Compliance and Respect for Human Rights

Giving Consideration to Human Rights on a Global Scale, Strengthening Compliance Management

Compliance

Management Approach

Our Approach to Compliance ManagementCompliance Management Depends on the Good Intentions of Each Employee

In Sekisui Chemical Group, we established our “Compliance Declaration” in 2003 based on principles such as “contributing to society,” “being a trusted company,” and “adherence to the letter and spirit of the law.” In keeping with the spirit of the Group Principles and our Corporate Code of Ethics, we defined our stance for the acquisition of high social trust through compliance. In April 2019, under the leadership of President Koge, compliance is management itself for Sekisui Chemical Group, and each and every one of our employees joined together to declare they will act in accordance with our compliance regulations. In order to ensure Sekisui Chemical Group will be widely trusted by society, we will continue to carry out initiatives for improving compliance awareness.

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Prevent Compliance IssuesPrevent Major Compliance Issues

In the CSR Medium-term Plan, which we started to implement in fiscal 2017, we carried over “zero incidents of major compliance issues” as a KPI target from the previous medium-term plan. From fiscal 2015 onward, Sekisui Chemical has continually achieved zero incidents of corruption and fraud.
In fiscal 2018 as well, no cases of major compliance issues arose.
We will continue strengthening our management of compliance and work to prevent compliance issues before they occur.

Growing Awareness Toward ComplianceCompliance Manuals and Compliance Cards Distributed

Sekisui Chemical Group has created and distributed the Compliance Manual, in which are described the matters with which each Group employee should comply, and also created a pocket version called the Compliance Card in order to instill awareness of compliance in each and every employee. The Compliance Manual includes information on topics such as the prohibitions on corruption and bribery, respect for human rights and the prohibition of discrimination, data management and protection, compliance with antitrust legislation, prohibitions on insider trading, conservation of the global environment and compliance with labor-related laws and regulations, and the internal whistleblowing system; it publicizes, and promotes thorough adherence with, these requirements among all employees.
In addition to the existing Compliance Manual, we have created a Global Compliance Manual covering regulations around the world. To allow all overseas Group employees to understand this manual, we have created English, Chinese, Thai, Indonesian, German, and Korean editions, and are proceeding with translating the manual into more local languages.

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  • 6-024
    • The Company’s Compliance Manual
    • The conveniently sized Compliance Card

Putting Compliance Management Efforts into PracticeBuilding an Effective Compliance Promotion System

We are building a realistic and effective compliance promotion system to ensure that compliance management is fully put into practice. In addition to having established a Compliance Subcommittee—which reports to the CSR Committee and is chaired by the executive officer who heads the Legal Department—as an organization to oversee Group compliance and to put forward policies and implementation measures, we are also establishing compliance promotion subcommittees at headquarters and at each divisional company, appointing persons responsible for putting compliance promotion into practice and implementing and deploying each measure. In the unlikely event that a major compliance issue arises, we will hold a Compliance Advisory Board meeting to address any problems that have actually occurred and examine measures to prevent a recurrence. The Compliance Subcommittee met twice in fiscal year 2018, in March and September.

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Compliance Management Promotion System

Compliance TrainingOngoing Provision of Opportunities to Learn About Compliance

As part of our efforts associated with putting compliance management into practice, we also focus on employee compliance education. We continuously provide opportunities for all Group employees to learn about the importance of compliance, such as by conducting e-learning sessions specific to compliance quarterly. These e-learning programs include information about compliance as training for new employees and as rank-specific training.

Upgrade of the Whistle-blowing ProgramWe Are Promoting Knowledge of S.C.A.N.'s Existence and Its Effective Operation

In 2002, Sekisui Chemical Group developed the Sekisui Compliance Assist Network (S.C.A.N.) intra-company whistle-blowing system, which is the mechanism that has been made available for use by all Sekisui Chemical Group employees and its business partners.
Operated under the supervision of the executive officer in charge of the legal department, S.C.A.N. enables direct reporting not only to the Legal Department but also to an outside law firm. In addition to serving as a reporting system, S.C.A.N. also plays a role as a point of contact for consultations, such as whether a specific act would be classed as a compliance violation.
In order to create an organizational culture that maintains full awareness of compliance, the system also prescribes the protection of the whistleblower and stipulates that information on the person who provided the information be kept secret from everyone other than at the point of contact and the prohibition of any prejudicial treatment toward that person. Regarding the report content, interviews are held to investigate the claims of both the informer and the informee, and eyewitnesses are interviewed as well when necessary. The truthfulness of these reports is confirmed in this way, ensuring intra-organizational issues are handled in a fair manner.

