., Ltd.

Responsible Care promotion system

As of April 2014, we are promoting Responsible Care at our headquarters, 13 business divisions, 15 workplaces, 3 branches, the Business Development Center and 15 Group major companies.At overseas group companies (manufacturing) as well, we have identified achievements relating to Responsible Care and provided local guidance to expand the target scope.The Responsible Care Promotion Council is placed under the CSR Committee to have preliminary deliberations on important issues concerning Responsible Care activities.

Responsible Care Action Guidelines

Showa Denko established the “Responsible Care Action Guidelines” in March 1995. These guidelines stipulate management policies related to the environment, safety, and health. Our Group promotes activities based on these action guidelines. In addition, we have also signed the “Responsible Care Global Charter” in 2005 and declared our support and implementation of the charter.The RC Charter was amended in 2014 to specify more detailed action strategies using plain words for better understanding by outside stakeholders. Our Group re-signed the amended RC Global Charter in 2014, declaring once again to promote RC activities through globally collaboration.


Responsible CareAction Plan



Environmental ConservationResponsible Care

Responsible CareManagement

Responsible Care Responsible Care Management

Auditing structure

Workplaces of Showa Denko and our major group companies evaluate their own Responsible Care systems and implementation statuses based on a checklist and reflect the results on their goals and action plans for the next year in order to move forward with continuous improvement.We also check on site how efforts are progressing at other domestic and overseas group companies (manufacturing) and provide guidance. In 2014, we audited 33 workplaces (including our headquarters, branch offices and business divisions), workplaces of domestic group companies, and 4 overseas group companies.

Self-audit

Workplaces of Showa Denko and its major group companies evaluate their own Responsible Care systems and implementation statuses based on a checklist, so as to reflect the results in the following year’s targets and action plans in order to move forward with continuous improvement.

Worksite auditing

The Environment & Safety Office of the CSR Department audits worksites to both, make evaluations and improvements regarding Responsible Care at Showa Denko and its major group companies. The CSR Committee deliberates these results to reflect them in the policies, goals and plans of the entire company and group companies.

Environmental management system

The Showa Denko Group has been continually working to improve the environmental management system and reduce environmental burdens. As of April 2015, 25 worksites of 23 domestic and overseas group companies, in addition to the 14 worksites our Company, maintain or have updated their certificate registration.

RC Training Session for Newly Assigned Environmental Safety Managers

Responsible Care seminar for new manufacturing section managers and others (November 2013, Yokohama Plant)

Formulatingmanagementpolicies andobjectives

Continualimprovement

Managementreview

Internal audit,evaluation of

results

Activityplans

Implementation

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The PDCA cycle

CSR Committee Responsible CarePromotion Council

Aluminum Can RecyclingPromotion Subcommittee

Safety Measures Committee

CSR Department

President& CEO

Board of Auditors

Environment & Safety Office

Divisions etc. ( Divisions Branches, Headquarters, etc. )

Persons in charge of themes ( Subcommittees )

Secretariat ( Section of environment & safety ) or the Manager in charge of environment & safety

Manager in overall Charge ofResponsible Care

PromotionCouncils etc.

Work sites ( Production sites, R&D bases, etc., of the group )

事業場体制

Responsible Care Promotion system

system of worksitesChart for reference : Each worksite defines its own system

The PDCA cycle

The Showa Denko Group works to achieve continuous improvement in its Responsible Care activities through the plan-do-check-act (PDCA) cycle of formulating Responsible Care activity plans (plan), implementing these (do), auditing and evaluating the results (check), and reflecting these via management review in the next round of objectives and activity plans (act).

Education system

The Showa Denko Group, employees receive Responsible Care education that focuses on occupational safety, environment preservation and compliance when they join the company or are promoted. In particular, Responsible Care seminars that target newly appointed manufacturing section managers are held at workplaces every year, where they perform practical risk assessment exercises using actual manufacturing sites and work as instructional materials.We also implement annual periodic training seminars for internal auditors on environmental management systems to nurture relevant human resources. In 2012, we started a training seminar for internal auditors on the Occupational Safety & Health Management System.


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Responsible Care

* Active Safety :

Policy and plans for 2014 Results and progress in 2014 Evaluation Policy and plans for 2015

Environmental conservation

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Policy • Zero environmental problems • Zero instances of environmental problems within the Showa Denko Group

• Implemented checklists to prevent environmental problems.

• Implemented measures to reduce risks in each plant.

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Policy • Zero environmental problems

Plans

• Steady implementation of "Active Safety" efforts (utilizing checklists to prevent environmental problems)

• Reducing environmental risks

Plans

• Steadily implement "Active Safety" efforts (review checklists to prevent environmental problems)

• Reducing environmental risks

Global w

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Policy

• Continuing to improve unit energy consumption • Failed to achieve benchmark on ethylene

and soda.• Implemented periodic reporting.

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Policy • Continuing to improve unit energy consumption

Plans • Thorough energy conservation


Policy

• Reduction in GHG and promotion of energy conservation towards the realization of a low-carbon society

• GHG emissions: 29% reduction (Showa Denko) and 26% reduction (group) in comparison to 2005 levels.

• Unit energy consumption as designated shippers in 2013 and reduction plans for 2014 reported to authorities.

◎

Policy


Plans

• Implementation of reduction plan reported to authorities

Plans

• Review CO2 emission level for accurate understanding.

Reducing industrial waste

Policy

• Achieving zero emission • Contributing to a recycling-based

society • Achieved target on amount of final

disposal by landfill: 912 tons (Showa Denko, down 175 tons from 2013), 1,158 tons (Showa Denko Group, down 202 tons from 2013).

◎

Policy

• Achieving zero emission • Contributing to a recycling-based society

Plans

• Reducing the amount of final disposal by landfill through efforts such as more effective use of sludge

• Target: Showa Denko only: 1,100 tons or less Showa Denko Group: 1,300 tons or less

Plans

• Reducing the amount of final disposal by landfill through efforts such as more effective use of sludge Target: Showa Denko only: 800 tons or less Showa Denko Group: 1,000 tons or less

Policy

• Contributing to a recycling-based society

• Plastic chemical recycling production: up 7.9% from 2013

• Paper-recycling rate (headquarter): 81% (down 4.1% from 2013)

• Aluminum can recycling: 98.3% Group participation rate, with each employee bringing in an average of 155 cans over a three-month period

◯

Policy • Contributing to a recycling-based society

Plans • Promoting recycling


Reducing chemical

substance

Policy • Reducing chemical emissions • Emission of PRTR: 223 tons (remained in same 2013); failed to achieve target.

• Emission of toxic atmospheric pollutants: 18 tons (down 10% from 2013); failed to achieve target.

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Policy • Reducing chemical emissions

Plans

• Reduce emission at plants with a total emission of 10 tons/year or more, and reduce emission of chemical substances with a current emission level of 5 tons/year or more.

Plans

• Thorough compliance with revised PRTR

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

Targets, achievements, evaluations of major efforts in 2014, as well as targets for 2015 are as follows. We will continue to promote active engagement in these efforts to meet our targets.

Every two or three years, the Showa Denko Group establishes a medium-term Responsible Care action plan, which is then used as the basis for annual action plans during the period covered. All workplaces draft detailed action plans based on the comprehensive plan, tailored to local conditions and circumstances, and promote Responsible Care.








Responsible Care

Responsible Care


Safety and disaster prevention

Equipment safety

Policy

• Realizing equipment-incident-free status

• Incidents (Showa Denko Group): 3 fires, 1 leakage, and 1 hoist wire breakage

• Horizontally deployed revised edition of the equipment incident prevention checklist, which includes information such as the JCIA Safety and Accident Prevention Guidelines and external accident information.

• Completed evaluations on safety capabilities (Kawasaki, Tatsuno), prepared and began implementation of improvement plan.

• Conducted 1 new HRM audit.• Promoted implementation of irregular case risk assessments

(e.g., S/U, S/D, upon emergency stops).• Systematically performed emergency drills and internal audits

at each plant.• Planned and promoted measures to strengthen anti-

liquefaction measures and earthquake resistance plans of key facilities (high pressure gas, hazardous materials, buildings specified in the Building Standard Law).

• Conducted audits to verify adequacy and effectiveness of investigation control and system of authorized high-pressure gas plants.

○Policy


Plans

• Thoroughly implementing Active Safety activities

• Horizontally deploy the equipment incident prevention checklist.

• Apply the evaluation on safety capability system

• Ensuring the implementation of HRM*1 examinations

• Promoting voluntary safety initiatives

• Establish a risk assessment framework and procedures in the nonstationary state and unusual operations

• Maintain and improve measures against earthquakes for each piece of equipment and facilities

• Maintain and improve PDCA at authorized high-pressure gas plants, etc.

Plans

• Thoroughly implementing "Active Safety" activities

• Complete the horizontal deployment plan of the equipment incident prevention checklist.

• Expand coverage of measures to prevent recurrence at plants where incidents had occurred.

• Establish and implement a method for determining equipment incident risk

• Ensuring the implementation of HRM examinations

• Consider how to conduct risk assessments regarding non-stationary states and unusual operations


• Systematically promote emergency drills and education


Occupational health and safety

Occupational safety

Policy

• Zero lost-time and non- lost-time injuries at each site

• Establishing the strongest safety management system in the chemical industry

• Showa Denko Group: Experienced 6 incidents resulting in employees taking time off work (3 cases in 2013), 4 incidents without lost work time (0 cases in 2013)

• Showa Denko Group lost-work time incident rate: 0.33 (0.22 in 2013)

• In response to the occurrence of 2 cases of serious injury, conducted thorough horizontal deployment among all group plants.

• Chichibu plant, Oyama plant of Showa Aluminum Can Corp, Hikone plant, and Ohmuta plant received external safety awards.

• Tatsuno plant and Yokkaichi plant of Showa Denko Gas Products acquired industrial safety and health management system certification. A total of 18 group plants acquired certification.

△

Policy



Plans

• Rate of lost-time injuries as the group: 0.1 or less

• Elimination of dangerous equipment and work

• Maintenance and improvement of safety sensitivity

• Increase in plants that acquire industrial safety and health management system certification

Plans




• Increase in plants that acquire industrial safety and health management system certification

Occupational

health

Policy • Zero work-related illnesses*2

• Zero work-related illnesses• Enhanced heat stroke measures.

◎

Policy • Zero work-related illnesses

Plans

• Enhancing sanitation management structure

• Improving work environment and work methods

Plans



Health m

anagement

Policy

• Maintain and promote the mental and physical health of employees

"Showa Denko Group Vivid Health Promotion Plan" Activity Results [compared with benchmark year (2012)]① Prevention of lifestyle-related diseases.

(1) Prevalence rate of hypertension, fat levels, and blood sugar levels increased.

(2) Total screening rate of "lung cancer", "colorectal cancer", and "cervical cancer" increased higher than the benchmark

② The rate of people with high risk levels on mental health increased slightly.

