sei csr report2011 · 2015-03-22 · 1 sei csr report 2011 editorial policy april 1, 2010 through...

C o r p o r a t e S o c i a l R e s p o n s i b i l i t y R e p o r t

● The Spirit of “Focusing on Technology” is a Driving Force for Business Development

● Micro Smart-Grid Demonstration System, a future-oriented power grid for the use of renewable energy, started its operation!

SEI CSR EYE Social Contribution through Business OperationsFeature

SEI CSR Report 2011

SEI CSR Report 2011

1 SEI CSR Report 2011

Editorial Policy

April 1, 2010 through March 31, 2011 (fiscal 2010). Some activities conducted in fiscal 2011 are also covered. The last CSR Report was published in November 2010. The next CSR Report is scheduled for release at the end of October 2012.

Global Reporting Initiative (GRI)'s Sustainability Reporting Guidelines Version 3.1, and Environmental Reporting Guidelines 2007 issued by the Ministry of the Environment of Japan.

This report introduces the profile of the Sumitomo Electric Group including the economic aspects in the first half, and reports the environmental and social aspects of the Group's activities (the five CSR priority categories for the Group) in the second half.

● The feature “SEI CSR EYE” (P13 to P16) presents our R&D efforts that assist the Sumitomo Electric Group in continuing its social contribution through business activities for the future. This year's report introduces the NEXT Center, which was established to develop innovative technologies, and an example of its R&D activities “Micro Smart-Grid Demonstration System.”

● In P24, the main targets and actual results in fiscal 2010, as well as the targets for fiscal 2011, are summarized to provide an overview of our Group's CSR activities in this fiscal year.

● In P65, the GRI Content Index is presented to show the comprehensiveness of the disclosed information. This report meets the Application Level B+ as defined in the GRI Sustainability Reporting Guidelines Versions 3.1, and the self declaration is assured by a third party.

● To ensure the accuracy and completeness of the performance indicators, we have engaged an independent third party to provide assurance on them, and the indicators subject to the assurance are marked accordingly. In addition, efforts have been made to enhance the credibility of this report by seeking comments from an external expert in this field on our initiatives and disclosure.

The acquisition of ISO 14001 certification is published in a separate booklet.

Sumitomo Electric Industries, Ltd. and its consolidated subsidiaries (284 companies)

In this CSR Report, “Sumitomo Electric,” or “the (our) Company” refers to Sumitomo Electric Industries, Ltd., “Group companies” or “affiliates” refers to the consolidated subsidiaries of Sumitomo Electric and “the Sumitomo Electric Group” or “the Group” refers to Sumitomo Electric and its Group companies.

● When quantitative information is disclosed, Tokai Rubber Industries, Ltd., Nissin Electric Co., Ltd. and Sumitomo Densetsu Co., Ltd., which are listed in a stock exchange in Japan, and their consolidated companies are excluded, and Sumitomo Electric alone or only the Company and limited consolidated subsidiaries are included in some cases. The items referenced within such a specifically limited boundaries are indicated in the text or footnotes in the table or graph.

● The boundaries of the data compilation for “Corporate and Business Outline” (P9 to P10) is Sumitomo Electric and 325 consolidated companies.

● The data in “Social Contributions” (P63) also cover some of the equity-method companies.

■ Period Covered by This CSR Report

■ Guidelines Referenced

■ Boundary of This CSR Report

In order to enhance objectivity and transparency, the information disclosed in this report has been reviewed by an independent third party for assurance. The results are presented in P67. As a result of the assurance, we have been authorized to use the mark shown on the right. This mark is the registration proof that “SEI CSR Report 2011” satisfies the J-SUS mark standards designated by the Japanese Association of Assurance Organizations for Sustainability Information (http://www.j-sus.org/).

● Hope that the outcomes of engagement with external stakeholders are reflected on the CSR management. ⇒ The opinions received at the stakeholder dialogue are reflected on the this report, such as the description of the boundary

on environmental issues and the sophistication of environmental accounting in comparison with that in the previous fiscal year (refer to P31 to P32).

●The explanation on how the results of the survey to create a lively working environment are used should be more specific, and it is desirable to improve the follow-up information.⇒ We tried to make the description more specific in comparison with the previous fiscal year’s report (refer to P54).

● It is time to start the collection and disclosure of labor information on a global basis.⇒ We included as much information on a global basis as possible, such as the Global Human Resources Management (HRM)

Policy and the number of employees in each region of the world (refer to P52).

● Hope that Sumitomo Electric continuously evaluates the effectiveness of compliance training and development of regulations and organizational structure.⇒ We will make more efforts to enhance our compliance system including our overseas Group companies (refer to P19 to P20).

Responses to findings by the independent third party

Con ten t s SEI CSR Report 2011

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Governance

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CSR Basic PolicyStakeholdersMateriality

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Foundation for CSR

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Procurement ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Relationships with SuppliersToward the thorough implementation of CSR procurement from a global perspective

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Responsibility for CustomersSeeking further quality improvement to satisfy customers

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Environmental ManagementActivities to Prevent Global WarmingPromotion of Resource Conservation and RecyclingReduction of the Release of Harmful Chemical SubstancesManagement of Chemical SubstancesExpansion of Environmentally Conscious Products / Biodiversity

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Relationships with EmployeesBecoming a truly global company through cross-border activities

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Corporate and Business OutlineOur Business Introduction

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SEI CSR EYE Social Contribution Through Business Operations

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・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・27Second Sumitomo Electric Group Stakeholder Dialogue

SEI CSR Report 2011 2

Micro Smart-Grid Demonstration System, a future-oriented power grid for the use of renewable energy, started its operation!

Response to the Great East Japan EarthquakeBasic Value Standards

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utlineGovernance

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The Spirit of “Focusing on Technology” is a Driving Force for Business Development

cables and many other products that support social infrastructure. While unstable conditions still continue such as concern over power supply and problems in the supply chain, I believe that it is a social mission for our Group to supply the products essential for the restoration and rehabilitation of the affected areas in a stable manner, and we will exert best united efforts for the earliest possible reconstruction.


I would like to offer my sincere prayers for the repose of the souls of those who lost their lives in the Great East Japan Earthquake, and my deepest sympathy to those who have been affected by this disaster. In the Sumitomo Electric Group, the earthquake caused no death or life-threatening injury to its employees although some of them suffered injury and/or damage to their houses. Part of the production facilities, mainly those in Tohoku and North Kanto areas, were destructed, which affected our manufacturing activities. Despite such difficulties, our employees made a united effort to inspect and restore facilities for the resumption of production. Consequently, we managed to restore most the production facilities by the end of April. In the meantime, our personnel performed the restoration of the communication circuit linking the Fukushima Daiichi Nuclear Power Station with Tokyo, which was disconnected due to the damage of the earthquake, on March 18. The work site was located 10 km from the power station, which was within the evacuation zone. While punctuated by aftershocks and challenged by the cold weather at a height of 70 meters above ground, the operation was successfully completed after about 15 hours. The nine employees of our Group companies who worked for the restoration showed a strong sense of duty to contribute to society and complete their tasks, which reminded me of the fact that it is such a sense of responsibility that underpins our Group. Our Group's businesses involve power cables, communication

Preface

The business environment surrounding the Sumitomo Electric Group in fiscal 2010, not only at home but also overseas, became more difficult due to faltering domestic demand and a sharp rise in the yen from the middle of the year, although global demand, pr imari ly in the automotive-related segment, continued to recover and expand. Under these circumstances, we at the Sumitomo Electric Group focused on expanding our marketing clout, capturing global demand, thorough cost reduction and the development and sales expansion of new technologies and products. As a result, in fiscal 2010, we managed to accomplish net sales and operating, ordinary, and net income increases from the previous fiscal year on a consolidated basis, surpassing the forecasts we announced at the beginning of the term although we posted an extraordinary loss of 20 billion yen in connection with the earthquake disaster. Fiscal 2011 is particularly important for us, since it is the year before the final year of our medium-term business plan “VISION 2012,” and we need to get prepared to meet the goals. Given the impact of the earthquake and other issues, it

Business Results

For Continuous Contribution to the Sustainable Growth and Development of Society

Top Message

Glossary ＊ SEQCDDSEQCDD stands for safety, environment, quality, cost, delivery and R&D, which are fundamental components in the business activities of the Sumitomo Electric Group.


While our CSR Report presents the Sumitomo Electric Group's activities from social, economic and environmental aspects every year, it does not have enough space to spare many pages for our research and development activities that support the sustainable corporate development. We have therefore introduced some of the activities in the Feature Article “SEI CSR EYE” for several years. The subject of the feature article for this fiscal year is the NEXT Center, which was created in January 2010 with the mission of predicting future technological innovations. As a topic of the center, the Micro Smart-Grid Demonstration System, which was installed in the Osaka Works of Sumitomo Electric in June 2011 and has begun testing, is also outlined in the article. As the efficient use of renewable energy is becoming increasingly important, we will accelerate the research and development of this demonstration system as a measure to solve energy problems, in order to put it to practical use as early as possible.

Research and Development

Along with the social contribution through its core business, the Sumitomo Electric Group is actively involved in social contribution activities as a member of society in accordance with the Sumitomo Electric Group Basic Policies on Social Contributions, which were stipulated in 2007. The SEI Group CSR Foundation, which was officially recognized as a public interest incorporated foundation in February 2010, operated a program to support academic and research activities in f iscal 2010, in addition to monetary contributions to university courses and granting of scholarships. The affiliates of our Group also performed various activities to contribute to local communities in their neighborhoods to live in harmony with them, such as cleanup activities, participation in local events and on-site science classes. We have also launched “Smile Relay,” a blog to introduce the social contribution activities of our Group, on our corporate website. The blog presents specific cases of our activities around the world with expectation that they encourage Group companies and their employees to perform social contribution activities and eventually stimulate the whole Group's contribution to local communities and corporate citizen activities.

Social Contribution

Lastly, Sumitomo Electric received notice from the Japan Fair Trade Commission advising us to end a practice that violated Act on P roh ib i t ion o f P r i va te Monopol i za t ion and Maintenance of Fair Trade in connection with the sale of optical fiber cable and related products in May 2010. In addition, concerning automotive wiring harnesses and related products, we were under scrutiny of the Commission and overseas competition authorities from the EU and U.S. We sincerely apologize to our shareholders for causing anxiety.

Compliance

With respect to environmental management, we held the second Sumitomo Electric Group Stakeholder Dialogue in March 2011 with the theme “Toward the Further Promotion of the Environmental Management of the Sumitomo Electric Group.” We invi ted three experts with outstanding knowledge, and exchanged opinions on the effective and sustainable environmental management of the Sumitomo Electric Group, which has been committed to environmental management as one of the key issues in corporate management since early on. We will use the valuable opinions received at the dialogue for continuous promotion of our environmental management.

Environmental Conservation Activitiesis expected that the business environment both in Japan and overseas remains unclear. In this situation, our Group will further improve our SEQCDD＊ so as to build a strong corporate constitution flexibly responsive to the changing times. To this end, we are continuing to implement safety and environment measures, conduct quality improvement and cost reduction activities, and develop new products and expand sales of such products. We are also making Group-wide efforts to achieve the targets set in VISION 2012 by focusing on capturing growing demand in emerging economies and promoting early launch of businesses in growth areas such as environmental and energy segments.

The other pillar of this report is the establishment of the Global Human Resource Policy. The business activities of the Sumitomo E lectr ic Group involves a wide range of technologies, markets and geographical areas, and approximately 180,000 employees (40,000 in Japan and 140,000 in other countries) in more than 30 countries work for our business operations. As you know, globalization is entering a new stage and a paradigm shift is taking place in every aspect, forcing the world to face unpredictable social, political and economic conditions. To grow in a global and sustainable manner under such circumstances, our Group needs to make full use of all the resources we have. In such efforts, the key is human resources. With the aims of sharing our policy on human resources that support such activities of our Group worldwide, creating organizations rich in diversity and promoting the effective use of human resources, we have established Global Human Resource Management (HRM) Policy and will disseminate it on a global scale. This Global HRM Policy declares that we will provide all human resources working for our Group companies across the world with opportunities for self-actualization and career development, promote diversification of human resources, and foster the leaders who lead and give energy to our global business. We will promote personnel programs based on this policy to establish a firm foundation for the global growth and development of the Sumitomo Electric Group.

Global Human Resource Policy

Second Sumitomo Electric Group Stakeholder Dialogue

Basis for Managem

ent


By “Glorious” we mean our ideal state in a qualitative sense, which is to win trust and respect from society. “Excellent” represents our ideal state in the quantitative sense, which is to achieve good business results such as sales, profits and earning capacity. In other words, the concept of “Glorious Excellent Company” is to achieve the goals set in our medium-term management plan “VISION 2012” and the new medium-term management plan currently under preparation with a view to future paradigm shifts so as to realize the sustainable development of the Group as a whole. To realize the concept, we will 1) follow the Sumitomo Spir i t that has permeated Sumitomo's history of 400 years, and the Sumitomo Electric Group Corporate Principles established on the basis of the Spirit as the foundations for our business activities, 2) nurture the human resources who inherit these basic spirits, 3) establish an organization whose R&D, production and sales & marketing divisions comprise a trinity supported by corporate staff divisions and 4) execute the development strategy that focuses on expanding our global presence and strengthening our leading technologies in the f ive priority business segments.

Regarding the Concept of “Glorious Excellent Company”

The Sumitomo Electric Group has inherited the Sumitomo Spirit with a history of more than 400 years, and continuously grown through many challenges and difficulties. Keeping adherence to compliance and corporate ethics in mind as the absolute foundation, we will develop our business activities with the aim of becoming the Glorious Excellent Company that wins the trust of society including stakeholders. We sincerely seek your continued understanding and support for our endeavors.

Closing Remarks

We took these matters very gravely and seriously, and formulated Competition Law Compliance Regulations in June 2010 by placing competition law compliance as our top priority. We also established a system to implement competition law compliance regulations. Thus, we have worked for the fundamental improvement of our system to eliminate violations and prevent recurrence. We are sincere in our efforts to conduct fair business activities continuously with an indomitable resolve.