Responses to External Notifications

In accordance with the establishment of the Corporate Governance Code, we reconfigured the intra-company whistle-blowing system in fiscal 2015 as part of the strengthening of governance functions at each Sekisui Chemical Group company and newly put in place points of contact for consultations from, and whistleblowing by, suppliers.
This consultation / notification point of contact is intended for use by the executive officers and employees of business partners in Japan who are continuously conducting business transactions with Sekisui Chemical Group companies. We occasionally accept requests for consultations and receive reports via a form made available on Group company websites and, while conducting consultations with business partners, proceed to confirm the facts and take corrective action concerning any alleged “law-violating conduct.” The content of consultations and reports is shared only among the minimum number of people necessary to resolve the “law-violating conduct" concerned, and all parties that need to be involved are obliged to keep that content confidential.

Prevention of Bribery and CorruptionGuidelines in Place, Educational Programs Conducted for High-risk Divisions

A signatory to and an approver of the UN Global Compact, which stipulates anti-corruption efforts under its voluntary action principles, Sekisui Chemical Group is promoting efforts to prevent acts of bribery and corruption in that spirit.
As part of our internal regulations, we have put in place rules to prevent bribery and corruption and are promoting their introduction at all Sekisui Chemical Group companies. We have also formulated anti-bribery guidelines, which summarize matters concerning bribery and corruption, that employees should observe when doing business in Japan, the United States and China. We have worked to make these regulations and guidelines known via the intranet, so that Group employees can check them at any time.

Main Measures Relating to Bribery and Corruption

In our efforts to prevent the breaking of any laws, we identify high risk cases regarding corruption and bribery, and put countermeasures in place. For example, when a government official is to be entertained or presented with a gift, a form must be submitted in advance to obtain approval from management. In the event that we appoint an agent or consultant in connection with business transactions, including those involving public officials from other countries, we stipulate that this can only be undertaken once we have confirmed that payments of remuneration to that agent or consultant could not be classed as bribes, that there are no reasonable grounds to suspect that payments could constitute bribes and only after a predetermined settlement procedure has been followed.

Identification of High-risk Divisions and Employee Training

In the sales and purchasing departments, which are especially at risk for bribery and corruption, we encourage them to learn about regulations and guidelines, such as by conducting training specific to countering graft and corruption, and to make full use of the relevant forms, among other measures.
In fiscal 2018, we conducted continuing training for the prevention of bribery at domestic business sites, with a focus on departments at high risk. At overseas business sites as well, we conducted bribery prevention training linked to the “Compliance Reinforcement Month,” held yearly throughout the Group in October.
In the United States, training sessions were held mainly for locations where no training was held in fiscal 2017, and training sessions in line with specific circumstances were also held at Group companies in China and Europe. In the Southeast Asia region as well, training visits were used in conjunction with e-learning to ensure the contents of the “Global Compliance Manual” were common knowledge among employees.

Cases of Violations in Fiscal 2018

No cases of major violations of the laws governing bribery and corruption occurred in fiscal 2018.

Protection of Intellectual PropertyProtecting Our Intellectual Property and Respecting the Intellectual Property Rights of Others

The Company regards intellectual property (IP) that has resulted from its R&D activities to be an important management resource underpinning Sekisui Chemical Group's growth and profitability as well as efforts toward the maximization of corporate value.
For that reason, Sekisui Chemical Group endeavors to secure strategic IP that supports our business activities, as well as to maintain and mange any acquired IP. Meanwhile, we conduct periodic investigations to avoid infringing upon the IP rights of others, and take appropriate measures to avoid and prevent others from infringing upon the IP rights of Sekisui Chemical Group. In order to thoroughly implement these measures, we have prepared several educational programs tailored to the level and needs of participants, from the acquisition of basic knowledge to strategy building, and conduct Group-wide educational activities relating to IP.

