2008...shin-etsu chemical environmental and social report 2008 2008 environmental and social report...

2008Shin-Etsu Chemical Environmental and Social Report

2008 Environmental and Social ReportPublished in September 2008Shin-Etsu Chemical Co., Ltd.6-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-0004, JapanURL: http://www.shinetsu.co.jp/

For further information regarding this report,please contact the Public Relations Department,Shin-Etsu Chemical Co., Ltd.Phone: +81-3-3246-5091Fax: +81-3-3246-5096E-mail: [email protected] opinions, inquiries, and request regardingthis report are welcomed at our website:URL: http://www.shinetsu.co.jp/e/profile/kankyo.shtml

Editorial PolicyThis Environmental and Social Report has been prepared to in-form you of the environmental activities and achievements of the Shin-Etsu Group and its approach to CSR. The report also provides an overview of our responsible care activities. Further-more, the report introduces U.S. subsidiary Shintech Inc. in its feature on the environmental activities of the Group’s overseas subsidiaries (p.35–36.) In editing the report, we have referred to the Environmental Accounting Guidelines and the Environmen-tal Reporting Guidelines prepared by the Ministry of the Envir-onment, Japan.

Period Covered by the ReportFrom April 1, 2007 to March 31, 2008 (Regarding the challenges and approaches mentioned, some information to cover the near fu-ture is also included.)

Organizations Covered by the ReportShin-Etsu Chemical Co., Ltd. and the Shin-Etsu Group companies are all covered. The scope of the data collection carried out is as follows:

1. Environmental Activity Report11 Companies: Shin-Etsu Chemical Co., Ltd., Shin-Etsu Handotai Co., Ltd., Nagano Electronics Industrial Co., Ltd., Naoetsu Electronics Co., Ltd., Mimasu Semiconductor Industry Co., Ltd.,Shin-Etsu Quartz Products Co., Ltd., Yamagata Shin-Etsu Quartz Co., Ltd., Fukui Shin-Etsu Quartz Co., Ltd., Nissin Chemical Industry Co., Ltd., JAPAN VAM & POVAL CO., LTD., and Shinano Electric Refining Co., Ltd.

2. Environmental AccountingShin-Etsu Chemical Co., Ltd.

3. SocialityShin-Etsu Chemical Co., Ltd. and consolidated accounting companies, including those overseas but excluding the Shin-Etsu Polymer Group, are all covered.

Notes: For the report of the Shin-Etsu Polymer Group, please refer to the Shin-Etsu Polymer Group Environmental and Social Report 2008.For the publishing date, the division in charge of publishing, con-tact point and URL, etc., please see the reverse cover.

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Table of Contents

Message from the President and CEO

Profile of the Shin-Etsu Group

Restoring Confidence

Highlight 1/Topics

Highlight 2/Shin-Etsu’s Eco-Friendly Products

Management Systems

Corporate Governance

Compliance

CSR Promotion System/

Environmental Management Promotion System

Environmental Charter

Environment and Safety Measures

Shin-Etsu’s Core Environmental and Safety Principles

Emergency Response and Safety Measures

Reducing the Environmental Impact of Business Activities

Input/Output

Environmental Activity Report

Social Activities

Relations with Employees

Communication with Local Communities

Efforts of the Shin-Etsu Group Companies

Shintech Inc.

History of Environmental Activities

RC Verification

CSR VisionThe Shin-Etsu Group supports to the fundamental policies outlined in the Charter of Corporate Behavior of the Japan Business Federation (Nippon Keidanren.) The Group

aims to increase its corporate value in both economic and social terms while upholding respect for human dignity, and giving top safety and environmental protection-first, as

basic guiding principles for its CSR activities.

Corporate Mission StatementTo contribute to people’s daily lives as well as to the advance of industry and society

providing key materials and technologies.

Basic Policies ConcerningCorporate Social Responsibility (CSR)

The Shin-Etsu Group’s mission is to contribute to people’s daily lives as well as to the ad-vance of industry and society providing key materials and technology. To ensure that all companies in the Group achieve this, Shin-Etsu places utmost priority on such core busi-ness principles as product quality and safety, fair competition, good relationships with

the public and governments, careful management and protection of customer data, and sound business practices. By acting in accordance with these principles, Shin-Etsu ensures

steady growth, and greater worth for the whole Group.

The Shin-Etsu Group continues to promote corporate activities while focusing on envir-onments based on our commitment, safety and environmental protection-first, and

strive for being trusted by our stakeholders.

Respecting for human dignity and achieving fulfillment in life, Shin-Etsu endeavors to create a work environment in which all employees can perform their jobs easily and ef-fectively and fully realize their potential. We forbid any discrimination the workplace,

any use of compulsory labor and any use of child labor.

The Shin-Etsu Group is committed to contributing to society and to disclosing accurate and timely information to the public about the business activities and position of the

Group so as to continue to gain the trust and understanding of society.

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Message from the President and CEO

On the occasion of the publication of the “Shin-EtsuChemical Environmental and Social Report of 2008,” Iwould like to report to you on the Shin-Etsu Group’s basicmanagement principles and on their concrete manifesta-tions with regard to our environmental activities and ourefforts to contribute to society.

Towards the realization of Shin-Etsu’s basic manage-ment principlesThe Shin-Etsu Group’s mission is “to contribute to people’sdaily lives as well as to the advance of industry and societythrough the provision of key materials and technologies.”The Shin-Etsu Group’s business operations are based onfair and equitable practices, and are carried out in strictcompliance with each host nation’s laws and regulations.We believe that a corporation fulfills its social responsibilityto contribute to society by making a profit from its fairbusiness operations, paying taxes, and striving to grow anddevelop while endeavoring to satisfy all of its shareholders,customers, clients and local residents in the communities inwhich we operate, and our employees. Accordingly,through each and every one of our daily activities, we areworking to fulfill our corporate social responsibilities.

Safety is our utmost priorityIt is above all important to place the utmost priority onsafety-first in all of our business operations and the factthat we are totally focused on assuring safety and acci-dent-free plant operations. The Shin-Etsu Group has con-sistently placed its highest priority on safety-first as its fore-most management principle in all of its business opera-tions. I have taken every opportunity to urge all of theemployees of the Shin-Etsu Group to make sure that ourcommitment to safety is being thoroughly implemented atall times at each worksite. Despite our consistently strongsafety efforts, an accident involving an explosion and sub-sequent fire occurred at our Naoetsu Plant in 2007. As aresult, we undertook a serious, comprehensive review of allof our safety measures. We proceeded to immediatelyimplement systematic safety inspections, and adopted arange of new safety measures aimed at preventing therecurrence of such an accident at any facility of the Shin-Etsu Group. Furthermore, not forgetting the lessonslearned from this accident, we will make all-out efforts inthe future in our daily business activities to ensure thatsafety continues to be our utmost priority. Among ourManagement Objectives for the fiscal year ending in March2009, we re-emphasized a policy of “avoiding any acci-dents or disasters by means of thorough safety manage-ment in everyday activities.” Towards achieving this objec-tive, we urged that the following five policy steps be con-cretely put into practice:

Fulfilling corporate social responsibilities and aiming to be a company that is trusted by society

September 2008

Chihiro KanagawaPresident and CEO

Shin-Etsu Chemical Co., Ltd

Chihiro KanagawaPresident and CEO

1. We must learn from the Naoetsu Plant accident andnever again cause such an accident or disaster.

2. Managers must always review safety operational manu-als and make sure that all of the recommended proce-dures are followed through.

3. Each and every employee must consider safety as his orher own responsibility, and perform their work activitiesaccordingly.

4. Even when a problem occurs in the production process,employees must never overly speed things up in anattempt to unreasonably make up for a productiondelay.

5. Managers must make the rounds of the production siteevery day, engage in an exchange of opinions withworkers and dedicate their all-out efforts to the promo-tion of safety.

These five policy steps represent guidelines that each andevery one of our Shin-Etsu Group employees must faithful-ly keep foremost in their minds to help the companyassure the achievement of safety as its maximum priority.

At the same time, employees must never forget thatsafety-first is also a promise that we make to society. Withthe Shin-Etsu Group working together to implement thesefive policy steps in order to put in place a system that elimi-nates any possibility of accidents, we will meet the expec-tations of society and thereby be enabled to recover itstrust.

Responsibility towards the global environmentThe Shin-Etsu Group considers that it is the responsibility ofa manufacturer of key materials to steadily supply high-quality products that are essential in everyone’s daily life aswell as for industry. We believe that it is an important partof our mission to efficiently use limited resources to helpachieve a sustainable society that places a strong emphasison environmental protection. In particular, with the start ofthe enforcement of the Kyoto Protocol, the reduction ofgreenhouse gases is becoming a crucial global issue, andthe Shin-Etsu Group, determined to attain its mid-termenvironmental goals, is working all-out to achieve a majorreduction in greenhouse gas emissions.

Furthermore, in our product development and manu-facturing processes, we are focusing on taking appropriatemeasures to comply with all the applicable environmentalregulations and standards. For example, we are continuallymaking strenuous efforts to live up to the trust of not onlyour global customers, but also of all of our consumer end-users. Toward this end, we have acted decisively at an earlystage in carefully following international regulatory trends.We have performed this way in recent years, as more strin-gent environmental regulations for chemical substanceshave come into force, such as the European Union RoHS

(Restriction of Hazardous Substances) Directive, whichrestricts the use of certain hazardous substances in electri-cal and electronics equipment, as well as the REACHRegulation (Registration, Evaluation, Authorization andRestriction of Chemicals) on chemicals, which requires theregistration of the properties of chemical substances.

Strengthening internal controlsAs another key managerial issue, we are proactively work-ing on strengthening corporate governance. In particular,the strengthening of internal controls is an important issuein fulfilling corporate social responsibility, together withimproving management efficiencies and promoting faircorporate activities. In this regard, we are taking such con-crete measures as appointing people with broad, high-levelexperience in company management to a number of posi-tions as external directors and statutory auditors. To carryout internal audits, we have established an AuditingDepartment, which operates independently from otheroperational or management departments. In anticipationof the enactment of the Japanese version of the U.S.Sarbanes-Oxley Law, which was passed in April 2008, weput into effect in May 2006 a ”Basic Policy ConcerningInternal Compliance“ and introduced a strict, reinforcedinternal-control system.

The Shin-Etsu Group is carrying out a wide range of busi-ness activities around the world.

We believe that these global corporate activities them-selves are the means through which we fulfill our corpo-rate social responsibilities. We always endeavor to appro-priately disclose information about the business operationsof our company and continue to strive to promote a highlevel of transparency about our corporate activities. In thefuture as well, by continuing to nurture the developmentof various new technologies and key materials that con-tribute to the development of people’s daily lives, industryand society, we will endeavor to maximize the worth ofthe Shin-Etsu Group. Through carrying out highly transpar-ent corporate activities, we will strive to fulfill our corporatesocial responsibilities and aim to become a company that istrusted by society.

30Companies

Asia/Oceania

57Companies

Japan

1Company

CentralAmerica

11Companies

Europe

14Companies

NorthAmerica

Principal Shin-Etsu Group Companies Japanese Domestic Group

Shin-Etsu Chemical Co., Ltd., Shin-Etsu Handotai Co., Ltd., Shin-Etsu Polymer Co., Ltd., Shin-Etsu Engineering Co., Ltd., Nagano Electronics Industrial Co., Ltd., Naoetsu Electronics Co., Ltd., Shin-Etsu Astech Co., Ltd., Mimasu Semiconductor Industry Co., Ltd., Shin-Etsu Quartz Products Co., Ltd., Kashima Vinyl Chloride Monomer Co., Ltd., others

Overseas GroupShintech Inc., Shin-Etsu Handotai America, Inc., S.E.H. Malaysia Sdn. Bhd., Shin-Etsu PVC B.V., SE Tylose GmbH & Co. KG, Shin-Etsu Handotai Europe, Ltd., Shin-Etsu Handotai Taiwan Co., Ltd., others

Note: The profile of the Shin-Etsu Group includes the Shin-Etsu Polymer Group.

Technology and Key Materials Provided by Shin-Etsu

Guide to Materials

PVC

Silicones

Optical fiber coating

Liquid fluoroelastomersPolymerization

technology

Photoresists

High-purity organometallics

Cellulose derivatives

Aromatic chemicals

Synthetic pheromones

Epoxy molding compounds

Silanes

Organicsynthetic

technology

Rare earth

Rare earth magnets

Silicon metal

Powdering,sintering

technology

Flexible copper-clad laminates

Pellicles

Plasticand film

processing

Synthetic quartz

Pyrolytic boron nitride (PBN)

Chemicalvapor

depositiontechnology

Chlorides, caustic sodaElectrolytictechnology

Semiconductor silicon

Compound semiconductors

Oxide single crystal

Optical Isolators

Single-crystalgrowing

technology

Product Information

Financial Highlights

Note: Final accounts include the Shin-Etsu Polymer Group.

Net Sales(Billions of yen)

Consolidated net sales

Operating Income(Billions of yen)

Net Income(Billions of yen)

As the world's leading supplier of semiconductor-related materials, we provide a diverse range of items that are in-dispensable to the manufacture of silicon wafers and semiconductors. We also deal in synthetic quartz photo-mask substrates, gases, chemicals and jigs used in their manufacture.

Non-consolidated net sales

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1,500

2008/32007/32006/32005/32004/30

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150

200

250

300

0

50

100

150

200

832.8

1,304.71,376.4

967.5

520.3

1,127.9

582.4697.2 708.6

482.6

Consolidated operating income

Non-consolidated operating income

2008/32007/32006/32005/32004/3

Consolidated net income

Non-consolidated net income

2008/32007/32006/32005/32004/3

Semico

nd

ucto

rm

aterials

We respond to a wide range of needs in the architecture and civil engineering fields by providing such building/civil engineering items as sealing materials, coating materials and admixtures.