Automotive

The Sumitomo Spirit The Sumitomo Electric Group

Corporate Principles

Ideal state or goal in qualitative terms

Growth Strategies

(Global Top 3 Target)

●Expanding our global presence ●Strengthening our leading technologies

Human Resource Development(SEI University)

Portfolio: Five Business Segments

2012 Targets ・Consolidated sales: 3 trillion yen ・Consolidated operating income: 210 billion yen・Consolidated ROA: 10%

The Second 5-year Plan

Industrial MaterialsInformation & Communications

Growth

Corporate StaffSales &Marketing

R&D

Production

Ideal state or goal in quantitative terms

Electronics Electric Wire &Cable, Energy

Achieved

2007 Targets (Initial) ・Consolidated sales: 2 trillion yen ・Consolidated operating income: 120 billion yen・Consolidated ROA: 8%

The First 5-year Plan

Masayoshi Matsumoto President & CEO Sumitomo Electric Industries, Ltd.


Advance Preparation --Business Continuity Plans (BCPs)--Sumitomo Electric has enhanced its preparedness for disasters, such as large-scale earthquakes, through fire prevention measu res based on the expe r i ence f rom the Grea t Hanshin-Awaji Earthquake. In fiscal 2008, in addition to traditional disaster prevention measures, we developed Business Continuity Plans (BCPs) in each business unit to ensure that our businesses can be continued even in the event of a disaster and that we can swiftly resume operations should our operations be interrupted. The plans have been improved continuously.

Initial ReactionSumitomo Electric set up the Group-wide crisis headquarters (Osaka Head Office) immediately after the occurrence of the earthquake. We secured an internal communication method using the dedicated line for disaster countermeasures, and connected the sites of Sumitomo Electric and its Group companies via teleconference systems to share and exchange information.● In the initial reaction, we confirmed the safety of employees and their families in accordance with the basic policy.

● In the sites hit by a big tremor, we managed to secure the safety of ourselves and evacuated to designated refugee areas smoothly as we did in the regular emergency drills.

Restoration Efforts● The Sumitomo Electric Group made a concerted effort to restore the affected sites. Specific actions included collection of information on the damage and estimation of cost for the restoration plan. The staff of the equipment design and equipment maintenance sections working at our affiliates in western Japan visited the affected areas to give support.

● Despite the difficult conditions such as rolling blackouts and shortage of everyday goods, most of the sites were ready for the resumption of production activities by the end of April thanks to the dedicated efforts of our employees for restoration.

Other● Donations　In addition of 200 million yen donated by Sumitomo Electric mainly to the Japan Red Cross, the Company Directors donated 5.5 million yen. Approximately 22 million yen in total, comprising the money collected from Sumitomo Electric employees and an amount equal to the collected money provided by the Company in its matching gift system, was also donated. Group and affiliated company employees at various Company-related locations made donations of around 3.9 million yen in total as well.

● Relief supplies　To support the affected areas, the Sumitomo Electric Group is sending survival food and batteries from its emergency stocks to the areas via public agencies.

● Physical support　We encourage our employees to use the volunteer holiday system, and also recommend that employees personally participate in volunteer activities in the affected areas.

Reconstruction Assistance● Support for the Fukushima Daiichi Nuclear Power Station　The Sumitomo Electric Group's employees worked for the restoration of the communication circuit l inking the Fukushima Daiichi Nuclear Power Station with the Tokyo Electric Power Company on March 18.

● Support for the reconstruction of infrastructure in the affected areas

　The core businesses of our Group include the manufacturing of transmission cables, communication cables and related products, which support social infrastructure, and we believe that the delivery of such products is our social mission. We received certificates of application from NTT DOCOMO, INC. and KDDI CORPORATION in July, for our Group's cooperation for the delivery. We are continuously doing our very best to help reconstruct the affected areas by supplying our products as stably as possible.

● Response to power shortage　To respond to power shortage during the summer time, we have introduced a shift of power consumption from daytime to night by adjusting the hours of operation. Holidays and summer vacation are moved in a way to cut electricity use. We are also making best energy saving efforts in offices.

Information on the State of Damage● While tsunami caused devastating damage as a result of the earthquake, our Group was not affected directly by tsunami.

● We also confirmed that no employees of our Group died from the earthquake although the family members of some employees suffered from the damage unfortunately.

● Among our Group's production sites, the earthquake caused huge damage to the buildings and facilities of the Electronic Wire Division and other affiliates in Kanuma and Kiyohara Industrial Park (both in Tochigi Prefecture), where the tremors registered an intensity of 6-plus on the Japanese scale of 7.

① Ensuring the safety of human lifeWe will give top priority to ensuring the safety of human life of customers, employees, suppliers, residents in local communities and other stakeholders.

② Stable supply of products and servicesWe will stably supply products and services required by societies to fulfill our responsibility as a supplier.

③ Respect for compliance and corporate social responsibility We will fulfill our corporate social responsibility by respecting compliance and by acting in accordance with the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior.

Sumitomo Electric Group Basic Policy for Business Continuity

The Great East Japan Earthquake, which caused massive damage to Tohoku, Kanto and other areas of Japan, had certain impact on the Sumitomo Electric Group. We are dealing with the earthquake disaster based on our experience of overcoming the crisis caused by the Great Hanshin-Awaji Earthquake with the great efforts of concerned persons.

Our Response to the Great East Japan Earthquake

Basis for Managem

ent

Basic Value Standards


The Sumitomo Spirit

● Attaching Importance to TechnologySumi tomo ' s o r i g i na l coppe r bus i ness cen te red on the nanban-buki (foreign-style) refining technique, which at the time comprised the leading edge of smelting technology. The business pol icy of valuing technology and actively developing new technology has been a driving force in the evolution of Sumitomo business from the very beginning.

● Respect for Human ResourcesAs the tenet that “people make the enterprise” indicates, it is no exaggeration to say that the future of companies depends on the capabi l i t ies of ind iv idual employees . The d iscovery and cultivation of superior human resources based on the respect for people has been handed down as a tradition of Sumitomo in the Sumitomo Electric Group.

● Long-Range PlanningThis principle is derived from Sumitomo's original experience in copper mine management, which requires long-term, continuous consideration. A future-looking, long-term view, complemented by a wider perspective to ensure national and social interests, has guided Sumitomo managers for generations.

● Mutual Prosperity, Respect for the Public GoodAs represented by “Sumitomo's business must benefit not only Sumitomo itself, but also the nation and society in general,” a statement by Sumitomo's Director General in the late 19th century, Sumitomo has traditionally conducted business in harmony with public interest, based on the fundamental spirit of “gratitude toward society.”

Sumitomo shall achieve prosperity based on solid foundation by placing prime importance on integrity and sound management in the conduct of its business.

Sumitomo's business interest must always be in harmony with public interest; Sumitomo shall adapt to good times and bad times but will not pursue immoral business.

The Sumitomo Spirit grew out of the guiding principles set down in his later years by first-generation Head of the House of Sumitomo, Masatomo Sumitomo (1585 - 1652), in Monjuin Shiigaki (the Aphorisms of Monjuin, which describes how a merchant should conduct his business). The Sumitomo Spirit has been passed down and elaborated through the history of Sumitomo, which mainly operated copper business. The essence of the Spirit was distilled in the “Business Principles” codified in 1891. Also integrated into the Sumitomo Spirit are other beliefs and principles behind business decisions, and remarks made by Sumitomo managers, which have been handed down through generations. The pioneering ideas of the Sumitomo Spirit, which also reflect today's concepts of compliance and CSR, have been steadfastly inherited as a commonly held asset of the Sumitomo Electric Group.

Monjuin Shiigaki (the Aphorisms of Monjuin)Masatomo Sumitomo was born in 1585 in Maruoka, Echizen (now Maruoka-cho, Sakai-shi, Fukui Prefecture) as the second son of a samurai warrior family, but entered priesthood in Kyoto at the age of 12. His intelligence led him to be given the name Monjuin, after Monju Buddhist saint who embodies enlightened wisdom. He later left the priesthood and started his own business to trade books and medicines, which was the origin of the House of Sumitomo. Even after he left the priesthood, many people continued to ask for his teachings and respect his faithful instructions. The fact that the founding father was a widely respected Buddhist priest is the unique feature of the Sumitomo Group. A letter written by Masatomo Sumitomo (Monjuin) in response to a family member's request for guidance on conducting business was Monjuin Shiigaki.

Consisting of five articles, Monjuin Shiigaki contains ideas reflecting the unstable social conditions of Kyoto in the 17th century, when it was written. The preamble admonishes us to pay attention to any matters including business and work wholeheartedly on everything. This precept “Banji-nissei” has been passed down continuously, by way of hoping that each one of us in Sumitomo does not focus only on making money but improves the personality and develops the character. This lofty document urges us to persist in sincere and careful effort and to cultivate good character. The Sumitomo Electric Group positions this “Banji-nissei” as the keyword representing the Sumitomo Spirit.

Banji-nissei

Monjuin Shiigaki※

Figure of Masatomo Sumitomo (Monjuin)※

Signboard of the medicine shop operated by Masatomo※

(do your sincere best in not only business but also every aspect of your life)

Business PrinciplesArticle 1 Article 2

※Collection of Sumitomo Historical Archives


The Sumitomo Electric Group Corporate Principles

The Sumitomo Electric Group Charter of Corporate Behavior

On the occasion of Sumitomo Electric's centennial celebration in 1997, the Sumitomo Electric Group defined the Sumitomo Electric Group Corporate Principles as a new management philosophy arising from the Sumitomo Spirit. The Corporate Principles underscore our basic policy of commitment to our important stakeholders--our clients, shareholders, society, the environment and our employees--and rededicate the Group to the importance of compliance and trust.

Each company of the Sumitomo Electric Group shall

● Offer the very best goods and services to satisfy customer needs. ● Build technical expertise, realize changes and strive for consistent growth. ● Contribute to creating a better society and environment, with a firm awareness of our social responsibility. ● Maintain high corporate ethics and strive to become a company worthy of society's trust. ● Nurture a lively corporate culture that enables employee self-improvement.

To realize a “Glorious Excellent Company,” it is essential that each and every administrator and employee in the Sumitomo Electric Group conduct business in accordance with the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles. In September 2005, the Sumitomo Electric Group Charter of Corporate Behavior was created to express the essence of our Group-wide code of conduct in a more straightforward and easy-to-understand manner, so as to help everyone in the Group realize the Group's corporate principles.

Basis for Managem

ent

1. Provision of Useful and Safe Products and Services●　We will aim to provide useful and safe products and services that will satisfy customers in all aspects including quality and cost.

2. Development of New and Original Businesses and Products●　We will aim to develop new, original and profitable businesses and products by using our unsurpassed creativity in meeting customer demands.

3. Growth and Development of the Sumitomo Electric Group through Global Business Activities●　We will strive for consistent growth of the Sumitomo Electric Group, by consistently conducting our businesses with a global perspective and taking full advantage of the Group's dynamic business operations.

4. Contribution to Preservation of the Global Environment●　We will contribute to the building of a sustainable society, taking voluntary and active initiatives to preserve the global environment.

5. Observance of Laws and Regulations●　We will observe national and international laws and regulations and always act fairly and openly.

6. Fair and Proper Business Activities●　We will promote fair, transparent and free competition and sound trade.

7. Conduct as a Member of Society●　We will contribute to creating a better society, with a firm awareness of our social responsibility as a “good corporate citizen.”

●　We will maintain a strong stand against any force that threatens public order and safety.

8. Harmony with the International Community●　As a corporate member of the international community, we will respect the culture and customs of every region of the world and contribute to the development of those regions.

9. Safe, Sound Workplace and Employees' Growth and Development●　We respect the rights of all individuals and will endeavor to make our workplaces safe, sound and energetic.

●　We will strive to respect personality and individuality of the employees and support their professional development and career to enable self-realization.

10. Disclosure of Relevant Information and Promotion of Communication with Society●　We will aim to disclose appropriate corporate information to our various stakeholders, including shareholders.

●　We will also promote good communication with society through public information and hearings.


Corporate and Business OutlineSumitomo Electric's business dates back to 1897, when the House of Sumitomo opened Sumitomo Copper Rolling Works to manufacture and market bare copper wires. Subsequently, to support the rapidly expanding electrical industry in Japan, the electric wire business became independent of the Sumitomo Copper Rolling Works and in 1911 formed a separate entity as Sumitomo Electric Wire & Cable Works. After this was incorporated as a limited company in 1920, the company name changed to its present name of Sumitomo Electric Industries, Ltd in 1939. Since its founding more than 110 years ago, the Sumitomo Electric Group has continued to develop unique technologies based on the electric wire and cable manufacturing technologies, and has persistently pursued new business opportunities. The Sumitomo Electric Group is now conducting global business operations that support social and industrial infrastructures in diverse ways, in the following five major business segments: automotive; information & communications; electronics; electric wire & cable, energy; and industrial materials.

Performance in Fiscal 2010The Japanese economy achieved positive growth in the first half of fiscal 2010 because of increased exports and capital expenditures. However, in the second half of the year, the economy lost momentum due to slowing consumer spending and further appreciation of the yen. Furthermore, in March 2011, Japan faced a national crisis caused by the Great East Japan Earthquake. In the meantime, with solid economic growth in emerging countries continuing, the global economy was on its way to a recovery in the first half of the year. In the second half of the year, however, in addition to soaring natural resource prices and concern about looming inflation in emerging economies, new uncertain factors including intensified regional conflicts and the expanding financial crisis in Europe weighed on the global economy.The business environment surrounding the Sumitomo Electric Group, not only at home but also overseas, became more difficult due to faltering domestic demand and a sharp rise in the yen from the middle of the year, although global demand, primarily in the automotive-related segment, continued to recover and expand. In addition, the Great East Japan Earthquake damaged some production facilities at the Group's strongholds. The influence of the disaster went beyond such direct losses. The earthquake and tsunami also caused indirect losses, such as stagnation of orders and production due to suspended operations at customers and suppliers. Furthermore, there is a fear that possible restriction on the use of electricity will make a negative impact on productivity in the future. We at the Sumitomo Electric Group strived to expand our marketing clout further to obtain global demand, and focused on thorough cost reduction and development of new technologies and products as well as expanded sales of such products. We immediately restored production lines at the Group's strongholds that suf fered damage from the earthquake and resumed their operations. In addition to these restoration efforts, we tried working out a scheme to better facilitate procurement of materials from multiple sources in order to upgrade the Group's supply chain, and

Company Name

Established

Incorporated

President

Capital Stock

Head Office

Sumitomo Electric Industries, Ltd.