Reasonable Evaluations with Regard to R&DPaying Fair Monetary Incentives for Valuable Inventions

In addition to paying monetary incentives for inventions made by employees, the Invention Grand Prize has been established as one part of our efforts to ensure researchers and engineers receive the evaluations and recognition they deserve. The Invention Grand Prize pays out monetary incentives to inventors employed by the company as compensation for those of their achievements that have made a particularly large contribution to profits.

Major Initiatives

Upgrade of Legal Affairs StructureReinforcement of Global Legal Affairs Structure

Sekisui Chemical Group has been reinforcing its legal affairs structure by developing and deploying legal personnel, strengthening collaboration among legal departments and enhancing legal functions.
In fiscal 2017, employees responsible for legal affairs at Sekisui Europe B.V. and Sekisui Southeast Asia Co., Ltd., our regional headquarters in Europe and Thailand, respectively, took up new posts. Initiatives undertaken during the Compliance Reinforcement Month in Japan have also been extended to the US and China. In fiscal 2018, initiatives undertaken during the Compliance Reinforcement Month were extended to the Southeast Asian and European regions.

Compliance Reinforcement MonthConducting Educational Programs in the Three Areas of Quality Fraud, Labor Management, and Information Management

In fiscal 2014, we decided that October of each year would be Compliance Reinforcement Month, to give all employees the opportunity to reflect on their compliance awareness and actions.
In fiscal 2018, we conducted educational programs covering the three areas of quality fraud, labor management, and information management.

Initiatives Taken During Compliance Reinforcement Month in Japan (FY2018)

  • 1.
    Disseminated the President’s Top Message
  • 2.
    Introduced the Compliance Reinforcement Month activities from the European and Southeast Asian regions in Group newsletters
  • 3.
    Implemented all types of compliance training / Held an open-style legal seminar in which employees participated of their own accord (8 locations, 11 times in total)
  • 4.
    Conducted e-learning / Implemented e-learning on the Company intranet (questions centered on quality fraud and information management)
  • 5.
    Compliance Implementation Report by frontier leaders
  • 6.
    Distributed Compliance Posters in 9 languages to business sites in Japan and overseas

< Other compliance training >

  • 1.
    Implemented education programs conducted by visiting staff at business sites where there had been several compliance issues
  • 2.
    Provided educational opportunities at business sites in Japan where the opportunities were deemed insufficient

Marketing CommunicationsLegal Compliance with Regard to Advertising and Labeling

When conducting business activities, Sekisui Chemical Group strictly adheres to laws and regulations while engaging in good-faith marketing activities. In fiscal 2018, there were no cases of serious violations of laws, regulations or internal rules to report within the context of marketing communications related to advertising and product labeling.

Handling Measures for Antitrust Laws

At Sekisui Chemical Group, we have been operating a business organization membership payment system, a pre-application and follow-up report system for competitor contact, and a price revision committee system since 2007 as a compliance program for antitrust laws. The implementation status of these systems is audited yearly, and the program is revised as needed. We are currently working to expand these systems to Group companies, and the introduction of the program was completed at domestic business companies with high cartel risk in fiscal 2018. There were no cases of major violations of antitrust laws in fiscal 2018.

Respect for Human Rights

Management Approach

Basic ConceptStriving to Respect the Human Rights of All Individuals Affected by Business Activities

At Sekisui Chemical Group, we consider it our duty to advocate for the human rights of all people affected by our business activities. Nowadays, the enaction of rules and laws related to human rights continues to progress both inside and outside of Japan, and human rights issues are getting increasing attention in society. In these conditions, we consider human rights initiatives for not only employees of the Group but also our business partners and other stakeholders to be essential for solidifying our sustainable management platform.

Human Rights Policy FormulationNewly Formulating Sekisui Chemical Group “Human Rights Policy”

Sekisui Chemical Group began formulating Sekisui Chemical Group “Human Rights Policy” in October 2018. Subsequently, we have established a new Human Rights Policy in June 2019 after implementing a human rights risk assessment and approval at a meeting of the Board of Directors. This policy has been disclosed on this CSR Report.
Unlike the earlier Sekisui Chemical Group Personnel and Human Rights Policy, which mainly focused on Group employees, the new Human Rights Policy is different in that it proposes to firmly respect human rights across the board, including the value chain beyond the Group, in compliance with the Guiding Principles on Business and Human Rights adopted by the United Nations Human Rights Council.
Going forward, we will work to achieve an understanding of and instill this new Human Rights Policy among all employees of the Group, as well as our suppliers and business partners.