③ The rate of "people with appropriate body weight" decreased, "people who exercise on a daily basis" remained the same, and "people with insufficient rest (sleep)" and "people working long hours" increased. ・ "People who walk for 1 hour or more" increased and ・ "People who smoke" decreased. ・"People who drink alcohol a lot" remained the same, but "People who drink alcohol on a daily basis" increased.

④ The follow-up rate failed to reach 100%.

〇

Policy


Plans

• Showa Denko Group Vivid Health Promotion Plan ① Preventing lifestyle-related

diseases ② Improving mental healthcare ③ Improving lifestyles ④ Steadily implementing medical

examinations and follow-up

Plans

• Objectives Showa Denko Group Vivid Health Promotion Plan ① Preventing lifestyle-related diseases ② Improving mental healthcare ③ Improving lifestyles ④ Steadily implementing medical

examinations and follow-up

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ical substance safety

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Policy • No mismanagement • Inappropriate management: 1 case. (Response delayed.)• Expanded database for internal sharing of information on

chemical substances contained in products, as well as the comprehensive chemicals management system.

• Enhanced the company's internal management system in accordance with revisions to domestic and foreign laws.

• Promoted risk assessment in accordance with revisions to the Industrial Safety and Health Act (conducted trainings and clarified scope).

• Promoted switch over to SDS/labels complying with GHS and country-specific laws.

△

Policy • No mismanagement

Plans

• Enriching education in laws and safety concerning chemical substances

• Enriching risk assessment • Completing revision of all products'

SDS*3 to conform to GHS • Appropriate response to overseas

laws and regulations

Plans



SDS to conform to GHS • Respond to domestic and foreign

laws/regulations appropriately

Quality assurance

Quality assurance

Policy

• Making products that offer total safety in use

• No product accidents, no major complaints

• In addition to product release reviews (accomplished 5 reviews in 2014), began implementation of pre-ship-out review from July 1st. Accomplished 20 reviews. Enhanced multi-perspective risk assessment from the stage of sample product handling.

• Reduced number of claims by approx. 10% compared to previous year by strictly conducting established corrective measures.

• Began a program to secure quality reproducibility through process capability quality control.

◎

Policy



Plans

• Performing appropriate product risk assessments (Revision of marketing procedures)

• Implementing effective preventive measures (process capability quality assurance)

Plans



*1 HRM : High Risk Material *2 Work-related illnesses : Legally recognized work-related sickness by the Workers' Compensation Insurance Law. Appearing symptoms of illness caused by exposure to

harmful factors under circumstances of employers' control. *3 SDS (Safety Data Sheet): This is a document provided by the supplier to the user (customer) of a chemical substance, covering such matters as its name, toxicity, and

physical/chemical properties; cautions concerning its handling and storage; and emergency measures.


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Responsible Care

Biodegradable resin "Bionolle™ "

Manufactured and sold by Showa Denko, the biodegradable plastic “Bionolle™” has peculiar properties which allow it to be degraded into water and carbon dioxide by microorganisms once disposed of after use, while maintaining properties that are equivalent to any other plastic during use.Bionolle™ is a high-molecular-weight resin with excellent formability (e.g., when forming into film) and superior physical properties once made into a product. It is used as agricultural film and garbage bags, as well as plastic shopping bags and apparel packaging mainly overseas. It has also been certified as compostable (biodegradable) in each country. A mechanism to make full use of the characteristics of biodegradable resin is essential in increasing demand of this product. An example would be agricultural film, which contributes to the reduction of industrial waste thanks to its characteristics of degrading back to soil by simply being left as is, after use.A trend to add plant-derived (carbon neutral) materials for biodegradability has been accelerating. Bionolle™ has also followed suite by adopting plant-derived materials for its main ingredient, succinic acid. The line-up has also been updated with “STARCLA™” , which are synthetic resin where starch and other plant-derived ingredients have been mixed to the compound.

Biodegradation in Compost

Applications

The Showa Denko Group endeavors to develop and manufacture “environment-friendly” products by drastically reducing environmental burdens inform the manufacturing process.

Environmentally-friendly ammonia "ECOANNTM "

“ECOANN™” is ammonia made partially from recycled plastic. Recycled plastic collected from general households and business operators is gasified at the chemical recycling plant of the Kawasaki Plant to extract hydrogen, which is then used to synthesize ammonia. While having a quality equivalent to that of a conventional product, ECOANN™ is accredited as a green product by our customers (mostly power companies), due to its significant contribution in reducing environmental burden during the manufacturing process. Ammonia is used in various areas, such as use as a de-nitration agent (detoxifying nitrogen oxide) at thermal power plants, nitriding treatment of metal (giving excellent corrosion resistance and abrasion resistance), raw material for chemical fertilizers and synthetic fibers, material for various products in the chemical industry, and ingredient for pharmaceutical products.

Emissions of carbon dioxide in manufacturing1kg of ammonia (internal estimation)

0

0.5

1

1.5

2

2.5

3

3.5

4

City gas & used plastic (used plastic accounting for 34% of entire use)

City gas only

2.4

3.7

(kg)




Responsible Care Environmental Conservation



Environment-friendly productsEnvironmental Conservation

INPUT OUTPUTShowa Denko

Group

Final land�ll disposal *4(t)Volume reduction by consignee (t)Reused by third parties (t)Total waste discharged to outside (t)

246(-27)549(-21)

8,047(+222)8,842(+173)

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

912(+175)12,731(+1,833)

10,811(-116)24,454(+1,544)

Wastewater volume (kt)JCIA PRTR-listed substances (t)

JCIA PRTR-listedsubstances (t) 0(0) 0(0)

Total phosphorus (t)Total nitrogen (t)COD (t)

3,705（+621)1(0)0(0)1(0)5 (0)

29,149（+482)25(0)10(0)

510(+50)355 (-25)

JCIA Toxic atmospheric pollutants (t)*3

JCIA PRTR-listed substances (t)Soot and dust (t)NOx(t)SOx(t) Greenhouse gas（kt-CO2)

18(+1)198(0)

112(-54)1,324(+57)

369(-29)2,218(+5)

7(-3)186(+11)

1(-6)15(-12)

3(0)461(-6)

Emission of soil pollutants

industrial waste discharge

Emissions of water pollutants

Emissions of air pollutants

Products

WasteReduction

InternalUtilization

0tGroup companies

(-1,610t)3,932t

(+5,596t)62,412t

（－55t)7,379t

（－0.12M㎥）3.35M㎥（+101㎥）

59.26M㎥

Raw materials

Water

Energy （crude oil equivalent）Showa Denko K.K. only

Showa Denko K.K. only

Groupcompanies

Showa DenkoK.K. only

Groupcompanies


Groupcompanies


Groupcompanies




170MℓGroup companies*2

Group companies

Group companies

（+10Mℓ）*1

（-20Mℓ）*1

98Mℓ

2014

Discharged amounts of greenhouse gases kt-CO2 380

The amount of water used million m³ 328

Wastewater volume kt 2,129

Final landfill volumes of industrial waste kt 2,956

Showa Denko Group Companies outside Japan

Here we summarize the date concerning the environmental loads including the input of resources and emissions to the atmosphere and water that accompany with the Group’ s business activities.

Actual values of environmental loads for 2014 are as follows:

*1 Last year’s energy consumption has been corrected for both, the number for Showa Denko only as well as the number covering the entire domestic group companies.

*2 Scope of the Showa Denko Group : Total for the 10 consolidated manufacturing subsidiaries in Japan; Showa Denko Gas Products Co., Ltd., Showa Denko Ceramics Co., Ltd,.(Toyama), Showa Aluminum Can Corp., Showa Denko Packaging Co., Ltd., Showa Denko Kenzai K.K. Niigata Showa K.K. Nippon Polytech Corp., Showa Denko Kenso ,Co., Ltd., Showa Denko HD Yamagata K.K. and Showa Fine Ceramics Co., Ltd., GHG emissions include those for Showa Denko Electronics K.K. and Tsurusaki Kyodo Doryoku Co., Ltd., and exclude those Niigata Showa K.K. Nippon Polytech Corp., Showa Denko Kenso ,Co., Ltd., Showa Fine Ceramics Co., Ltd., which arenoto required to report emissions as emitters designated under the Act on Promotion of Global Warming Countermeasures.

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

*4 We expanded the scope of this number from PRTR-listed substances defined by PRTR Law to PRTR-listed substances defined by Japan Chemical Industry Association.


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Resource use andenvironmental impact


Responsible Care

Promoting energy conservation

The Showa Denko Group promotes energy conservation measures such as review and optimization of production processes and modification of facilities from the viewpoints of global warming prevention and resource conservation.In FY2014, our GHG emission was 2,678 kt-CO2-equivalent (an increase of 24 kt-CO2-e from the previous year), and among that amount, our

GHG emission originating from our energy consumption was 2,540 kt-CO2-e (an increase of 1 kt-CO2-e from the previous year).

In addition, our Group owns and operates hydroelectric power stations in four plants. They are utilized to generate clean energy. We generate 21% of all electricity used by our group through hydroelectric power generation. This reduces about 150 kt-CO2-e

GHG emission a year compared with purchased electricity.

2010 2011 2012 2013 2014 (FY)

（kt-CO₂）

2005Reference year

Amount discharged

2,6782,509

2,7022,6952,728

3,621

Trends in discharged amounts of greenhouse gases and target �gures (Showa Denko Group)

3,500

3,000

2,500

2,000

1,500

1,000

500

0

47

91

2,540

CO₂ (non-energy source origin) 5 GHGs other than CO₂

CO₂ (energy source origin)

■■■

Power use rates by source (FY 2014)

Power purchase57%

Thermal power (including IPP)

22%

Hydraulic power21%

Electric energy

1,500GWh

Measures for c-LCAC-LCA (carbon-Life Cycle Analysis) is a methodology to assess the CO2 emissions in the total lifecycle of products from the time their raw materials are taken, they are manufactured, distributed, used up, to the time they are abandoned. Showa Denko is working on quantification of its contribution to the reduction in CO2 emissions generated from the use of our chemical products by comparing the CO2 emissions in the production processes of our chemical products as well as in the use of those products, with the CO2 emissions in the use of alternative products in the assumption that those chemical products did not exist.From the perspectives of total optimization across the product lifecycles, not to mention the reduction in CO2 emission in the manufacturing processes of chemical products, we will focus on the contribution to the reduction in CO2 emissions of our entire community generated from the use of chemical technologies and chemical products by applying this methodology.

CO2 注意


Global w

arming

initiatives

Policy

• Continuing to improve unit energy consumption • Failed to achieve benchmark on ethylene and soda.

• Implemented periodic reporting.△

Policy • Continuing to improve unit energy consumption



Policy


• GHG emissions: 29% reduction (Showa Denko) and 26% reduction (group) in comparison to 2005 levels.

• Unit energy consumption as designated shippers in 2013 and reduction plans for 2014 reported to authorities.

◎

Policy


Plans

• Implementation of reduction plan reported to authorities

Plans

• Review CO2 emission level for accurate understanding.