Through a wide range of products including silicones, rare earth magnets and liquid fluoroelastomers, we con-tribute to the improved performance, function and reli-ability of such devices as electrical home appliances, com-munication equipment and computers.

Electron

icm

aterials

Such products as our PVC, silicones and synthetic phero-mones help save resources, conserve energy and reduce environmental impact.

Using both natural and synthetic quartz as a base, we de-velop a diversified range of optical materials, including synthetic quartz preform for optical fibers and assorted optical parts. We supply a wide range of items, from raw materials to processed products.

Op

ticalm

aterials

Because of their diversity and varied characteristics, our products are expected to be crucial for the development of new automobile technologies in the areas of improved reliability size and weight reduction, as well as environ-mental responsiveness.

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93.2

115.0

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154.0

183.6

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151.7

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241.0

287.1

Arch

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aterials

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materials

Enviro

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aterials


As of March 31, 2008, the Shin-Etsu Group comprisedShin-Etsu Chemical Co., Ltd., 96 subsidiaries and 16affiliates. Shin-Etsu Chemical Co., Ltd., and its sub-sidiaries and affiliates share responsibility for sales,manufacturing and other operations, and cooperate todevelop their respective business activities.

Our business fields are divided into three businesssectors: Organic and Inorganic Chemicals, ElectronicsMaterials, and Functional Materials and Others. Each

business sector offers products that either have thelargest global market share, such as PVC, semiconduc-tor silicon, photomask substrates for LCDs, and rareearth magnets for hard disk drives (HDDs,) or have thelargest market share in Japan, such as silicones.

The Group’s products are used in countless every-day applications and are integral to the advancement ofsociety.

By achieving a globally unrivalled level of technology, quality andcost competitiveness, and through our proactive efforts in CSRactivities, we aim to be a Group of companies that society can trust.

Profile of the Shin-Etsu Group

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Restoring Confidence

To ensure that 2008 is our base year for restoring confidence, we are goingabout our safety management activities with a certain sense of urgency.

On March 20, 2007, an accident occurred at the methyl-cellulose manufacturing facility of Shin-Etsu Chemical’s NaoetsuPlant in Niigata Prefecture, Japan, involving an explosion and subsequent fire. In line with its management policy ofputting safety and environmental protection-first, the Shin-Etsu Group is resolved to prevent a recurrence and is makingevery effort to restore confidence.

President Kanawaga, personnel in charge of environmental control and safety assurance, and managers in charge of man-ufacturing at various plants met to reflect upon the Naoetsu Plant accident and reconfigure the Company’s systems toprevent a recurrence. Panel members discussed a variety of topics, ranging from routine safety management to specificsafety measures. In keeping with its resolve to make 2008 the base year for restoring confidence, the Shin-Etsu Groupoutlined specific actions for putting safety first.

Ongoing reviews of safety procedures, absentthe overconfidence stemming from a previouslack of accidents

Takahashi: On March 20, 2007, an accident occurredat the methyl-cellulose manufacturing facility of Shin-Etsu Chemical’s Naoetsu Plant in Niigata Prefecture,Japan, involving an explosion and subsequent fire. Weare in the process of facing head-on the problems thatwere the background for this accident, and we arepulling together as a Group to formulate safety mea-sures and systems to preclude such an accident fromrecurring. During today’s panel discussion, I would likefor us to reflect back on our everyday safety activities aswe work to enhance our safety system. Endo: The accident that took place at the NaoetsuPlant disturbed the local community, our business part-ners, shareholders and other stakeholders. Again, Ioffer my apologies. Typically, the plant’s cellulose pro-duction process takes place in an atmosphere whereworkers wear antistatic shoes and clothing that pre-vents electrostatic buildup; a variety of electrostatic pre-vention and other safety measures are in place. Thisaccident resulted from a source that we had not recog-nized as a safety issue.

Now I recognize that the sense of security that aris-es from an absence of accidents can be quite danger-ous. It is important to determine, without having pre-conceived notions, methods of handling dangeroussubstances and powders, as well as understanding suchfactors as explosion characteristics and the ignitionenergy of static electricity. We must constantly pursuetechnical measures to counter such characteristics.Reflecting on this accident, I recognize the need toreview the way we handle combustible substances thatare suspended in air.

Based on the president’s instructions immediatelyfollowing the accident, we conducted checks of allfacilities and processes.

We also distributed questionnaires to all workerswho are involved in the plant’s daily operations, receiv-ing 3,069 comments from 1,440 people in the Naoetsu

area. These comments covered a host of topics, includ-ing equipment improvements, training and education.As of November 2007, we had addressed 90% of thetopics that were raised.

Sharing safety information involving close-callincidents and plant patrols

Kaneko: At the Takefu Plant, as well, we formed acommittee to conduct a comprehensive check andreview factory safety. To elicit a wide range of views,we drew participants from a broad pool of people,including the plant manager, the Safety AuditCommittee Chairman, the Environmental Control andSafety Department Manager, plant workers andresearchers. We followed up by introducing specificsafety measures as needed.

In October 2007, we began disclosing on theCompany Intranet and website information involvingclose-call incidents at each plant. Benefiting from thishorizontal development, at the Takefu Plant werespond to situations similar to those that other plants

have experienced. Supervisors also patrol the plant con-tinuously, keeping a constant lookout for unsafe activi-ty. They keep records of points that require caution andshare this information throughout the plant.

Using HAZOP* to keep an eye out for dangerOseki: Whenever we construct new facilities or addequipment, engineers and other personnel maintain aconstant safety awareness at all stages from conceptu-alization to design and processing. Despite this vigi-lance, some factor that nobody recognized can cause aloss of safety. We have introduced the HAZOP method-ology to prevent such oversights. At the GunmaComplex, we involve a range of members in HAZOP,including engineers, production line personnel, opera-tors and the Environmental Control and SafetyDepartment. We conduct detailed evaluations through-out the plant, involving every piece of equipment andeach system. We look for what could go wrong in cer-tain environments and decide how we would respond ifa problem did arise. If we cannot answer those ques-tions, we create additional response measures. Theaccumulation of these processes over time raises theoverall safety level.

The diverse makeup of the teams that participate inHAZOP means that we are paying attention to safetyfrom a wide range of perspectives.

Important is preventing accidents, not earningcertifications

Kojima: Kashima Vinyl Chloride Polymer is now in itsfifth year as a licensed supplier or high-pressure gases.Operating in a society that is making an overall shiftfrom regulation to voluntary safety assurance, we arebeginning to solidify the way we think about voluntarysafety assurance. Specifically, our system involves havethree administrative divisions—safety assurance, facili-ties and operations. We have created a managementsystem for certify the systems and operations of each.In principle, all procedures are documented and subjectto rules of operation. Under this system, equipment ismanaged to operate for a two-year period without reg-ular maintenance, assuming that equipment has a cer-tain expected life remaining and that safety tests areconducted during operations. Under the certification

system, on the other hand, equipment must berenewed every five years. Maintaining certificationinvolves personnel time and expenditures. We benefitat least as much from ensuring two years of continuousoperation.

Of course, we must exercise caution when puttingequipment back into operation following regular main-tenance. Detailed plans and well-established measuresare needed to ensure that appropriate confirmationmeasures are in place. We also have to remain alert forsigns of irregularity.

Raising operating levels through OJTEndo: At the Naoetsu Plant, our efforts to prevent dan-ger focus on operator training. The manufacturing divi-sion that I manage has a single integrated instrumentroom for four plants. We conduct training on a rotatingbasis, lasting approximately six months for each plant.This on-the-job training (OJT) helps operators learntechnical skills. In addition, all employees participate indialog aimed at evaluating safety measures and elimi-nating waste at facilities, as well as enhancing operat-ing efficiency through such efforts as improving logis-tics. We implement proposed improvements that havebeen introduced in this way.

I believe that OJT is the key to operator training.The sort of training we conduct in this example main-tains a sense of urgency for both the trainer and thetrainee. It gives both the opportunity to go about theirjobs with a fresh outlook, and I believe this approach iseffective from the standpoint of assuring safety. Wewill continue operating on this rotating basis within ourproduction division. In the future, I would like to createa system whereby all personnel become capable ofoperating all plants.

Work safety is enhanced by each person main-taining a sense of urgency

Takahashi: From my point of view, plant safety assur-ance relies on two important underlying aspects of pro-duction: safety technologies and routine safety man-agement. By safety technologies, I mean the widerange of production technologies spanning all process-

Panel Discussion

* HAZOP (Hazard and Operability Study):HAZOP is designed to facilitate improvement in work procedures andfacilities by anticipating potential malfunctions in manufacturing facili-ties and the resultant environmental pollution brought about by changesin operating conditions. HAZOP is conducted whenever a new facility isat the design stage, and is implemented by the designers and managersto ensure that a high degree of safety is designed into the facility rightfrom the start. Existing facilities are also subject to HAZOP, in whichtheir operators participate, and this is reflected in the improvementsmade to operating procedures and facilities.

From left: Ken Nakamura, Chihiro Kanagawa, Kiichi Habata, Masaharu Takahashi, MikioEndo, Fumiaki Kaneko, Hideaki Oseki, Shohei Kojima, Ryoichi Ishizaki

Chihiro Kanagawa, President and CEOKiichi Habata, Managing Director in Charge of Environmental Control andSafety AssuranceKen Nakamura, Director and Public Relations Department ManagerMasaharu Takahashi, Manager, Environmental Control and SafetyMikio Endo, Manager, No. 2 Manufacturing Department, Naoetsu PlantFumiaki Kaneko, Manager, No. 2 Manufacturing Department, Takefu PlantHideaki Oseki, Manager, No. 1 Silicone Manufacturing Department, Gunma ComplexShohei Kojima, Deputy Manager, Kashima Vinyl Chloride Monomer PlantRyoichi Ishizaki, Deputy Manager, Shirakawa Plant, Shin-Etsu Handotai

(Held in November 2007)

Participants

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es from design and operation to facility maintenance.Improvements and enhancements stem from the abilityto project fundamental design concepts into the futureand to incorporate technical successes and processes.

Routine safety management involves workingtogether with people on the factory floor to ensure thatday-to-day production activities deliver products safelyand dependably. Success in this area requires supervi-sors to have a safety mind-set. I consider the experiencegained through risk prediction activities and close-callincidents important, as it allows supervisors to reviewoperations and direct improvements.

Applying safety technologies in the workplacerequires supervisors to communicate closely with eachperson who works there. I believe that a cheerful envi-ronment is essential to their success.Habata: I hope to make 2008 the base year for recov-ering trust in our manufacturing departments. Just afterthe accident, in line with the president’s instructions weconducted thorough checks. This situation created asense of urgency for all of us and brought about somemajor breakthroughs. I believe that this sense ofurgency is important. Rather than this being a one-offsituation, I would like us to maintain an ongoing senseof urgency that becomes a part of our daily activities. Ibelieve that this sense encourages us to pay closerattention, reviewing and studying our work, which ulti-mately becomes more fulfilling. A sense of urgency fos-ters better awareness of everyday issues and a greatersense of mission. If we can all approach our work witha sustained sense of urgency, I am confident that wewill succeed in making this our base year for restoringconfidence.Kanagawa: The phrase “putting safety first” is morethan just words. It means placing an importance onmaking sure that accidents do not actually occur, andensuring that everybody works toward that end everyday. I use this phrase on any number of occasions andalways list it at the top of my management objectives.What is important is not the sense of satisfaction thatthings have remained safe in the past. Rather, we mustimplement safety measures on a daily basis to keep

accidents from actually occurring. The people on the factory floor are the ones who

have the best-developed precognition of danger, so it isessential for managers to create an organizational andworkplace atmosphere that encourages them to com-municate such information. We need to foster thisatmosphere with phrases such as, “Thank you for shar-ing that useful information.” Managers must actuallyfeel this to be the case, rather than being annoyed, inthe sense of “What is that person going on about thistime?” Fostering that sort of atmosphere prevents amanager from knowing what is happening on the fac-tory floor.

I would like to ask everyone first to review thor-oughly all manuals, with the eyes of a specialist, tomake sure that nothing is missing or defective. Wemust make sure that manufacturing facilities are pro-tected by their manuals and take the responsibility ofcreating solid systems. We need specific systems thatdefine who is responsible for confirming what items.Next, I would ask that you do not skimp on environ-ment-related costs. Make the necessary investments.Even in difficult economic times, we cannot cut back onexpenditures related to safety and the environment.Finally, if things are running behind schedule—forwhatever reason—do not try to do the impossible toaccelerate work back onto schedule. You should nottreat delays as “running behind.” By this, of course I donot mean to encourage slipshod scheduling. Rather,create work plans that have leeway built into them.

In addition, we must carefully study cases of acci-dents that have occurred at other companies. Weshould apply lessons from these examples toward ourown everyday safety management activities. We neednot limit ourselves to examples in within the chemicalindustry. Also look at accidents that have occurred inother industries. It is important for us to learn why suchaccidents happened and take them as points of cau-tion. Even while reading the newspaper, be thinkingwhether there are lessons that you could apply in yourown plant. If you come across case studies that couldapply on a Companywide basis, I want you to sharethese throughout the Group.

The problem with everyday safety management liesin getting all personnel to maintain open minds andshed their preconceived notions. Rather than as just aset phrase, thing of “putting safety first” as words thatwill protect your life. Please, continue to maintain asense of urgency.

The Shin-Etsu Group’s principal safety measures1) The Group has introduced the following mea-

sures to prevent powder dust explosions.• Substitution of nitrogen gas• Antistatic measures• Dust prevention

2) Revising manualsWe are undertaking a thorough review of our manu-als and safety training, confirming as we go thatmanuals are in no way inadequate and striving toraise safety levels.

3) Identifying sources of dangerWe are reviewing work processes to identify thosewith explosion or conflagration potential. As weidentify such sources of danger, we strive to under-stand the type of danger and introduce appropriatecountermeasures.

