DENKA

Denka Group’s CSR Management

Denka Group CSR Basic Policies

E Environment

Environmental preservation and protection
We will proactively facilitate the use of clean energy, take on the development of eco-friendly products and technologies, and promote energy-saving and resource-recycling measures. By doing so, we will help preserve and protect the global environment.

S Social

Value creation via manufacturing
Through the pursuit of innovation, we will deliver products, services and solutions capable of supporting sustainable economic growth and helping resolve issues society is now confronting.
Prioritization of safety
We will steadfastly abide by our policy of placing the utmost priority on occupational safety, employee health, facility security and disaster prevention in all aspects of our business activities. In this way, we will create a workplace free of accidents and disasters.
Relationships of trust with customers
We will commit ourselves to delivering products with superior quality while providing sufficient product information to ensure customer satisfaction. We will also remain sincere in customer relations, thereby maintaining relationships of trust with customers.
Diversity
and work-life balance
Respecting the diversity, personalities and unique qualities of all those working for the Denka Group, we will strive to help them determine optimal working styles to ensure they realize their full potential. At the same time, we will create a vibrant workplace, promote employee health and realize a safety-oriented corporate culture.
Respect for human rights
We respect the human rights of all people while striving to raise human rights awareness and helping to eradicate all kinds of human rights infringement.
Information disclosure and stakeholder dialogue
We will disclose corporate information in a proactive, effective and fair manner, thereby maintaining constructive dialogue with a wide range of stakeholders.
Social contribution
As a good corporate citizen, we will proactively play a positive role in society to contribute to sound and sustainable social development.

G Governance

Fair business conduct
We will engage in fair and free competition, appropriate dealings and responsible procurement while maintaining sound relationships with political bodies and administrative agencies.
Risk Management
In addition to remaining apprised of risks that may affect our corporate activities, we will implement thoroughgoing and organized crisis management measures to secure resilience against natural disasters, terrorism cyberattacks and other events that cause serious threats to our operations.

Governance and CSR Promotion Structure As of November 7, 2018

Corporate Governance

We have adopted an Audit & Supervisory Board System as the basis of our Corporate Governance System. Said board includes two outside members to assess operations and management, thereby ensuring that our business properly serves stakeholders.
Similarly, the Board of Directors has two (three from June 19, 2015 onward, details explained in the following) independent outside members. Moreover, there are no hierarchical relationships between directors, so each is free to oversee and supervise business execution.
Moreover, we have in place a Management Committee, composed of directors, members of the Audit & Supervisory Board and selected executive officers, to streamline and accelerate deliberation on important managerial matters. For individual items entailing budget planning and capital investment, we set up special committees or deliberative councils by function.
With the aim of enhancing its corporate governance, Denka has clarified the separation of executive officers’ business execution and the Board of Directors’ supervisory functions.
To further enhance management transparency and soundness, we increased the number of outside directors (from two to three) while reducing the total number of Board members (from 12 to 10) based on a resolution passed at General Meeting of Shareholders held on June 19, 2015.
The three outside directors and two outside Audit & Supervisory Board members are all registered as independent directors/auditors under the rules of Tokyo Stock Exchange Inc. They maintain sufficient independence while retaining extensive knowledge in their areas of specialty, ensuring the stringent supervision of the Company’s management.
Looking ahead, we will strengthen our management structure through aggressive expansion while introducing preventive initiatives as we aim to better adapt to the globalization of our operating environment and the advance of information communication technologies.

Corporate Governance

CSR Promotion Structure

CSR Promotion Structure

Our CSR Materiality Issues As of November 10, 2017

The Selection of Materiality Issues

We have identifi ed our CSR materiality issues to determine our priorities regarding what should be done to realize our corporate philosophy. These CSR issues were carefully examined and evaluated with an eye to how the Denka Group should help resolve the pressing challenges society is now facing, such as global issues designated as Sustainable Development Goals (SDGs) by the United Nations. Denka then organized such issues into 13 items, each of which represents a matter of critical importance for chemical manufacturers committed to fulfi lling their social responsibilities. These items were fi nalized upon the approval of the Company’s Management Committee on April 24, 2017. Going forward, we will engage in CSR activities and dialogue with our stakeholders based on these materiality issues. In these ways, we will continuously improve our CSR-oriented management approach. (Please also see pages 50 and 51 for more detail.)

Six categories of CSR most important issues (materiality) of Denka Group

Denka’s CSR Promotion Structure

To promote its CSR activities, Denka has established a CSR promotion structure in which the CSR & Corporate Communications Department serves as a secretariat and collaborates with other specialized bodies to oversee activities undertaken by all Group members. CSR materiality issues are discussed by the Management Committee, which is chaired by the president and in charge of deliberating important managerial matters, with the committee’s conclusions being reported to the Board of Directors. Each body and department placed under the Management Committee supervises such initiatives as worksite safety and Responsible Care activities and is striving to achieve systematic improvements in their respective areas of responsibility. Meanwhile, the CSR & Corporate Communications Department is charged with raising Group employees’ CSR awareness as well as publishing these activities’ results in the CSR report with the aim of facilitating stakeholders