Responsible Care Action Plan & achievements for 2014, and plans for 2015







The use of resources and environment loads.

Global WarmingPrevention Measures

The showa Denko Group promotes energy saving in various �elds includingproduction processes, supply chains and o�ces.


Reducing environmental impact through supply chain management (SCM)

Showa Denko K.K. is working to reduce its environmental impact by improving transportation efficiency and by promoting a modal shift throughout its supply chain, from the procurement of materials, through production and sales, to delivery.In FY 2014, the unit energy consumption of our supply chain was deteriorated by approximately 2.6% on a year-to-year basis. This was mainly due to the relocation of certain plants overseas, which lead to the reduction in the volume of industrial waste that could be transported by vessels with superior unit energy consumption. In the meanwhile, FY 2014 was also an year where we aimed to reduce truck transportation distance by making effective use of local ports nearby delivery destinations. We also adopted the milk run method (round trip collection method) to reduce the transportation distance, while also reducing the number of truck services by enhancing cargo loading efficiency.

Promotion of modal shift and other effortsTo reduce environment impact associated with logistics, we are moving ahead with a “modal shift” by using rail and ship transport instead of trucks to reduce CO2 emissions. In FY 2014, we continued this effort by partially switching the means of long-distance transportation to/from inland plants from trucks to ferries. We also made progress on replacing trucks with railroads for transportation between plants. In FY 2014, the freight ton-km by rail and ship transport in Japan was approximately 316 million ton-km which corresponds to approximately two-thirds of our total freight ton-km in Japan.In addition to the modal shift, we are improving transportation efficiency by increasing the size of delivery lots, improving the loading ratio of trucks and containers, and reducing transport distances. In cooperation with transport companies, we are striving to reduce energy consumption by adopting low emission vehicles, digital tachographs, and eco-friendly tires, in addition to encouraging eco-friendly driving.

Transportation sector's CO2 emissions and energyconsumption rate

■ CO2 emissions by transport sector● Unit energy consumption for transport

38

34

30

26

22

0

（thousand tons）（kl/kl per million ton-km）23

22

21

20

19

02013 2014 (FY)2012

27.5

29.3 29.0

21.822.422.2

CO2 em

issions by transport sector

emissions by transport sector

Freight ton-km (Showa Denko K.K.)

2012 2013 2014 (FY)

（million ton-km）

500

400

0

467 505 488

FY2014 ratios for use of various modes of transport

■ Road■ Rail■ Sea

Freight ton-km Freight ton

（%）100

60

80

20

40

0CO2 emissions

1.4

36.8

61.83.7

61.0

35.3

1.1

29.1

69.8

Promoting energy saving in office

Using the tight electric power conditions after the Great East Japan Earthquake disaster as an opportunity, we have implemented thorough energy saving measures even in the office buildings.

Power-saving measures at the Head OfficeFacilities-related

• Changed to energy-saving type air conditioners• Room air temperature is set at 28 degrees Celsius by the air-conditioners, limiting hours of use.

• Changed to LED lighting• Lights are turned off in spaces where lighting is unnecessary, and during lunch time.

• Operations of some elevators are suspended.• Use of copy machines should be limited to the minimum level required.

Work-related

• Work after 19:15 hours is prohibited, in principle.• Period for "Cool Biz" campaign is extended. (From May to the end of October)

1,363

1,055 1,065 967 949

Trend of electric power used at the Head O�ce building

2010 2011 2012 2013 2014 (FY)

（thousand ｋWｈ）

1,400

1,200

1,000

800

600

400

200

1,

0


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Global WarmingPrevention Measures

Responsible Care


Reducing industrial wasteThe Showa Denko Group is reducing, reusing and effectively using waste through the following activities to reduce the amount of industrial waste disposed.・ Reuse of waste acids and waste alkalis ・ Use of waste oil and waste plastics as fuels (heat recovery) ・ Effective use of inorganic sludge (e.g., in cement) The final landfill volumes of industrial waste for FY 2014 was 912 tons for Showa Denko only and 246 tons for the rest of Group companies, and 1,158 tons in total, which is a year-on-year decrease of 202 tons, and achieved the Group target (1,600 tons or less). For FY 2015, we have set the Group target for the final landfill volumes of industrial waste as 1,000 tons or less to achieve zero emission as a Group. In addition, Showa Denko is currently assessing contractors for intermediate processing and final disposal to ensure appropriate processing and disposal of waste generated from us.With respect to the discharge of bauxite residue into the sea for disposal, the process was completed in March 2015.

PCB control

Based on its PCB control checklist, Showa Denko K.K. regularly checks the status of stored polychlorinated biphenyl (PCB) waste. This waste is appropriately stored in suitable facilities to prevent leaks. Additionally, each worksite submits an

annual report on the status of stored PCB waste and related matters to the prefectural governor, as required under the Law Concerning Special Measures against PCB Waste.Taking full advantage of the waste processing facilities of Japan Environmental Safety Corporation etc., we are continuing systematic disposal of PCB waste

The amount of industrial waste deischarge

■ Showa Denko K.K. ■ Showa Denko Group (Japan)

(FY)

（t）

40,000

30,000

20,000

10,000

02011

35,143

2012

26,060

8,441

2013

22,910

8,669

2014

24,454

8,842

40mm

P00Trends of the �nal land�ll volumes of industrial waste

（t）

2,500

2,000

1,500

1,000

500

0(FY)20142010 2011 2012 2013

■ Showa Denko K.K. ■ Showa Denko Group (Japan)

2,390

201

1,932

212

1,850

235

1,087

273

912

246

Responsible Care Action Plan & achievements for 2014, and plans for 2015Policy and plans for 2014 Results and progress in 2014 Evaluation Policy and plans for 2015


Policy


• Achieved target on amount of final disposal by landfill: 912 tons (Showa Denko, down 175 tons from 2013), 1,158 tons (Showa Denko Group, down 202 tons from 2013).

◎

Policy


Plans

• Reducing the amount of final disposal by landfill through efforts such as more effective use of sludge

• Target: Showa Denko only: 1,100 tons or lessShowa Denko Group: 1,300 tons or less

Plans

• Reducing the amount of final disposal by landfill through efforts such as more effective use of sludge Target: Showa Denko only: 800 tons or less Showa Denko Group: 1,000 tons or less


• Plastic chemical recycling production: up 7.9% from 2013

• Paper-recycling rate (headquarter): 81% (down 4.1% from 2013)

• Aluminum can recycling: 98.3% Group participation rate, with each employee bringing in an average of 155 cans over a three-month period

◯


• Promoting recycling










We strive to attain zero emission by curbing waste generation, encouraging reuse, identifying ways for e�ective use of wastes, etc.

Reducing Industrial Waste /Environmental Accounting

Capital investm

ent

Expenses

Cost within business site

Pollution prevention

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

732 170

Global environ-mental protection

Capital investments and expenses associated with energy conserva-tion and combating global warm-ing and ozone-layer depletion

485 720

Resource recycling

Capital investments and expenses associated with resource conserva-tion and waste treatment

133 1,375

Upstream

and dow

n stream

costs

Costs associated with reducing environmental impact in business operations upstream and down-stream, including green purchas-ing and recycling of products and packaging

6 14 A

dministrative costs

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

0 515

R & D

costs

Costs associated with research and development of environment friendly products and technologies

270 230

Comm

unity outreach costs

Environmental conservation costs for local community outreach activities not directly linked to business operations, such as envi-ronmental conservation projects in communities, dialogue with residents, and plant tours

0 6

Other

Compensation for health damages resulting from environmental pollution, etc.

38 154

Total 1,664 3,185

Energy conservation 484

Resource recycling 673

Waste reduction 8

Other 4

Total 1,169

Economic benefits (million yen)

Reducing environmental impactEnvironmental accounting (million yen)

1990 2014

SOx 3,698t 369t

NOx 3,522t 1,324t

Soot and dust 283t 112t

COD 786t 355t

Total nitrogen 607t 510t

Total phosphorus 51t 10t

Landfill disposal 19,723t 912t

Actual values of environmental accounting for 2014 are as follows:


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The Showa Denko is committed to ongoing environment investment designed to reduce energy consumption and minimize environmental impact of our operations.

Reducing Industrial Waste /Environmental Accounting

Responsible Care


Reducing chemical

substance

Policy • Reducing chemical emissions • Emission of PRTR: 223 tons (remained in same 2013); failed to achieve target.

• Emission of toxic atmospheric pollutants: 18 tons (down 10% from 2013); failed to achieve target.

△

Policy • Reducing chemical emissions

Plans

• Reduce emission at plants with a total emission of 10 tons/year or more, and reduce emission of chemical substances with a current emission level of 5 tons/year or more.

Plans • Thorough compliance with revised PRTR

Reducing chemical substance discharge

As a member of the Japan Chemical Industry Association (JCIA), Showa Denko since 1996 has voluntarily undertaken surveys of the volumes of chemical substances it has discharged and transported. In 2014, the Company performed a survey of 433 substances, including substances subjected to the PRTR Law, submitting a report to the JCIA on 132 substances (of which 98 were subject to the PRTR Law). Total discharge of PRTR listed substances. Showa Denko will continue to make focused efforts to reduce discharge volumes by preparing reduction plans for each site for PRTR-listed substances and for substances with high annual discharge volumes. The Company is currently seeking to ascertain and assess potential impact in areas surrounding its sites and improve communication with local communities and governments concerning risks as it works to reduce discharge volumes.

40mm

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

(FY)

（t）

700

600

500

400

300

200

100

010 11 12 13 14090807060504030201009998979695

Volume released / transferred

Volumetransferred

223t1,257t

Total volumereleased

0tInto soil

25tInto water

198t Into air

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

2010 2011 2012 2013 2014

Into air

(t)

Showa Denko K.K. 273 317 231 198 198

Showa Denko group in Japan - - 61 175 186

Into water

(t)

Showa Denko K.K. 43 55 105 25 25

Showa Denko group in Japan - - 0 1 1

Total(t)

Showa Denko K.K. 365 381 336 223 223

Showa Denko groupin Japan

62 61 61 176 187

Release of PRTR-listed substances (FY)









Environmental Conservation Reducing Chemical Substance Discharge

The Showa Denko Group is advancing with efforts to minimize the effect of the production and use of chemical substances.