April 1897

December 1920

Masayoshi Matsumoto

99,737 million yen (as of March 31, 2011)

4-5-33, Kitahama, Chuo-ku, Osaka, JAPAN

0

25,000

20,000

15,000

10,000

5,000

(Unit: 100 million yen)

2006 (Fiscal year)2007

23,844 25,409

2008

21,220

2009

18,364

2010

20,338

Net Sales (Consolidated)


Net Income (Consolidated)

0

200

800

1000

400

(Fiscal year)

600

760

2006

878

2007

172

2008

287

2009

706

2010


Total Assets and Net Assets (Consolidated)

0

4,000

8,000

12,000

16,000

(Fiscal year)

20,000

24,000

10,530

21,264

2006

11,282

21,949

2007

10,141

18,682

2008

10,646

19,399

2009

10,926

19,563

2010Net AssetsTotal Assets

（％）

Return on Equity (ROE) and Return on Assets (Note) (ROA) ＊

2

0

4

6

10 8.9

8.8 9.5

9.8

8

ROAROE (Note) Assets: Total assets less interest-free liabilities(Fiscal year)2006 2007

1.9

1.6

3.67.3

2008 2009 2010

3.3

7.6

Corporate and Business Outline

Glossary ＊ ROAROA (Return on Asset) indicates how efficiently a company uses its assets to make profits. Sumitomo Electric calculates ROA by dividing operating income by assets (total assets less interest-free liabilities).

reorganized production lines to cope with possible energy rationing including electricity.As a result, in the reporting term, we posted net sales of 2,033,827 million yen, operating income of 103,810 million yen, ordinary income of 129,099 million yen, and net income of 70,614 million yen. Although we registered a loss on disaster of 8,845 million yen and impairment loss of 11,336 million yen due to the Great East Japan Earthquake, we thus recorded year-on-year growth in both sales and profits.

Global Business ExpansionThe Sumitomo Electric Group is a global corporate group with 325 consolidated companies and over 180,000 employees in more than 30 countries around the world--primarily in Asia, America, Europe and Japan. While providing superior products and services, we respect the cultures and customs of the countries and regions in which we operate. As a corporate entity we conduct business in harmony with society, so as to contribute to the development of the economy and society.

0

160,000

120,000

80,000

40,000

(Persons)

2006 (Fiscal year)2007

133,853153,725

2008

152,547

2009

157,203

2010

182,773

Number of Sumitomo Electric Group Employees

※Sumitomo Electric and consolidated subsidiaries

Numbers as of end of March each year

Net Sales by Region (Consolidated)

Japan 11,435

America 2,399

Asia 4,511

Europe and others 1,993

[Breakdown of companies consolidated] (as of March 31, 2011)Consolidated subsidiaries (284), equity-method non-consolidated subsidiaries (3) and equity-method affiliates (38)

● Manufacturing/Construction　 ● General/Sales

Companies Consolidated: 325 in total

Singapore ●●●●●●

Thailand ●●●●●●●●●●●●●●

Malaysia ●●●●●

Indonesia ●●●●●●●

Philippines ●●●●●●●●●●

Vietnam ●●●●●

China

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

Hong Kong ●●●●●

Taiwan ●●●●●

South Korea ●●●●

India ●●●●●

A S I A 117

Japan

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

J A P A N 124UK ●●

●●●●

Germany ●●●●●●

Poland ●●●●●●

Slovakia ●●

Hungary ●●●

Italy ●

Netherlands ●

Romania ●●

Spain ●

Turkey ●●

Portugal ●

Bulgaria ●

Ukraine ●●

Belgium ●

E U R O P E 36

South Africa ●

Morocco ●●●

Tunisia ●

Egypt ●

A F R I C A 6Australia ●●●

OC E A N I A 3USA

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●

Canada ●

Mexico ●●●●●●

Brazil ●●

AM E R I C A 39


Russia ●

Total for Fiscal 201020,338(100 million yen)

200,000

Business Outline

H i s t o r y1897 Sumitomo Copper Rolling Works was founded.

1900 Started production of coated wires.

1908 Started production of power cables.

1909 Started trial production of telecommunication cables.

1911 Established Sumitomo Electric Wire & Cable Works (the foundation of the Company).Manufactured and supplied the first Japan-made underground high-voltage (11,000 V) cables.

1931 Started production of cemented carbide (“IGETALLOY”) tools.

1932 Started production of special steel wires.

1941 Opened the Itami Works.

1916 Opened a new factory (now the Osaka Works) Started production of enamel wires.

1920 Incorporated Sumitomo Electric Wire & Cable Works as a limited company (the establishment of the Company).


1948 Started marketing sintered powder metal products.

1949 Entered into the business of construction of overhead transmission lines.

1957 Supplied the first Japan-made television broadcasting antennas.

1961 Opened the Yokohama Works.Delivered the wiring harnesses for four-wheel vehicles for the first time in its history.

1962 Started production of IRRAXTM Tube electron beam irradiation tubes.The Head Office was moved from Osaka's Konohana Ward to the present address in Chuo Ward.

1963 Started production of disc brakes.

1968 Entered into the business of traffic control systems.1964 Started production of electron beam irradiation wires.

1939 Company name changed to the current name, Sumitomo Electric Industries, Ltd. 1969 Established its first overseas production facility.Started development of flexible printed circuits (FPCs).

1946 Opened a branch office in Tokyo (now the Tokyo Head Office).1943 Started production of vibration-proof rubber and fuel tanks.

Our Business Introduction

Starting with copper wire production, the electric wire and cable business of Sumitomo Electric has expanded in the respective segments, including the manufacturing of power cables and communication cables and then magnet wires, automotive wiring harnesses and electronic wires for information equipment, in line with the development of society. In the meantime, we also began to diversify our business in early years based on the technology to produce electric wires and cables. The production of cemented carbide tools and special steel wires launched in 1931 and 1932 respectively was a firm step into the areas outside the electric wire segment. We have accelerated the diversification with the target of increasing the ratio of the non-electric wire business to 50% since the 1960s, and offered innovative products and technologies such as compound semiconductors, optical fibers, artificial diamonds and high-temperature superconductivity in sequence so as to support the changing times. The Sumitomo Electric Group has thus continued to develop unique technologies and persistently pursued new business opportunities, and is now conducting global business operations in the following five major business segments: automotive; electronics; e lectr ic wire and cable, energy; in format ion & communications; and industrial materials.

History of the Sumitomo Electric Group “Pursuing Profits by Coping Efficiently with Changing Times”


1975 Contracted to construct a power transmission line in Iran.

1976 Received an order for a large telecommunications network project in Nigeria.

1978 Delivered and put into operation the world's first bi-directional fiber optic CATV system “Hi-OVIS.”

1981 Delivered the fiber optic LAN system for the first time in its history.

1996 Developed a technology for producing long-length oxide high-temperature superconducting wires.

1998 Developed and started marketing ecology wires and cables.

2002 Sumitomo Electric Networks, Inc. (network equipment) started operation.Sumitomo (SEI) Steel Wire, Corp. (special metal wires) started operation.Sumitomo Electric Wintec, Inc. (magnet wires) started operation.

2003 Sumiden Hitachi Cable Ltd. (wires and cables for buildings and industrial equipment) started operation.Sumitomo Electric Hardmetal Corp. (powder metal and diamond products) started operation.

2006 The HTS cable used in a power transmission grid in the U.S. started supplying electricity.

2004 A.L.M.T. Corp. was made a wholly-owned subsidiary.

2007 Sumitomo Wiring Systems, Ltd. was made a wholly-owned subsidiary.Nissin Electric Co., Ltd. was made a consolidated subsidiary.

2008 Opened the Technical Training Center.Sumiden Friend, Ltd. (Special subsidiary) started operation.

2009 Sumitomo Electric Device Innovations, Inc. was organized.

2010 Opened the WinD Lab, a new laboratory building.SEI Optifrontier Co., Ltd. was organized.

1970 Started production of compound semiconductors.

1971 Opened the Kanto Works.

1974 Started production of optical fiber cables.

1982 Succeeded in producing the world's-largest-class synthetic monocrystal diamonds (1.2 carats).

1999 Sumitomo Electric Fine Polymer, Inc. (fine polymer products) started operation.

2001 J-Power Systems Corporation (high-voltage power cables) started operation.

Motorization progressed rapidly in the 20th century and has developed to a higher level. Cars are now required not only to serve as safe and comfortable living space but also to have environmentally-friendly design. The Sumitomo Electric Group is contributing to the realization of an ideal car society by meeting the needs of the times through the development of wiring harnesses and automotive parts and systems.

Automotive

Electronics

Electric Wire & Cable, Energy

Information & Communications

Industrial Materials

The Sumitomo Electric Group supplies various industrial material products based on its original technologies accumulated through the production of electric wires and cables, including powder metal products, sintered powder metal parts, and special steel wires. These products are used in machining tools and machine parts in various industrial fields as well as the materials that support social infrastructure such as highways and bridges, in addition to automobiles and home appliances.

Supporting the foundation of industries with a wide range of technologies

Electronic products are used in every aspect of our life. Reduction in size and weight and sophistication are keys to the electronic age. The Sumitomo Electric Group supports the development of the electronic society with diverse product groups using our original material technologies such as electric wires, FPCs, compound semiconductors and fluorine resin products.

Supporting the evolution of the electronics industry

The Great East Japan Earthquake reminded us of the importance of stable power supply. The Sumitomo Electric Group has continuously provided products used in various aspects of the energy transmission, including power transmission cables, railroad trolley wires and magnetic wires contained in home appliances and automobiles, to support social infrastructure since its foundation. We will continue to lead the time with high-temperature superconductivity and smart-grid related technologies, among others.

Supporting stable energy supply

The spread of the Internet and mobile phones is changing our society dramatically. The Sumitomo Electric Group has been involved in the information communications industry since the spread of telephones. With the rich experience and know-how as well as original technologies, the Group has carved out a path to the era of optical communication as a pioneer. We are also leading the development of the ICT society through the supply of various network products and system products such as traffic control systems.

Supporting the development of the ICT society

Vibration-proof rubberWiring harness

Compound semiconductorFlexible printed circuit

Ultra-fine magnet wiresBismuth-based superconducting cables

Communication module for WiMAX

Multicore optical fiber cables

Oil-tempered wires for valve springs

Cutting tool

Supporting the realization of a safe, comfortable and eco-friendly car society

Business Outline


S E IC S RE Y E

At Sumitomo Electr ic , we bel ieve that research and development is the engine for sustainable corporate growth, and have developed original products and technologies, as well as providing products, technology and services that benefit society, according to the belief. Our current business portfolio comprises five business segments: Automotive; Information and Communications; Electronics; Electric Wire, Equipment and Energy; and Industrial Materials. All of these business segments grew out of innovative technology developed by the Sumitomo Electric Group with the dual aims of contributing to the development of society and strategically creating sustainable growth in the Group, through optimal distribution of our management resources. This business portfolio is firmly supported by R&D in the technological aspects. As business conditions are changing drastically, the R&D Division will be required to play even more important roles in facilitating the Group's growth, through the development of new products and business.

Research and development of unique new technologies generated with the diversity of businesses

In “VISION 2012,” we set the target of “a contribution to sales ratio of 30% for new products.” To meet this target, it is essential to develop new business domains using the core technology of the Sumitomo Electric Group, in addition to the development of new products in the conventional business fields. The R&D Unit has set the three themes of “li fe sciences,” “environment, energy and resources,” and “safety & security, ubiquitous networking” as the priority domains for research and development activities.

Toward the development of new business domains

The Spirit of “Focusing on Technology” is a Driving Force for Business Development

Near infrared analytical system (CompovisionTM)

Water treatment unit using fluorine resin (POREFLONTM)

In the life sciences domain, we have developed CompovisionTM, a near infrared light imaging system, using the technologies we had cultivated in the information and communications field. We are now promoting the application of the product to various areas including food, pharmaceutical and medicine.

Life sciences

In the domains of environment, energy and resources, we focus on water resources and promote the development of a ballast water management system and desalination pretreatment system for practical application. Other R&D subjects include renewable energy, industrialization of agriculture and effective use of scarce resources.

Environment, energy and resources

Using the technologies related to optical telecommunications, wireless communications and terminal devices that support broadband communication, we are promoting R&D of the system products that contribute to safety, security and ubiquitous networking in automobile transport and other sectors.

Safety & security, ubiquitous networking

0

400

300

200

100

(100 million yen)

684723 730 723

790427254

171

451

500

600

700

800

4096

71

134

389

4169

79

120

414

383877

122

409

417656

175

375

2006 (Fiscal year)2007 2008 2009 2010

Industrial materials and otherElectric wire & cable, energy

ElectronicsInformation & communications

Automotive

R&D Expenses of the Sumitomo Electric Group by Year

R&D Organization

Analysis TechnologyResearch Center

Industrial Materials and ProcessTechnology R&D Laboratories

Semiconductor TechnologiesR&D Laboratories

Electronics & MaterialsR&D Laboratories

Automotive TechnologyR&D Laboratories

NEXT Center

R&D GeneralPlanning Division

Power SystemR&D Laboratories

Optical Telecommunications R&D Laboratories

Transmission DevicesR&D Laboratories

Information & CommunicationsLaboratories

Safety & Security,Ubiquitous Networking

Lifescience BusinessDevelopment Department

Life Sciences

Product for Aqua Business

Environment, Energy and Resources

Information andCommunications

Technology R&D Unit

Materials and ProcessTechnology R&D Unit

Overseas operationsInnovation Core SEI, Inc.


At present, the NEXT Center places particular emphasis on “cities,” which are an overlap between all of the five keywords and experiencing major changes from all of the five perspectives. Predicting the future changes of the cities around the world at different stages of development, the NEXT Center is examining various aspects of the potential that our Group can contribute to the creation of new urban infrastructure using its rich basic technologies such as power, traffic control and information telecommunication systems. Especially for the practical use of smart grid, a key is the establishment of an integrated system using information and telecommunications technologies because it is necessary to control a wide range of devises including power generating facilities such as photovoltaic and wind power systems, power supply units for electric vehicles and secondary batteries used for adjusting demand. The fo l lowing pages in t roduce “Micro Smar t -Gr id Demonstration System,” which is future-oriented power grid that connects and controls the above-mentioned devices, as an outcome of our R&D on smart grid.

