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Operating Environment of the Sekisui Chemical Group

What are your thoughts on the buisiness environment in fiscal 2015 and policies for the future?
Operating income reached a record high in fiscal 2015.

Economic conditions outside Japan during fiscal 2015, the fiscal year ended March 31, 2016, were mixed. On the one hand, the pace of economic growth slowed in emerging countries including China. The economies of resource-rich nations also suffered as a result of such factors as the decline in crude oil prices. On the other hand, modest recovery trends were evident mainly in developed countries. Turning to the domestic market, signs of instability began to emerge from the New Year. This was largely attributable to appreciation in the yen's value, a downturn in share prices, continued anxiety toward financial conditions in Europe, and uncertainties surrounding the U.S. economy.

Under these circumstances, strong performances by products in such strategic fields as Automobiles and Transportation as well as Life Science, helped to drive the Sekisui Chemical Group's overall results. Buoyed by robust growth, the Company reported record-high operating income in fiscal 2015.

Fiscal 2016 is the final year of our medium-term management plan SHINKA!-Advance 2016. As a result, our efforts throughout this 12-month period will play a vital role in mapping out a vision for growth that will take us to a higher plane. In order to ensure the Group's sustainable growth, I will continue to vigorously promote the three core policies that I introduced following my appointment as president. Guided by these policies, the Group will draw on the theme of “co-creation and innovation” to bring to market a steady stream of new products and businesses, cultivate new markets by “opening frontiers,” and promote rigorous management efficiency while implementing the careful selection and concentration of businesses by “fortifying earning power.”


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The Relationship between Business Activities and CSR

What do you see as the Sekisui Chemical Group’s corporate social responsibility?
Our mission is to create value for society through our business activities.

“Service,” or creating value for society through business activities, is a key component of our “3S Principle” Corporate Philosophy. This is in fact, the very essence of our corporate social responsibility.

The Sekisui Chemical Group engages in a wide range of business activities. Regardless of the merits, this wide range of business activities means that we not only have a considerable impact on society, but also a significant responsibility. Recognizing the critical need to ensure a common understanding of the importance of CSR across the Group as a whole, we have positioned CSR SHINKA as a core management strategy of our medium-term management plan.

In identifying priority fields, we also took steps to position the environment as an important business pillar from 2003. Working in unison, we reexamined those areas in which to increase our prominence, and have made every effort to balance ecological concerns with economic development in order to contribute to society. Put simply, our mission is to expand and create Environment-Contributing Products.

The Sekisui Chemical Group has opened the door in its efforts to reach a higher plane. In order to ensure a presence that is strong enough to last a century, we will ensure that all employees are united in their commitment to help create a better society. Rallying to a common cause, our aspirations are embodied in the Group slogan “A new frontier, a new lifestyle.”


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A striking feature of fiscal 2015 has been the number of corporate improprieties reported by the media.
        What is the Sekisui Chemical Group’s stance toward compliance?
We continue to promote a corporate culture that strives to eliminate the risk of impropriety.

I have often commented to employees that “100-1 = 0.” A momentary incident or action by a single employee can obliterate a company’s credibility and reputation years in the making. It is therefore imperative that we eliminate the risk of impropriety to the greatest extent possible. Putting in place the necessary structure and systems to eliminate any and all risks is a given. Of equal importance is the need to ferment a corporate culture in which silence is considered unacceptable. It is vital that employees understand the negativity of leaving things unsaid.

In fiscal 2015, we focused on strengthening accounting compliance. In addition to conducting educational seminars at business sites in Japan and overseas, we revised a portion of our intra-company whistle-blowing system. As well as mandating the need to report any breach of compliance, we bolstered measures aimed at protecting whistleblowers while expanding the scope of the system. Through these and other means, we took steps to eliminate complacency and to reform an in-house culture that was prone to follow precedents.

CSR Encompassing the Group and Supply Chain

How does the Group reconcile concerns for human rights, labor standards, and the environment with respect to
        the supply chain when carrying out its business activities?
We are forging increasingly close ties with business partners while maintaining a deep respect for international norms.
CSR Encompassing the Group and Supply Chain

Focusing on CSR across the supply chain is a basic prerequisite for gaining the acceptance of society.

The Sekisui Chemical Group maintains a deep respect for international norms, standards, and initiatives including the Universal Declaration of Human Rights, the ILO’s International Labor Standards, the Ruggie Framework, and the United Nations’ Global Compact, which form the basis of its CSR management policy. In particular, the Group has pledged its commitment to prevent global warming, maintain biodiversity, and work with customers and business partners to build a recycling-oriented society.

In addition, we have declared our opposition to human rights violations as well as forced and child labor across the supply chain. From a CSR procurement perspective, we take steps to confirm the extent to which environmental and human rights concerns are incorporated into the activities of suppliers as well as the status of compliance, health, and safety initiatives.

We have already confirmed that all of the Group’s suppliers surveyed in Japan comply with its standards. In fiscal 2015, we began steps to survey overseas suppliers including those in North and Central America.


Our Response to New CSR Indicators

What are your thoughts on and how will you respond to the introduction of Japan’s Corporate Governance Code
         and sustainable development goals (SDGs)* in fiscal 2015?
We maintain a flexible approach toward the introduction of new guidelines and are committed to realizing a sustainable society.

Sekisui Chemical disclosed details of its approach and initiatives toward the principles of the Japan Corporate Governance Code in October 2015. In addition to its Basic Policy for Constructive Dialogue with Shareholders, the Company has disclosed details of its Criteria for Independence of Outside Board Members. The decision has also been made to newly establish an advisory committee on such matters as nomination and remuneration to supplement the functions of the Board of Directors. With the introduction of SDGs, companies are being asked to closely examine how they can help resolve issues confronting society.

This is especially true for efforts aimed at balancing economic development and the need to eradicate poverty with concerns regarding the environment and its protection. For its part, the Sekisui Chemical Group is well positioned to address many of the world’s challenges. Moving forward, I will steer the Group toward sustainable growth by putting in place a structure that is capable of taking acceptable risks in order to make the most of every opportunity. Through our business activities, we will then overcome many of the world’s immediate issues and achieve each SDGs.

SDGs:Sustainable Development Goals
  A set of global-scale sustainable development goals that the international community must collectively address over the next 15 years.

Self-Evaluation and Overview of CSR Activities in Fiscal 2015

How would you assess the Group’s CSR activities in fiscal 2015?
        Reflecting on the Group’s CSR activities over the past year, is there any one aspect that stands out?
We are focusing on the development of Environment-Contributing Products and maintaining a high sales ratio.

In fiscal 2015, the Sekisui Chemical Group worked diligently to balance ecological concerns with economic development while bringing to market a host of innovative products. As a result, the ratio of Environment-Contributing Product sales to total sales reached 44% helping the Group achieve record-high profits.

At the 21st Conference of the Parties (COP21), a gathering organized by the United Nations on the subject of climate change each year, participating nations agreed on initiatives designed to hold any increase in worldwide temperatures to not more than two degrees Celsius (3.6 degrees Fahrenheit). With the urgent need to strengthen efforts aimed at conserving and creating energy, the use of renewable and clean energy is growing in importance. In fiscal 2015, Sekisui Chemical completed development of a high-capacity film-type lithium-ion battery. In addition to storing clean energy, this battery boasts high levels of safety and a long service life. The battery is scheduled for delivery to the housing sector in fiscal 2016. In the future, plans are in place to extend application to the automobile field. The Sekisui Chemical Group is committed to realizing a sustainable society by developing unique Environment-Contributing Products for use throughout the world.