Response to UK Modern Slavery ActDisclosing Sekisui Chemical Group “Modern Slavery Statement”

Sekisui Chemical Group formulated Sekisui Chemical Group Modern Slavery Statement in September 2019, which was approved at a meeting of the Board of Directors.
This statement is made pursuant to section 54 (1) of the UK Modern Slavery Act 2015, setting out the actions taken by Sekisui Chemical Group, to prevent any forms of modern slavery and human trafficking in any part of its business or its supply chains.

Identifying Human Rights Risks Within the GroupEmploying a Specialized Agency to Assess Human Rights Risks in Primary Business Activities

In November 2018, we employed an external specialized agency (Verisk Maplecroft*1) to conduct a human rights risk assessment among the primary business activities of Sekisui Chemical Group. On the basis of 10 human rights issues, this agency calculated a human rights risk score for four industries, namely Homebuilder, Auto Parts, Industrial Machinery and Goods, and Pharmaceutical. Moreover, the results, which take into account the risks of each country in which Group companies are located, confirmed that Sekisui Chemical Group business activities, particularly overseas (China, India, Thailand, Brazil), held a potentially high risk of human rights violations in terms of occupational health and safety, etc.

10 Human Rights Issues in Primary Business Activities
(1) Child labor (2) Fair wages, (3) Fair working hours, (4) Discrimination in the workplace, (5) Modern slavery*2 (6) Freedom of association and right to collective bargaining, (7) Rights of indigenous peoples, (8) Rights relating to property, assets, and housing, (9) Occupational health and safety, and (10) Right to privacy

Industry Priority Country (Latent) Priority Issues
Homebuilder Thailand
  • Modern slavery
  • Occupational health and safety
  • Fair wages
Auto Parts China
India
Brazil
Thailand
  • Fair wages
  • Modern slavery
  • Occupational health and safety
Industrial Machinery and Goods China
Thailand
  • Occupational health and safety
Pharmaceutical China
  • Occupational health and safety
  • Right to privacy
  • *1
    A risk analysis and research corporation with a global perspective and knowledge of human rights, economic, and environmental risks.
  • *2
    The definition of slavery in the modern era as established in the UK Modern Slavery Act 2015. Primarily refers to (1) slavery, servitude, forced or compulsory labor, (2) human trafficking, and (3) exploitation (sexual exploitation, organ harvesting etc.).

Identifying Human Rights Risks within the GroupImplementation of Internal Interviews Based on Risk Assessment Results

Since February 2019, we have been implementing interviews of related internal staff with third parties (Caux Round Table Japan*). By carrying out these interviews regarding countries with high latent risks identified in human rights risk assessments and with staff at the Group who have experience stationed in Thailand, China, and India, as well as related internal departments, we confirmed whether there was any gap between the assessment results and actual business conditions at the Company.
Interview Results

  • Awareness of safety at overseas production companies is high and safety activities have taken hold
  • Positive conditions such as a lack of discrimination toward immigrant laborers, foreigners, and women working there were identified at the Group companies involved in the interviews
  • Although headquarters-led CSR procurement survey are implemented for suppliers, no supplier checks were performed from the perspective of human rights at the site level
  • Some overseas production companies have factories that use a large number of temporary workers (fixed-term employees)

As per above, some of the findings indicated issues requiring further confirmation of on-site conditions.
Moving forward, Sekisui Chemical Group will identify possible human rights burdens which could be imposed on society and aim to build a human rights due diligence framework which can prevent and reduce the impact of these problems.

  • *
    A non-profit organization with a network of a variety of CSR initiative organizations both inside and outside of Japan and extensive experience with support programs for initiatives to reduce human rights risks within corporate supply chains

Business Activities That Respect Human RightsDeepening Understanding of Human Rights, Implementing Business Activities That Respect Human Rights

Along with its suppliers, Sekisui Chemical Group engages in business activities that respect human rights as part of its obligation to all stakeholders. All Group employees are provided with a copy of the Company’s Compliance Manual. We have set strict standards for respecting human rights, prohibiting discrimination, preventing harassment, and protecting personal information. We conduct training and e-learning sessions for employees about the prevention of all forms of harassment. We work diligently to raise the understanding and awareness of such issues among all of our employees.