Emission of PRTR-listed substances at respective sites in FY 2014 （Showa Denko K.K.）

Others5.1%

Normal-hexan7.3%

Toluene22.4%

Nickel compounds32.4%

Xylene32.8%Total emissions

1.6t

◯ Oyama Plant

Toluene12.2%

Triethylamine7.6%

Others5.0%

Methylnaphthalene13.2%

Dichloromethane62.0%Total emissions

1.1t

◯ Higashinagahara Plant

◯ Isesaki PlantOthers3.4%Toluene9.0%

Styrene19.5%

Phenol29.5%

Formaldehyde38.6%Total emissions

4.1t

Others4.1%Benzene8.8%

Aceraldehyde

12.7%Vinyl acetate36.2%

Normal-hexan38.3%Total emissions

10t

◯ Oita Complex

Boron compounds91.1%

Hydrogen fluorideand its water-solublesalts8.9%

◯ Shiojiri Plant

Aceraldehyde Chloroform Dichloromethane

Tetrachloroethylene Trichloroethylene 1,3－Butadiene

Benzene Formaldehyde Acrylonitrile

Emissions of each toxic atmospheric pollutant in FY 2014 （Showa Denko K.K.）

0

0.2

0.4

0.6

0.8

1.0

0

3

6

9

12

15

0

0.1

0.2

0.3

0.4

0.5

0

0.1

0.2

0.3

0.4

0.5

0

2

4

6

8

10

0

5

10

15

20

25

30

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

01 02 03 04 05 06 07 08 09 10 11 12 13 14

0

0.5

1.0

1.5

2.0

2.5(t) (t)

(FY) (FY)0

50100150200250300350

(t)

(FY)

(t)

0

0.02

0.04

0.06

0.08

0.10

0.12

(FY)

(t)

(FY)

(t)

(FY)

(t)

(FY)

(t)

(FY)

(t)

(FY)

■ Tokuyama■ Oita Complex

■ Oyama Plant■ Kawasaki Site■ Omachi Plant

■ Kawasaki Site ■ Kawasaki Site■ Oita Complex

■ Oyama Plant■ Higashinagahara Plant■ Chiba　（Showa Denko Electronics）

■ Tokuyama

■ Kawasaki Site　■ Oita Complex ■ Omachi Plant

■ Kawasaki Site■ Isesaki Plant

■ Tatsuno Plant■ Kawasaki Site

Total emissions4.0t

◯ Omachi PlantOthers9.8%

Methylnaphthalene10.7%

Benzene22.6%

Naphthalene27.0%

Acenaphthene29.9%

Total emissions32.4t

Others27.2%

Chlorodifluoromethane6.8%

Liner alkylbenzenesulfonate and its salt*6.9%

１，３－Butadiene28.5%

Toluene30.6%


◯ Kawasaki Site

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

Others5.5%

Methylmethacrylate3.4%

n-Butyl acrylate5.3%

Vinyl acetate11.3%

Styrene74.5%


◯ Tatsuno Plant

Total amounts released of harmful atmospheric pollutants (Showa Denko K.K.)

2010 2011 2012 2013 2014

( t ) 32 28 21 17 18


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Responsible Care

Reducing emissions of toxic atmospheric pollutants

On completing the JCIA Phase 2 Voluntary program for reducing discharged volumes of 12 harmful atmospheric pollutants, the Showa Denko Group is now working to achieve a new target : a 10% year-on-year reduction in pollutants released in relatively large volumes, In 2014, the total amount discharged of nine substances handled by the Company was 18 tons, an increase of 1 ton from the previous year.The Group remains committed to achieving steady reductions in the discharge of toxic atmospheric pollutants through a combination of various measures, including switching to substitute materials and booting recovery and recycling rates.

Reducing atmospheric impact

The Showa Denko Group is working to reduce emission of pollutants such as ulfur oxides (SOx), nitrogen oxides (NOx), and soot through the following measures:

• Shift in fuel• Modifying combustion processes (e.g., using low-NOx burners)• Appropriate operation and management of desulphurization and denitration systems

• Reductions in fuel consumption through exhaust heat recovery systems

• Strengthening monitoring systemAmounts of SOx and soot/dust decreased from 2013 levels, whereas that of NOx increased.

● Soot and dust

● NOx● SOx

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

0

500

1,000

1,500

2,000

2,500

3,000

3,500

010099989796959493929190 02 03 04 05 06 07 0809 10 11 12 13 14 (YEAR)

(t)

year 2010 2011 2012 2013 2014

SOx(t) 464 457 453 398 369

NOx(t) 1,285 1,238 966 1,267 1,324

Dust and soot(t) 132 153 174 166 112

Reducing water quality impact

The Showa Denko Group continues to strive to reduce its impact on water quality in areas such as chemical oxygen demand (COD), total nitrogen, and total phosphorus through the following measures:

• Improvements in manufacturing processes• Improvements in wastewater processing equipment and operation and control factors

• Promoting water reuse• Strengthening monitoring system

Compared to 2013, COD decreased, total phosphorus remained unchanged, and total nitrogen increased.

Discharged amounts of substances with water quality impact　　　　　　　　　　　　　　　　　　　　　（Showa Denko K.K.)

0100

300

500

700

900

010099989796959493929190 02 03 04 05 06 07 0809 10 11 12 13 14 (YEAR)

(t)

● total phosphorus

● total nitrogen● COD

year 2010 2011 2012 2013 2014

COD(t) 444 386 365 380 355

total phosphorus (t) 12 16 13 10 10

total nitrogen(t) 574 502 419 458 510

Measures to prevent soil and groundwater pollution

On occasions such as changes in the uses of plant sites or soil removal, the Showa Denko Group undertakes surveys and other measures in line with the Soil Contamination Countermeasures Law and local government regulations.

Minamata disease in Niigata Prefecture

This year marks the fiftieth year from the official confirmation of Minamata disease in Niigata Prefecture. Maintaining an awareness of the significant scale at which we have caused damaged to the victims and residents of neighboring areas through contamination of the Agano River, Showa Denko is committed to collaborating with the Japanese Government as well as local governments in order to cope with this issue with sincerity, and provide solutions in accordance with the Act on Compensation for of Pollution-Related Health Damage and other relevant laws and regulations.

*12 harmful atmospheric pollutants : The 12 substances are the hazardous air pollutants selected by the JCIA for voluntary control , which include a c r y l o n i t r i l e , a c e t a l d e h y d e , v i n y l c h l o r i d e m o n o m e r , c h l o r o f o r m , 1.2-dichloroethane, dichloromethane, tetrachloroethylene, trichloroethylene, 1.3-butadiene, benzene, formaldehyde, and ethylene oxide.







Environmental considerations

The Showa Denko Group Strives to contribute to sustainable development in harmony with the global environment through its e�orts to reduce chemical substance discharge into the atmosphere, water, and soil by means of fuel conversion, improvement of production processes, etc., not to mention its conventional environment protection actives.


Received the Japan Greenery Research andDevelopment Center Chairman’s Award

Omuta Plant of Showa Aluminum Can Corporation received “the Japan Greenery Research and Development Center Chairman’s Award 2014”

from the Japan Greenery Research and Development Center.

Omuta Plant strategically maintains green spaces which are in harmony with their surroundings. “In particular, the ”Garden of Ariake“ which is a tea garden landscaped with pine trees and tea gardens under the motif of the Ariake Sea coastline and brushwood, has encouraged an annual tradition of tea picking by employees,” Administrative Group of the Plant commented.Such proactive efforts of greening the plant were recognized as significantly effective in improving the environment both inside and outside the plant, and thus worthy of the award.

Certi�cate of CommendationGarden of AriakePicked tea leaves are processedat the tea factory, to be brewedat the company cafeteria or usedas gifts for stakeholders.


It is necessary to ensure biodiversity and preserve the ecosystem to maintain the sustainable global environment in the future. In 2013, Showa Denko decided to take part in “Japan Business and Biodiversity Partnership*,” endorsing the objective of the Action Policies to Private Sector Engagement in Biodiversity. The Showa Denko Group, taking this Action Policies into account, will assess the effects of our business activities on biodiversity and make our business activities more biodiversity conscious ones.

Worksite efforts

At the worksites, we have organized our on-going environmental conservation efforts such as water resources, greening, and community activities from a viewpoint of biodiversity conservation in order to determine the tasks that should tackled. In 2014, we conducted surveys and reviews, focusing on the following three items so as to promote measures suitable to the locational characteristics of each worksite: (1) proper securement of green space; (2) proactive effort to reduce environmental burdens from effluent; and (3) promotion of programs that make effective use of the unique characteristics of each worksite.

*Japan Business and Biodiversity Partnership: A private sector biodiversity initiative jointly founded by Nippon Keidanren (Japan Business Federation), Japan Chamber of Commerce and Industry and Keizai Doyukai (Japan Association of Corporate Executives). The objective of this partnership is to have a wide range of companies, regardless of industry and size, participate in this partnership and voluntarily engage in efforts to contribute to biodiversity to achieve the objectives of the Convention on Biodiversity.

The Showa Denko Group is working to conserve biodiversity in order to maintain a sustainable global environment toward the future.


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Equipment safety

Policy


• Incidents (Showa Denko Group): 3 fires, 1 leakage, and 1 hoist wire breakage

• Horizontally deployed revised edition of the equipment incident prevention checklist, which includes information such as the JCIA Safety and Accident Prevention Guidelines and external accident information.

• Completed evaluations on safety capabilities (Kawasaki, Kumano), prepared and began implementation of improvement plan.

• Conducted 1 new HRM audit.• Promoted implementation of irregular case risk

assessments (e.g., S/U, S/D, upon emergency stops).

• Systematically performed emergency drills and internal audits at each plant.

• Planned and promoted measures to strengthen anti-liquefaction measures and earthquake resistance plans of key facilities (high pressure gas, hazardous materials, buildings specified in the Building Standard Law).

• Conducted audits to verify adequacy and effectiveness of investigation control and system of authorized high-pressure gas plants.

○

Policy • Realizing equipment-incident-free status

Plans

• Thoroughly implementing Active Safety activities

• Horizontally deploy the equipment incident prevention checklist.

• Apply the evaluation on safety capability system

• Ensuring the implementation of HRM examinations

• Promoting voluntary safety initiatives• Establish a risk assessment framework

and procedures in the nonstationary state and unusual operations



Plans

• Thoroughly implementing "Active Safety" activities• Complete the horizontal deployment plan of the

equipment incident prevention checklist.• Expand coverage of measures to prevent recurrence

at plants where incidents had occurred.• Establish and implement a method for determining

equipment incident risk• Ensuring the implementation of HRM examinations• Consider how to conduct risk assessments regarding

non-stationary states and unusual operations• Maintain and improve measures against earthquakes

for each piece of equipment and facilities• Systematically promote emergency drills and

education• Maintain and improve PDCA at authorized high-

pressure gas plants, etc.


The Showa Denko Group is promoting its Active Safety initiative to eliminate equipment incidents.

Basic policies

Since 2008, the Showa Denko Group has been promoting its “Active Safety” initiative in which we analyze past accidents and incidents to prevent recurrence. In 2014, there were five equipment accidents, in which there were fortunately no personal injuries involved (average number of accidents for the past five years = less than five accidents a year). In the chemical industry, serious accidents have occurred since 2011, and with this, our group has enhanced various activities such as holding “Safety Meetings,” which are management meetings where discussions focus on discussing safety-related matters in order to return to the origins of the “Active Safety” initiative. Accidents that have occurred at other companies were caused by insufficient identification of potential risks and measures at facilities that handle highly self-reactive or other highly hazardous materials. The Showa Denko Group is engaged in the following activities to prevent such incidents.