Toward the establishment of an energy-efficient society

Since the global financial crisis after the collapse of Lehman Brothers, each and every segment has been undergoing a paradigm shift. To respond to such major and dramatic social and economic changes and give direction to our Group's future business, we established the NEXT Center within the R&D Unit in January 2010. The NEXT Center cooperates with internal and external experts and advanced research institutes to discuss social changes and trends on state-of-the-art technologies. Based on the prediction of the ideal state of the society 30 years later, the center examines what innovative technologies and business changes are required for Sumitomo Electric in the process to reach the ideal state (Figure 1). More specifically, the NEXT Center has identified five keywords as to the major social changes expected in the future (Figure 2) and assumes that any major change that can bring innovation to society occurs in relation to one or multiple of the keywords. As a simple example, we can consider smart grid＊ as a change in the “overlap between energy and communication.” Similarly, reduction in the weight of cars and use of electric motors are changes in the “overlap between energy and mobility.” Through research and development of the technologies with potential impact on the major changes that can lead to such social changes as mentioned above ahead of others, the NEXT Center aims to generate innovations to solve social problems and create large-scale new businesses that will play pivotal roles in the future performance of the Sumitomo Electric Group.

Technical innovations that lead the future social reform, and the NEXT Center

The Sumitomo Electric Group performs R&D activities and promotes the commercialization of the results to achieve the goal of becoming a Glorious Excellent Company. In response to the major changes emerging in society especially in the fields of energy, information and communications and automotive, which are crucial business domains for our Group, we have launched the R&D activities to identify such social changes and create the products and services needed by the future society.

Energy

Mobility Communication

Community Human welfare

1 4

8 10

9

2 35

6 7

keyword

keyword keyword

keyword keyword

❶ Energy efficiency: energy saving, high fuel efficiency❷ Micro grid, uneven geographical distribution of resources❸ Food & water, eco life　❹ Green IT, power source for mobile devices❺ Traffic control, sitting in the living room ⇔ mobile❻ Barrier free, “traffic rights”　❼ Regional conflicts, national security❽ Personal/public, traffic jams　❾ Culture, security, welfare, healthcare10 Privacy, interface, five senses

EMSserver

EV

Heat pumpWater heater

Storage battery

Monitor

PVSmall/mid-size PVWind power

Large load (air conditioners, refrigerators, etc.)

Control center

Mega solar systemWind farm

Powergeneration

Powertransmission

Transformation Distribution Consumption, distributed power sources

Conceptual Diagram of Smart Grid

Figure 1

Exploration into new business domains

Analysis of external situation

Analysis of internal situation

Well-informed outside personsDetermine the new domains that Sumitomo Electric should explore in the future (next 30 years), considering the analytical results on the external trend and the internal business and technical potential as well as the knowledge of well-informed outside persons.

■ To create large-scale new technologies and products

■ To respond to the rapidly changing social conditions

■ To promote market-oriented R&D activities from a long-term perspective

Design research themesfrom future vision

Ideal state

Society 30 years later

Backcasting

21

Present society

《Backcasting》We shape an ideal future vision and review the present from the perspective of the i dea l f u t u r e t o d r aw up necessa ry s t ra teg ies fo r achieving the vision.

Socialchanges

Technicalreform

Figure 2

Missions of the NEXT Center

Five Keywords Describing Societal Trends

Business Outline

● Social/economic trends

● Technological trends

● Core technology potential

● Business potential

● R&D responding to social needs from a long-term perspective (up to 30 years)

● Creation of large-scale innovative businesses that serve as Sumitomo Electric’s business foundation

Glossary ＊ Smart GridA power transmission network that can optimize the flow of power with a function to adjust the flow of power automatically from both supply and demand sides through installation of measuring devices equipped with artificial intelligence or communication facilities.

AB

C

D

E

E

E

E

E

I

F

G

H


S E IC S RE Y E

Distribution board with power measurement and communication functions. It sends data on each of the branch power lines to the central control server.

Smart distribution boardA

Power strip equipped with power measurement and communication functions. It sends the measurements of power consumption to the central control server, and turns the switch on/off according to directions from the server.

Smart power stripB

Photovoltaic power generation system designed in the size aimed at domestic use. An environment to test the interconnection of power conditioners with the grid has been established.

Crystalline silicon photovoltaic power generationC

Electricity generated with solar light and wind is converted to AC in this unit, in order to supply stable and quality power to electric products. There are three types: DC/DC converter, DC/two-way converter and DC/AC inverter＊.

Power conditionerEThis storage battery charges/discharges to maintain the demand and supply balance of the power grid. It offers great promise as a large megawatt-class storage battery.

Redox flow batteryG

Chargers for superconductor electric vehicles and normal electric vehicles (EVs) are installed in this station.

EV charging stationF

Micro Smart-Grid Demonstration System, a future-oriented power grid for the use of renewable energy, started its operation!


The Smart Grid＊, which was introduced in our CSR Report 2010, is an “intelligent power network” that controls the flow of power from both supply and demand sides. The grid is now drawing increasing attention in Japan, which has urgent need to make use of renewable energy. As a further step to put the research results on Smart Grid to practical use, we have developed “Micro Smart-Grid Demonstration System.” This very compact power grid connects control devices, such as photovoltaic power generator, small wind power generator, small power storage battery and power conditioner, via DC power cables of 1 km in total. The sources of energy are only the photovoltaic and wind power received in the Works. The data on the amounts of electric power generation, storage and consumption are monitored and controlled. The fluctuations are managed by the energy management system (EMS) with a storage battery so as to allow stable and efficient use of electricity. This system also features a DC interconnection system called “DC Link.” With the EMS and DC Link, the system is expected to cut energy consumption by around 10% by reducing energy loss due to AC/DC conversion and transmission loss in cables. In its small size, this system contains our original control and telecommunications technologies as well as safety functions. Independent from any commercial power network, it can be a prototype for the stable use of renewable energy, and has received a great response since the announcement of the development. The power generated with the system is actually used for part of the lights and electric products in the Works and EV charging stations. We plan to collect and analyze various data including those on the impact of different weather conditions on the amount of power generation in order to demonstrate the effectiveness of the system over approximately one year.

“Micro” and “intelligent” package of Smart Grid

Junji ItohDoctor of ScienceExecutive OfficerGeneral Manager, Power System R&D Laboratories, andAdvanced Superconductor Department

Solar light is collected in this system with high-efficiency small compound semiconductor cells. A large amount of electricity can be generated with a small footprint.

Concentrating photovoltaic (CPV)D

The world's first electric vehicle powered by a superconducting motor using the bismuth-based high-temperature superconductor developed in 2008 by Sumitomo Electric.

Superconductor electric vehicleH

Small wind power generatorI

We continue to use this Micro Smart-Grid Demonstration System to evaluate the power system-related devices produced from our R&D activities and promote the commercialization. This system will be marketed under the brand name of “Ingenious Power SystemTM.” Paying attention to the energy policy of the Japanese Government, we will meet the needs at various levels ranging from individual houses to local communities and cities. Electric power infrastructure, especially smart grid is a key to the creation of a new society and energy in the 21st century, and also a new domain that shorten the distance between society and Sumitomo Electric. With the slogan “for Society, for SUMITOMO ELECTRIC” in mind, we will continuously prioritize social contribution. Sumitomo Electric will also make efforts to synchronize the phase of its growth and development to the phase of social development.

Toward the future with the “Ingenious Power System TM”

Sumitomo Electric established the Power System R&D Laboratories in January 2010, which engage in research and development of power infrastructure systems integrating electrical energy and information telecommunication technologies. The Laboratories have promoted R&D activities for Smart Grid since the establishment, and in June 2011, released the “Micro Smart-Grid Demonstration System (Project-W)” as one of the outcomes and started its demonstration experiment in the Osaka Works. The future-oriented power grid, which is expected to play an essential role in the use of renewable energy in the days ahead, is outlined below.

Business Outline

Glossary ＊ Smart GridA power transmission network that can optimize the flow of power with a function to adjust the flow of power automatically from both supply and demand sides through the installation of measuring devices equipped with artificial intelligence or communication facilities.

＊ Converter/InverterA converter is a device that converts AC power to DC power, or performs DC voltage conversion. An inverter converts DC power to AC power.

Corporate Governance


Basic Structure of Corporate GovernanceWe adopted the Executive Officer System and the Business Unit System, which resulted in transfer of authority on business execution to individual business units and in the clarification of their responsibilities. Through these measures, we reduced the number of directors to accelerate decision making on business management and improve supervising functions in business activities by selecting an independent outside director. We also enhance the auditing functions of Corporate Auditors. We selected independent outside Corporate Aud i tors w i th va r ious spec ia l i zed knowledge and multifaceted views for the majority of the Corporate Auditors.

Basic ConceptSumitomo Electric, guided by the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles, unwaveringly upholds its basic policy of making social contribution by engaging in fair and open business activities. While continuing to adhere to the above basic policy, we are committed to improving overall management efficiency and speed to develop our business and heighten the corporate value, and to ensuring the legality and appropriateness of our business decisions and activities. We also work to further strengthen the management oversight system, so as to increase monitoring capabilities and enhance remedial functions.

Outside Directors & Outside Corporate AuditorsWe have one Outside Director and three Outside Corporate Auditors with no business relationship with our Company. Sumitomo Electric has selected an independent outside director to further enhance the supervising functions of the Board of Directors with an external viewpoint and to improve the transparency and objectiveness of the management. We have also appointed independent outside corporate auditors with expertise in various fields and a multifaceted perspective. To reinforce the monitoring system that ensures lawful and proper management of our company, such Corporate Auditors represent the majority of the Board of Corporate Auditors. These independent outside officers provide useful opinions from an independent standpoint at Board meetings and other occasions.

Business Execution SystemThe Company holds monthly meetings of the Board of Directors , which comprises 13 Directors , as wel l as extraordinary meetings when necessary. The meetings deliberate and take decisions on execution of important business with the President as a chairman because the position of the chairman of the Board of Directors is vacant. Prior to meetings of the Board of Directors, to facilitate the Board's deliberation a Management Conference is convened to discuss important subjects. Directors (excluding the Outside Director) receive 655 mil l ion yen in total as remuneration in fiscal 2010. The business activities based on the decisions taken at the Board of Directors meetings are executed promptly by individual General Managers as well as Directors and Executive Officers in charge of Corporate Staff Group under the President. In addition, to establish an internal check function, in its corporate regulations Sumitomo Electric has clarified the scope of authority of individual business units and persons in charge of certain business activities, and has stipulated appropriate business procedures. As to the gender of the Directors, all of them are male.

System to Ensure Appropriateness of Financial ReportingWe have established the Financial Reporting Internal Control Committee, chaired by the President, and an organization to promote control in the Corporate Staff Group. Under their policy, guidance and support, we promote development and proper operation of the internal control system in each division and affiliate in accordance with the Securities and Exchange Law as well as, the assessment and audit criteria and enforcement criteria specified by the Financial Services Agency. Thus, we are committed to further improving the systems to ensure appropriateness of financial reporting.

Auditing and Supervision SystemsSumitomo Electric receives three types of audits, namely corporate auditor audits, internal audits and accounting audits, to ensure the legality and appropriateness of its business management. In the corporate auditor audits, five Corporate Auditors, three of whom are outside auditors, inspect the performance of Board members in business execution, making use of staffs to Corporate Auditors (Office of Corporate Auditors).The Board of Corporate Auditors establishes audit plans and policies, in accordance with which each Corporate Auditor fulfills his role, as assigned by the Board of Corporate Auditors.

General Meeting of Shareholders

ManagementConference

Board ofDirectors

Appointments / dismissals

Accounting Audit

Audit

Audit

Cooperate

Cooperate

Board ofCorporateAuditors

President

Sales Units

R&D Units

Production Units

Affiliates in Japan and Overseas



CorporateStaff Group

Cross-sectionalRisk Management

Activity etc.

CorporateAuditors

Internal Auditing

Department

AccountingAuditors

Risk Management CommitteeCompliance Committee

Corporate Environment CommitteeInformation Management Committee

CSR Committee

Sumitomo Electric Group's corporate governance structure

Specifically, Corporate Auditors attend important meetings including those of the Board of Directors, conduct hearings with the Directors, Internal Auditing Department and other relevant divisions regarding their performance, inspect important authorizat ion documents, and vis it major establishments to conduct audits. Corporate Auditors also receive reports from other auditors regarding their audit status, and exchange information with the Accounting Auditor when required.


Risk Management

Risk Management System and InitiativesThe Sumitomo Electric Group organized the Crisis Management Committee in August 2003. Since then, the Company has established the Group-wide crisis management system to cope with various emergencies such as natural disasters, factory fires, terrorism and infectious diseases. In July 2007, we established the Risk Management Office, which plans and promotes the risk management activities of the whole Group, to survey and analyze the common risks among the Group and the risks unique to each business unit and aff i l iate. In cooperation with the corporate staff divisions, we are promoting the risk management activities of the whole Group. Our risk management activities are based on taking inventory of risks that is conducted by each unit and each affiliate every year. We have promoted planning and implementation of measures to address significant risks and insufficiently controlled risks. Thus, Sumitomo Electric is following risk management procedures cons is tent ly to ra i se the Group-wide risk management level.

● Giving top priority to ensuring quality and safety, as a product and service provider

● Maintaining favorable relations with stakeholders, including customers, shareholders, local communities and employees

● Ensuring that compliance with laws and regulations and adherence to corporate ethics constitute the basis of the Sumitomo Electric Group's management

● Honoring the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles, and the Sumitomo Electric Group Charter of Corporate Behavior

Basic Policy of Risk Management

① “Respect for human life” ② “Maintenance of safety” for local communities ③ “Protection of environment” of the local area ④ Prompt and proper “information disclosure” ⑤ “Stakeholder-focus”

Basic Principles of “Emergency” Response

Business ContinuityAs part of the Company's risk management efforts, Sumitomo Electric developed Business Continuity Plans (BCPs) in fiscal 2008 to ensure that our important and core businesses can be continued even in the event of a disaster, such as an earthquake, and that we can swiftly resume operations should our operations be interrupted. Since then, we have improved the plans on a regular basis. The BCPs actually played a certain role in responding to the situation caused by the Great East Japan Earthquake, which occurred in March 2011. Nevertheless, the plans were insufficient in some aspects because the earthquake caused massive damage on an unprecedented scale, which far outstripped the damage assumed in them. In the future, we will improve the BCPs based on the lessons from our response to the Great East Japan Earthquake, and also promote practical drills and training programs to confirm the effectiveness of the plans. We will also continue to set up a system to cope with various risks, including a BCP to be ready for outbreaks of infection diseases, such as the pandemic influenza virus.