4) Disclosing close-call incidentsWe have begun disclosing on our website the occur-rence of close-call accidents, in which danger is miti-gated at the scene, in the interest of the propagat-ing safety measures horizontally.

Efforts at the Naoetsu Plant1) Establishing a communication system

We have put in place a hotline system for communi-cating with representatives of the local community inthe event of emergency. The system is designed tominimize the time needed to relay information whenthe unexpected occurs.

2) Reinforcing protective barriersWe have reinforced protective barriers and plantedtrees in green belts between the barriers and housesin the immediate vicinity of the plant to enhance thearea’s attractiveness

Aftermath of the Naoetsu Plant accident1) People who were injured

All 17 people who were injured in the accident havebeen released from the hospital.

2) Cellulose production facilitiesWe are progressing toward the reopening of the cel-lulose production facilities that were shut down fol-lowing the accident. Facility repairs had all beencompleted as of October 2008, and productioncapacity returned to nearly the pre-accident level.

The Company conducted a study to determine the factors leadingto the 2007 accident at the Naoetsu Plant involving an explosionand subsequent fire. I participated in this study, as well as the fol-low-up safety audit in 2008, involving an all-point safety check.During this process, I was given the opportunity to express myown opinions freely. I have witnessed numerous accidents in thepast, which typically occur when appropriate measures have notbeen enacted. In this instance, a host of fundamental improve-ments were indeed in place, including core safety policies. A com-prehensive, Companywide check revealed that although extensivesafety measures were in place at various plants and the Companywas taking an aggressive stance on safety measures, certaininconsistencies were evident at different locations. In addition, weuncovered areas involving processes with poor workability or thatwere inexpertly implemented. Such discoveries indicated room for

Future accident preparedness

safety improvement. Compared to 2007, during the 2008 safetyaudit the various personnel responsible for safety assurance wereclearly more confident. Companywide efforts to enhance riskmanagement were evident, and it was clear that the Companyhad raised the effectiveness of its policies. I consider risk levels tohave been substantially reduced.

As medium- to long-term goals, Ilook forward to the seeing theCompany adopt even more sophisti-cated safety procedures, cultivate itssensitivity toward safety and foster anindependent safety-oriented culture.

Kazutoshi HasegawaProfessor, Faculty of Risk and Crisis Management,

Chiba Institute of Science Graduate School

The Shin-Etsu Group is formulating safety systems and remainsunswerving in its ongoing efforts to restore confidence.All the people who were injured in the Naoetsu Plant accident have now been released from the hospital, and the cellu-lose production facility is back in operation. We are putting in place a variety of safety measures to restore confidence inour operations. At the Naoetsu Plant, such measures include enhancing its system for communicating with local residentsand reinforcing its environmental protective barriers.

Safety Measures

Production of PVC Ecologically Friendly Bags


H I G H L I G H T 1Here we introduce some of the latest Shin-Etsu Chemical environmental and social contribution activities.

Topics

The Shin-Etsu Group has begun manufacturing the Shin-Etsu ECO SEA BAG, an ecologically friendly novelty bagmade from PVC, to highlight this core product’s contribu-tion to the environment.

PVC is made 60% from inexhaustible salts, with theproportion of oil in its raw materials at just 40%.Accordingly, it is cited as a resource-conserving resinbecause of its low dependence on oil. In addition, CO2

emissions during production are low relative to otherresins, it is easy to recycle, and it is rated highly in lifecycleassessments as a material having a low environmental

impact. PVC finds a broad range of applications inprocessed products, such as water pipes, and can be uti-lized in sheet form to produce top-class brand bags. Itstexture, durability and ease of cleaning have gained PVCwidespread acclaim for its practical properties.

The Shin-Etsu ECO SEA BAG features effective utiliza-tion of limited global resources in a strong, durable andlong-lasting product that can be used with peace of mind.The naming of this truly eco-friendly bag alludes to factthat the salts from which PVC is made are derived fromthe sea.

Strong, durable and economical on resources

SEH-Kanagawa Way—a New Street Name for Vancouver, Washington, the United States

The street leading to the gates of our Shin-Etsu HandotaiAmerica, Inc. plant in Vancouver, Washington, the UnitedStates, has changed its name from Northeast 39th Streetto SEH-Kanagawa Way. According to Royce Pollard, Mayorof Vancouver, this initiative was taken through a desire tomake a lasting mark on the region to honor SEH America’smany years of social contributions and the achievements ofShin-Etsu Chemical’s President and CEO, ChihiroKanagawa. In addition, Mr. Pollard has proposed that themain road leading into the plant from SEH-Kanagawa Waybe named Kanagawa Avenue.

SEH America is one of the Shin-Etsu Group’s 300mmwafer production bases, delivering high-quality products tomarkets worldwide. As its business performance hassteadily picked up momentum, the company has devel-oped its contributions to the regional economy and soci-ety. In recognition, President Kanagawa was made anHonorary Citizen of Vancouver In November 2007.

The Shin-Etsu Group has introduced a system whereby itcontributes to employees a portion of the costs ofinstalling PVC window sashes in residences where they liveor that they own. The system provides grants toward pur-chase and installation of PVC window sashes when con-structing, renovating or repairing a property. The Japanesegovernment and the New Energy and IndustrialTechnology Development Organization (NEDO) providesubsidies for PVC window sashes through the High-Efficiency Housing/Building Energy System IntroductionPromotion Program, for which employees are eligibleunder the newly introduced system.

Compared to conventional aluminum sashes, PVClowers thermal conductivity by one third and providesexcellent insulating benefits, which contribute to CO2

reductions through energy conservation. PVC also preventscondensation and noise pollution. For these reasons, PVCis attracting significant attention as a lifestyle-enhancingbuilding material.

We deliver a variety of environmentally friendly materi-als out into the world. Our subsidy system is an approachthat is particularly viable because of our status as a materi-al manufacturer providing products in a wide range offields. The system is designed to raise employees’ environ-mental awareness of and foster their participation in ener-gy conservation activities.

Making an impression on a region through social contributions

Introduction of a PVC Window Frame Grant System

Friendly to both the global environment and household budgets

I have always said that in our local community the role of anengine for greater economic development is necessary, and SEHAmerica is certainly performing that role. SEH America is not onlyan economic asset of the local community, but it is also a wonder-ful friend of Vancouver because of Vice President Tatsuo Ito. It isour pleasure to name the street to commemorate our gratitudeover our long-time relationship and to honor Shin-Etsu Chemical’sPresident Kanagawa.

Royce Pollard, Mayor of Vancouver

“I installed PVC interior window sashes in the living room of ourhouse. From that point on, I’ve had no condensation. I am verysatisfied for that result alone.”

“I had PVC interior window sashes installed in the kids’ roomsto give them a quiet space to study. The sashes serve as a excel-lent noise barrier; It’s unbelievable how little of the disturbancesoutside can be heard.”

Comments from the system’s beneficiaries

H I G H L I G H T 2


The Shin-Etsu Group is striving to reduce environmental impactsand conserve energy and resources through its ongoing develop-ment of environmentally considerate products.

Shin-Etsu Eco-Friendly Products

Pledging energy savings and lifestyle amenity

PVC window sashes

PVC is derived from 60% salts and 40% oil, which ren-ders it a general-purpose plastic with low oil-resourcedependency. Furthermore, high durability and easyrecycling find it broad range of uses as a constructionmaterial.

PVC window sashes are being promoted to con-sumers for their thermal conductivity, anti-condensa-tion and soundproofing benefits. Compared with alu-minum window sashes, PVC facilitates energy savingsand enhances lifestyles, in addition to making a majorcontribution to global warming prevention.

Helping reduce product size and weight

Rare earth magnets

Rare earth magnets contribute to the miniaturization,weight saving and power performance of motors andother electrical equipment through their strong mag-netic intensity. Such factors find them a broad range ofapplications, spanning energy-saving air conditionersand a variety of automobile motors.

Employing rare earth magnets in air conditionercompressor motors improves the coefficient of perfor-mance (COP) by 5% to 10%, bringing energy savingsand CO2 emission reductions, thus contributing toglobal warming prevention. Automotive applicationsinclude the drive components and generators ofmotors for hybrid and fuel cell vehicles and sensors,helping realize reductions in size and weight of compo-nents and promote energy conservation and utilizationof clean energy.

Novel eco-friendly agrochemicals

Synthetic pheromones

Synthetic pheromones are artificial formulations ofthe pheromones secreted by insects that can beapplied as a new weapon in pest control. By dis-rupting communications between pests that areharmful to agriculture, pheromones have the effectof reducing next-generation pests density.

Synthetic pheromones are being increasinglyadopted as innovative alternatives to pesticide forapple and peach crops in Europe and the UnitedStates, and in Japan during the cultivation of fruit,tea, and cabbages and other vegetables. They aregaining widespread attention on account of theirreduced environmental impact, which is significant-ly lighter than conventional agrochemicals.

Aiding atmospheric pollution prevention

Cellulose derivatives

Cellulose derivatives are manufactured from envi-ronmentally friendly natural high-polymer materials.These derivatives are used for appropriate bindersfor moduling automobile components as ceramiccatalyst carrier and diesel particulate filter (DPF.)

Ceramic catalyst carriers function as a purifica-tion system for noxious compounds, using chemicalreactions that convert hydrocarbons, carbonmonoxide and NOx to such harmless substances aswater and nitrogen. DPFs perform almost completeremoval of harmful particulate matter from dieselvehicle exhaust emissions.

PVC window sashes—the choice of theMinistry of the Environment

In October 2006, the Ministry of the Environment took theinitiative over other Japanese government ministries andagencies through the model construction of PVC interior win-dow sashes at the Kasumigaseki Central GovernmentBuilding No. 5 in central Tokyo. The work spans 20 officewindows on the 23rd and 26th floors, covering an area ofapproximately 200 square meters. The adoption of PVC win-dow sashes had imme-diate benefits in termsof reducing thermalconductivity and noise.Moreover, the installa-tion work was praisedfor its simplicity. InApril 2007, PVC win-dow sashes were alsoadded to ministerialand other executiveoffices.

Top three benefits of PVC window sashes

PVC window sashes installed at the Office of the Minister of the Environment

Hydro-carbons

(HC)

Carbonmonoxide

(CO)

Nitrogenoxide(NOx)

Water(H2O)

Carbondioxide(CO2)

Nitrogen(N2)

Chemical conversion of

noxious compounds in exhaust gas to

harmless substances

Catalytic device

Conversion to PVC from conventional aluminum window sashescan result in annual CO2

emissions cuts of morethan 1 ton per house, or300kg per condominium.

If all detached housesand collective housingthroughout Japan adopt-ed PVC window sash sys-tems, the annual reduc-tion in CO2 emissionscould be as high as 35million tons.Source: PVC Siding Promotion Committee

Help prevent global warming

PVC window sashes feature low thermal conductivity with highinsulation benefits. PVC sash/multilayered glass systems can cutheating and air-conditioning costs by 25% to 40%. In a modelcase, this is reckoned as an economy of 35,000 yen per year.

1

Save on expenditures2

Heating and air conditioning cost reduction effects

Aluminum sashes(single-pane glass)

PVC sashes(Low-E multilayered glass)

0 20 40 60 80 100 120(1,000 yen/year)

118

83 35

Condominiums(Per household)

Annual CO2 reduction

298kg

Detached houses(Per household)

Annual CO2 reduction

1,042kg

1. Using national average heat-insulated housing as a model (1980 energy conservationspecifications)

2. Maintaining temperatures of 26°C in summer and 20°C in winter during occupationonly using a heat pump air conditioner.

3. Electricity charges calculated at 23 yen/kWh.Source: Sakamoto Laboratory; Department of Architecture, Faculty of Engineering,

University of Tokyo

PVC window sashes offerexcellent soundproofingqualities. In addition to vastlyreducing outdoor trafficnoise, leakage of interiorsounds, such as voices andmusic, can be constrained. Source: PVC Siding Promotion Committee

Eliminate noise pollution3

Approx.

35dB70dB

Approx.

55dB 90dB

Prevents leakage of interior noise

Cuts intrusion of exterior noise

Outdoors Interior

PVC window sash sound insula-tion characteristics

15 16

Management Systems Corporate Governance/Compliance

S h i n - E t s u C h e m i c a l E n v i r o n m e n t a l a n d S o c i a l R e p o r t 2 0 0 8 S h i n - E t s u C h e m i c a l E n v i r o n m e n t a l a n d S o c i a l R e p o r t 2 0 0 8

The Board of Directors consists of 20 members, four ofwhom are external directors with broad managementexperience. By minimizing the number of members,Shin-Etsu is working to establish a system capable offaster decision-making and more flexible management.

The Board of Directors determines the Company’sfundamental policies, and deliberates and decides uponimportant business operations in light of theCompanies Act and the Company’s articles of incorpo-ration. The Managing Directors’ Meeting engages indeliberation and determination concerning a variety ofother business operations.

We have adopted a statutory auditor system. In orderto improve and strengthen the audit function, three ofthe five auditors are external. Statutory auditors attendnot only meetings of the Board of Directors andManaging Directors, but also other important in-com-pany meetings, and carry out all audits concerning ourbusiness operations. In addition, the auditors hold regu-lar monthly meetings with the Auditing Department,where they receive progress reports on all activities andinternal auditing results, give advice on activity detailsand audit themes, and request further investigationwhen necessary.

The Officers’ Remuneration Committee, chaired by anexternal director and consisting of a further three direc-tors, carries out all deliberation and evaluation of boardmembers’ remuneration and submits its recommenda-tions to the Board of Directors, based on theRegulations of the Officers’ Remuneration Committee.

The Auditing Department is a specific department, ded-icated to taking charge of all matters concerning inter-nal operation audits and internal control systems. ThisDepartment also strives to further strengthen corporategovernance.