Preventing HarassmentConducting Educational Programs for the Purpose of Preventing Harassment

In order to prevent power, sexual, maternity, and other forms of harassment, Sekisui Chemical Group continues to cover harassment prevention as part of its compliance educational programs during employee rank-based training, including new employee and newly appointed manager trainings. In this way, we provide knowledge for preventing harassment tailored to each rank and position. We also periodically provide harassment training as part of field-based educational programs.

Assessing the Human Rights Situation at Our SuppliersCaring About Human Rights Issues Across the Entire Supply Chain

Through CSR procurement with our suppliers, we make sure our business partners respect human rights. In order for our suppliers to understand the Group’s procurement policy, including respect for human rights, we have produced English and Chinese translated versions as well as the Japanese version and are promoting the process of making procurement policies available in a variety of languages, such as by posting them in Japanese and English on our websites.
With regard to suppliers that do not meet the prescribed standards, a request is made to ensure that the necessary steps are taken to resolve any issues. Sekisui Chemical Group works together with suppliers in the implementation of appropriate measures. We are making progress with the development of mechanisms, designed specifically for our overseas business partners and suppliers, to encourage improvements via our regional headquarters.

Major Initiatives

Internal Deliberations During Human Rights Policy FormulationInviting External Specialized Agencies to the Human Rights Policy Formulation Workshop

As part of our initiatives related to formulating the new Human Rights Policy, in December 2018 we held the Human Rights Policy Formulation Workshop. This workshop was attended by each of the headquarters’ Group department managers.
Under the guidance of external specialized agency (Caux Round Table Japan), participants considered the association between our mission (3S Principles/Group Vision, etc.) and human rights issues, the policy’s scope of application, and norms, laws, and ordinances that must be referenced during policy formulation, among others. In this way, participants confirmed that taking on the challenge of preparing a human rights policy must first consider a wide range of risks while taking the business characteristics and features of Sekisui Chemical Group into account.

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Scenes from the Human Rights Policy Formulation Workshop

Initiatives Geared Toward SuppliersConducting CSR Procurement Surveys

Guided by its procurement policy, Sekisui Chemical Group has been conducting surveys as a part of the process to select new suppliers in Japan since 2007.
Through these surveys, the Company works to ascertain the stance of each supplier toward human rights and environmental protection as well as the status of each supplier’s CSR activities. In fiscal 2017, we formulated and put into effect CSR Status Survey Guidelines for Suppliers, which are geared toward the raw materials procurement departments at each divisional company.
Following upon the survey implemented in fiscal 2017, in fiscal 2018 we assessed the status of human rights related initiatives among the major suppliers for Group Companies in the Asian and Oceania regions by implementing the CSR procurement survey. As a result, we confirmed that no major human rights infringements, including child labor and forced labor, occurred at our major suppliers.

Initiatives Geared Toward EmployeesImplementing Human Rights Training and Education

Sekisui Chemical Group conducts training and educational programs focusing on the theme of human rights for its employees. In this manner, the Group is endeavoring to engage in management that takes into consideration concerns regarding human rights.
We incorporate content that raises awareness about human rights issues, such as forced labor, child labor, harassment, etc., in particular in training carried out at career milestones, such as when joining the Company or upon promotion.
In fiscal 2018, we invited a lawyer with a strong background in harassment issues from outside the company to hold lectures on the theme of harassment during the Headquarters Compliance Training implemented at each headquarters business site. These training sessions were held at four business sites in Tokyo, Osaka, Tsukuba, and Kyoto, and were attended by a total of 191 employees.
In addition, training programs that aim to prevent all forms of harassment are held every year. In fiscal 2018, 722 employees participated in these programs.