Emergency DrillsSumitomo Electric carries out Group joint emergency drills twice a year (two sessions: day and night), on the assumption that a large-scale earthquake had occurred, to enhance the ability to address emergency situations. In production facilities, inspection of places where hazardous materials are used, and simulation of emergency measures are also carried out in addition to the emergency drills. Additionally, Sum i tomo E lec t r i c ca r r i e s ou t d r i l l s o f i n fo rmat ion communication and sharing information with aims of acquiring disaster information swiftly in a disaster situation, organizing the information, and reporting accurately and promptly the situations to executives, and sharing disaster information among Sumitomo Electric and Group companies.Sumitomo Electric also continues to disseminate the Earthquake Early Warning System installed in each base, and carry out drills for familiarization with the Employee Safety Confirmation System to report safety of employees from outside of the company, to enhance disaster awareness of employees. Through these dril ls, we verify the effectiveness of our emergency response plans and improve the contents of the plans to raise the reliability of the BCPs.

The Risk Management Office serves as the organizer of risk management activities for the whole company. We are making steady efforts to promote the measures to address key risks in each unit and the review of Business Continuity Plans (BCPs) and operate emergency drills. While the BCPs and emergency drills played a certain role in responding to the situation caused by the Great East Japan Earthquake on March 11, we also identified problems in the system for addressing the large-sca le d isasters a f fect ing extens ive areas , and infrastructure-related challenges. As our Group covers various business sectors and wide geographical areas, the scope of risk management will also be extended increasingly on a global scale. We will cooperate with our affiliates and other units to continue to enhance our capabilities to collect information so as to improve our capacity to address risks.

Haruo Takeda Assistant General Manager, the Risk Management Office, HR & Administration Department

We will enhance our capabilities to collect information on a global scale in order to improve our Group's capacity to address risks.

C S R V O I C E

Governance

Contributions to and Building Harmonious Relations with Local CommunitiesRisk management activities are initiatives to reduce the possibility of various risks related to business activities to come to the surface. However, the possibility of some risks cannot be eliminated. In case of an accident, such as a fire or explosion, in our base or a Group company, we will follow the emergency response plans and the BCPs. In particular, in case of a situation that affects the neighboring local communi t ies , we wi l l communicate wi th the loca l communities through prompt and appropriate information disclosure. In case of a disaster, such as a large-scale earthquake, neighboring communities are also assumed to be affected. Therefore, we work on improving local communities' abil ity to address disasters by concluding a disaster prevention agreement with local governments on disaster emergency response activities.

Compliance


１. Developing competition law compliance rulesIn June 2010, Sumitomo Electr ic formulated new Competition Law Compliance Regulations, which contain provisions restricting contact with competitors, and has put them into effect. We have also developed similar rules in our subsidiaries in Japan, and are now promoting the application of them to overseas subsidiaries.

２. Forming dedicated organizations and establish an auditing system

In June 2010, Sumitomo Electric newly established the Competition Law Compliance Office in its Corporate Staff Group, which is exclusively responsible for promoting compliance with competition laws. The Company also formed the Sales Compliance Office in the electric wire-related Sales Group, and specially appointed a competition law compliance manager and a person in charge of promoting the compliance at each of other units.

Strengthening of the Competition Law Compliance SystemFor competition law compliance, which is positioned as the most important assignment in our compliance activities, we determined and announced in June 2010 the strengthening of our competition law compliance system through the measures mentioned below. All employees and officers at the Sumitomo Electric Group are firmly engaged in eliminating cartel and collusion, including suspicious acts in the Group, and preventing recurrence.

Compliance CommitteeThe Sumitomo Electric Group has established the Compliance Committee, chaired by the President, as an organization that promotes measures necessary to develop and further strengthen the compliance system. The Committee engages in various activities, including preparing and distributing the Sumitomo Electric Group Compliance Manual and organizing compliance training seminars. In addition, the Committee identif ies and analyzes Group-wide compliance risks, disseminates preventive measures Group-wide, and monitors the compliance activities implemented by each division and subsidiary. In fiscal 2010, the Committee held four meetings (May, August and November 2010, and March 2011).

Compliance ManualThe Compliance Committee has prepared the Sumitomo Electric Group Compliance Manual, which explains specific instructions to be followed by employees in their daily work and other situations so that they can act in a socially acceptable way from legal and ethical perspectives. The Manual is also based on the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior . We distr ibuted this manual to employees in Sumitomo Electric and subsidiaries in Japan.

Speak-Up SystemWe have established the Speak-Up System, which enables employees to directly report and consult on potential compliance-related issues, so as to identify and resolve such issues by ourselves at an early stage. In addition to the Company's compliance staff, a law firm has been appointed as an external contact in the Speak-Up System. To address issues reported through this System, the Compliance Committee swift ly conducts investigation and takes necessary action. Sumitomo Electric instructed Group companies in Japan to establ ish their own in-house consultation contacts. At the same time, Sumitomo Electric positions outside contacts in its Speak-Up System as those for the entire Sumitomo Electric Group. We are working to disseminate the Speak-Up System to employees through monthly in-house magazines.

Compliance EducationTo check compliance risks, ensure implementation of preventive measures and develop and enhance awareness of compliance, the Compliance Committee organizes regular training seminars for all officers and administrative members every year. New employees and newly promoted personnel are also provided with training seminars. In fiscal 2010, compliance training seminars were organized as shown in the table below.

The Sumitomo Spirit, which forms the basis of the Sumitomo Electr ic Group's compl iance system, as wel l as our phi losophies and code of conduct mentioned in the Sumitomo Electric Group Corporate Principles and the Sumitomo Electric Group Charter of Corporate Behavior are also disseminated by, for example, holding a variety of training programs and citing comments made and actions taken by top management.

Efforts to Pursue Fair Business Activities Worthy of Society's TrustSumitomo Electric believes that complying with laws and regulations and maintaining corporate ethics comprise the backbone of its management; these matters are its social duties as a corporation, and form the absolute basis for the Company's continued existence and development. In recognition of this understanding, Sumitomo Electric has developed the compliance system. Despite our efforts in this regard, in February 2003 Sumitomo Electric received notice from the Japan Fair Trade Commission advising us to end a practice that violated the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade. This has led us to redouble our ceaseless efforts to further strengthen our compliance. Despite that, in May 2010, we received Cease and Desist Orders and other orders from the Fair Trade Commission in connection to the sale of optical fiber cables and related products. In addition, concerning automotive wiring harnesses and related products, we were under scrutiny of the Fair Trade Commission and overseas competition authorities of the EU, U.S. and other countries. We take the fact that we caused cartel and collusion problems quite seriously. We are sincerely striving to implement fair business activities that merit the trust of society by positioning competition law compliance as the most important assignment, and implementing measures that get deeply involved in how to proceed with actual business activities such as the establishment of rules to restrict contact with competitors, while continuing existing activities.

PeriodTarget

Administrative members of Sumitomo Electric and its subsidiaries in Japan

Officers (including executive officers)

Newly promoted personnel

Feb. - May. 2011

Dec. 2010

Feb. - Mar. 2011New employees of Sumitomo Electric Apr. & Oct. 2010


Training session

We also established the Automotive Compliance Office in the Automotive Business Unit in March 2011.The Compet i t ion Law Compl iance Of f ice c losely cooperates with the dedicated organization or person in charge of each of the units involved in actual business activities. By operating the rules to restrict contact with competitors based on the Competition Law Compliance Regulations and promoting related activities such as monitoring and auditing of compliance with competition laws and the Competition Law Compliance Regulations, we will establish an effective system involving the front-line players. Established in the respective business units subject to the scrutiny of competition authorities, the Sales Compliance Office and the Automotive Compliance Office promote more thorough measures on the front line, such as periodical interviews on compliance with competition laws and monitoring of orders, and the measures proven to be effective will be applied to other units.

３. Enhancing and continuing compliance law training

In spring 2010, instead of the regular compliance training programs for administrative members organized every year, special training programs on compliance with competition laws were conducted for all members of Sumitomo Electric and its subsidiaries in Japan (excluding employees engaging in manufacturing). In total, 81 sessions were held in 40 locations nationwide for 5,000 participants. We are placing even more emphasis on competition law-related issues in the periodical compliance training sessions to promote the thorough improvement of awareness among employees.

４. Establishing action guidelines for competition law compliance

Sumitomo Electric has been considering competition laws to be a priority matter to be observed in the Compliance Manual. To more clearly specify prohibited conduct and matters to be observed, new sales-related Competition Law Action Guidelines were established in October 2010 as action guidelines for employees specialized for compliance with competition laws. These Guidelines also take account of foreign competition laws. Training sessions were organized in October and November 2010 to familiarize the guidelines to all of the employees involved in sales jobs. We will continue to make efforts to ensure compliance with the Guidelines.

Training Seminar in an Overseas Affiliate (Germany)

Developing the Compliance System among Group Companies OverseasWhile a system to respond to competition laws is developed in the Competition Law Compliance Office as mentioned earlier, we also organize a tour to visit overseas Group companies and provide compliance training seminars for local managers to develop a compliance system based on a wider concept including compliance management, corporate ethics and the Sumitomo Spirit. We already provided basic course seminars at almost all of the main overseas offices from April 2008 to September 2009, and held 72 sessions at 121 companies in 16 countries with 1,750 part ic ipants in total . The contents were composed of (1) Importance of compliance and our Group's initiatives (lecturer: Overseas Contracts & Legal Affairs Dept. staff) and (2) Local laws and regulations and actual cases of troubles (lecturer: local attorney). Through the training seminars, we also strived to disseminate awareness of compliance and to “create a sense of unity among the Sumitomo Electric Group.” Subsequently, we have provided new training seminars as an advanced course since January 2010. The contents of the new training seminars are enhanced from the first version to include the study of actual cases in our Group and discussion among trainees so that the trainees consider compliance as a close issue and further raise their awareness, and each company can organize similar training sessions autonomously and continuously. Our target is to take a round of the main offices by September 2011. The table below shows the results of the training seminars.

To catch the circumstances of the compliance systems of overseas Group companies, we prepared a “Legal affairs, contracts and compliance check sheet” and have conducted investigation since fiscal 2008, including it in the self-check sheets sent from the Auditing Department to those companies. The investigation in fiscal 2010 was conducted on the basis of the results of the investigation in fiscal 2009 and of preliminary discussions of the development of the system with the respective units in charge of the overseas companies. We are committed to further enhancement of the compliance system of each company through concerted efforts with the business units.

Countries where seminars are held: 15 countries (USA, UK, Germany, Italy, China, Taiwan, Korea, Hong Kong, Singapore, Malaysia, Indonesia, Vietnam, Thailand, the Philippines, Brazil)

Total(scheduled)

No. of participating companies 23 140

Total number of seminars 20 90

No. of trainees 350 1,850

117

70

1,500

Results betweenJan. 2010 andMar. 2011

Schedule betweenApr. andSep. 2011

Compliance Training Seminars for Overseas Managers (Advanced Course)

Governance

Information Disclosure


Disclosure of Corporate InformationWith growing demand for corporate transparency and accountability, accurate and timely information disclosure to stakeholders is increasingly important and has significant impact on the creation of corporate brand value. In April 2006, Sumitomo Electric established the Public Relations Committee as a cross-sectional organization to promote necessary measures to develop and enhance the Group's information disclosure system and establish its corporate brand. The Committee engages in activities such as discussions on the need for disclosing certain corporate information, development of rules on such information disclosure, related education and knowledge dissemination within the Group, and planning of measures to enhance the corporate brand value. During fiscal 2010, we worked to comply with the laws and regulations related to insider information as well as the management and disc losure of important company information specified by stock exchanges. We were also committed to the transmission of a wide range of information on our corporate activities and the improvement of our PR activities mainly on our website so that our stakeholders can deepen their understanding of our Group.

Provision of Information on Various Corporate ActivitiesIn fiscal 2010, we worked actively to provide information on various activities of our Group in cooperation with the relevant divisions. As a result, the number of the news releases, papers in “SEI Technical Review” and newsletter articles published in fiscal 2010 far exceeded the previous year's level respectively.

Enhancement of the WebsitesTo develop more attractive websites, we continuously worked to improve the content in fiscal 2010. As specific efforts, we added the clear explanation of new products and technologies, such as POREFLON microfiltration membrane module, and the introduction of our global business bases to present the worldwide operation of the Sumitomo Electric Group.

Blog of Our President

“President & CEO Masayoshi Matsumoto's Blog” opened in July 2007 to help Sumitomo Electric Group employees and their related persons improve their understanding of the Group's management policies as well as to promote information sharing among them. We also hope that the blog encourages external stakeholders to understand our Group and feel closer to us. In fiscal 2010, with a monthly average of approximately 40,000 unique users, 81 entries were posted on the blog and more than 100 comments were received from the visitors during the fiscal year. Thus, the blog serves as an effective tool to promote interactive communication with stakeholders.

President & CEO Masayoshi Matsumoto’s Blog

Briefing on financial results

Communication with Shareholders and InvestorsSumitomo Electric believes that an important goal of its investor relations is to notify market participants of accurate information in a timely and fair manner, so as to obtain appropriate evaluation of our corporate value in the capital market. The Company ensures communication with institutional investors and analysts by organizing briefings on financial results and interviews. In fiscal 2010, Sumitomo Electric made presentations for a total of 907 persons from 727 companies in Japan and overseas. We also strive to enhance communication with general shareholders and investors by developing the websites in consideration of such shareholders. For example, we post financial information and press releases on our corporate website and disseminate moving images of financial result briefings. In fiscal 2010, Sumitomo Electric was honored by the Securities Analysts Association of Japan as a company that significantly improved its disclosure according to the corporate disclosure evaluation. We will be continuously committed to fair and prompt information disclosure for shareholders and investors and further improvement of the content.