Chaired by a managing director, this committee’s role isto identify and take preventive measures regarding thevarious kinds of risk that could possibly occur as a resultof the Shin-Etsu Group’s business operations.

Shin-Etsu will comply with J-SOX from the fiscal yearending March 31, 2009. In preparation, the Companyhas established the Internal Control Promotion Team,which formulated the Basic Policy Statement on InternalControls Related to Financial Reporting in December2007 and is creating other fundamental plans.

Corporate Governance

The enhancement of corporate governance is the most importanttask in CSR management.

•Shin-Etsu’s Corporate Governance Structure

Marketing, Manufacturing, Research & Development and Management Departments

Committees for each main management taskRisk Management Committee, CSR Promotion Committee, etc.

Managing Directors’ MeetingDeliberation over operational issues and their execution, etc.

President & CEO

Board of Statutory AuditorsFive statutory auditors

of whom three are external statutory auditors

Accounting Auditors

Auditing Department

Board of Directors20 members

of whom four are external directors

Officers’Remuneration

CommitteeChairman: External director

* For further details of our corporate governance, please refer to the “Report on Corporate Governance.”URL : http://www.shinetsu.co.jp/j/profile/cg.shtml (Japanese only)

Election/Dismissal Election/Dismissal

CommitteeReport

Election/Dismissal

Election/Dismissal

Reporting

Reporting

Reporting

Auditing

Reporting

Reporting

Reporting

Auditing

Investigation/Guidance Auditing

Reporting

Consent to ElectionJudgment of AccountingAudit Adequacy

Supervision,Election/Dismissal

Advice/RequestInstruction

Instruction/SupervisionInstruction/Supervision

General Shareholders’ Meeting

Board of Directors/Managing Directors’ Meeting Officers’ Remuneration Committee

Auditing on Operation

Risk Management Committee

Internal Control Reporting System

Statutory Auditors

Compliance

The Shin-Etsu Group believes that its obligation to com-ply with laws and regulations in its business activities,and always includes compliance in its periodical man-agerial objectives.

In cases where legal statutes concerning corporateactivities are newly established or revised, the LegalDepartment leads efforts to notify all employeesthroughout the Shin-Etsu Group and conducts explana-tory meetings. In the event that illegal activities are dis-covered at other companies, reminder notices are trans-mitted throughout the Group, with the intention ofcontinually raising awareness of compliance issues.

A Compliance Pledge has been introduced, to be takenby Company directors and employees, all of whompledge to conduct their daily business activities in thespirit of compliance. Anyone who violates the Pledge isseverely punished.

We have set up a Compliance Consultation Office,whose role is to support every staff member of theShin-Etsu Group in conducting their business activitiesin strict compliance with all laws, government regula-tions and in-company rules.

This office strictly protects the privacy of all thosewho use it, ensures that they are not subjected to anydisadvantages, investigates all information obtainedfrom consultations and formulates appropriate counter-measures. Under the Compliance Consultation andNotification Regulations, no one using the Office maybe disadvantaged in any way or lose their job becauseof any consultation or notification.

The Company has developed a fundamental policy con-cerning information security to ensure the confidentiali-ty, safety and stability of its information assets and pre-vent the leakage of important information concerningour customers and business partners. We are construct-ing an information asset management system, haveappointed an officer responsible for information con-trol, and are striving to manage its information inaccordance with established information managementregulations and standards.

In response to the Act on the Protection of PersonalInformation, which came into force on April 1, 2005,we formulated a personal information protection policythat is now posted on the Company’s website*.Moreover, we hold explanatory meetings within theGroup related to compliance with all relevant laws, andare making exhaustive efforts related to the appropriatehandling and protection of personal information.

* Personal Information Protection Policy:URL: http://www.shinetsu.co.jp/j/about/hogo.shtml (Japanese only)

Through the concerted efforts of the Company and all directorsand employees, we are trying to ensure the establishment of athorough and comprehensive system for compliance.

•Flow of Seeking Advice or Reporting Information on Compliance

The relevant departments carryout corrective measures

with the director in chargeof general affairs as

the management representative

Investigation Team(Auditing Department and relevant departments, etc.)

Feedback

InvestigationInspection of the need totake corrective measures

Corrective measures

Seekingadvice

Reportinginformation

ComplianceConsultation Office

(Set up in the General Affairs Dept.)

Acceptance

Thoroughgoing Awareness of Compliance

Information Management System

Protection of Personal Information

Compliance Pledge

Compliance Consultation Office

17 18

Management Systems CSR Promotion System/Environmental Management Promotion System/Environmental Charter


Continualimprovement

Establishment of Policy

Auditing

Imple-men-tation

P

C

A D

Plan

DoAc t

Check

Review


1

2

3

4

5

I. Fundamental PrincipleThe Shin-Etsu Group recognizes that global environmental protection is one of the most important issues facing hu-mankind. We believe in the fundamental principle of pursuing environmental protection in every aspect of our busi-ness activities as we aim to help create a society in which the issue of global warming can be effectively addressed and sustainable development is possible.

II. Action GuidelinesWe strive to accurately anticipate any effects that our business activities might have on the environment, and we comprehensively implement policies focused on the strict control of chemical substances, conser-vation of resources and energy, recycling of materials and reduction of waste products. We endeavor to continually improve the local, regional and global environment.

We fully comply with national and international laws, regulations, and agreements related to the environ-ment. Moreover, we also strive to prevent environmental pollution and work together with local societies to achieve this goal.

In developing new products and technologies, we aim at minimizing any adverse environmental effects from the fundamental research and design phases through to the manufacturing, distribution, usage, and disposal phases.

By means of Group company training programs and internal communications regarding environmental protection, we strive to raise the consciousness of all employees about environmental matters. Further-more, with deep regard for the local, regional and global environment, we promote a wide range of envir-onmental protection activities.

To promote environmental protection activities, we organize to effectively carry out environmental man-agement activities.

CSR Promotion System/Environmental Management Promotion System

By revisiting the very basis of Corporate Social Responsibility, weare now approaching CSR activities with a new outlook.

Since fiscal 2005, we have promoted various CSR activi-ties by establishing the position of Officer Responsiblefor CSR and setting up the CSR Promotion Committee.

Based on the acknowledgment that “CSR is itself acorporate activity,” the CSR Promotion Committeereviews the actions undertaken by Shin-Etsu at a corpo-rate level and ensures that any positive aspects areretained while any points needing to be improved arerectified, and continues to support those activities thatcan further enhance the corporate value of the Shin-Etsu Group.

To further promote and develop CSR Activities at aGroup level, the Committee has made special efforts toassess the status of the promotion of CSR activities inthe Group companies, both in Japan and abroad, andhas focused on improving the promotion system forShin-Etsu, which is seen as the core of promotion activi-ties.

The Group will keep working on CSR promotionactivities while revisiting the original question of justwhat is the social responsibility of a corporate body.

To promote environmental management, we areaddressing specific problems related to environmentalprotection via the Shin-Etsu Group Environment Controland Safety Meeting, chaired by the officer responsiblefor environmental control and safety. With the participa-tion of those persons in charge of environment andsafety, the Shin-Etsu Group Environment Control andSafety Meeting addresses environmental protection andsafety issues affecting the Group as a whole. As forEnvironmental Control and Safety Guidelines and Safetyand Health Guidelines, the Environmental Control andSafety Department of the head office has compiled allthe required guidelines and is in charge of their promo-tion and further development.

The Environmental Control and Safety Departmentsat each plant and business establishment are providingsupport for the manufacturing departments and per-forming public relation activities in association withlocal governments, related governmental offices andindustrial organizations, etc.

Regular environment and safety audits and specialaudits with specific themesare performed and veri-fied in accordance withthe activities of all envi-ronmental and safetyassurance operations.


The Shin-Etsu Group conducts its business activitieswith safety and environmental protection-first as itsbasic corporate philosophy. We place a high priority ontechnological developments capable of contributing tothe reduction of environmental impact, and conductthorough environmental management at all stages,from the design of products and manufacturing facili-ties through to the creation of an efficient manufactur-ing system.

We strive to achieve the above goals by establish-ing objectives in each business and unit based on theEnvironmental Charter. We will continue to pursuesafety and environmental protection-first and imple-ment environmental initiatives contributing to the con-struction of a sustainable society.

Environmental Management Systems

•Shin-Etsu Group CSR Promotion System •Shin-Etsu Group Environmental Management Promotion System

Board of Directors

President & CEO

CSR Promotion Committee(Chairman: Kiichi Habata, Managing Director)

All Shin-EtsuChemical Co., Ltd.

Departments

Companies ofthe Shin-Etsu Group

Board of Directors

President & CEO

Shin-Etsu Group Environment Control and Safety Meeting(Chairman: Kiichi Habata, Managing Director)

All Shin-EtsuChemical Co., Ltd.

Departments

Companies ofthe Shin-Etsu Group

Special environment control and safety audit(conducted at JAPAN VAM & POVAL CO., LTD., in June 2007)

We will keep pursuing safety and environmental protection-firstas the basis of our management, and continue to contribute tothe establishment of a sustainable society.

CSR Promotion System Environmental Management Promotion System

Environment Control and Safety Audits

19 20

Environment and Safety Measures Shin-Etsu’s Core Environmental and Safety Principles


The Shin-Etsu Group is making strenuous effortsto effectively put in place safety measures thattake all possible accidents or disasters into accountThe Shin-Etsu Group has been carrying out security andsafety management at its plants guided by Shin-Etsu’s basicmanagement policy of putting Safety and EnvironmentalProtection-First as its most crucial management objective.However, as a result of the accident that occurred in 2007at the Naoetsu Plant, we have deeply reflected upon thefact that latent safety dangers may still exist and that thereare some safety matters that need to be improved.

During the past year, for all Shin-Etsu’s productionprocesses and ways of working, including those of over-seas Group companies, we have carried out countermea-sures by tracking down all the possible risks of an accidentinvolving an explosion occurring related to the raw materi-als and products that we handle. With these countermea-sures, we believe that safety has been greatly improved.

Moreover, we are seriously undertaking the activitiesof gathering and analyzing information about close-callincidents and safety measures, and we have receivedmany safety improvement suggestions from employeesat our plants. To make sure that the suggestions that weare continuously receiving are immediately and effective-ly utilized for the improvement of worksite safety bymeans of implementing them for the actual productionprocesses and work within the entire Shin-Etsu Group,we have established a registration and access system forthese suggestions on Shin-Etsu’s Intranet, which speedsup the sharing of information and disclosures.

We are implementing measures aimed at creatingsafer worksites in parallel with carrying out risk evalua-tions of plant and work processes.

For many years, we have strengthened our systemsfor dealing with large-scale earthquakes by such meansas establishing a system to speed up information trans-mission through having multiple communication chan-nels, carrying out reconfirmation and reinforcementwork for each plant’s earthquake-resistance strength,and connecting each plant’s safety shutdown systemwith an earthquake recorder, a seismic instrument thatcontinually monitors the Earth’s crust vibration levels.

We are going ahead with new earthquake counter-measures and safety and disaster prevention measuresbased on the BCM (business continuity management)planning concept, which involves a back-up system toprotect all essential company information.

Measures in response to the REACH EuropeanCommunity Regulation on safe use of chemicalsFrom risk to business opportunityOn June 1, 2007, the REACH Regulation, which dealswith the Registration, Evaluation, Authorization and

restriction of chemical substances, came into effect. REACH is a new regulation to require the better and

earlier identification of the intrinsic properties of chemicalsthat are distributed in European Community. UnderREACH, chemical manufacturers are required to make safe-ty evaluations, including the gathering of information onthe properties of all the chemicals they use and manufac-ture and their safe handling, and to register this informationin a central database. As a chemical manufacturer Shin-Etsu is making strong efforts throughout the Shin-EtsuGroup to sincerely comply with the REACH Regulation.

In line with the REACH regulation, if we make a mis-take of omission with regard to taking the necessary stepsstipulated by that new law, it could become a grave man-agement risk. Shin-Etsu has established a Risk ManagementCommittee that is taking charge of all matters related torisk management. By strengthening our relationships withsupply chains and promoting the sharing of information,we would like to make use of our response to the REACHRegulation to create new business opportunities.

By achieving our mid-term environmental goals, we willfulfill our responsibility and role as a member of societyAs medium-term environmental objectives, the Shin-Etsu Group has laid out two objectives: 1) A reduction in greenhouse gas emissions to 66% of

the 1990 level in terms of the energy consumptionrate in 2010.

2) Achievement of zero emissions (buried waste under1%) in 2010.

We are proactively installing co-generation facilities toreduce greenhouse gas emissions and promoting the effi-ciency of existing processes to improve our energy con-sumption unit of output so as to work toward the achieve-ment of our medium-term environmental objective of realiz-ing in 2010 a reduction of 66% of the emission level of 1990.With regard to the lat-ter goal — reducing,reusing and recycling ofwaste generated in theproduction process —our efforts to achievezero waste emissionsare going smoothly. Weare totally focused onmaking sure to achieveour medium-term envi-ronmental objectives.

The Sh in-E t suGroup will do its partby fulfilling our respon-sibility and role as amember of society.

Shin-Etsu’s Core Environmental and Safety Principles

Shin-Etsu’s core principles of ‘Safety and EnvironmentalProtection-First’

Kiichi HabataManaging Director in charge ofEnvironment Control and Safety

Shin-Etsu Chemical Co., Ltd.

Challenges and Results of Shin-Etsu Chemical in Fiscal 2007Achieving zero environmental accidents and medium-term environmental objectives were the challenges of Shin-EtsuChemical in fiscal 2007. At the same time, we conducted Responsible Care (RC) Initiative Verifications and tried to correctitems cited by the inspectors.

In fiscal 2007, we experienced no explosions, accidental fires or other environmental accidents. The energy consumptionrate in the medium-term objectives exceeded the target value, 69% of the 1990 level, and the amount of buried waste inzero emission objectives was reduced to 0.7%, and we achieved zero emissions in fiscal 2007. The results of inspections ofour RC activities are shown below.