CSR Promotion Structure

Our CSR Materiality Issues

In April 2017, the Denka Group specifi ed key CSR issues that are critical to its stakeholders and to the Group itself, identifying them as materiality issues that it will employ in guiding its CSR activities. This move was intended to help us achieve sound and sustainable growth over the future as a corporate group that lives up to society’s expectations and deserves its trust. We carefully selected these materiality issues based on pressing challenges society is now facing and in reference to external inputs, including United Nations SDGs, guidelines compiled by the GRI, ISO26000 and other international standards, as well as prevailing ESG investment criteria and insights we have gained through its involvement in CDP and CSR procurement. Moreover, these items were examined and evaluated with due consideration given to stakeholders’ expectations and their impact on our operations and were discussed by Denka’s Management Committee, which, in turn, approved on the fi nalization of each item.

Selection process of the most important issue (materiality) of CSR

Outlook for Our CSR Materiality Management

Based on the materiality issues thus defi ned, each business unit in the Group is diligently pursuing ongoing CSR activities. Looking ahead, we will continually strive to improve our corporate activities while engaging with stakeholders to maintain meaningful dialogue. Well aware of possible changes in the operating environment and society that may affect our management priorities, we will also perform the timely review of these materiality issues based on feedback from our stakeholders.

Relationship between Our Materiality Issues and SDGs

While Denka’s CSR materiality issues consist of 13 items that are critical to chemical manufacturers committed to fulfi lling their social responsibilities, these are also relevant to United Nations SDGs. The relationship between such materiality issues and SDGs is presented in the chart below. Denka is thus determined to contribute to SDGs in the course of its pursuit of CSR activities.

Relationship between the identified materiality and SDGs

CSR Procurement Policies and Guidelines As of November 1, 2015

CSR Procurement

The Denka Group recognizes that all of its suppliers are essential partners in its pursuit of initiatives aimed at fulfilling its social responsibilities. In line with this recognition, the Group works hand in hand with its supply chain to promote CSR procurement while clarifying its approach and standards through the CSR Procurement Policies and CSR Procurement Guidelines that it formulated based on the Denka Group Guidelines. In fiscal 2014, we sent out questionnaires with regard to our CSR Procurement Guidelines to key suppliers representing 70% of our raw material supply chain in terms of transaction value. As of June 2015, we had heard back from half those queried, and all respondents expressed approval of Denka’s CSR Procurement Policies and Guidelines.
Going forward, we will conduct a detailed analysis of the survey results while engaging in dialogue with those who have yet to reply in order to identify upcoming challenges and thus determine countermeasures to be implemented.
In these ways, we will step up CSR activities by encouraging the involvement of suppliers in CSR procurement.

The CSR Procurement Policies

  1. We will maintain respect for human rights while striving to improve the workplace environment and occupational safety and health.
  2. We will pursue environment-conscious procurement, striving to secure safety and to reduce our impact on the earth’s environment.
  3. We will undertake procurement activities based on compliance with relevant laws, regulations and corporate ethics.
  4. We will purchase raw materials and equipment and consign construction work by comprehensively taking into account such factors as quality, prices and delivery time as well as suppliers’ technological capabilities, supply reliability and environmental conservation initiatives.
  5. We will sincerely engage with our suppliers and treat them as important business partners, fostering mutual understanding and trustworthy relationships with them through fair business transactions.
  6. We will not accept from our suppliers nor provide them with any gifts or entertainment of value that are deemed in excess of social norms or of an inappropriate nature.
  7. We will not divulge any non-public information acquired in confidence from our suppliers in the course of procurement activities while properly managing and protecting their intellectual property rights.
  8. We will maintain an equal partnership with all suppliers and provide them with equal opportunities for competition in a fair manner.

The CSR Procurement Guidelines

1. Respect for Human Rights and Occupational Safety and Health
A supplier is required to include respect for fundamental human rights and the pursuit of occupational safety and health in its corporate policy.
2. Compliance with Laws and Regulations
A supplier is required to include compliance with law and regulations, as well as fair corporate activities in accordance with social ethics, in its corporate policy.
3. CSR Promotion
A supplier is required to recognize CSR as being integral to its business activities. This entails including sustainable social and business development in its corporate policy and establishing an in-house CSR promotion structure.
4. Environmental Conservation
A supplier is required to include environmental conservation activities in its corporate policy and disclose the status of said activities to the general public. The said activities include the appropriate management of chemical substances contained in its products and green procurement.
5. Product Quality and Safety
A supplier is required to include quality and safety assurance in its corporate policy. Such activities are expected to take place under an established product quality management system.
6. Fair and Just Business Transactions
A supplier is required to include fair and just business transactions in its corporate policy.
7. Risk Management
A supplier is required to make sure that any risk or contingencies it may confront are managed and controlled through such means as the appropriate and timely information disclosure.
8. Contribution to Society
A supplier is required to include proactive contribution to local communities and global society in its corporate policy.
9. Severing Ties with Antisocial Forces
A supplier is required to not have any relationship with antisocial forces, whether they are individuals or entities.