Together with expressing our deepest concern for the victims of the Great East Japan Earthquake, we offer our heartfelt hopes and prayers for a quick recovery of the affected areas.

Sekisui Chemical Group has numerous customers and business partners in the areas affected by the earthquake. As an enterprise involved in the residential and water infrastructure businesses essential to building the infrastructure of society, truly our social mission is to continue supplying products and services just as we did before the earthquake. While the road to restoration and recovery is a very long one, we will do our absolute best on behalf of our communities, customers, and business partners.

Although a number of Sekisui Chemical Group business facilities were damaged by the earthquake and tsunami, we have strived to restore our production and other systems and have resumed operation at such facilities. In the future, the Group will dedicate its combined abilities not just to aiding the recovery of affected areas but also to building safe and secure residences and communities as well as a sustainable society.

Sekisui Chemical Group's CSR management efforts are based on the principles of the Three Prominences in the Environment, CS & Quality, and Human Resources and the Three Attitudes of Sincerity of Compliance, Risk Management, and Disclosure & Communication.

The greatest result in fiscal 2010 was expansion and growth of Environment-Contributing Products. We defined Environment- Contributing Products as those that can contribute to reducing society's environmental load instead of just incorporating the perspectives of consideration for the environment, and we have strived to expand the lineup of such products. As a result, in fiscal 2010 we surpassed our target of sales of Environment- Contributing Products accounting for a percentage of 33% of net sales. In addition, the effects of Environment-Contributing Products on reducing carbon-dioxide emissions have grown to a level largely offsetting carbon-dioxide emissions from our domestic production activities, as we have demonstrated steady progress toward the goal in our vision for 2030 of achieving the carbon negativity.

At the same time, the year also saw some matters requiring reconsideration. A problem arose concerning fires in MJS telephone exchange systems that we had supplied, greatly inconveniencing customers and other related parties. It cannot be denied that behind this problem was insufficient sensitivity in the areas of compliance and risk management. We intend to prevent reoccurrence of such problems through reviewing related systems together with striving to raise consciousness of such matters.

Over the past five years, the percentage of Sekisui Chemical Group's sales ratio of overseas businesses has roughly doubled. As seen in developments such as substantial increases in numbers of Group companies and employees overseas, globalization is accelerating.

Based on such circumstances, we believe that it is extremely important to share Group ways of thinking and values. For this reason, each year we hold a meeting in which the presidents of overseas affiliate companies gather together in one place. In deploying CSR management at overseas affiliates, the most important things are ensuring that the presidents of overseas affiliates understand the importance of CSR management and can speak on the subject in their own languages and working together to address issues common to overseas areas. For this purpose, we will strive to grow our businesses and achieve permeation of CSR management while continuing to hold area-specific company presidents' conferences together with these meetings. In addition, in the future too we will continue supporting the United Nations Global Compact as a platform for deploying CSR management on a global basis.

In CSR management, I place the greatest importance on being a company that will maintain its presence even 100 years in the future.

For this purpose, we need first of all to reform our business model with constant sensitivity to changes in the external environment, as we in Sekisui Chemical Group continue SHINKA ("evolution") ourselves.

Another important element is that of energizing the organization internally. For this purpose, it is important that each and every employee working in Sekisui Chemical Group at all times feels that he or she plays a leading role, as well as having pride in his or her own work.

We believe that when each employee is conscious and proud of his or her membership in Sekisui Chemical Group - through contributing to sustainable society by expanding Environment-Contributing Products with a balance between ecological and economic objectives while also growing our businesses in the area of the environment, supplying truly satisfying products and services by being open to customer feedback, and achieving an environment in which individual employees can grow through their work, seeing themselves as leaders and taking on challenges with full devotion to their work - Sekisui Chemical Group will be able to grow as well.

In the future as well, we will aim to be a sustainable enterprise with presence, evolving Sekisui Chemical Group CSR management.

Naofumi Negishi, President