Verification of RC ActivitiesShin-Etsu Chemical strives to maintain safety and pre-serve the environment according to our managementpolicy safety and environmental protection-first. As partof our efforts, we have been promoting ResponsibleCare (RC) activities since 1995, which are participatedin by chemical companies worldwide. RC activities arevoluntary management activities by the chemical indus-try to protect the environment, safety and health.

Environmental preservation, process safety and disasterprevention, occupational health and safety, chemicaland product safety, distribution safety and communica-tion with the community are included in RC activities.

Because of the voluntary nature, we felt the neces-sity for third-party assessment of our RC activities, andunderwent inspections by outside inspectors in additionto in-house audits on the PDCA of RC activities, contin-uing such activities from fiscal 2006.

•A reduction in greenhouse gas emissions to 66% of the 1990 level in terms of the energyconsumption rate in 2010.

•Achievement of zero emissions (buried waste under 1%) in 2010.

Shin-Etsu Chemical’s Tasks for Fiscal 2008

1. Through accident instruction at the Naoetsu Plant, prevent recurrence of accidents and fire damage.2. Strive to achieve medium-term objectives in 2010.

(1) Introduction of co-generation facilities to reduce greenhouse gas emissions and further improve the energy consumption rate.(2) Assurance of 3R (reduce, reuse and recycle) in our efforts to sustain zero emissions (buried waste under 1%.)

In January 2008, inspections covering occupational health and safety and process safety and disasterprevention were conducted at the Naoetsu Plant and the Takefu Plant. Results were as follows.

These results will surely be fed back to our RC activities. We will continue holding such inspections inthe future, and outside inspections will be extended to other plants and inspection items.

•The distribution of post-accident questionnaires to allemployees and public disclosure of questionnaireresponses was recognized.

•Comprehensive disaster drills, including late-night andholiday drills, were recommended.

•It was recognized that a system was in place to followup on cited inspection items through to improvement.

•The initiation of process hazard prediction trainingand safety education and training was recognized.

•It was anticipated that that STOP activities would beintroduced and be effective in preventing unsafeactions.

•The introduction of effective training and education,combining desktop education and hazard experiencetraining, was recognized.

•The encouragement of activities to promote healthand raise individual health levels was recognized.

Medium-TermEnvironmental

Objectives

21 22

Environment and Safety Measures Emergency Response and Safety Measures


Emergency Response and Safety Measures

To ensure the safety and security of local residents and employeesby taking every possible measure to keep the workplace safe andprevent accidents.

Ensuring the safety and security of local people andimproving the environment where our employees canwork in safety every day is our duty as a corporate enti-ty. We have therefore established ensuring safety andenvironmental protection as mutually inseparable, top-priority components of the basic guidelines used for allour business practices.

The Shin-Etsu Group handles and manufactures avariety of chemical substances as raw materials.Although the chemicals we handle are useful to society,some of them are, by their very nature, also harmful tohuman health. For that reason, the Group abides by alllaws and regulations regarding chemicals, making allnecessary efforts to prevent outside pollution andenforcing appropriate controls.

As the Shin-Etsu Group handles many kinds of chemi-cals, there is the possibility of a large-scale disasteroccurring and involving both employees and local peo-ple in the event of an accident. In preparation for thepossibility of such an accident, disaster or large-scaleearthquake, we have arranged a Companywide emer-gency response system and established relevant proce-dures. We also verify the efficiency of our response pro-cedures by performing regular drills.

As well as the accident and disaster drills carriedout in each plant and business establishment, divisionaldrills are practiced for fires caused by explosions and forleaks of dangerous materials. All necessary equipmentand materials are also prepared in the event of an acci-dent taking place outside the Company’s premises,such as during transportation. Above all, in considera-tion of recent accidents in Japan and abroad, we havestrengthened our response capabilities for emergencysituations as follows:

The Shin-Etsu Group handles, manufactures and sells avariety of chemical substances, including many haz-ardous substances, which are flammable, explosive,toxic, poisonous or corrosive. Such dangerous sub-stances should be handled according to their proper-ties, and strict observation of the handling rules repre-sents the basics of safety measures. These hazardoussubstances are regulated by laws and regulations.Compliance with such legislation is a means of imple-menting safety measures.

We issue MSDS*1 for each of the hazardous chemi-cal substances. When these hazardous materials arehandled in the plant, observing the MSDS is to keepemployees’ safety, and prevent mechanical failure andaccidents in facilities. An MSDS is created for eachproduct provided to customers. Accordingly, the MSDSis also used to ensure the safety by the customer.

Ensuring safety during transportation is alsorequired. The Shin-Etsu Group issues a Yellow Card*2

for bulk transportation, or a Container Yellow Card*3

for the transportation of small quantities of chemicals.Further, the GHS*4 labeling system was introduced toensure the Group complies with protocols arising fromrevisions to the Labor Safety and Sanitation Law inDecember 2006.

The Shin-Etsu Group reports the amount of atmos-pheric emissions of chemical substances we handle inaccordance with the PRTR Law*5. At the same time, westrive to reduce emissions, and make our utmost effortsto develop less hazardous materials. In developing andmanufacturing Small Amount of New Specific ChemicalSubstances*6 or New Specific Chemical Substances*7,we make sure of safety and submit notifications inaccordance with the Law concerning the Evaluation ofChemical Substances and Regulation of TheirManufacture, etc.*8.

• Establishment of emergency communication sys-tems (inside the Company, in conjunction withpublic agencies such as fire departments and incollaboration with the local community)

• Quantitative assessment of disasters using simula-tions

• Improvement and reinforcement of equipment andmaterials for emergency measures (including pro-viding support for people outside the company)

• Execution of plantwide and divisional drills basedon specific accident scenarios

• Provision of and education on the use of YellowCards (in response to accidents occurring duringtransportation)

• Implementation of Container Yellow Cards

Water discharge drill (Gunma Complex, July 2007) First-aid training for a person facing cardiac or respiratory arrest(Shin-Etsu Handotai, Shirakawa Plant, October 2007)

*1 MSDS:MSDS stands for Material Safety Data Sheet, on which all relevant dataconcerning the chemical in question is described in order to handlechemicals safely and prevent any accident from occurring. When a busi-ness operator delivers chemicals or products containing chemicals toanother business operator, the MSDS must be attached.

*2 Yellow Cards:The cards on which all relevant information on treatment required in caseof an accident during transportation is described. These are prepared inthe interests of safety and handed over to the carrier whenever chemicalsare transported and retained by the carrier throughout delivery.

*3 Container Yellow Cards:A label indicating safety information is attached to every container whentransporting small quantities of chemicals individually or with otheritems. Information requirements are internationally accorded.

*4 GHS (The Globally Harmonized System of Classification and Labelingof Chemicals):This internationally accorded system addresses the classification of chemi-cals by type of hazard, in accordance with labels and safety data sheets.

*5 PRTR Law (Law Concerning Reporting, etc. of Releases to theEnvironment of Specific Chemical Substances and PromotingImprovements in Their Management):Promulgated on July 13, 1999, the law is intended to promote improve-ments in the voluntary management of chemical substances by business-es and prevent impediments to environmental protection, based on dif-ferent ideas from existing environmental laws.

*6 Small Amount of New Specific Chemical Substances:The notification of new chemical substances is obligatory under the twobelow-mentioned laws, regardless of the amount manufactured or handled.

*7 New Specific Chemical Substances:The Law Concerning the Examination and Regulation of Manufacture, etc.,of Chemical Substances and the Labor Safety and Sanitation Law establishreporting duties with respect to new specific chemical substances.

*8 Law Concerning the Evaluation of Chemical Substances andRegulation of Their Manufacture, etc.: A law concerning examination and regulation of manufacture and otheraspects of chemical substances.

MSDS

Yellow Cards

Emergency Response System Safety Measures for Chemical Substances

23 24

Environment and Safety Measures Emergency Response and Safety Measures


The Shin-Etsu Group’s factories use various types ofmachines and facilities for a host of purposes, includingproduction, environmental conservation, utilities anddistribution. Operating this equipment requires a sub-stantial amount of energy. We also employ facilitiesthat process hazardous and toxic materials, operate athigh pressures, and certain equipment sustainsextremely hot or cold temperatures during operation.

The machines and facilities in factories ease thelabor of workers, but are potentially dangerous, as sug-gested above. A significant number of people wereinjured in the March 2007 Naoetsu Plant accident, withextensive impact on residents of the local community.Our safety measures for machines and facilities aretherefore focused on identifying the risk factors inadvance to minimize the risks of an accident.

A number of techniques are available to identifyrisk factors, but HAZOP* is typically used in chemicalplants. The most effective plans are proposed for therisk factors identified with various techniques, and thesafety review board, including factory managers in itsmembers, investigates and approves the proposed safe-ty plans. The plans are then presented to all Groupcompanies for their approval and put into practice.

Because of the seriousness of the potential damagecaused by accidents in factory machines or facilities,adequate preparedness for accidents is very important.Emergency drills are conducted at individual sectionsand across plants, in addition to damage simulation topredict the scope of damage, preparation of equipmentfor dealing with accidents, and implementation of anemergency communication system.

Shin-Etsu Chemical’s CSR Procurement Basic Policy isposted on the Company website. It covers materialsrequired for manufacturing processes, including mainraw materials and secondary materials such as packag-ing materials, and machinery and equipment.

Specifically, the policy promotes green procure-ment and publicizes legal compliance and the need tomanage chemical substances subject to environmentalregulations to our business partners. In the future, wewill prioritize procurement from business partners thatare aggressively pursuing CSR activities, including envi-ronmental protection measures.

The RoHS directive was enacted in the EU in July 2006.Further, REACH has also been in force since June 1,2007. Similar laws on the management of chemicalsubstances have been formulated in other countries,too, calling for information management throughoutthe supply chain to ensure supply of appropriately con-trolled products. In response to these advances, we areproviding many customers with chemical substancemanagement certification, verifying the contents of ourproducts.

The Shin-Etsu Group, as a materials manufacturer,supplies an array of products to customers that in turnrequire us to issue certification documents. As part ofour CSR procurement activities, we are increasing thenumber of Green Procurement Certificates we issueyear on year, reaching 9,181 for Fiscal Year 2007.

Cellulose and silicone are key materials used in certainfood additives and pharmaceuticals. As these productsare directly related to human health, the Group paysclose attention to their quality control and compliancewith all relevant laws and regulations.

The Shin-Etsu Group implements a range of measuresfor the safety of its staff. The basis of our measures forthe safety of employees in the course of their activitiesis recognition that people do make mistakes. From thisstandpoint, our safety measures span enhancing intrin-sic safety of facilities and processes as error preventionmeasures, boosting safety through interlocks and alarmsystems to limit the consequences in the eventuality ofan error occurring, and implementing revisions andimprovements.

We use various machines and facilities in our man-ufacturing factories to process a variety of chemical

substances. Tangible safety measures are taken forthese machines and facilities. We also focus on theintangible aspects, such as education on the correctoperation of the machines and facilities. Workers areeducated on the purpose and effect of protective gearand repeatedly told to wear it. We have launched ascheme for the promotion of zero accidents, and intro-duced risk prediction training, potentially serious errorproposals, prevention, risk assessment, and hazardexperience training have been carried out on all Groupcompany sites.

The work environment is continuously improved inour effort to maintain the health of workers, and thedensity of substances handled at workplaces is mea-sured to ensure it is within the control level. The instal-lation of local exhaust systems and changes to sub-stances less harmful to workers are also promoted.

Throughout the Shin-Etsu Group there were 16injuries in total, 4 LTIs and 12 Non-LTIs during 2007*.Most injuries arose from being pinched or caught inmachinery or other wounds sustained in the course ofactivity. We promote the “intangible” safety measuresgiven above.

* HAZOP (Hazard and Operability Study):HAZOP is designed to facilitate improvement in work procedures andfacilities by anticipating potential malfunctions in manufacturing facili-ties and the resultant environmental pollution brought about by changesin operating conditions. HAZOP is conducted whenever a new facility isat the design stage, and is implemented by the designers and managersto ensure that a high degree of safety is designed into the facility rightfrom the start. Existing facilities are also subject to HAZOP, in whichtheir operators participate, and this is reflected in the improvementsmade to operating procedures and facilities.

* REACH: The Registration, Evaluation, Authorization and Restriction of Chemicalsubstances

(Number) (Frequency Rate)

Change in the Number of LTIs and Frequency Rate in the Shin-Etsu Group

0

2

4

6

8

10

200720062005200420030.0

0.1

0.2

0.3

0.4

0.5

Frequency Rate of LTI

Number of LTIs

3 3

0.250.24 5

0.41

4

0.32

4

0.31

Safety Measures for Facilities

REACH* is a new European Union Regulation on chem-ical substances, which was enacted in June 2007.Preliminary registration opened from June 1, 2008.Under the REACH directive, parties that manufacture inor import into the EU substances to a volume of oneton or more are obliged to complete registration proce-dures, in a process comprising registration, notification,approval and restriction.

Specifically, substances, preparations, molded partsand other components relating to the chemicals con-tained in products are subject to registration and notifi-cation procedures. Further, for the protection of healthand the environment, the use and handling (includingproduction, processing, assembly, transfer, and han-dling by general consumers) within the EU of chemicalsubstances and the products in which they are used aresubject to approval and restriction regulations.

Information on dangers and hazards posed bychemical substances must be provided to customers inthe form of a safety data sheet. Further, data must becollected on customers’ uses and volumes handled. Asa result, Shin-Etsu Chemical requires the cooperation ofall Group members and related parties throughout thesupply chain in the processing and sharing of informa-tion.

Based on the cooperation of all operating andrelated divisions, the Shin-Etsu Group is deliberatelyand actively striving to realize its response to REACH asit progresses with the clarification of target substancesand processing of information.