1.Thorough implementation of HRM (high risk material) examinationsWe have adopted special examinations to thoroughly identify potential risks and their countermeasures at new facilities that handle highly self-reactive or other hazardous HRMs. We have completed assessments of existing plants at each workplace to determine whether each material handled comes under HRM or not. We will continue to identify major risks in existing HRMs and implement countermeasures.

2.Utilization of the equipment incident prevention checklistWe revised the “Equipment Incident Prevention Checklist” to incorporate the Safety and Accident-Prevention Guidelines issued by JCIA and other information such as those on accidents that had occurred at external sites, for utilization as a tool for spreading notification and horizontal deployment.









3.Substantial safety design guidelinesEach plant is making effective use of the function-based Substantial Safety Design Guidelines (process, machine, electricity and instrumentation).

4.Response to the action plan for industrial safety (Japan Petrochemical Industry Association: JPCA) Under our management philosophy, we are continuing to advance improvement programs by following PDCA toward the achievement of the goal of Zero Serious Incident and Disaster under the medium-term business plan and management policies for contributing to safe and stable operation.Through site visits and annual event messages, the president emphasizes that securing safety is "at the core of all business activities", and thus the need for all management personnel and all employees address and follow through with their work with a sense of vigilance.The safety control implementation plan puts particular effort into risk assessment of unusual conditions and operations, while implementing educational trainings and various improvement activities to create a safe culture and strengthen the foundation of safety. Achievements from these activities are commended every year by granting awards such as the Responsible Care President Award to encourage promotion of safety activities.

Drill conducted assuming abnormalconditions at the facility.

(Shiojiri Plant, Showa Denko Ceramics Co., Ltd.)

On May 20, 2014, a drill assuming abnormal conditions of the electricfurnace was conducted at Shiojiri Plant of Showa Denko Ceramics Co., Ltd.The most serious facility accident expected in the Shiojiri district isphreatic explosion at the electric furnace. We conduct annual drills toconfirm initial response procedures, evacuation from buildings, andevacuation routes as well as assembly sites for employees working atnearby workplaces. In addition, we also conduct inspections to verifywhether rotating beacons function properly and sirens/alarms can beheard.Once the drill is over, we review the results to identify points forreconsideration, correct or improve these points, and make use of these results to further ensure our capability of responding appropriately to abnormal situations.

Precautions against earthquakes

In 2010, the Showa Denko Group started estimations of the scale of ground motion caused by earthquakes that are expected to occur in the future, earthquake risk assessments and examination of earthquake-resistance for facilities and buildings, and completed them for all workplaces including affiliated companies, by 2012. In regards to earthquake-resistance measures for equipment and buildings, we have set priorities according to earthquake risk and implementing measures in order of priority. We have been continuously implementing earthquake risk assessments and earthquake-resistance measures since that time, paying attention to developments of countermeasures at the national and local government levels against earthquakes that may hit directly under the Tokyo area, to quickly incorporate measures for our group as well.Since 2014, we have been reinforcing existing facilities such as high-pressure gas facilities with a high degree of importance, facilities where hazardous materials are handled, facilities falling under the Act on Promotion of Renovation for Earthquake-Resistant Structures, and hydroelectric dams in order to bring them in line with the latest earthquake resistance standards.

On December 19, 2014, a disaster prevention drill was conducted at Tokuyama Plant, supposing that a fire had broken out due to leakage caused by an earthquake, followed by tsunami.The drill was started with a member of the manufacturing section who spotted a leakage and fire during the post-earthquake site patrol. He tripped the emergency alarm and made an all-building “Fire Broke Out” announcement. The on-site headquarter was established and employees practiced verifying the situation, as well as giving instructions and exchanging situation updates with emergency response groups including the fire brigades and environment/rescue teams. An emergency response headquarters and administration team were organized at the office to practice response to media personnel and relevant authorities based on the information provided from the on-site headquarter. Once the fire had been extinguished and the leakage stopped, an evacuation drill was conducted following tsunami evacuation instructions.We will use our experiences in this drill to ensure that each and every employee is prepared to respond appropriately to a future emergency.

Disaster preventiondrill assuming an earthquake（Tokuyama Plant）


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• Showa Denko Group: Experienced 6 incidents resulting in employees taking time off work (3 cases in 2013), 4 incidents without lost work time (0 cases in 2013)

• Showa Denko Group lost-work time incident rate: 0.33 (0.22 in 2013)

• In response to the occurrence of 2 cases of serious injury, conducted thorough horizontal deployment among all group plants.

• Chichibu plant, Oyama plant of Showa Aluminum Can Corp, Hikone plant, and Ohmuta plant received external safety awards.

• Tatsuno plant and Yokkaichi plant of Showa Denko Gas Products acquired industrial safety and health management system certification. A total of 18 group plants acquired certification.

△

Policy



Plans


• Elimination of dangerous equipment and work • Maintenance and improvement of safety

sensitivity • Increase in plants that acquire industrial safety

and health management system certification

Plans




• Increase in plants that acquire industrial safety and health management system certification Occupational health


• Zero work-related illnesses• Enhanced heat stroke measures.

◎


Plans

• Enhancing sanitation management structure • Improving work environment and work

methods

Plans



Health m

anagement

Policy


"Showa Denko Group Vivid Health Promotion Plan" Activity Results [compared with benchmark year (2012)]① Prevention of lifestyle-related diseases.

(1) Prevalence rate of hypertension, fat levels, and blood sugar levels increased.

(2) Total screening rate of "lung cancer", "colorectal cancer", and "cervical cancer" increased higher than the benchmark

② The rate of people with high risk levels on mental health increased slightly.

③ The rate of "people with appropriate body weight" decreased, "people who exercise on a daily basis" remained the same, and "people with insufficient rest (sleep)" and "people working long hours" increased. ・ "People who walk for 1 hour or more" increased and ・ "People who smoke" decreased. ・"People who drink alcohol a lot" remained the same, but "People who drink alcohol on a daily basis" increased.

④ The follow-up rate failed to reach 100%.

〇

Policy


Plans

• Showa Denko Group Vivid Health Promotion Plan ① Preventing lifestyle-related diseases ② Improving mental healthcare ③ Improving lifestyles ④ Steadily implementing medical examinations

and follow-up

Plans

• Objectives Showa Denko Group Vivid Health Promotion Plan ① Preventing lifestyle-related

diseases ② Improving mental

healthcare ③ Improving lifestyles ④ Steadily implementing

medical examinations and follow-up

Basic policies

In order to eliminate work-related accidents, the Showa Denko Group has promoted “Active Safety” activities since 2008 by using its original “Active Safety Checklist.”Regarding the serious accident which had occurred at Showa Denko Sakai Aluminum K.K. and a business partner of Toyama Plant of Showa Denko Ceramics Co., Ltd. in 2014, we thoroughly analyzed the causes to implement recurrence prevention measures at all worksites of the Group.

Asbestos

Conditions related to asbestos were as follows.Use of asbestosThe Group neither manufactures nor sells any products incorporating asbestos.


* Scope of Group companies : (Underlined companies are those added to the scope of industrial accident statistics in FY 2011.) :Tsurusaki Kyodo Doryoku K.K., Showa Denko Ceramics Co., Ltd. (Toyama) , Shiojiri Showa Co. Ltd., Showa Denko Packaging Co., Ltd. (Hikone and Isehara) , Showa Aluminum Can Corp., Showa Denko Sakai Aluminum K.K., Showa Denko Electronics K.K., Showa Denko Kenzai K.K., Union Showa K.K., Niigata Showa K.K., Showa Aluminum Can Recycling Center, HIPACK Co., Ltd., Showa Denko Gas Products Co., Ltd., Clean-S Showa K.K., Nippon Polytech Corp.,KANAE CHEMICALS Co., Ltd., Showa Denko Kenso K.K., Tohoku Metal Chemical Co., Ltd.( to March 31, 2013) , Nagoya Kenmazai Kogyo K.K. (Nagoya and Shiojiri) (to September 30, 2014) , Tokyo Aluminum Wire Corporation (to March 31, 2013) , Showa Denko HD Yamagata K.K., and Fuyo Perlite Co., Ltd.


Trends infrequency rate of lost-time injuries

All Industries Chemical Industries Showa Denko Showa Denko Group*

0

0.5

1

1.5

2010 2011 2012 2013 2014

0.24

0.1

1.61

0.72

0.14 0.21

1.62

0.88

0

1.59

0.85

0.140.43

0.76

1.66

0.14

1.58

0.82

(YEAR)

0.13

0.22

The Group uses sealing materials containing asbestos for certain production facilities, including those for chemicals. We are currently replacing these materials with materials that do not contain asbestos.








The Showa Denko Group is promoting its Active Safety initiative to eliminate work-related accidents.

Health impairmentFor employees who have directly or indirectly handled asbestos, we perform periodic health checkups as required by relevant laws. No incidents of health impairment have occurred in employees.We are continuing to respond to various consultations from those who have retired from our Group. There was one case officially recognized as work-related asbestos disease among retired employees in FY 2013 (according to the latest data published by the Ministry of Health, Labour and Welfare). We have received no reports of injury or impairment to the health from families of employees, retired employees, or the residents of local communities.

Promoting mental and physical health

To work vigorously without anxiety, it is important for employees to maintain and promote their own health and the health of family throughout their lives.We are currently promoting “Showa Denko Group Vivid Health Promotion Plan” activities that focus on prevention and improvement of lifestyle-related diseases and developing a healthy mind as new health promotion activities for the four years between 2013 and 2016.We will provide follow-up support, including subsequent measures and health guidance following health checkups for efforts regarding "prevention and improvement of lifestylerelated diseases". In regards to "developing a healthy mind", these efforts will be steadily advanced based on the “Mental Health Promotion Plan” established in 2012.In view of the stress check that will be mandated under the amended Industrial Safety and Health Act starting December of this year, we will commit ourselves in promoting mental health by actions such as improving the work environment at high-stress workplaces.

In May 2014, Chichibu Plant of Showa Denko and Hikone Plant of Showa Aluminum Can Corporation received Safety Merit Awards of the JCIA Safety Awards. These awards are given to exemplary business sites that perform outstanding activities as part of voluntary promotion of security, safety and health in the chemical industry. The winners are selected based on on-site investigation and as a result of deliberations by the Safety Award Committee consisting of experts in the field.Chichibu Plant has been renewing its no-accident record by pursuing substantial safety based on thorough risk assessment as well as actively implementing well-thought out unique safety education programs, such as hands-on experience to get a feel of the effectiveness of protective equipment and monthly flier distribution promoting safety awareness.Hikone Plant of Showa Aluminum Can Corporation has also been renewing its no-accident record through faithful safety programs based on “substantial safety for facilities and operations” and “elimination of unsafe actions.” Furthermore, the plant provides all employees with opportunities to reconfirm one’s safety awareness and exchange opinions through annual one-on-one meetings with general managersof the Plant and Production Department.