I used to work for the development of new products in a R&D division for many years, and was also familiar with patents. Then, when I was assigned to the Intellectual Property Department, I was placed on the position to advocate the importance of intellectual property rights and promote applications for patents and use of them for business. Intellectual property rights have attracted attention in Japan and overseas in recent years, and the revision to the related laws and the review of the procedures have been conducted frequently. Behind this situation, there is a fact that other East Asian countries are rapidly catching up with Japan in the high-tech sector, which has been a specialty for Japan. Technical capacity is the source of growth for manufacturers. It is awful if we develop an excellent technology but, other companies copy it and sell products cheaply. It is patents and other intellectual property rights that protect products from such copycats. The divisions that do not make products may be an unsung hero in manufacturers. I think, in a sense, our department can make real contr ibut ions because we know how hard i t is to manufacture splendid products. To protect our businesses and products, we work very hard everyday to acquire quick, strong and diverse patents, use them and manage the information.

Keiji Osaka Assistant General Manager, Intellectual Property Department　

“Intellectual property rights are a key to a company that supports its technical capacity”

C S R V O I C E

Information Protection

Strengthening of Information SecuritySince the formulation of the Information Security Policy in fiscal 2003, Sumitomo Electric has considered all information handled by the in-house information systems to be important management assets, and has been working with the Group companies including overseas affiliates to develop and improve the in-house management system. The Company also provides all employees with education on information security in accordance with revisions to the policy every year to ensure observance of the rules. We introduced information security diagnosis to all affiliates in Japan and overseas in fiscal 2010, and have developed and operated a system to enhance the security level of each company. With the rapid progress of the global network, it is an increasingly important management challenge to take thorough measures to prevent information leakage. In addition to the conventional network management method of introducing IT asset management software to all terminals used in the Company, we have taken measures adopting newly developed information and communications technologies immediately. Such measures include encryption of the hard drive of laptop computers (fiscal 2005), supply of safe and secure file transfer service (fiscal 2008) and the prohibition of data storage in USB thumb drives and external hard drives other than the specified models with encryption technology (fiscal 2009). In f iscal 2010, we started to prevent the activation of file-swapping software and other prohibited software, and introduced an e-mail system that can limit the destinations and the volume of the attached files on a per-user basis. Thus, efforts are made to further reduce information leakage risk.

Intellectual Property ProtectionSumitomo Electric seeks protection of the own company technology by acquisition of the intellectual property rights (IPRs) such as patent rights or design rights. At the same time, we pay scrupulous attention and respect for the IPRs of other companies. As a specific effort, an official business rule was issued relating to the basic management of the IPRs. We are also working to improve IPR consciousness throughout the Group by organizing in-house training programs to match with experience and the level of proficiency of each employee or by publishing the company magazine “IP news” five times a year. In June 2010, the annual Group-wide Intellectual Property Right Convention was held with attendance of the President and 260 participants, connecting the Osaka, Itami and Yokohama Works via teleconference. In addition to commendation of excellent activities on intellectual property rights, oral presentations of specific activities and a poster session, we actively exchanged information on intellectual property rights by use of the interactive communication system. Moreover, we hold “IP strategy meetings,” which are organized by the managers of respective divisions, as well as the meetings of the division-based “IP committees” composed of practitioners. Through these meetings, we perform such activities as: 1) preparation of patent maps, 2) promotion of patent application and use of IPRs along the business plan, and 3) thorough investigation of IPRs of other companies and examination of measures to avoid infringement. Such initiatives are promoted through concerted efforts among respective business units, R&D departments, and Intellectual Property Department.

Protection of Personal InformationSumitomo Electric declares that it will observe laws and regulations relating to personal information protection and other codes, and will establish voluntary rules and frameworks. This is stipulated in our Personal Information Protection Policy, which was implemented in April 2005. To effect the above declaration, the Company also set forth the Personal Information Protection Rules. Through employee education programs and other means, the Company has worked to develop the in-house system for personal information management. The “Information Management” section of the Sumitomo Electric Group Compliance Manual, which was revised and distributed to the employees of our Company and affiliates in March 2009, explains the issues to be considered when handling personal information to ensure thorough implementation of personal information protection. However, as a result of the accelerated development of information and telecommunications technologies, there is an increasing risk that a large amount of information can be leaked at once. It is also reported that some companies have suffered from the leakage of a vast amount of personal information due to attacks from outside. Under such circumstances, we will start new initiatives for risk management in fiscal 2011, including the hierarchical management of internally prepared documents and electronic data, the clarification of access authority and further improvement of the monitoring system, while our Legal, HR & Administration and In format ion Systems Departments cooperate to reorganize document control rules and ensure the thorough implementation of the information security policy.

Governance

CSR Basic Policy


Sumitomo Electric Group CSR Promotion System

External disclosure Public hearing function

Legal Dept.Overseas Contracts & Legal

Affairs Dept.

HR & Administration

Dept.

Group Procurement Div.

Logistics Management

Dept.

Public Relations Dept.

Investor Relations Office, Accounting

Dept.Information Systems Dept.

Safety & Environment Dept.Plant & Production

Systems Engineering Div.

Quality Management Div.Information Systems Dept.Sales Planning & Marketing Div.

Human Resources Development Dept.Plant & Production

Systems Engineering Div.

Compliance Environment and safety

Information disclosure and information protection

Procurement and logistics

Human resources development

Quality and customer satisfaction improvement

Employees, human rights and social contribution

Promoting business philosophy and visions, compiling the results of CSR activities and disclosing information inside and outside the CompanyCSR Committee :

Category

Department in charge

Respective business sections and Sumitomo Electric Group companies Employees

Society (stakeholder)Report on objectives and results Instructions and guidance

Promotion and education of business philosophy and visions Public hearing functionTarget and achievement report Support and guidance

Management Conference : Deciding CSR basic policy

Sumitomo Electric Group CSR Basic PolicyThe Sumitomo Spirit, which gives top priority to social credibility and corporate ethics, is deeply instilled into the Sumitomo Electric Group. The Sumitomo Spirit, as well as the Sumitomo Electric Group Corporate Principles, serves as the basic value standards that guide us. We feel that the Sumitomo Electric Group's CSR basic policy is to contribute to a better society and environment through business operations in line with compliance regulations. We have specified five priority categories on which we focus our CSR efforts: environmental preservation; procurement and logistics; safety and quality; employees and human rights; and social contribution. Based on this approach, we will establish good relationships with stakeholders and continue sustained growth with the aim of becoming a Glorious Excellent Company, i.e., realizing the ideal state of the Sumitomo Electric Group, so as to fulfill our corporate social responsibility.

Basiccomponentsof CSR

Good products and serviceTechnological innovationDividend and tax paymentEmployment creation, etc.

CSR prioritycategories

Basic valuestandards

Social contribution throughbusiness operations

Contribution toa better society andenvironment

In July 2004, Sumitomo Electric established the CSR Committee, which is chaired by the off icer in charge of personnel and general administration and comprised by the managers of the departments in charge of CSR-related areas (currently 13 members). Under the system shown in the figure below, the Committee conducts its activities as a cross-sectional organization to promote CSR initiatives in the Sumitomo Electric Group. The roles of the CSR Committee include:

1. Holding semiannual meetings to review the CSR activities from a group-wide perspective and give support and guidance on the future development.

2. Promoting internal and external information disclosure and public hearings on CSR.

3. Promoting CSR education programs throughout the Sumitomo Electric Group, etc.


Main Targets for Fiscal 2011

●Achieve the targets in all 23 items in the Action ECO-21 (Phase Ⅳ) campaign

●Conduc t comp l i ance -o r i en ted environmental audits in the remaining 4 manufacturing facilities in Japan and 9 facilities of overseas Group companies

● Improve environmental education by adding new programs including the issues pointed out in environmental audits and expanding the targeted trainees

●Expand and improve the education program that supports compliance

●Make requests based on the CSR Procurement Guidelines to individual suppliers

●Disseminate the Global HRM Policy

●Start the ful l -scale operation of GEC-Net

●Launch and develop the SWITCH Plus Campaign

● Increase monetary contributions to university courses, scholarships and grants to academic and research activities supplied through the fund

●Consider and take specific measures fo r the ac t i va t ion o f the loca l con t r i bu t i on a c t i v i t i e s o f t he Sumitomo Electric Group

●Take concrete actions to cooperate with NPOs mainly in the environmental field

●Reduce complaints by 20% from the previous fiscal year

●Cont inue to promote “Own Process Quality Assurance Activities” (second year)

● R educe t o z e r o t h e n umbe r o f accidents resulting in lost work time, and reduce the number of no lost work time accidents to 12 or less

● C omp l e t e t h e M a n u f a c t u r i n g Foundation Reinforcement Program (KKP) for the intended trainees in three years (initiative in the third year)

Page

33

In the Sumitomo Electric Group, the departments in charge of the five CSR priority categories respectively set annual targets, prepare specific action plans based on the annual targets and work to achieve them autonomously. The table below shows the main targets and results in fiscal 2010 and targets for fiscal 2011 on the main initiatives in priority categories. To meet the targets, we will continue to promote the initiatives based on the PDCA (plan-do-check-act) cycle.

Main Targets and Results in Fiscal 2010 / Main Targets for Fiscal 2011

Main Targets for Fiscal 2010 Results in Fiscal 20105 Priority Categories Evalu-

ation

Achieve the targets in all 23 items in the Action ECO-21 (PhaseⅣ) campaign

C o n d u c t c o m p l i a n c e - o r i e n t e d environmental audits in the remaining 25 manufacturing facilities in Japan and 14 overseas Group companies

Offer compliance environmental training using the actual cases of environmental audits as learning materials, and expand the time of training sessions

Promote modal shift in procurement from suppliers in addition to modal shift in delivery to customers

Out of the 23 items, Target achieved (◎, ○): 18 items,Target not achieved (△, ▽, ▼): 5 itemsConducted the audits in the 49 manufacturing facilities in Japan (audits in the remaining 4 facilities were postponed due to the Great East Japan Earthquake) and 11 overseas Group companies (in China)

Started practical training, and held 38 training sessions for 622 participants in total

Conducted no modal shift in procurement from suppliers because we had no applicable cases; and increased the modal shift rate in delivery to customers by 0.5% from the previous fiscal year

Fami l ia r i ze employees in overseas affiliates with the Basic Procurement Policies at the overseas regional liaison committees of procurement staff

Famil iar ized employees in overseas affiliates with the Basic Procurement Policies at the l iaison committees of procurement staff in China and Thailand

Disseminate the CSR Procurement Guidelines among suppliers

D i s t r i bu ted t he CSR P rocu remen t Guidelines at a Partners’ Meeting and asked suppliers to take measures to follow them; and sent the CSR Report and the CSR Procurement Guidelines to 500 main suppliers and asked them to take necessary measures

Evaluate suppliers with the supplier evaluation sheet

Performed the evaluation in part of the procurement divisions

Develop the communication platform and organize regional human resources meetings to enhance global communications

Developed a global communication tool “GEC-Net”

Improve the manufactur ing training programs in Asian countries and provide the training in more countries

Held the Global Leadership Program (GLP) for the executives from Sumitomo Electric Group companies across the world

Increase monetary contr ibut ions to un i v e r s i t y cou r se s and supp l y o f scholarships through the fund, and start the support of academic and research activities

Expanded the activities of the SEI Group CSR Foundation

Take concre te ac t ions to suppor t environmental NPOs

Continuously supported an environmental NPO “Mo r i no Chona i - K a i ( F o r e s t Neighborhood Association)”

Develop a company-wide campaign for the improvement of work efficiency and product iv i ty as part o f the SWITCH Campaign

Launched a campaign to enhance work efficiency in the SWITCH Campaign

△

△

○

△

○

○

△Reduce complaints by 20% from the previous fiscal year

Reduced complaints by 8% (by 20% per unit of sales) from the previous fiscal year

Reduce to zero the number of accidents resulting in lost work time, and reduce the number of no lost work time accidents to 12 or less

Accidents resulting in lost work time: 8, and no lost work time accidents: 24

Comp l e t e t h e Manu f a c t u r i n g Founda t i o n Reinforcement Program (KKP) for the intended trainees in three years (initiative in the second year)

A total of 2,591 persons participated in the KKP from January 2009 to March 2011

△

▽

○

△

○

△

○

▽

31

31

38

49

49

50

45

Promote “Own Process Quality Assurance Activities” (first year)

Provided intensive education on “Own Process Quality Assurance Activities” (19 sessions for 535 participants) and practitioner training education (30 persons per session); and each division performed theme-based activities (88 themes in the first half and 101 themes in the second half)

○ 45

60

60

52

58

56

62

Consider specific measures for the activation of local contribution activities Launched “Smile Relay” in May 2011 ○

61・64

61

Legend　◎：Target achieved and performance far exceeding the target (by more than about 50%); ○：Target achieved; △：Target not achieved (performance improved from the previous fiscal year); ▽：Target not achieved (performance similar to that in the previous fiscal year); ▼：Target not achieved (performance deteriorating from the previous fiscal year)

Foundation for CSR

Environmental preservation

Employees and hum

an rightsSocial contribution

Safety and qualityProcurem

ent and logistics

GlobalEnvironment

Central and

Local Governments

Local Communities and

NPOs/NGOs

EmployeesShareholders

andInvestors

Customers

SumitomoElectric Group

Stakeholders


The business operat ions of the Sumitomo Electr ic Group are supported by interact ion with a wide range of stakeholders. We clarify our responsibilities for the stakeholders who have deep relationships with us on a daily basis, and continuously endeavor to promote communication with them through various opportunities.

Main responsibilities of the Sumitomo Electric Group

●Compliance with laws, regulations, administrative guidance, etc.

●Tax payments●Cooperation for government policies to solve public problems

Main means of communications

●Communications through economic organizations and trade associations

●Notifications, response to surveys and questionnaires

●Consultation with competent authorities, public comments


●Respect for culture and custom, contribution to development

●Prevention of accidents and disasters, environmental conservation

●Cooperation and coordination for the solution of environmental and other problems


●Participation in events, support of traditional performing arts

●Factory tours, opening of facilities, joint hosting of festivals

●Employees’ contribution to local communities

●Communication through cooperation and support

●Stakeholder dialogue


●Maintenance and improvement of the corporate value

●Proper return of the profits (as dividends)

●Timely and proper disclosure of corporate information


●General meetings of shareholders

●Financial result briefings●Reception of investors and interviewers

●Annual reports● Investor relations website


●Fair trade●Support and cooperation for the achievement of CSR procurement


●Reduction of greenhouse gas emissions●Promotion of energy saving and recycling

●Reduction of waste, reduction of hazardous chemical substances


●Supply of socially useful and safe products and services

● Improvement of customer satisfaction on all aspects including delivery time etc.