Response to REACH Promoting CSR Procurement

Responding to CSR Procurement Requirements

Control of Food Additives and PharmaceuticalProducts

Safety Measures for Employees

* These figures include two victims of the March 2007 Naoetsu PlantAccident. However, they do not include contractors or constructionworkers.

Environment and Safety Measures Reducing the Environmental Impact of Business Activities Input/Output

Energy usage

679ML (crude oil equivalent)

Water usage

42Mm3

• Methanol• Pulp• Industrial salt• Silicon metal• PVC monomer• Polycrystalline silicon• AcetateOthers

By promoting the reduction of environmental impact at all stages, from product design through to the procurement of raw materials and the establishment of an efficient manufacturing system, we are limiting increases in the amounts of energy, water and raw materials needed to match the rising volume of products manufactured.

Emission gases

CO2 : 1,240kton-CO2

Discharge Wastewater

42Mm3

Final Waste Disposal Amount

5,310t

Waste Recycling Amount

61,100t

Product• PVC• Silicon resin• Silicon wafers• Cellulose derivatives• Rare earth magnets• Synthetic quartz photomask substrate• Optical fiber preforms• POVAL• Hot-melt adhesives• Silicon carbideOthers

INPUT

OUTPUT

Resources/Energy

Raw materials

Shin-Etsu Group To the environment

Waste

To society

Notes: The numbers are a total of 11 companies: Shin-Etsu Chemical Co., Ltd., Shin-Etsu Handotai Co., Ltd., Nagano Electronics Industrial Co., Ltd., Naoetsu Electronics Co., Ltd., Mimasu Semiconductor Industry Co., Ltd., Shin-Etsu Quartz Products Co., Ltd., Yamagata Shin-Etsu Quartz Co., Ltd., Fukui Shin-Etsu Quartz Co., Ltd., Nissin Chemical Industry, JAPAN VAM & POVAL CO., LTD. and Shinano Electric Refining Co., Ltd in fiscal 2007.Please refer to Shin-Etsu Chemical’s website, at http://www.shinetsu.co.jp/e/profile/kankyo.shtml for environmental data on Shin-Etsu Group companies

DevelopmentProduct design and development is being promoted, which emphasizes the importance of reducing environmental impact.

ProcurementThe procurement of raw materials and supplies on a global basis is another method that is being examined to reduce environmental impact.

ManufacturingImproved manufacturing systems are being established with less environmental impact due to the promotion of energy saving, recycling and the reuse of resources.

Reducing the Environmental Impact of Business Activities Input/Output

As a key material manufacturer, we aim to reduce environmentalimpact, not only for our own benefit but also for that of thewhole society, by developing advanced technologies.

The Shin-Etsu Group intends to implement a management environment to reduce environmental impact and risks andincrease energy efficiency via its own business activities. At the same time, our mission is to offer new materials that cancontribute to reducing environmental loads and increasing energy efficiency across society, through the development ofadvanced technologies as a leading material manufacturer.


27 28

Environment and Safety Measures Environmental Activity Report


Environmental Activity Report

The Group is addressing all issues that are relevant to realizing energysaving and preventing global warming, including reducing the envi-ronmental impact, protecting the environment and recycling resources.

*1 pH:Hydrogen ion concentration (-log[H+]) indicating acidity (<pH7,) neutral-ity (=pH7) and alkalinity (>pH7) of water solution.*2 BOD:Biochemical Oxygen Demand (BOD): This indicates the amount of oxy-gen required for water-borne micro-organisms to break down contami-nants in water. This value is a measure of the degree of water pollution.*3 SS:Suspended Solids (SS): These are organic and mineral particles suspend-ed in water. They are a major cause of turbidity, and have a significantimpact on aquatic life.*4 COD:Chemical Oxygen Demand (COD): This is the amount of oxygen requiredto degrade the organic compounds of wastewater. A higher COD valuemeans more polluted wastewater.

Reduction of energy usageThe Shin-Etsu Group manufactures a variety of prod-ucts handling a range of energy sources, including elec-tricity, fuel oil, kerosene, diesel oil, liquefied petroleumgas, liquefied natural gas and steam. We select themost suitable energies for manufacturing facilities andutilities used in such processes as reaction, purified,synthetics, processing.

Although overall energy usage is growing, owingto increased Group-wide production, each companyand plant also strives to save energy.

The amount of energy consumed by the Shin-EtsuGroup in fiscal 2007 was 679,000 kiloliters (crude oilequivalent,) an increase of 37,000 kiloliters from fiscal2006. This figure, approximately the same amount perunit of sales, represents a 24% decrease in the fiveyears from fiscal 2003.

managed so as not to be released in the air. The effortsof individual companies and plants have maintained orreduced levels of air pollutants such as soot, nitrogenoxides (NOx) and sulfur oxides (SOx.) Emission gasesfrom boilers and incinerators are regulated by laws,regulations and ordinances, but we go beyond simplycomplying with these regulations; we reduce emissionseven further. We regularly measure levels of soot, NOxand SOx and monitor their impact on the atmosphere.

Prevention of global warming and pollution abatement measures

The Shin-Etsu Group is trying to reduce greenhousegases to stop global warming. We are also working tominimize discharged air pollutants through pollutionabatement measures.

CO2 emissions have risen as our energy use increas-es, but every company and plant is making an effort toreduce CO2 emissions. Some of our affiliates use a spe-cific CFC as a refrigerant, but this substance is strictly

Energy-caused CO2 emissions by the Shin-Etsu Group infiscal 2007 totaled 1,240k CO2-ton, a slight increase of30k CO2-ton from fiscal 2006. Amounting to a 2%improvement per sales unit, we achieved a 29%improvement compared with the fiscal 2003 level.

Soot emissions amounted to 16 tons. Although thisemission quantify varies by year, the trend is steadilydownward. NOx and SOx emissions were 660 tons and800 tons, respectively, and the combined emissions ofthese chemicals are decreasing.

Prevention of water pollutionThe Shin-Etsu Group uses large quantities of industrialwater, groundwater and tap water for manufacturingand cleaning products, and maintaining and managingfacilities. Wastewater is discharged into rivers afterbeing checked for compliance with laws and regula-tions specifying the limits. pH*1, BOD*2, SS*3 andCOD*4 are measured on a regular basis to monitor theireffects on water quality. We are also trying to reduceour use of water.

The total amount of discharge wastewater produced bythe Shin-Etsu Group in fiscal 2007 was 42,000 kilotons,down 600 kilotons from fiscal 2006 and a 5% improvement

in emissions per unit of sales. COD emissions totaled700 tons, down 250 tons from fiscal 2006, and emis-sions per unit of sales improved 19%.

Waste managementVarious types of waste, including unreacted raw materi-als, byproducts, defective products and broken orunnecessary goods, are produced in various manufac-turing processes. The Shin-Etsu Group applies the 3Rs(reduce, reuse, and recycle) to ensure effective use ofthe Earth’s limited resources. We also periodicallyinspect contractors to ensure the proper handling ofwaste consigned to them.

Examples of our approach• Extensive use of co-generation systems• Improvements in energy saving by facil ity:

Improved efficiency, productivity, insulation, etc.• Recovering heat from waste

Examples of our approach• Promotion of energy saving by introducing co-

generation systems, etc.• Switch to fuels, such as liquefied natural gas,

with less CO2 and air pollutant emissions• Addition of a pollutant treatment facility and

installation of a recovery facility• Improvement of the combustion method

Examples of our approach• Improvement and expansion of wastewater treat-

ment equipment• Leveling of effluent water quality and volume• Recycling and reuse of cooling water

2003 2004 2005 2006 2007

Energy Usage (crude oil equivalent)Energy Usage

Unit Sales Index (%)

0

20

40

60

80

100(10,000 kl) 100.0

96.889.4

75.3 75.5 (k CO2-ton)

2003 2004 2005 2006 2007

CO2 Emissions (CO2 equivalent)CO2 Emissions


0

400

800

1,200

1,600

2,000100.0

95.9

87.5

72.870.8

(ton)

2003 2004 2005 2006 2007

Soot EmissionsSoot Emissions


0

10

20

30

40

50100.0

51.457.0

38.134.6

(ton)

2003 2004 2005 2006 2007

NOx EmissionsNOx Emissions


0

400

800

1,200

1,600

2,000100.0

90.484.4

53.2

43.6

(ton)

2003 2004 2005 2006 2007

SOx EmissionsSOx Emissions


0

500

1,000

1,500

2,000

2,500100.0

88.9

72.2

40.7

31.9

Regulationvalue

Soot (g/Nm3) <0.25

NOx (ppm) <150

SOx (Nm3/h) <74

2003

<0.02

<110

<1.1

2004

<0.02

<83

<1.2

2005

<0.03

<110

<2.6

2007

<0.01

<88

<0.1

Boiler Emission Gas Monitoring Result Table: Naoetsu Plant

Regulationvalue

Soot (g/Nm3) <0.15

NOx (ppm) <250

SOx (k value)

Hydrogen chloride (mg/Nm3)

Dioxin (ng/Nm3)

<17.5

<700

<5

2003

<0.03

<90

<1

<54

<0.01

2004

<0.01

<100

<0.55

<28

<0.01

2005

<0.02

<110

<0.51

<62

<0.01

2006

<0.01

<99

<0.1

2006

<0.004

<62

<0.47

<24

<0.01

2007

<0.003

<55

<1.03

<51

<0.01

Incinerator Emission Gas Monitoring Result Table: Gunma Complex

(Million m3)

2003 2004 2005 2006 2007

Total Discharge Wastewater AmountTotal Discharge Wastewater Amount


0

16

32

48

64

80100.0

91.986.1

73.568.5

(100 ton)

2003 2004 2005 2006 2007

COD EmissionsCOD Emissions


0

4

8

12

16

20100.0

85.0

73.6

44.0

63.1

Regulationvalue

pH 5.8~8.6

BOD (mg/L) <25.0

SS (mg/L) <50.0

2004

6.7~7.4

<17.0

<43.0

2005

6.3~7.5

<14.0

<38.0

2006

6.4~7.8

<25.0

<31.0

2003

6.8~7.3

<22.0

<41.0

2007

6.3~7.4

<21.0

<32.0

Effluent Water Quality Monitoring: Gunma Complex

Energy Saving and the Prevention of GlobalWarming

29 30

Environment and Safety Measures Environmental Activity Report


In fiscal 2007, the Shin-Etsu Group experienced twoenvironmental accidents, as well as one physical distrib-ution accident and one facility accident.

Environmental accidentsOne environmental accident involved a hydrochloricacid leak that resulted from damaged piping to a tankwithin a plant. A rise in the tank’s internal pressure wasthe cause of the rupture. Countermeasures to preventrecurrence included resetting the gas extraction pipeand introducing a system to monitor internal tank pres-sure during normal hours. The other accident arosefrom a leak in the a cooling pipe that occurred asrefrigeration equipment was being removed. Neitheraccident was major, thanks to swift responses by facto-ry managers and personnel, and in neither case was theatmosphere in the plant’s vicinity affected.

Physical distribution accidentWhile transporting products, a container suspendedfrom a five-ton truck while clearing away an accidentdropped, spilling product out onto the roadway. Thetruck driver’s swift reporting and rapid support from

the factory prevented this from becoming a major envi-ronmental accident involving the surrounding area.Furthermore, the driver was uninjured.

Facility accidentIn this incident, factory operation was suspended owingto the development of a hole in a part attached to anincinerator within the plant. As no leakage occurredfrom the facility and the suspension of operation pre-vented the discharge of pollutants outside the plant,the surrounding environment was not affected.

Soil pollutionAt each of our plants, ground water and soil quality aremonitored and the pollution status is checked.However, no soil pollution has yet been identified atany of our plants.

Education on the environment and safetyEnvironmental conservation and accident preventionrequire both correct responses at the facility level andeffective actions by all personnel involved. Therefore,we organize many training sessions regarding environ-mental and safety operations. We also conduct safetyeducation, environmental education and education onchemical handling to prevent accidents.

Furthermore, we regularly carry out education andtraining sessions for employees at various levels and jobdescriptions.

Safety and environment qualificationsMany different machines and facilities are used for ourmanufacturing activities. Education and training ses-sions are therefore organized to cover the operationand management of all equipment and machinery.

When legal qualifications are required, personnelacquire the relevant qualifications and attend appropri-ate technical training.

TrainingAlthough we are fully prepared for accident and disas-ter prevention, accidents cannot be completely ruledout. We therefore conduct emergency response train-ing to prevent the spread of any damage and promptlydiffuse the situation in the eventuality of an accident.Apart from the training carried out at each workplace,

we organize general drills assuming that a large-scaleaccident or disaster has occurred. We hold such drills incooperation with local fire departments, if necessary,and open them to the public.

Environmental activities at the industry levelShin-Etsu Chemical participates in such associations asthe Japan Chemical Industry Association, the VinylEnvironmental Council and the Plastic WasteManagement Institute. Moreover, we strive to improvethe safety management and environmental control lev-els of each of our companies and cooperate with otherindustry member companies. We also undertake publicrelations activities to research and enhance the under-standing of chemical substances and provide technicalsupport.

Examples of safety and environmental education• Education of new employees, transferred person-

nel and newly appointed managers• RST education (Article 60 of the Labor Safety and

Sanitation Law, “Safety and health education forforemen and others”)

• Hazard prediction training, risk assessment training• Experiments and training on combustion and

explosions, low voltage electricity handling train-ing and chemical substance handling training

• Experience training, maintenance training • Environmental Management System (ISO 14001)

education, etc.