Chichibu Plant of Showa Denko K.K. and Hikone Plant ofShowa Aluminum Can Corporation

received the Safety Merit Awards of the 2014 JCIA Safety Awards

Name of award Recipient site and individual Year received

Responsible Care 8th JCIA Annual Responsible Care Award Toyama Plant of Showa Denko Ceramics Co., Ltd. (Zero emission efforts) May , 2014

Disaster

prevention

Fiscal 2014 Excellent Hazardous Materials Facility Accreditedby the Commissioner of the Fire and Disaster Management Agency Tatsuno Plamt June , 2014

Fiscal 2014 Excellent Hazardous Materials Facility Accreditedby the Commissioner of the Fire and Disaster Management Agency Yokkaichi Plant, Union Showa K.K. June , 2014

Fiscal 2015 Japan Association for Safety Hazardous Materials President Award (for superior facility in the handling of hazardous substances) Institute for Advanced and Core Technology June , 2015

Fiscal 2015 Japan Association for Safety Hazardous Materials President Award (for superior facility in the handling of hazardous substances) Omuta Plant of Showa Aluminum Can Corp. June , 2015

Health and

occupational safety

Safety Merit Award of the 38th JCIA Safety Awards Chichibu plant May , 2014

Safety Merit Award of the 38th JCIA Safety Awards Hikone Plant of Showa Aluminum Can Corp. May , 2014

Special Award for Excellence, 2013 Japan Aluminum AssociationOccupational Safety Awards Omuta Plant of Showa Aluminum Can Corp. May , 2014

Special Award for Excellence, 2013 Japan Aluminum AssociationOccupational Safety Awards Oyama Plant of Showa Aluminum Can Corp. May , 2014

Special Award for Excellence, 2013 Japan Aluminum AssociationOccupational Safety Awards Hikone Plant of Showa Aluminum Can Corp. May , 2014

Accident-free record certificate from the Ministry of Health, Labour and Welfare (First-class) Oyama Plant November, 2014

Fiscal 2014 Minister of Health, Labour, and Welfare's Award forbusiness-facility managers who place priority on safety Eiichi Kudo , Production Department , Oita Complex January, 2015

Fiscal 2014 Minister of Health, Labour, and Welfare's Award forbusiness-facility managers who place priority on safety Masao Ichikawa, Production Department, Omachi Plant. January, 2015

Merit Award of the 39th JCIA Safety Awards Tatsuno Plant May , 2015

Merit Award of the 39th JCIA Safety Awards Kitakata Plant May , 2015

Special Award for Excellence, 2014 Japan Aluminum AssociationOccupational Safety Awards Omuta Plant of Showa Aluminum Can Corp. May , 2015

Special Award for Excellence, 2014 Japan Aluminum AssociationOccupational Safety Awards Oyama Plant of Showa Aluminum Can Corp. May , 2015

Special Award for Excellence, 2014 Japan Aluminum AssociationOccupational Safety Awards Hikone Plant of Showa Aluminum Can Corp. May , 2015

2014-2015 List of RC-related awards received by the Showa Denko Group companies


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International chemicals management activities

As it works to achieve the goal agreed to in the World Summit on Sustainable Development (WSSD) "to minimize the negative effects of chemical substances on people and the environment by 2020", the Showa Denko Group is seeking to implement integrated management of chemical substances under the International Council of Chemical Associations (ICCA).We now participate in a new voluntary chemical substancemanagement activity "JIPS"*1(Japan Initiative of ProductStewardship) to consider the supply chain and enhancerisk assessment and management. We are also enhancingchemical substance management program "ProductStewardship" by collecting information and evaluating safety at each stage of manufacturing, sales, and use/consumption.The Showa Denko Group has introduced a comprehensivechemicals management system to provide the basic infrastructure for managing chemicals. The newly introduced comprehensive chemicals management system will integrate information management for all chemicals we use in and outside Japan and allow information sharing Group-wide.

Foreign laws and regulations

The Showa Denko Group is paying attention to and thoroughly addressing conformity with REACH*2 and CLP*3 regulations in the European Union as well as the new BIOCIDE regulations enforced in September 2013. We will also keep an eye on movement overseas concerning new laws and regulations, including law revisions in Asia/ASEAN countries (such as Korea, Taiwan, China, Malaysia, Vietnam, Indonesia, Thailand, Philippines and Australia), amendments to the United States' HCS, and proposed amendment to TSCA*4.We will continue to respond without fail, to new movements in each country by sharing information within the Group.


Chemical substance

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Policy • No mismanagement • Inappropriate management: 1 case. (Response delayed.)• Expanded database for internal sharing of information on chemical

substances contained in products, as well as the comprehensive chemicals management system.

• Enhanced the company's internal management system in accordance with revisions to domestic and foreign laws.

• Promoted risk assessment in accordance with revisions to the Industrial Safety and Health Act (conducted trainings and clarified scope).

• Promoted switch over to SDS/labels complying with GHS and country-specific laws.

△

Policy • No mismanagement

Plans



SDS to conform to GHS • Appropriate response to overseas

laws and regulations

Plans


• Enriching risk assessment • Completing revision of all

products' SDS to conform to GHS • Respond to domestic and

foreign laws/regulations appropriately


*1 JIPS : The new voluntary chemical management initiative by JCIA to enhance risk assessment and risk management with consideration for supply chain.

*2 REACH : EU Regulation on Registration, Evaluation, Authorization, and Restriction of Chemicals *3 CLP : Classification, Labeling and Packaging

*4 TSCA : Toxic Substance Control Act








Here we report on our programs to manage safety information of chemical products, our comprehensive chemicals management system, and international activities and trends concerning chemicals management.

Introducing a comprehensive chemicals management system

To help achieve goal of the 2020 World Summit on Sustainable Development (WSSD) --To use and produce chemicals in ways that minimize significant adverse effects on human health and the environment -- the Showa Denko Group has introduced a comprehensive chemicals management system to provide the basic infrastructure for managing chemicals. The newly introduced comprehensive chemicals management system will integrate information management for all chemicals we use in and outside Japan and allow information sharing Group-wide. This new system made it possible for us to ensure accordance with amendments to country-specific regulations and follow through with various documents that are mandated under the amended Chemical Substance Control and PRTR Act.

Introduction of this system is expected to lead to the following results:1. Sharing of information on chemicals throughout the

Showa Denko Group Through unilateral management of information such as those related to manufacturing and sales or supply chain purpose, it is possible to effectively use such information outside the company.

2. Safeguarding against human error related to the enforcement or revision of related laws and regulations Automatic updates of information on laws and regulations concerning products, linked to the databases of Japanese and foreign laws and regulations

3. Enhanced efficiency and simplification of chemical information management Automatic updating and output of SDS information Improved data precision and transparency for each business site for use in compiling various statistical reports

4. Establishment and automation of the systems relating to chemicals risk assessment such as GPS and JIPS. Comprehensive chemicals management system

GHS-compatible SDS

The Group provides its customers and consumers with information on risks or hazards related to all of its products for sale in Japan using the JIS-based labels and SDS. Regarding overseas products, we also promote GHS compliance of the labels and SDS based on the regulations of each country, such as CLP regulations of EU, the revision of HCS (Hazard Communication Standard) by US-OSHA(Occupational Safety and Health Administration of the United States), etc.

Comprehensive chemicals management system


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Ensuring product safety

In addition to legal compliance, Showa Denko established a set of internal rules named “Quality Assurance and QualityControl Rules” (“Rules” hereinafter) to provide quality products to our customers.The “Rules,” which are based on the concept of “product safety” that allows customers to use our products without concerns, are fundamental rules that enable us to organizationally and systematically implement our product safety activities through tactics such as management of information on product design/development, marketing/

manufacturing, sales, and after-sales.As a part of our activities to secure product safety, we not only confirm the safety of the product itself, but also consider various topics related to the product such as how a customer would use and dispose of the product, so as to determineand reduce potential risks. The details of these processes are examined by our internal staff to ensure the effectiveness ofour activities. Particularly the products which may be taken into or contact with the human body are strictly checked.The “Rules” are reviewed annually to cope with changes in environment and society, and enhance effectiveness of product safety accordingly.


Quality Assurance and Quality Control Rules



Quality assurance

Policy



• In addition to product release reviews (accomplished 5 reviews in 2014), began implementation of pre-ship-out review from July 1st. Accomplished 20 reviews. Enhanced multi-perspective risk assessment from the stage of sample product handling.

• Reduced number of claims by approx. 10% compared to previous year by strictly conducting established corrective measures.

• Began a program to secure quality reproducibility through process capability quality control.

◎

Policy



Plans

• Performing appropriate product risk assessments


Plans









Quality Assurance

In an effort for further improvements in product safety and quality control levels, we established the “Quality Assurance and Quality Control Regulations” which are reviewed and revised every year. In addition, we implement plant audits and organize a variety of seminar. The number of complains has decreased and remains at its lowest level in 2014 as well.

Improving quality assurance and quality control levels

Quality management system (Quality control scheme)Most of our group companies have been certified by international standards such as ISO9001 and ISO/TS16949, and we continue to review our quality management systems to improve the quality of products and services.

Reducing complaintsThe number of complaints regarding product quality has been declining year by year, thanks to recurrence prevention measures and preventative measures. The trend continues in 2014, with an approximately 10% decline from the previous year.

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

20060

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 (年)

（%）

0

20

40

60

80

100

2006 2007 2008 2009 2010 2011 2012 2013 2014 (YEAR)

Activities targeting improved quality management levelsEach division, plant, and Group company is working to enhance quality assurance and quality control through original systems that are tailored to each product and organization. For the entire Group, the Quality Assurance Office of the headquarters has been conducting audits of divisions/plants and Group companies, offering various group seminars and voluntary study programs using e-learning to provide knowledge on product safety and quality control. The 2014 audit succeeded in identifying and correcting issues from the perspective of our capability to constantly manufacture products of the same quality. The group seminars on quality control frameworks, improvement activities, explanations about the “Rules,”

* ISO : International Organization for Standardization / A private-sector international specialist organization established in 1947 to promote international standardization of products and services. It established the ISO9000 series of standards on quality control and assurance; in 1996. It began establishing the ISO14000 series of environmental standards. The ISO26000 standard for social responsibility was announced in2010.

and product safety. Members of the Quality Assurance Office of the headquarters also visited the actual worksites to offer worksite-specific on-demand seminars to promote improvement in quality assurance and control levels.E-learning materials were also prepared according to the actual situations at our Company, and further enhanced the content in 2014.

In April 2014, members of the Quality Assurance O�ce of the headquarters held a seminar on “statistical quality control” for upgrading quality control levels at manufacturing sites of Union Showa K.K., which is one of the Group companies.At the seminar, the members explained method for verifying that products of the same quality are being continually manufactured through numerical data and graphs. Participants also had an opportunity to practice putting this method into use.

Quality control seminarheld at Union Showa K.K.