Addressing the Issue of Conflict Minerals“Conflict Minerals Survey Guidelines" Put into Effect

Sekisui Chemical is concerned about the conflict mineral problem, namely the mineral resources controlled by armed forces in the Democratic Republic of Congo and neighboring countries that commit human rights violations and destroy the environment. We conduct surveys on the use of conflict minerals at companies throughout our supply chain from a CSR perspective.
We put our “Conflict Minerals Survey Guidelines” into effect in April 2017. These guidelines were newly formulated for each Group division* responsible for receiving survey requests for conflict minerals from suppliers and for conducting the surveys.
In fiscal 2018, we conducted 569 conflict mineral surveys (as of June 18, 2019) at Sekisui Chemical's Urban Infrastructure & Environmental Products Company, High Performance Plastics Company, and the Group companies of each. We were unable to identify any conflict minerals among the surveyed companies. However, there were some issues such as the smelting facility being unclear for 2 of these surveys. These surveys will continue to be implemented in fiscal 2019.
In addition, we provided instructions and began implementation of the Conflict Minerals Survey Guidelines in fiscal 2018 at Sekisui Polymatech Co., Ltd., a member of Sekisui Group since August 2017.

  • *
    For the quality control department of each divisional company factory and the quality control departments of affiliated companies or affiliated company factories

Addressing the Procurement of Timber MaterialsStarted Implementation of Timber Procurement Survey Guidelines

We have been implementing Timber Procurement Surveys for Housing Company suppliers since fiscal year 2015, and Timber Procurement Survey Guidelines for the procurement departments of each divisional company were established in 2017. Implementation of the guidelines began in April 2018.
In order to contribute to the eradication of deforestation as well as the sustainable use of timber resources, every effort is made to ensure that the timber used in products is logged in accordance with statutory and regulatory requirements (FSC etc.).
In fiscal 2018, we conducted a survey based on the Timber Procurement Survey Guidelines for all companies. The results confirmed that all of the timber was logged in accordance with statutory and regulatory requirements for the business partners (39 companies) of the Housing Company. In addition, testing surveys were started for the paper products purchased by the High Performance Plastics Company (craft paper, release paper) at the same time, and the Timber Procurement Survey Guidelines were revised for applicability to paper product testing surveys.

Performance Data

e-Employees Using the e-learning System Over Time

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Employees Using the e-learning System Over Time

  • Average values for four sessions conducted in each year. However, the third and fourth sessions were underway during fiscal year 2018 when this chart was created, so the average value for sessions one and two is provided for that year.
  • With the exception of overseas local hires, all Sekisui Chemical and Sekisui Chemical Group employees are required to take part in e-learning programs.

List of Results Relating to Compliance Training

Fiscal Year 2018 List of Results Relating to Compliance Training

Training Training content Trainees Attendance
Sekisui Chemical Co., Ltd. Group companies
Domestic Overseas
Regular training Training for new employees   143
Training for new managers   210
Training for specific employee ranks Training for employees in their 3rd year     19
Newly appointed senior management training   48
Newly appointed assistant manager training   200
Newly appointed executive officer training     4
Executive officer training     29
Affiliated company
full-time directors training
    48
Training for new auditors at affiliated companies     11
Training for those responsible for management     14
Training for those responsible for compliance     29
Training for compliance promotion committee members     19
Training for auditing office supervisors   58
Area-specific training Compliance training   1263
Harassment preventing training   722
Export controls training   240
Act against Delay in Payment of Subcontract Proceed, etc. to Subcontractors training   154
Bribery prevention training     48
Training in Act against Unjustifiable Premiums and Misleading Representations     47
Stamp Tax Act training     30
Risk management training     257
Mental health training   26
Accounting training   17
Human rights training     168
Contract fundamentals training   40
Information management training     43
Global training Training for prior to overseas transfers   29
Compliance training     34
Compliance Reinforcement Month Domestic training   1102
North America training     711
China training     446
Southeast Asia training     275
Europe training     40

Number of Whistleblowing Cases and Consultations

Fiscal Year 2018 Number of Whistleblowing Cases and Consultations

Reports/consultations Number of cases
Power harassment 44
Working conditions 34
Sexual harassment 6
Workplace environmental concerns 7
Misuse of expenses 5
Sales methods related 0
Misrepresentation of work performance 2
Incidents with business partners 0
Others 14
Total number of complaints 112

DonationsDonations Relating to Governmental Policies

Donations (made by Sekisui Chemical non-consolidated) to industry bodies and political groups for fiscal 2014 to fiscal 2018 are as follows:

(Thousands of yen)
FY2014 FY2015 FY2016 FY2017 FY2018
18,681 18,936 19,050 22,909 23,596