Examples of environmental activities under-taken in cooperation with the industry•Activities to reduce air pollutants and volatileorganic compounds

• Support of the Long-range Research Initiative (LRI)• Introduction to the benefits of PVC and promo-

tion of PVC recycling• Support for waste plastics recycling

Examples of legal qualifications regardingsafety and the environment• High pressure gas production safety controller

(High Pressure Gas Safety Law)• Pollution control manager (Law Concerning the

Improvement of Pollution Prevention Systems inSpecific Factories)

• Hazardous materials engineer (Fire Service Law)• Health supervisor (Labor Safety and Sanitation

Law)• Operations chief for various operations (as set

down in the rules of the Labor Safety andSanitation Law)

• Specially controlled industrial waste control man-ager (Waste Disposal and Public Cleansing Law,)etc.

Environmental Accounting

In fiscal 2007, Shin-Etsu Chemical calculated its invest-ments and expenditures on reducing the environmentalimpact from such factors as air pollution, water pollution,the emission of chemical substances into the air, savingenergy to conserve the global environment, reducingwaste by improving resource recycling and recycling usedgoods. The company computed this amount in accor-dance with the Environmental Accounting Guidelinesprepared by the Ministry of the Environment, Japan.

The Company’s cumulative capital investmentrelated to environmental protection over the pastdecade came to approximately ¥18.5 billion.

Main investments• Introduction of a cogeneration facility• Expansion of wastewater treatment equipment• Installation of waste disposal and recovery facilities• Improvement of dust collecting facilities• Improvement of the industrial waste disposal yard• Promotion of energy saving and installation of

an energy recovering facility• Environmental improvement, etc., of areas

around other plants

Category Details Investment Expenditure

Business area costs:

1. Pollution prevention costs Air, water, noise and other types of pollution prevention measures 1,048 3,827

2. Global environment conservation costs Energy conservation and global warming prevention measures 200 982

3. Resource circulation costs Waste prevention, recycling and other measures 162 1,517

Upstream and downstream costs Green purchasing and container and packaging measures 0 6

Administration costs Environmental management, monitoring environmental impacts and education measures 0 480

Research and development costs Environmentally conscious product and process research and development 0 1,237

Social activity costs Donations and contributions to environment protection 8 163

Environmental remediation costs Assessment, handling and other costs related to environmental degradation 15 310

Total 1,433 8,522

Environmental Costs in Fiscal 2007(Millions of yen)

Examples of our approach• Utilization of inorganic sludge as a raw material

for cement/steel• Utilization of organic sludge as a fertilizer• Reuse of acids and alkalis through separate

recovery• Thermal recycling of waste oil and waste solvent• In-house incineration, in-house disposal• Separate recycling of valuable metals

The amount of waste recycled by the Shin-Etsu Groupin fiscal 2007 totaled 61,000 tons, up 3,000 tons fromfiscal 2006, and recycling proceeds satisfactorily. Theamount of waste added to landfills was 5,300 tons.Emissions per unit of sales improved 70% from fiscal2003.

(1,000 ton)

2003 2004 2005 2006 2007

Amount of Waste Recycled

Amount of Waste Recycled

0

15

30

45

60

75

(1,000 ton)

2003 2004 2005 2006 2007

Amount of Waste Added to LandfillsAmount of Waste Added to Landfills

0

4

8

12

16

20100.0

73.4

51.1

28.532.1


Other Environmental Protection Activities

31 32




People create and support technology. We aim to provide idealworking conditions so they can.

The Shin-Etsu Group respects fundamental human rightsand implements a variety of approaches to establish aworkplace environment that is easy to work in, help eachemployee realize an affluent and healthy life to make themost of his/her potential and career.

Health considerationsTo further decrease the number of sick, we focus onactivities that promote fitness and developing physicalstrength, and by improving the regular health consulta-tion service, health guidance for lifestyle-related dis-eases and mental health treatment. Industrial physiciansconduct interviews and provide guidance for peopleworking long hours.

Fitness and Physical Strength DevelopmentPromotion Committees are also being established ineach plant and business establishment. These commit-tees organize physical strength monitoring and holdseminars and events for physical strength improvementin cooperation with local Medical Treatment Rooms. AFamily Health Consultation Desk has also been estab-lished in the corporate health insurance society to helpensure the health of employees’ families.

The human rights enlightenment promotioncommittee

We respect the human dignity of all individuals. To helpaccomplish this, the Human Rights EnlightenmentPromotion Committee implements initiatives to ensurethat work environments are free of all racial, gender andother forms of discrimination and are places where allemployees can work together in a spirit of mutual trust.

In addition, Shin-Etsu belongs to both the IndustrialFederation for Human Rights, Tokyo, and the IndustrialFederation for Anti-Discrimination, Osaka. Our employ-ees participate in training sessions held by both federa-tions to raise staff awareness of human rights.

BAKER-KANAGAWA Japan—U.S. scholarshipprogram

This new scholarship program was set up for the chil-dren of Japanese employees of the Shin-Etsu Group toattend universities in the United States. The program isthe brainchild of Mr. Robert Baker, founder and the firstpresident of Dow Chemical Japan Ltd. and a former chair-man of the American Chamber of Commerce in Japan,and Mr. Chihiro Kanagawa, president of Shin-EtsuChemical. Their shared idea for this program was tofoster internationally active human resources and deep-en the exchange between Japan and the United States.

Bullet train commuting benefitsSince 1989, Shin-Etsu has allowed commuting byshinkansen bullet train at company expense. Thisoption has allowed more employees to own houses andenables personnel who are reassigned to headquartersfrom business locations in Gunma and Fukushima pre-fectures to transfer jobs without changing theirlifestyles. As of July 2008, 78 employees were takingadvantage of this Company offer.

Childcare and nursing-care systemsOur childcare leave system permits employees to takeleave till their children have reached the age of three incases where parents are unable to secure places fortheir children in nursery schools, and many employeestake advantage of the system. Employees raising chil-dren who have yet to reach age of three are alsoallowed to shorten their work time to as little as twohours a day.

As for nursing-care leave, under certain conditions,employees can take up to one year of leave per eligiblefamily member. No employees used the system in fiscal2007.

Accumulated holidaysEmployees are granted a certain number of annual paidholidays in accordance with labor regulations. If thoseholidays are not taken, they are treated as accumulatedholidays, which are then carried over to the next yearand may be utilized as family-care leave days or as daysoff for injury or illness. From July 2007, this system hasbeen applied to people who work as volunteers in dis-aster regions, as well as to donors for organ or bonemarrow transplants.

Other systemsIn the event of the death of an employee, we offer ascholarship system to support surviving children andfamily members. Because the Company has grouplong-term accident and indemnity insurance, workersmay still receive a portion of their salaries, should theybe unable to work due to long-term illness or injury. Inaddition, we have established asset-building schemes, ashareholding system, and a mutual aid society to pro-vide support for weddings, births or sudden hospitaliza-tions of family members.

•Number of employees who have taken child-careleave (Fiscal 2007)

Note: The length of childcare leave differs from country to country, asthe program is based on the local laws.

Performance-based personnel evaluation sys-tems and equal opportunities

We have introduced a performance-based personnelevaluation system for wages, promotions, transfers, etc.that is applied equally to both genders. The system hasproven useful for increasing employees’ motivation, astheir treatment reflects the way in which they meettheir challenges to achieve higher goals.

To operate the personnel evaluation system in afair and appropriate manner, the evaluation standardsare made available to all employees and evaluationtraining is provided for all managers. All possible stepsare taken to ensure that all evaluation is carried outaccording to the uniform standards. Communicationbetween the evaluator and the person being evaluatedis ensured by holding two interviews per year.

A Communication Sheet is also prepared betweeneach staff member and his/her immediate superior. Thissheet is utilized for further capacity building by ensur-ing mutual confirmation of the superior’s expectations,the subordinate’s desires, target setting for the next sixmonths, and feedback on achievements discussed dur-ing the interview.

Auditing student systemWe established an auditing student system in 1962. Inthis system, designed to help mid-level employeesupgrade their skills, about 10 employees chosen fromplant manufacturing sites are sent to study at universityfor one year. In the 47 years since this system wasintroduced, 477 employees have completed the pro-gram and now function as leaders at their job sites.

Participation in CEO 40s trainingMid-level employees are sent on the CEO 40s Program,conducted by President Iwao Nakatani of TamaUniversity, as part of our efforts to foster executive can-didates. Those who have attended the courses applythe knowledge gained by establishing project teamsthroughout the Company.

Career development support systemTo support individual career development, we offerbonuses to employees who have obtained official certi-fication. We also offer correspondence courses, onlinelearning courses for those who have completed twoyears of study abroad or attended other educationalprograms.

Shin-Etsu Chemical (non-consolidated) 10 (male: 0; female: 10)

Consolidated companies in Japan 39 (male: 0; female: 39)

Consolidated companies total* 77 (male: 9; female: 68)

A health lecture on smoking held to coincide with World No TobaccoDay (July 2007 at Shin-Etsu Handotai’s Shirakawa Plant)

Taking advantage of the bullet train commutingbenefits

I decided to live in Shin-Shirakawa and putmy lifestyle and child-raising first.

It has been 10 years since Istarted commuting by bullettrain from my home near Shin-Shirakawa Station (FukushimaPrefecture) on the TohokuShinkansen Line. I used to livein Omiya (Saitama Prefecture,)but the commuting time towhere I work near TokyoStation is almost the same. Idon’t like crowding or traffic

much, so it’s very convenient for me to be able to sit onthe train and read the newspaper or a book at myleisure. The only bothersome thing I can point to is thatthe last train is earlier than before.

There are multiple shopping malls, hot springs, golfcourses and ski resorts scattered around Shin-Shirakawa, making it a relatively comfortable environ-ment. I am particularly fond of the walking path alongthe Abukumagawa River. I had also been hoping toraise my children in a carefree setting in the countryside,so I am very happy with this choice. Additionally, I rec-ommend this area to anyone who likes ramen noodles,because the local ramen restaurants are outstanding.

Chiaki SuzukiAccounting DepartmentShin-Etsu Handotai Co.,Ltd.

Occupational Health and Safety

Respect for Human Rights

Education/Training and Self-Enlightenment

Benefits

Social Activities

Communication with Local Communities

We maintain communications with local communities throughour plants and business sites.

Summer School has become an essential event for local elementaryschool students

The Shin-Etsu Group continues its efforts to deepenmutual understanding by promoting an array of com-munications aimed at building trust-based relationshipswith a variety of stakeholders in society and successfullyrealizing the Group’s mission to ensure that its globalcustomers are satisfied with its business activities.

Educational Support Activities 191 children participate in annual summerschool

Providing a venue for elementary school chil-dren to get to know local industries

Naoetsu Plant

Gunma Complex

The Naoetsu Plant held its annual Summer School this year, asusual, marking its 33rd year. The event is put on mainly by newemployees assigned to the plant. The school helps local elemen-tary school students in grades four through six with their summervacation homework, encouraging community interaction andcontribution.

The school is run in daily two-hour sessions, with learning inthe first hour and recreation in the second. A total of 191 chil-dren attended in the seven-day period.

Participating in the Naoetsu Gion Festival minyo-nagashi in matching yukata

Participating in Local Events Participating in the Naoetsu Gion Festival inmatching yukata

Naoetsu Plant

From the Naoetsu Plant Group, 134 employees wearing matchingyukata (light summer kimono) with the Shin-Etsu logo participat-ed in the minyo-nagashi (folk dance procession) during the GionFestival, which is a famous summer event in Naoetsu. In 2007,despite the event being held on a Saturday, more employees thanusual attended—primarily new employees. Despite hasty prepara-tions, the participants danced through the town of Naoetsu fortwo hours, greatly enlivening the town and shouting encourage-ment to each other along the way.

Senior Managing Director Shunzo Mori (left) handing the donationregister to Chuetsu Deputy Mayor Hideyuki Murayama

Associates at the corporate breakfast club

In its desire to be of use to the residents of Niigata Prefecture andfulfill its roles as a corporation with a production center there, theShin-Etsu Group donated relief funds to the victims of the NiigataChuetsu Offshore Earthquake of July 16, 2007, through the cityof Chuetsu, where the Naoetsu Plant is located. Volunteers at theNaoetsu Plant also contributed relief funds at this time.

Visitors receiving rhododendrons as presents on their way home

Gathering around the certificate of appreciation

Beautifully blossoming rhodo-dendrons

Communication with Local Communities Demonstrating plant safety to the publicthrough display of rhododendrons

Other Activities Donating to Victims of the Niigata ChuetsuOffshore Earthquake

Activities Overseas Donating $50,000 to the Brazosport MemorialHospital

The display of rhododendronsto the public doubled as a showof plant safety and security

Shirakawa Plant of Shin-Etsu Handotai Co, Ltd.

Shintech

Earning a certificate of appreciation at theNational Convention for promoting blooddonations

Takefu Plant

Naoetsu PlantShin-Etsu Group

When Shin-Etsu Handotai opened its Shirakawa Plant to the pub-lic to show off its rhododendrons to area residents, 534 people—from children to the elderly—came to see them. Under sunnyskies, visitors viewed the rhododendrons at their leisure and weresurprised at their size and variety. The visitors were accommodat-ed by 128 employee volunteers at the plant. This event proved tobe a good opportunity to inform area residents of the safety andsecurity of the plant.

With Honorary Vice-President of the Japan Red Cross Society HisImperial Highness the Crown Prince of Japan in attendance, AsahiSub-Plant of the Takefu Plant was awarded a certificate of appre-ciation by the Governor of Fukui at the 43rd National Conventionfor Promoting Blood Donations (sponsors: Ministry of Health,Labour and Welfare; Fukui Prefecture; The Japan Red CrossSociety.) The certificate was based on the branch plant’s activecontributions to promoting blood donation activities in FukuiPrefecture, which serve as a model for others to follow.

Shintech (United States) donated $50,000 to BrazosportMemorial Hospital’s cancer treatment center in Texas. The dona-tion will be used toward replacing radiation therapy equipment,adding chemotherapy facilities and other expenses. BrazosportMemorial Hospital established its cancer treatment center afterreceiving generous contributions from a number of donors in1995. The cancer treatment center is now the main treatmentfacility of its type in Brazoria County, where it treats more than1,100 patients a year.