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Classification Items Boundaries Units 2012 2013 2014 ReportNumber


Number of requests for consultation received by the Corporate Ethics Hotline

Showa Denko group cases 32 41 44 33

Labor practices

Number of employees Male Consolidated subsidiaries Japan persons 5,203 5,287 5,290 43

Female Consolidated subsidiaries Japan persons 599 618 642 43

Total number of employees in Japan Consolidated subsidiaries Japan persons 5,802 5,905 5,932 22

Male Consolidated subsidiaries Abroad persons 2,849 3,042 2,642 43

Female Consolidated subsidiaries Abroad persons 1,239 1,287 2,003 43

Total number of all overseas employees Consolidated subsidiaries Abroad persons 4,088 4,329 4,645 22

Total Consolidated subsidiaries persons 9,890 10,234 10,577 22

Number of female managers Number of female managers Showa Denko K.K. persons 14 14 18 43

female managers ratio Showa Denko K.K. % 0.35 0.36 0.47 43

Number of new employees Male Showa Denko K.K. persons 149 159 86 -

Female Showa Denko K.K. persons 22 25 21 -

Total Showa Denko K.K. persons 171 184 107 -

Non-Japanese male among the above Showa Denko K.K. persons 5 4 3 -

Non-Japanese female among the above Showa Denko K.K. persons 0 3 2 -

Non-Japanese among the above Showa Denko K.K. persons 5 7 5 -

Ratio of reemployed employees Showa Denko K.K. % 83 88 90 44

Ratio of handicapped employees Showa Denko K.K. % 2.28 2.34 2.48 44

Working hours (per employee per year) Showa Denko K.K. hours 2,008.5 2,009.1 2,023.1 45

Annual paid holidays taken (per employee per year) Showa Denko K.K. days 12.7 12.8 13.2 45

Number of job separation (excluding retirement and permanent transfer ) Showa Denko K.K. persons 42 49 49 45

Job separation rate (excluding retirement and permanent transfer) Showa Denko K.K. % 1.0 1.0 1.3 45

The average age Showa Denko K.K. age - 39.5 40.0 45

The average length of continuous employment Showa Denko K.K. years - 16.7 17.1 45

The average overtime work per employee per month Showa Denko K.K. hours - 17.7 18.7 45

Childcare leave Male Showa Denko K.K. persons 36 53 50 46

Female Showa Denko K.K. persons 31 33 35 46

Total Showa Denko K.K. persons 67 86 85 46

Family care leave Male Showa Denko K.K. persons 2 0 3 46



Shortened working hours for childcare / family care

Male Showa Denko K.K. persons 1 1 2 46



Ratio of reinstated employees to those who took childcare leave Showa Denko K.K. % 100.0 82.4 100.0 -

Labor union Number of unionized Employees Showa Denko K.K. persons 3,106 3,092 2,987 47

Ratio of unionized Employees Showa Denko K.K. % 78.6 78.9 78.4 47

Number of incidents resulting in lost-time injuries Showa Denko group cases 2 3 6

Infrequency rate of lost-time injuries Showa Denko K.K. 0.00 0.14 0.24 70

Showa Denko group 0.14 0.22 0.43 70



Classification Items Boundaries Units 2012 2013 2014 ReportNumber

CSR procurementNumber of received self-evaluation responses companies - - 351 36

CSR visits cases 54 58 54 36


Education Dispatched employeesas instructors

Showa Denko K.K. cases 10 28 26 50

Showa Denko K.K.. man-hours 264 720 705 50 Accepted interns Showa Denko K.K. cases 34 30 36 50

Showa Denko K.K. persons 78 67 64 50

Improvement of the environmentaround the worksites

Cleaning activities Showa Denko K.K. cases - 145 125 50

Showa Denko K.K. hours in total 6,866 7,147 6,717 50 Promotion of arts, culture and sports

Cooperation for and granting subsidies to arts, culture and sports: spend Showa Denko K.K. thousand yen 5,416 5,544 4,878 50

Exchange withlocal communities

Events Showa Denko K.K. persons 6,277 5,752 5,313 50 Facilities rented Showa Denko K.K. hours 11,154 12,294 10,573 50 guided plant tours Showa Denko K.K. persons 8,581 8,760 9,351 50


Harmonizing with local economy: spend Showa Denko K.K. thousand yen 3,214 1,571 1,662 50 Aluminum can recycling: participation rate Showa Denko K.K. % 94.3 96.6 98.0 -

Aluminum can recycling: proceeds Showa Denko K.K. thousand yen 1,302 1,217 1,752 -

Collaborating with NPOs and local organizations: spend Showa Denko K.K. thousand yen 36 135 131 50 Environmental conser vationDischarged amounts of greenhouse gases

CO2 (energy source origin) Showa Denko group kt-CO2 2,328 2,541 2,540 60

CO2 (non-energy source origin) Showa Denko group kt-CO2 89 110 91 60

GHGs other than CO2 Showa Denko group kt-CO2 92 51 47 60

Total Showa Denko group kt-CO2 2,509 2,702 2,678 60

Showa Denko K.K. / Group companies in Japan Showa Denko K.K. kt-CO2 2,052 2,212 2,217 -

Group companies in Japan kt-CO2 457 490 461 -

Total Showa Denko group kt-CO2 2,509 2,702 2,678 60

Transportation sector's CO2 emissions kt-CO2 27.5 29.3 29.0 61

The amount of water used Showa Denko K.K. million m³ 6,146 5,825 5,926 59

Group companies in Japan million m³ 366 347 335 59

Wastewater volume Showa Denko K.K. thousand t 32,282 28,667 29,149 59

Group companies in Japan thousand t 3,084 4,089 3,705 59

The amount of industrial waste discharge Showa Denko K.K. t 26,060 22,910 24,454 62

Group companies in Japan t 8,441 8,669 8,842 62

Showa Denko group t 34,501 31,580 33,453 62

Final landfill volumes of industrial waste Showa Denko K.K. t 1,850 1,087 912 62

Group companies in Japan t 235 273 246 62

Showa Denko group t 2,085 1,360 1,158 62

Release of PRTR-listed substances Into air Showa Denko K.K. t 231 198 198 64


Into water Showa Denko K.K. t 105 25 25 64


Total Showa Denko K.K. t 336 223 223 64


Total amounts released of harmful atmospheric pollutants Showa Denko K.K. t 21 17 18 65-66

Discharged amounts of substances with atmospheric impact

SOx Showa Denko K.K. t 453 398 369 66

NOx Showa Denko K.K. t 966 1,267 1,324 66 Soot and dust Showa Denko K.K. t 174 166 112 66

Discharged amounts ofsubstanceswith water quality impact

COD Showa Denko K.K. t 365 380 355 66

Total phosphorus Showa Denko K.K. t 13 10 10 66 Total nitrogen Showa Denko K.K. t 419 458 510 66

Environmental accounting Total amount of capital investment Showa Denko group million yen 1,823 6,597 1,664 63

Total expenses Showa Denko group million yen 4,079 3,649 3,185 63

Economic benefits Showa Denko group million yen 427 1,466 1,169 63


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Governance

Indicator Report page

Strategy and analysis

G4-1 A statement from the most senior decision-maker of the organization about the relevance of sustainability to the organization and the organization’s strategy for addressing sustainability 4-5

G4-2 Provide a description of key impacts, risks, and opportunities 4-5,30-31

Organizational profileG4-3 The name of the organization 8

G4-4 The primary brands, products, and services 8-15

G4-5 The location of the organization’s headquarters 8

G4-6 The number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report 8-9

G4-7 The nature of ownership and legal form 8-9

G4-8 The markets served 10-15

G4-9 The scale of the organization 20-22

G4-10 The breakdown of the employees 43

G4-11 The percentage of total employees covered by collective bargaining agreements 47

G4-12 The organization’s supply chain -

G4-13 Any significant changes during the reporting period Not applicable

G4-14 Whether and how the precautionary approach or principle is addressed by the organization 30-31

G4-15 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses 54-55,72-73

G4-16 Memberships of associations and national or international advocacy organizations 72-73

Identified material aspects and boundaries

G4-17 All entities included in the organization’s consolidated financial statements or equivalent documents; whether any entity included in the organization’s consolidated financial statements or equivalent documents is not covered by the report 2,82

G4-18 The process for defining the report content and the aspect boundaries; how the organization has implemented the reporting principles for defining report content 24-26

G4-19 All the material aspects identified in the process for defining report content 26-27,56-57

G4-20 The aspect boundary within the organization for each material aspect 27,56-57

G4-21 The aspect boundary outside the organization for each material aspect 27,56-57

G4-22 The effect of any restatements of information provided in previous reports, and the reasons for such restatements Not applicable

G4-23 Significant changes from previous reporting periods in the scope and aspect boundaries Not applicable

Stakeholder engagementG4-24 A list of stakeholder groups engaged by the organization 24-25

G4-25 The basis for identification and selection of stakeholders with whom to engage 25

G4-26 The organization’s approach to stakeholder engagement 25,38-39

G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded; the stakeholder groups that raised each of the key topics and concerns 25,38-39

Report profileG4-28 Reporting period (such as fiscal or calendar year) for information provided 2

G4-29 Date of most recent previous report (if any) 2

G4-30 Reporting cycle (such as annual, biennial) 2

G4-31 The contact point for questions regarding the report or its contents 2

G4-32 The ‘in accordance’ option the organization has chosen; the GRI Content Index for the chosen option; the reference to the External Assurance Report, if the report has been externally assured Reference

G4-33 The organization’s policy and current practice with regard to seeking external assurance for the report 83

Governance

G4-34 The governance structure of the organization; any committees responsible for decision-making on economic, environmental and social impacts 26,28-29

G4-35 Process for delegating authority for economic, environmental and social topics from the highest governance body to senior executives and other employees 26,28-29

G4-36 Delegation of responsibility for economic, environmental and social topics to executive and/or other positions, and process for directly reporting to the highest governance body 26,28-29

G4-37 Processes for consultation between stakeholders and the highest governance body on economic, environmental and social topics, delegation of consultation and feedback processes to the highest governance body 24-26

G4-38 Composition of the highest governance body and its committees 28-29

G4-39 Whether the chair of the highest governance body is also an executive officer 28

G4-40 Nomination and selection processes for the highest governance body and its committees 28-29

G4-41 Processes for the highest governance body to ensure conflicts of interest are avoided and managed Corporate Governance Report

G4-42 Roles of the highest governance body and senior executives in the organization’s actions related to economic, environmental and social impacts 28-29

G4-43 Measures taken to develop and enhance the highest governance body’s collective knowledge of economic, environmental and social topics 40-41,48-49

G4-44 Performance evaluation process for the highest governance body with respect to governance of economic, environmental and social topics 27,56-57

G4-45 The highest governance body’s role in the identification and management of economic, environmental and social impacts, risks, and opportunities, including the implementation of due diligence processes 27,56-57

G4-46 The highest governance body’s role in reviewing the effectiveness of the organization’s risk management processes for economic, environmental and social topics 30-31