●Provision of accurate and appropriate information on products


●Efforts to meet the Kyoto Protocol targets and comply with the relevant laws and regulations

●Environmental conservation activities in accordance with the PDCA cycle

●Stakeholder dialogue

Main means of communication

●Communication through daily operations●Newsletters, e-mail delivery, websites● Information exchange at exhibitions, etc.


●Communication through daily procurement activities

●Partners’ meetings●Communication through the supplier evaluation sheet


●Respect for human rights, personality and individuality

●Development, use and evaluation of human resources

●Creation of a work environment where all employees can demonstrate their capabilities

●Contribution to occupational safety and health


●Surveys to create a lively work environment

● In-house magazines, Global Magazines

● Intranet, President’s blog●Management council meetings for discussion between labor and management

● Informal meetings between executives and employees

Business Partners(Suppliers)

Materiality


Concept of MaterialityMateriality in Terms of ActivitiesAs Sumitomo Electric, as well as the Group companies, has adopted the Business Unit System, the departments in charge of CSR activities (e.g. legal affairs, personnel affairs, general affairs, PR and IR, environment, safety, improvement of quality and customer satisfaction, procurement and logistics) work to solve cross-sectional problems and achieve cross-sectional targets autonomously. The CSR Committee supervises the progress of the activities of the departments. In fiscal 2005, the 13 divisions in charge were classified into 5 categories, which have been promoted as the CSR priority categories. The composition of the five priority categories has been reviewed on an as-needed basis to reflect the opinions from an independent assurance organization and the findings of the third parties. The specific activities, targets and results are summarized in P24. We are also doing our best to examine the valuable opinions received in the stakeholder dialogue organized since 2010 (P27 to 29) in the Company and reflect them on our activities.

Materiality from the Perspective of ReportingFrom the CSR Report 2010, we adopt a new approach to reporting our CSR activities, which is based on the type of stakeholders, instead of the conventional style of reporting on each of the f ive CSR pr ior i ty categor ies , so that stakeholders can find the information they need more easily. In the process of reclassifying the activities in the five CSR priority categories by type of stakeholder, we regarded the especially important issues in the respective segments as being “material from the perspective of reporting,” and the relevant division managers describe the material issues in the respective sections of this report. We assume that this approach helps stakeholders understand the Sumitomo Electric Group's CSR activities even better.

Correlation between Materiality in Terms of Activities and Materiality from the Perspective of Reporting

Environmentalpreservation

Employeesand

human rights

Socialcontribution

Safety and quality

Procurementand logistics

Classification on Materiality in Terms of Activities (Main Targets for Fiscal 2010)

5 PriorityCategories

● Achieve the targets in all 23 items in the Action ECO-21 (Phase Ⅳ) campaign

● Conduct compliance-oriented environmental audits in the remaining 25 manufacturing facilities in Japan and 14 overseas Group companies

● Offer compliance environmental training using the actual cases of environmental audits as learning materials, and expand the time of training sessions

● Promote modal shift in procurement from suppliers in addition to modal shift in delivery to customers

● Familiarize employees in overseas affiliates with the Basic Procurement Policies at the overseas regional liaison committees of procurement staff

● Disseminate the CSR Procurement Guidelines among suppliers

● Evaluate suppliers with the supplier evaluation sheet

● Develop the communication platform and organize regional human resources meetings to enhance global communication

● Improve the manufacturing training programs in Asian countries and provide the training in more countries

● Develop a company-wide campaign for the improvement of work efficiency and productivity as part of the SWITCH Campaign

● Increase monetary contributions to university courses and supply of scholarships through the fund, and start the support of academic and research activities

● Consider specific measures for the activation of local contribution activities

● Take concrete actions to support environmental NPOs

● Reduce complaints by 20% from the previous fiscal year● Promote “Own Process Quality Assurance Activities” (first year)

● Reduce to zero the number of accidents resulting in lost work time, and reduce the number of no lost work time accidents to 12 or less

● Complete the Manufacturing Foundation Reinforcement Program (KKP) for the intended trainees in three years (initiative in the second year)

Page

27

Stakeholders

Environment

Employees

Society

Customers

Suppliers

Classification on Materiality from the Perspective of Reporting(Main Targets for Fiscal 2010)

● Achieve the targets in all 23 items in the Action ECO-21 (Phase Ⅳ) campaign

● Conduct compliance-oriented environmental audits in the remaining 25 manufacturing facilities in Japan and 14 overseas Group companies

● Offer compliance environmental training using the actual cases of environmental audits as learning materials, and expand the time of training sessions

● Promote modal shift in procurement from suppliers in addition to modal shift in delivery to customers

● Familiarize employees in overseas affiliates with the Basic Procurement Policies at the overseas regional liaison committees of procurement staff

● Disseminate the CSR Procurement Guidelines among suppliers

● Evaluate suppliers with the supplier evaluation sheet

● Develop the communication platform and organize regional human resources meetings to enhance global communications

● Improve the manufacturing training programs in Asian countries and provide the training in more countries

● Develop a company-wide campaign for the improvement of work efficiency and productivity as part of the SWITCH Campaign


● Consider specific measures for the activation of local contribution activities

● Take concrete actions to support environmental NPOs


● Complete the Manufacturing Foundation Reinforcement Program (KKP) for the intended trainees in three years (initiative in the second year)

● Reduce complaints by 20% from the previous fiscal year● Promote “Own Process Quality Assurance Activities” (first year)

45

48

51

59

61

Foundation for CSR

External Factors

● Main interests raised by stakeholders

● The main topics and future challenges for the sector

● Significant laws or agreements to the organization and its stakeholders

● Impacts, risks or opportunities identified through sound investigation by specialists or expert bodies

● Main policies, strategies and targets of the organization

● The interests/expectations of stakeholders having specific relationships with the organization

● Significant risks to the organization● Critical factors for enabling organizational success

● The core competences＊ of the organization and other matters

Internal Factors

Materiality Principle in GRI Guidelines

From 2006 to 2008

Environmental preservationProcurement and logisticsSafety and qualityEmployees and human rightsSocial contribution

From 2009ComplianceEnvironment, procurement and logisticsSafety, quality and customer satisfaction improvementEmployees, human rights and social contributionInformation disclosure

Glossary ＊ Core competence“Abilities overwhelmingly higher than those of competitors” or “core abilities that competitors cannot imitate” in the business activities of a company.

In the second stakeholder dialogue held at the Tokyo Head Office of Sumitomo Electric, we invited three experts with outstanding knowledge about corporate environmental management, and exchanged opinions on the effective and sustainable environmental management of the Sumitomo Electric Group. We will use the valuable opinions received at the dialogue for further promotion of our environmental management.


Relationship with the Global Environment

Toward the Further Promotion of the Environmental Management of the Sumitomo Electric Group

Theme

Second Sumitomo Electric Group Stakeholder Dialogue

1 2 3 4

Guests：

Prof. Yoshinao Kozuma Faculty of Economics, Sophia UniversityProf. Kozuma specializes in environmental accounting theory and international accounting theory. He has served as chair and member of CSR and environment-related review committees and study groups organized by Ministry of the Environment, Ministry of Economy, Trade and Industry, Ministry of Land, Infrastructure, Transport and Tourism, Ministry of Agriculture, Forestry and Fisheries, Cabinet Office, Government of Japan, Japanese Institute of Certified Public Accountants, etc.

Mr. Sadahiro Tanaka Mr. Tanaka entered Toyota Motor Co., Ltd. (current Toyota Motor Corporation), and took the current post after serving as General Manager, General Admin.Dept of Global Purchasing Planning Division, Group Leader, the CSR Office of CSR & Environmental Affairs Division etc.

Dr. Michiyo Morisawa Japan Director, Carbon Disclosure ProjectAfter working for the mitigation of settlement risk among financial institutions at Citibank, etc., Dr. Morisawa started the research of environmental studies in 2003. When CDP expanded its operation to include more countries in the world in 2006, she joined CDP as a person in charge of Japan. Ph.D. in environmental studies at the University of Tokyo.

Facilitator： Mr. Takashi Fukushima (President, Sustainability Accounting Co., Ltd.)Participants from Sumitomo Electric： Shigeru Noda (Managing Director)

Safety & Environment Dept. : Akinobu Kohara (General Manager), Toshio Matsutomo (Manager of the Energy Saving Office)

CSR Promotion Office of HR & Administration Dept. : Kazunori Tokuda (Manager), Tatsuro Yoshida (Senior Manager), Kazumasa Mitsuhashi (Assistant Manager)

Prof. Yoshinao Kozuma, Dr. Michiyo Morisawa, Mr. Sadahiro Tanaka (from left)

Outline of the Stakeholder Dialogue

Schedule

Date：March 7, 2011 (Mon.)　Venue：Tokyo Head Office of Sumitomo Electric Industries, Ltd.

General Manager, Environmental Affairs Division, Toyota Motor Corporation

Opening remarks and explanation of the purpose

Presentation on the environmental management of the Sumitomo Electric Group

Exchange of opinions Summary and closing remarks

Glossary ＊ Carbon Disclosure Project (CDP)Collaborative project of institutional investors to request companies to establish their strategies against climate change and publish specific data on GHG emissions.

＊ Connected Reporting Framework (CRF)A reporting scheme recently developed in the United Kingdom that integrates financial and non-financial information in the disclosure.


Tanaka： I have an impress ion that Sumitomo Electric has incorporated the concrete environmental policy into its business activities and is making steady efforts. On the other hand, the explanation of the Company's social contribution through its main business seems to be insufficient. I would like to ask how Sumitomo Electric will chiefly contribute to the sustainable development of society through its main business in the future.

Morisawa： I work for Carbon Disclosure Project (CDP)＊, a Br i t i sh NGO, and Sumitomo Electric cooperates in the information disclosure initiative of CDP. As I also work as the Japan manager of United Nations Principles for Responsible Investment (PRI), I have chances to observe the activities of the company from various aspects. I especially appreciate its commitment to modal shift involving other companies in Japan. I hope that the commitment is disclosed even more actively as a best practice for other companies. I would also like to ask how the company will address the increase in its greenhouse gas emissions in foreign countries and respond to environmental laws and regulations in the future.

Kozuma： I think that the environmental management of the Sumitomo Electric Group is more advanced in comparison with other material manufacturers. I assume that i t i s the first Japanese company that addressed the Connected Reporting Framework (CRF)＊, which was introduced from its CSR Report 2010. For environmental management in these days, it is a crucial question to which level of the supply chain or lifecycle is handled. I would like to know the opinion of Sumitomo Electric about this issue.

Noda： We believe that Sumitomo Electric is disclosing its environmental management data wherever possible. Nevertheless, as a consequence, the disclosed data may be d ifficu l t t o unde r s t and . We shou ld communicate the data in a way that people outside our company can understand them more easily.

Fukushima： Firstly, would you mention the subjects on the environmental management of the Sumitomo Electric Group in which you are interested?

Demands for the Sumitomo Electric Group in its environmental management

Fukushima： With respect to long-term commitment , the core of Sumitomo Electric's environmental conservation activities is the “Action ECO-21” campaign, and its Phase Ⅳ is set to be until 2012. What do you think about this period sett ing? In addit ion, what is your opinion about the relationship between absolute and intensity＊ targets when setting targets?

Kozuma： The span of a corporate management plan is 10 years at the longest. It will be impossible to make a super long-term plan for environmental issues in spite of such a period setting for the management plan.

Morisawa： I think that it depends on the strategy of the company whether it gives priority to absolute or intensity targets as its long-term targets, and either type of targets is acceptable. When the data are disclosed, on the other hand, both absolute and intensity targets should be presented because intensity data may highlight your superiority over the companies that have entered the market later, like Chinese and Indian companies.

Relationship with the management plan, target setting and boundaries

Fukushima： What do you think about the opinion that, in the environmental management of Sumitomo Electric, it is unclear what contribution the company makes to society?

Matsutomo： Until now, the environmental department has not joined discussions of how to use our technologies for social contribution in our company. We will consider involving the department from the R&D stage when, for example, we discuss our approach to the low-carbon society.

T o k u d a： As we a r e a ma te r i a l manufacturer , i t is inevitable to pay attention to customers first. We tend to try to contr ibute to society through c u s t om e r s . A s t o r e s e a r c h a n d development, our NEXT Center established in 2010 engages in the proposal of new business areas as well as research and exploration for the acquisition of necessary fundamental technology. While the sales group, which has direct contact with customers, has joined the d i scuss ion , CSR P romot ion Office wi l l suppor t the environmental department in participating in it as a contact point for society.

The role of environmental management in the future society

Morisawa： When your company enhances the disclosure of overseas components in the future, it will be better not to exclude data for the reason that the performance has not reached 100% but to present the achievement rate at that point and the target rate to be achieved in the future.

Exchange of Opinions

Relationship with

the Global Environm

ent

Glossary ＊ IntensityAn indicator of the efficiency of activities, based on the amount of the factors (raw materials, energy, services, time required, waste, etc.) used/discharged to achieve a certain amount of outcomes in such activities as production, sales and life.


Tanaka： When business activities cover extensive areas as in the case of Sumitomo Electric, it may be difficult to select the denominator of the intensity. As to the period setting, in consideration of the current economic circumstances, a foreseeable period will be three years or less.

Matsutomo： We set both absolute and intensity targets. However, intensity targets are set only in our production units. We think that the targets on office work and sulfur hexafluoride (SF6) emissions should be absolute values. Potential causes of an increase or decrease in absolute values are wide ranging, it is difficult to make an assessment based on absolute values at the field level. The activities are evaluated based on intensity.

Noda： To perform environmental management linked with the medium-term plan, a common period is applied to both VISION 2012 and Action ECO-21. The goal for environmental management is also set to be 2012 although the global financial crisis has caused a significant delay in part of the plan. Environmental and manufacturing activities are linked with business management. We have already started to discuss the medium-term plan for the next period internally, and the committee members representing our divisions and departments are now discussing specific subjects.