Participating in Corporate Breakfast Activitiesto provide breakfast to those in need

Shin-Etsu MicroSi

Employees of Shin-Etsu MicroSi (United States) have becomemembers of the Corporate Breakfast Club at the Society of St.Vincent de Paul, where they volunteer to provide breakfasts. TheSt. Vincent de Paul Society is an international volunteer groupthat helps meet the needs of homeless people and low-incomeworkers. The group serves breakfast to homeless and otherwisedisadvantaged people at one of five kitchens in the Phoenix area.

On the first day, two Shin-Etsu MicroSi employees who hadserved breakfast to 448 people commented, “We realized notonly how much we take for granted, but also how thankful weare for what we have been given in our own lives.”

In the product display area of the Silicone-Electronic MaterialsResearch Center

62 third-year students of Nishiyokono Elementary School inMatsuida-machi, Annaka, toured the Gunma Complex, MatsuidaPlant. This tour was part of a program to familiarize local resi-dents with local industries. On the day of the tour, the childrenwere lit up with excitement at learning things they had neverseen or heard before.

33 34

Social Activities Communication with the Local Community


35 36

Efforts of the Shin-Etsu Group Companies


“Safety and environmental protection-first” is a key phrase throughoutthe Shin-Etsu Group.Each of the Group companies is conscious of the key characteristics of theirbusinesses and actively implements environmental protection activities.

Based on the Environmental Charter adopted in 1998, each Group company prepares its own environ-mental policy and carries out environmental protection activities.This report describes the environmental protection efforts of overseas Group company Shintech.

Shintech Inc.Representative: Chihiro Kanagawa, PresidentLocation of Main Office: Houston, Texas, U.S.A. Businesses: Manufacture and sale of polyvinyl chlo-

ride resin (PVC)

Established in 1973 in Houston, Texas, USA as a jointventure (although Shin-Etsu Chemical’s wholly ownedsubsidiary since 1976) between Shin-Etsu Chemical andRobintech, Inc., Shintech commenced production ofpolyvinyl chloride (PVC) resin the following year at itsnewly constructed Freeport facility. At its start of opera-tions, the facility’s annual production capacity was100,000 tons. Capacity is now 1,450,000 tons, as aresult of effective eight expansions. The construction in2000 of the Addis facility in Louisiana, with annualcapacity of 590,000 tons, brought Shintech’s PVCcapacity to more than 2,000,000 tons, making it cur-rently the world’s largest PVC manufacturer. In 2008,the company constructed and began operating thePlaquemine Plant in Louisiana, which handles integrat-ed production from PVC monomers.

Located roughly 100 kilometers south of Houston, theFreeport Plant is the world’s largest PVC plant. Eventhrough repeated facility expansions, the plant hasoperated for the past seven years with no lost timeinjuries (LTIs.) We believe this record is a result of ourcorporate culture of putting safety first and ouremployees’ tireless efforts.

The plant has proactively implemented a plant-wide AIMS program. The system aims to forestall acci-dents by having individual employees seek out andfocus on potential safety issues at the plant and handlethem before they can manifest. The suggestions fromemployees are then validated, implemented and evalu-ated by the company’s Safety and EnvironmentalCommittee.

Having obtained ISO 9001 certification in 1995 andISO 14001 certification in 2005, the Freeport Plantmaintains a high awareness of product quality andenvironmental issues. The plant continues to engage ina broad range of environmental activities. Examplesinclude a 30% reduction in wastewater discharge overthe past seven years through effluent recycling and a60% reduction in NOx emissions over the past sevenyears through upgrades to boiler equipment.

Moreover, as a member of the local community theFreeport Plant supports a wide variety of local business-es and organizations, and proactively discloses informa-tion. For instance, the plant periodically invites commu-nity representatives and explains to them its safetyefforts, information disclosure on emissions, overviewof plant operations and other matters.

The Addis Plant is located approximately 20 kilometerssouth of Baton Rouge, Louisiana’s capital.

The Addis Plant is channeling resources into itssafety and environmental plans. Reporting based on theEnvironmental Protection Agency (EPA)’s Toxic ReleaseInventory is compulsory in Louisiana, and the plant’semissions of methanol, chlorine, PVC and monomersare all under the approved limit. Furthermore, the plantcomplies with risk management and federal and stateenvironmental plans. These results evidence the plant’s

Jim HodgesSite Manager, Freeport Plant

The World’s Largest PVC Maker, and Growing

Freeport Plant—the World’s Largest PVC Plant

Freeport facility

Environment control and safety audits conductedat the Freeport Plant

Addis facility

Shintech Inc.

Company Outline

efforts to prevent environmental pollution and mini-mize emissions, which are checked at 52 monitoringpoints including site area. The Addis Plant obtained ISO9000 certification in 2005 and is working to acquireISO 14001 certification.

The plant also actively participates in the local com-munity under the Shintech motto of “Live locally, Hirelocally and Buy locally.” Out of desire to be goodneighbors to the community, plant employees partic-ipate in local events and an array of charity activities.They also provide direct financial assistance to a roadconstruction project important to the area, carried outby the State of Louisiana.

As the world’s largest PVC manufacturer, Shintech isobligated to maintain constant safe operations and liveup to the trust of its customers and the general public.To fulfill that trust, in February 2008 Shintech per-formed environment control and safety audits jointlywith Shin-Etsu Chemical. The three items of the auditwere (1) to meet the directive issued by PresidentKanagawa on March 26, 2007; “to carry out a system-atic review of all plant safety measures” (2) confirma-tion of the renovation plan and (3) verification of envi-ronmental control and safety management status.

The results of the audit proved that Shintech’s envi-ronmental control and safety management efforts haveresulted in the stringent observation of the fundamen-tals of production technology and that rational safetymanagement procedures fully accounting for on-sitepractice have been established and are being carefullyand repeatedly implemented. In his assessment ofShintech, Kiichi Habata—the Managing Director incharge of Environment Control and Safety at Shin-EtsuChemical, who performed the audit—stated, “The fun-

damentals of environmental control and safety, whichare to steadfastly do what should be done, are beingfaithfully implemented. In the United States, guidanceis provided under a clear division between theOccupational Safety and Health Administration (OSHA)for inside business site premises and the EPA for out-side the premises. The standards for devices and facili-ties are also systematically maintained under a rationaland practical system. Japan could learn a lot from thissystem.”

The audit was a valuable opportunity for the Shin-Etsu Group to enhance its environmental and safetyactivities. We remain committed to uniting the powerof the Group to thoroughly implement environmentaland safety measures.

Addis Plant Works to Prevent EnvironmentalPollution

David WisePlant Manager, Addis Plantand Plaquemine Plant

Conducting Environment Control and SafetyAudits

37 38

History of Environmental Activities/RC Verification


RC Verification History of Environmental Activities

Apr. 1953 Work manuals and standards formulatedSep. 1955 Education and training committees establishedMar. 1961 R&D Committee and Chemical Industry Council establishedJun. 1961 Safety Council establishedOct. 1961 First safety audit carried outNov. 1966 Safety Health and Hygiene Committee establishedNov. 1970 Environmental Control & Safety Department establishedOct. 1971 Wastewater treatment facility completed at Isobe PlantMar. 1972 Large-scale hydrochloric acid recovery facility (byproduct incinerator) completed at

Kashima Vinyl Monomer plantNov. 1973 Company wide emergency council establishedFeb. 1974 Environmental Control & Safety Departments in each plant placed under the

direct jurisdiction of plant general managersAug. 1975 Environmental Control & Safety Management Regulations and Emergency

Response Regulations formulatedOct. 1989 CFC Control Countermeasures Committee established

May 1990 Global Environment Issues Countermeasures Committee established (by reorga-nizing the CFC Control Countermeasures Committee)

Mar. 1995 Participation in Responsible Care (RC) promotionJul. 1996 ISO 14001 certification obtained for the Gunma ComplexDec. 1997 ISO 14001 certification obtained for all production plants of Shin-Etsu HandotaiAug. 1998 Environmental Charter adoptedNov. 1998 First Environmental Report publishedJan. 1999 ISO 14001 certification obtained for JAPAN VAM & POVAL CO., LTD.Nov. 1999 Company-wide hearing on environmental issues

Mar. 2000 ISO 14001 certification obtained for all domestic production plants of Shin-EtsuChemical

Apr. 2000 ISO 14001 certification obtained for Nissin Chemical IndustryMay.2000 Final disposal facility completed at the Gunma ComplexOct. 2001 Waste disposal facility completed at the Naoetsu PlantMar. 2003 Attended First International Conference on Green and Sustainable Chemistry

(GSC TOKYO 2003)Apr. 2005 Corporate Social Responsibility (CSR) Promotion Committee establishedJul. 2005 Waste-recycling system at Naoetsu Plant began full-scale operationOct. 2005 Environmental Charter revised

Measures taken by the Shin-Etsu Group

Nov. 1988 Fukui Prefectural Governor’s Award for Excellent Manufacturer of High- PressureGases (Shin-Etsu Handotai/Takefu)

Sep. 1992 International Trade and Industry Minister’s Award for Excellent Green Factory(Shin-Etsu Handotai/Shirakawa)

Oct. 1993 Osaka Prefectural Governor’s Award for Excellent Manufacturer Related to High-Pressure Gases (JAPAN VAM & POVAL)

Nov. 1994 Achieved 13,300,000 disaster-free hours, a 3rd class disaster free record (Shin-Etsu Handotai/Shirakawa)

Jun. 1996 Prime Minister’s Commendations for Outstanding Contribution to the NationalGreening Campaign (Shin-Etsu Handotai/Shirakawa)

Oct. 1996 Minister of International Trade and Industry Award for Excellent ManufacturingFacility of High-Pressure Gases (Shin-Etsu Chemical/Gunma)

Jun. 1997 Fire Defense Agency Director General’s Prize for superior handling of hazardousmaterials (Shin-Etsu Chemical/Gunma)

Jun. 1997 Fire Defense Agency Director General’s Prize for superior handling of hazardousmaterials (JAPAN VAM & POVAL)

Nov. 1998 Superior High-Pressure Gas Production Facility Award from the Head of the KinkiBureau of Economy, Trade and Industry (Shin-Etsu Handotai/Takefu)

Jul. 1999 Superior High-Pressure Gas Production Facility Award from the Head of the KantoBureau of Economy, Trade and Industry (Shin-Etsu Chemical/Kashima)

Jun. 2000 Fire Defense Agency Director General’s Prize for superior handling of hazardousmaterials (JAPAN VAM & POVAL)

Jul. 2000 Minister of Labor Superior Prize (Nissin Chemical Industry)Jul. 2000 Minister of Labor Superior Prize (Naoetsu Electronics Industrial)Nov. 2000 Superior High-Pressure Gas Production Facility Award from the Head of the Kinki

Bureau of Economy, Trade and Industry (Shin-Etsu Quartz Products/Takefu)Oct. 2001 Minister of Health, Labor and Welfare’s commendation for industrial hygiene

activities (Shin-Etsu Quartz Products/Takefu)Oct. 2001 Minister of Economy, Trade and Industry Award for Superior High- Pressure Gas

Production Facility (Shin-Etsu Chemical/Kashima)Oct. 2002 Thirty-Year disaster-free Special Achievement Award from the Japan Soda

Industry Association (Shin-Etsu Chemical/Naoetsu)Nov. 2002 Superior High-Pressure Gas Production Facility Award from the Head of the Kinki

Bureau of Economy, Trade and Industry (Fukui Shin-Etsu Quartz)Jul. 2003 Superior High-Pressure Gas Production Facility Award from the Head of the Kanto

Bureau of Economy, Trade and Industry (Shin-Etsu Chemical/Kashima)Aug. 2003 Achieved 7,000,000 disaster-free hours, a 1st class disaster-free record (Shin-Etsu

Handotai/Isobe)Aug. 2003 Achieved 5th class disaster-free record (Naoetsu Electronics Industrial)Jul. 2005 Excellent Safety and Hygiene Workplace Award from the Minister of Health, Labor

and Welfare (Shin-Etsu Chemical/Kashima)Dec. 2005 Commendation of the Malaysian Ministry of Human Resources (a counterpart of

the Japanese Health, Labour and Welfare Ministry) for One of Five DomesticCompanies in Malaysia for Excellence in Safety and Occupational HealthManagement (S.E.H.(Shah Alam) Sdn. Bhd.)

Jul. 2007 Nagano Labor Bureau Director’s Superior Prize (Nagano Electronics Industrial)

Safety/Environment/Industrial Health-relatedCommendation Results

External Assessments

FTSE4 Good

Rating

Moody’s Investors Service, Inc. has classified Shin-EtsuChemical Co., Ltd.’s long-term debts as Aa3

Memberships

Nippon Keidanren (Japan Business Federation)Japan Chemical Industry AssociationVinyl Environmental CouncilPlastic Waste Management InstituteThe International Friendship Exchange CouncilThe Japan Committee for UNICEF, etc.

Responsible Care (RC) VerificationAiming to further improve its RC activities, Shin-EtsuChemical carries out RC verification. They involve theverification of all Group activities and reports by theJapan Responsible Care Council (JRCC.)

RC verification is conducted in accordance with theFundamental Policy of the Japan Chemical IndustryAssociation for Environment and Safety (Revised edition,2005) and the Responsible Care Codes*. The verifica-tion process aims to improve the quality of RC activitiesby providing objective evaluations of the content andresults of RC activities carried out by JRCC members,and serves to enhance the credibility of RC activities bypublishing the results and ensuring accountability.

As of March 31, 2008

* Responsible Care CodesSix principle areas are addressed when implementing Responsible Care:environmental preservation, process safety and disaster prevention,occupational health and safety, distribution safety, chemical and productsafety, and social dialogue with the public. The codes cover initiatives inthese areas, together with the Management System Codes required foroperating all the above.

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