GRI Sustainability Reporting Guideline, Version 4

Indicator Report pageG4-47 The frequency of the highest governance body’s review of economic, environmental and social impacts, risks, and opportunities 28-31G4-48 The highest committee or position that formally reviews and approves the organization’s sustainability report 26G4-49 The process for communicating critical concerns to the highest governance body 24-25,33

G4-50 The nature and total number of critical concerns communicated to the highest governance body and the mechanism(s) used to address and resolve them 24-25,33

G4-51 Remuneration policies for the highest governance body and senior executives, and how performance criteria in the remuneration policy relate to the highest governance body’s and senior executives’ economic, environmental and social objectives

Corporate Governance Report

G4-52 The process for determining remuneration 29

G4-53 How stakeholders’ views are sought and taken into account regarding remuneration -

G4-54 The ratio of the annual total compensation for the organization’s highest-paid individual to the median annual total compensation for all employees -

G4-55 The ratio of percentage increase in annual total compensation for the organization’s highest-paid individual to the median percentage increase in annual total compensation for all employees -

Ethics and integrityG4-56 The organization’s values, principles, standards and norms of behavior 6-7

G4-57 The internal and external mechanisms for seeking advice on ethical and lawful behavior and matters related to organizational integrity 32-33

G4-58 Internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity 33

Specific standard disclosures Report pageDisclosures on management approach

G4-DMA Reasons why the Aspects are of material significance, impacts that affect judgment, approach to organizational management, and evaluation of management approach 24-27,54-57

EconomicEconomic performance

G4-EC1 Direct economic value generated and distributed 20-21

G4-EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change -

G4-EC3 Coverage of the organization’s defined benefit plan obligations -

G4-EC4 Financial assistance received from government -

Market presenceG4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation -

G4-EC6 Proportion of senior management hired from the local community at significant locations of operation -

Indirect economic impactsG4-EC7 Development and impact of infrastructure investments and services supported 50

G4-EC8 Significant indirect economic impacts, including the extent of impacts 50

Procurement practicesG4-EC9 Proportion of spending on local suppliers at significant locations of operation -

EnvironmentalMaterials

G4-EN1 Materials used by weight or volume 59

G4-EN2 Percentage of materials used that are recycled input materials 59,60

EnergyG4-EN3 Energy consumption within the organization 59-61

G4-EN4 Energy consumption outside of the organization 59-61

G4-EN5 Energy intensity 60-61

G4-EN6 Reduction of energy consumption 60-61

G4-EN7 Reductions in energy requirements of products and services 58

WaterG4-EN8 Total water withdrawal by source 59

G4-EN9 Water sources significantly affected by withdrawal of water -

G4-EN10 Percentage and total volume of water recycled and reused -

BiodiversityG4-EN11 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside

protected areas 67

G4-EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas 67

G4-EN13 Habitats protected or restored -

G4-EN14 Total number of IUCN red list species and national conservation list species with habitats in areas affected by operations, by level of extinction risk -

EmissionsG4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 60-61

G4-EN16 Indirect greenhouse gas (GHG) emissions (Scope 2) 60-61

G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) 60-61

G4-EN18 Greenhouse gas (GHG) emissions intensity 60-61

G4-EN19 Reduction of greenhouse gas (GHG) emissions 60-61

G4-EN20 Emissions of ozone-depleting substances (ODS) 60-61

G4-EN21 NOx, SOx, and other significant air emissions 66


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Specific standard disclosures Report pageStrategy and analysis

G4-EN22 Total water discharge by quality and destination 59G4-EN23 Total weight of waste by type and disposal method 59,62G4-EN24 Total number and volume of significant spills -

G4-EN25 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally -

G4-EN26 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the organization’s discharges of water and runoff -

Products and servicesG4-EN27 Extent of impact mitigation of environmental impacts of products and services 58G4-EN28 Percentage of products sold and their packaging materials that are reclaimed by category -

ComplianceG4-EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations -

Transport

G4-EN30 Significant environmental impacts of transporting products and other goods and materials for the organization’s operations, and transporting members of the workforce 61

OverallG4-EN31 Total environmental protection expenditures and investments by type 63

Supplier environmental assessmentG4-EN32 Percentage of new suppliers that were screened using environmental criteria -

G4-EN33 Significant actual and potential negative environmental impacts in the supply chain and actions taken 36-37Environmental grievance mechanisms

G4-EN34 Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms -

SocialLabor practices and decent work

EmploymentG4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region 45,76-77G4-LA2 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation -

G4-LA3 Return to work and retention rates after parental leave, by gender 46,76-77Labor/Management relationsG4-LA4 Minimum notice periods regarding operational changes, including whether these are specified in collective agreements -

Occupational health and safety

G4-LA5 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs 47,70

G4-LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender 70

G4-LA7 Workers with high incidence or high risk of diseases related to their occupation -

G4-LA8 Health and safety topics covered in formal agreements with trade unions 70-71Training and educationG4-LA9 Average hours of training per year per employee by gender, and by employee category -

G4-LA10 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings 48-49

G4-LA11 Percentage of employees receiving regular performance and career development reviews, by gender and by employee category -

Diversity and equal opportunity

G4-LA12 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity 43

Equal remuneration for women and menG4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation -

Supplier assessment for labor practicesG4-LA14 Percentage of new suppliers that were screened using labor practices criteria -

G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken 36-37Labor practices grievance mechanismsG4-LA16 Number of grievances about labor practices filed, addressed, and resolved through formal grievance mechanisms -

Human rightsInvestment

G4-HR1 Total number and percentage of significant investment agreements and contracts that include human rights clauses or that underwent human rights screening -

G4-HR2 Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained -

Non-discriminationG4-HR3 Total number of incidents of discrimination and corrective actions taken -


GRI Sustainability Reporting Guideline, Version 4

Specific standard disclosures Report pageFreedom of association and collective bargaining

G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights -

Child labor

G4-HR5 Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor -

Forced or compulsory labor

G4-HR6 Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor -

Security practicesG4-HR7 Percentage of security personnel trained in the organization’s human rights policies or procedures that are relevant to operations -

Indigenous rightsG4-HR8 Total number of incidents of violations involving rights of indigenous peoples and actions taken -

AssessmentG4-HR9 Total number and percentage of operations that have been subject to human rights reviews or impact assessments -

Supplier human rights assessmentG4-HR10 Percentage of new suppliers that were screened using human rights criteria -

G4-HR11 Significant actual and potential negative human rights impacts in the supply chain and actions taken 36-37Human rights grievance mechanismsG4-HR12 Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms -

Society Local communitiesG4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs 50-53G4-SO2 Operations with significant actual and potential negative impacts on local communities -

Anti-corruptionG4-SO3 Total number and percentage of operations assessed for risks related to corruption and significant risks identified 34-35G4-SO4 Communication and training on anti-corruption policies and procedures 34-35G4-SO5 Confirmed incidents of corruption and actions taken -

Public policyG4-SO6 Total value of political contributions by country and recipient/beneficiary -

Anti-competitive behavior

G4-SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes -

ComplianceG4-SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations -

Supplier assessment for impacts on societyG4-SO9 Percentage of new suppliers that were screened using criteria for impacts on society -

G4-SO10 Significant actual and potential negative impacts on society in the supply chain and actions taken 36-37Grievance mechanisms for impacts on societyG4-SO11 Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms -

Product responsibilityCustomer health and safetyG4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement 74-75

G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcome -

Product and service labeling

G4-PR3 Type of product and service information required by the organization’s procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements 72-73

G4-PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes 72-73

G4-PR5 Results of surveys measuring customer satisfaction 74-75Marketing communications

G4-PR6 Type of product and service information required by the organization’s procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements -

G4-PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes -

Customer privacyG4-PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data -

Compliance

G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services -


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For the data described as “Showa Denko K.K.” or “Showa Denko only,” the boundary of those data is Showa Denko K.K. only.For the data described as “Showa Denko Group,” the boundary of those data includes Showa Denko K.K. and the group companies listed below.

Scope of Group companies

Energy,GHG emissions

Others(amount of water used,

chemical substance discharge into air and water, industrial waste

discharge)

Industrial accident statistics

Japan

Consolidated subsidiaries

Showa Denko Gas Products Co., Ltd. ○ ○ ○

Showa Denko Ceramics Co., Ltd. (Toyama) ○ ○ ○

Showa Aluminum Can Corp. ○ ○ ○

Showa Denko Packaging Co., Ltd. ○ ○ ○

Showa Denko Kenzai K.K. ○ ○ ○

Showa Denko HD Yamagata K.K. ○ ○ ○

Niigata Showa K.K. - ○ ○

Nippon Polytech Corp. - ○ ○

Showa Denko Kenso K.K. - ○ ○

Tsurusaki Kyodo Doryoku K.K. ○ - ○

Showa Fine Ceramics Co., Ltd. ○ ○ ○

Other affiliated com

panies

Shiojiri Showa Co. Ltd. - - ○

Showa Denko Sakai Aluminum K.K. - - ○

SHOWA DENKO Electronics K.K. ○ ○ ○

Union Showa K.K. - - ○

Showa Aluminum Can Recycling Center - - ○

HIPACK Co., Ltd. - - ○

Clean-S Showa K.K. - - ○

KANAE CHEMICALS Co., Ltd. - - ○

Fuyo Perlite Co., Ltd. - - ○A

broad

Consolidated subsidiaries

Taiwan Showa Chemicals Manufacturing Co., Ltd.(including Showa Specialty Gas (Taiwan.) Co., Ltd.) ○ ○ ○

Zhejang Quzhou Juhua Showa Electoronic Chemical Materials Co., Ltd. ○ ○ ○

Showa Denko Carbon, Inc. ○ ○ ○

SHOTIC (Singapore) Pte Ltd. ○ ○ ○

SHOTIC Europa Industria de Aluminio Lda. ○ ○ ○

Showa Aluminum Corporation of America ○ ○ ○

Showa Aluminum ManufacturingPhilippines Corporation ○ ○ ○

Showa Denko HD Singapore Pte Ltd. ○ ○ ○

Showa Denko HD (Malaysia) Sdn. Bhd. ○ ○ ○

Showa Denko HD Trace corp. ○ ○ ○

Ganzhou Zhaori Rare Earth New Materials Co., Ltd. ○ ○ ○

Showa Denko Rare-Earth Vietnam Co., Ltd. ○ ○ ○

Showa Denko (Dalian) Co., Ltd. ○ ○ ○



We received the third-party verification about the quantitative data concerning our CSR performance shown in this SHOWA DENKO CSR Report 2015 from SGS Japan Inc.

For the data described as “Showa Denko K.K.” or “Showa Denko only,” the boundary of those data is Showa Denko K.K. only.For the data described as “Showa Denko Group,” the boundary of those data includes Showa Denko K.K. and the group companies listed below.

Scope of Group companies


Third-party Veri�cation

Documents

SHOWA DENKO CSR Report 2015 - sdk.co.jp · Web [Full Report] (PDF), is issued in PDF as an annual report. We take into consideration the readability, such as the layout at the time