Fukushima： With respect to boundaries＊, what do you think about the issue of consistency with the boundaries of consolidation for financial reporting?

Morisawa： The boundaries for reporting emissions can be based on financial management, business management, stock holding and other criteria. CDP recommends the use of the boundaries of consolidation if financial management is selected as the basis for the boundaries of reporting.

Kozuma： The original idea came from the demand for the disclosure of how much environmental impact is actually covered in the boundaries of consolidation. Although boundaries are important, there is also the issue of scope＊ and I think the scope of disclosure will expand in a more multi-layered way.

Kohara： As the emp loyees do not understand the Japanese language, we employ videos for education. We are also using local languages in danger-prediction activities to make them closer to the common level . I t i s actual ly d ifficult because the sense of people is different between countries.

Tanaka： While it is essential to pursue both economic and environmental benefits, it may be better to highlight the unique features of Sumitomo Electric related to coexistence with society such as the action plan, which will facilitate further development. Society has great expectations from your company.

Morisawa： With a history of over a century, Sumitomo Electric has been a top runner that played a role in the high economic growth of Japan. I hope that your company continues to exercise leadership over Asian companies on environmental aspects as well.

Kozuma： I hope that your company promotes advanced initiatives, such as CRF, step by step. To enhance response to global environmental regulations, it may be necessary to ask for public support.

Noda： Although the time was limited, we received many opinions from the guests who are active in the front lines of the respective fields. I was impressed with a new way of thinking many t imes. We would l ike to add these perspectives to our future activities. Thank you everyone.

Expectations from the environmental management of the Sumitomo Electric Group in the future

Matsutomo： I find it difficult to grasp environmental laws and regulations in foreign countries. It took one year to make a checklist of them in China. While we somehow managed the task in China, we now have to do it in Southeast Asia. We have issued an instruction to conduct a survey, but we are not sure where to begin.

Tanaka： Toyota appoints persons in charge of environmental issues or information collection in the regional headquarters and other sites to send information to the head office. Nevertheless, our basic goal is that environmental issues are handled autonomously within each country/region.

Noda： Sumitomo Electric also performs relatively advanced safety audits. The knowledge achieved from them is used for environmental activities and quality control. Concerning the establishment of bases, we consider forming the Manufacturing

Establishment of overseas bases for environmental management

After the Stakeholder Dialogue

We h a v e b e e n c omm i t t e d t o environmental management as one of the key issues in management, and the exchange with the experts from ou t s ide ou r company was ve ry meaningful. Our activities, such as CRF and joint modal shi f t with other

companies, received unexpectedly high evaluation, and we would like to place even more emphasis on them. We will respond to the indications and advice given in the dialogue, such as disclosure of information in a more proper and easy-to-understand way, promptly in the CSR Report for this fiscal year wherever possible, while some issues including those related to our basic approach and the matter of boundaries are difficult to improve in a short term. This dialogue enhanced our awareness of coexistence with society and initiatives from a global perspective. We will specifically discuss these subjects to improve and strengthen our environmental management.

Shigeru Noda Managing Director

Glossary ＊ BoundaryOrganizations covered in the report.

＊ ScopeContent covered in the report; scope in the value chain.

Management & Engineering Unit in each region to serve as the base. We plan to establish two bases in China and one in ASEAN countries and assign a dedicated team with a small number of members in each of the bases.


The Sum i tomo E l ec t r i c G roup has deve loped i t s environmental policy based on its business philosophy, which forms the bas is for i t s bus iness management . The environmental policy, detailed below, places the highest managerial priority on activities related to preservation of the global environment.

Established: July 1997

Organizations for Promoting Environmental ManagementThe Corporate Environment Committee is the supreme Group organization for making decisions related to environmental management. It oversees the entire Group's environmental preservation activities on a global basis. Environment Task Committees provide technical support to the Corporate Environment Committee in four themes. The Business Unit Environment Committee established in each of five business units supervises the concrete activities of the divisions belonging to the unit for achieving Group-wide environment objectives as well as mid- and long-term targets.

Environmental Management

President

InternalEnvironmentAudit Teams

Corporate Environment Committee

Environment Task Committees● Energy Saving Task Committee　● Zero Emission Task Committee● Chemical Management Task Committee● Green Logistics Promotion Task Committee

Business Unit Environment Committees (Note1)

Divisions

Domestic affiliates located inside Works

Domestic affiliates located outside Works

Overseas affiliates

Divisions

Domestic affiliates located inside Works

Domestic affiliates located outside Works

Overseas affiliates

Affiliates: Domestic: 49 / Overseas: 100

Works Environment Committees (Note 2)

Relationship with

the Global Environm

ent

Basic PhilosophyThe Sumitomo Electric Group thinks it is primarily important to estab l i sh a soc iety that i s susta inab le and has less environmental impact. While making continuous and steady efforts to promote our global environmental preservation activities, the Sumitomo Electric Group contributes to world people and society by providing products and services in “Electric Wire & Cable, Energy,” “Infocommunications & Systems,” "Electronics,” “Automotive,” and “Industrial Materials & Others” related business.

Action Guidelines

Environmental Policy

1.In order to promote environmental-oriented management in which the Sumitomo E lectr ic Group cons iders environmental preservation activity is one of the most important issues for corporative management, the Group's action plan under this Environmental Policy will be established together with Group-wide environmental indicators and long term targets for environmental preservation. Reviewing environmental objectives and targets voluntarily, the Sumitomo Electric Group promotes continuous improvement on environmental performance.

●Reduce environmental impacts in manufacturing activities① Proceed our efforts to prevent global warming ② Promote saving and recycling of resources ③ Keep progress in environmental pollution prevention

●Increase environmentally-conscious products and services for our customer demands① Make best efforts toward phaseout of harmful substances contained in the Sumitomo Electric Group's products

② Enforce carrying out product assessment③ Increase number of products accomplishing life cycle assessment

2.The Sumitomo Electric Group will fulfill and enforce environmental management system.●We communicate the Sumitomo Electric Group's Environmental Policy to all people who work at the Sumitomo Electric Group and for the Sumitomo Electric Group while we provide educational programs on environmental preservation to improve their awareness.

●We conduct environmental audits, and we review and strengthen our environmental management system as well as environmental preservation activities.

3.The Sumitomo Electric Group will keep and improve compliance action.● In addit ion to comply with relevant environmental legislation and regulations, and with other requirements to which the Sumitomo Electric Group subscribes, we set up the Sumitomo Electric Group's self-standards better than legislative ones and make efforts to maintain and improve them.

4.The Sumitomo Electric Group's Environmental Policy will be opened to the public upon request.

Managing Director in charge of environmental management

Chairperson：

General Managers of HR & Administration Department, Group Procurement Division, Logistics Management Department, individual Sumitomo Electric Works (3 persons), Safety & Environment Department, Quality Management D i v i s i o n , P l a n t & P r oduc t i on S y s t ems Engineering Division, and business units (5 persons)

Members：

General Managers of Business Units

Chairperson：

Deputies of General Managers of business units, and persons in charge of environmental preservation activities in divisions (affiliates)

Members：

(Note 1) Business Unit Environment Committees are established in Electric Wire & Cable, Energy Business Unit, Infocommunications & Systems Business Unit, Electronics Business Unit, Automotive Business Unit and Industrial Materials Business Unit.

(Note 2) Works Environment Committees are established in Osaka Works, Itami Works and Yokohama Works.



New Environmental AuditsThe Sumitomo Electric Group promotes the acquisition of ISO 14001 (environmental management system) certification, and conducts internal and external audits for the continual improvement of the environmental management system. In addition, to ensure compliance with relevant laws and reduce even more environmental impact, we have implemented new environmental audits with a focus on compliance with environment-related laws and the efforts in the Action ECO-21 campaign at manufacturing bases in Japan since fiscal 2008 and at overseas manufacturing bases since fiscal 2010.

● Confirmation of Legal ComplianceIn Japan, we conduct audits to confirm compliance with 120 items of 23 environmental and related laws as well as the ordinances of the prefectures and municipalities where the sites are located.

Overseas , we a l s o c a r r y o u t aud i t s based on t h e environment-related laws in the countries and regions where the sites are located, as we do in Japan.

Since our CSR Report 2010, we have collected and disclosed environmental accounting data based on a new disclosure approach in reference to the concept of the Connected Reporting Framework (CRF)＊.We further improved the approach this fiscal year by adding data on the cost of social activities and factor analysis of changes as well as data on the sectors excluded from the boundaries of data collection for the Action ECO-21 (Phase Ⅲ) campaign in a retroactive manner.

boundaries of tabulation: Sumitomo Electric and domestic affiliates(Note 1) The values for fiscal 2008 and 2009 have been adjusted

retroactively to the boundaries of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010.

(Note 2) The amount of investment in the activities certified as “Energy saving activities” by the Energy Saving Office of the Safety & Environment Department is calculated. The economic effect includes that of the energy saving activities in which no investment has been made.

(Note 3) The amount of investment does not include investment related to efficient use of resources but covers investment for reduction of waste generation and recycling.

(Note 4) The cost is calculated based on payment to the waste disposal contractor. Metals are not included in the calculation of either cost or economic effect.

(Note 5) 2009: emissions in fiscal 2009 from the boundaries of collection for the Action ECO-21 (Phase Ⅲ) campaignChange due to boundaries change: emissions in fiscal 2009 from the boundaries of collection newly added in the Action ECO-21 (Phase Ⅳ) campaignChange due to sales change: [emissions in fiscal 2009 from the whole boundaries of collection for the Action ECO-21 (Phase Ⅳ) campaign] x (sales in fiscal 2010 / sales in fiscal 2009 - 1)Actual change: calculated by subtraction2010: emissions in fiscal 2010 from the whole boundaries of collection for the Action ECO-21 (Phase Ⅳ) campaign

(Note 6) The target presented is reduction by 25% on average between fiscal 2008 and fiscal 2012 based on the fiscal 1990 level.

2008 2009

345 227 384

2008 20082009 2009

37

2010

642

7035

Cost of management

activities

Cost of social activities

Cost of environmentalremediation

989

10 1214

14 2852

570

1,030 75968 70

414

2010 2010

1,098 77

Investment in energy saving

(Note 2)

Reduction of energy cost

(Note 2)

Investment in resource saving and recycling

(Note 3)

Wastedisposal cost

(Note 4)

Sale ofvaluables materials

(Note 4)

Investment(million yen)

Expense(million yen)

Economic effect(million yen)

23 laws subject toenvironmental audits

4 recycling laws

2 waste laws

1 energy law

3 chemical substances laws

13 pollution laws

Training system

Sumitomo Electric Group's environmental activities

General training

On-site training

Position-based training

Environmental awareness education

Education on environmental lawsEducation on legal issuesISO 14001 internal auditor educationEducation on energy saving methods and the improvement

Sumitomo Electric Group Eco-Life Activities

Waste separation and treatmentPRTR LawManagement of harmful substances contained in productsManagement of chemical substancesEnvironmental laws, chemical control, energy savingEducation on energy saving methods and the improvement

General environmental education

Legal and compliance education

Sectoral education

General environmental and sectoral training

Sectoral education

Other education

ISO14001Energy savingEco-Life ActivitiesWaste

Chemical substances

Energy savingOthers

Provided since fiscal 2010

Training menu Title of the training

Glossary ＊ Connected Reporting Framework (CRF)A reporting scheme recently developed in the U.K. that integrates financial and non-financial information in the disclosure.

Environmental Accounting (New Approach to Calculation and Disclosure)

Reduction ofGHG

emissions

Wastereduction

Financial items (Note 1)

Education and TrainingTo enhance every employee's environmental awareness and knowledge, the Sumitomo Electr ic Group provides al l employees with education on the history of measures to protect the global environment as well as the Group's environmental policy and the Action ECO-21 campaign. In fiscal 2010, we also started to provide general environmental education as well as systematic education on environmental laws, chemical control and global warming as part of the position-based training program. A total of 622 employees participated in 38 sessions.


Compliance with Environmental Laws and RegulationsAccording to the investigation of compliance with laws in our sites in Japan and overseas by the business units, no significant environmental violation was identified in the Sumitomo Electric Group in fiscal 2010. However, the regulatory authority indicated to our affiliate in Mexico of fai lure to submit suf f ic ient documents and nitrogen concentration exceeding the standard, and paid a fine according to the decision in 2010.

Non-financial itemsPerformance (in Japan)

(Retroactively adjusted to the boundariesof data collection for Phase Ⅳ)

Change factors in fiscal 2010 (in Japan)(The value for fiscal 2009 covers the boundaries

of data collection for Phase Ⅲ)Strategy/opportunity and risk

We established the Energy Saving Office in the Safety & Environment Department in fiscal 2010, and have increased the staff on an as-needed basis to considerably enhance our energy saving diagnosis and energy saving education activities. As a result, we obtained more economic effect than we did in fiscal 2009, in which we focused our efforts on the initiatives that were expected to produce steady results. We will continue and expand these activities. GHG emissions increased from the fiscal 2009 level with the recovery of sales, and the reduction rate from the fiscal 1990 level also dropped. On the other hand, emissions per unit of sales were improved in comparison with the fiscal 2009 level, and the actual change was minus 41 thousand tons-CO2/year, which indicates an increase in the energy saving effect. In fiscal 2011, we need to further enhance energy saving activities to respond to the impact of the Great East Japan Earthquake. With the Energy Saving Office playing the core role, we are making efforts to overcome the difficult situation and achieve the target of Action ECO-21 (Phase Ⅳ) campaign of reducing GHG emissions by 25% on average between fiscal 2008 and fiscal 2012 from the fiscal 1990 level.

We reviewed the definition of the cost of management activities for the start of the Action ECO-21 (Phase Ⅳ) campaign, and made adjustments to include the sections that had been excluded from the boundaries of data collection in Phase Ⅲ.

We continuously restore the contaminated soil and groundwater identified in our facilities.

Most of the cost was spent for cleanup of areas outside company sites, especially the neighboring areas, which is conducted by the great majority of our facilities. While continuing the cleanup activities, we plan to diversify the social activities in the future.

While the recovery of sales resulted in an increase in waste generation by 7% from the fiscal 2009 level, we reduced waste generation per unit of sales, and recorded an actual change of minus 2.0 thousand tons/year. On the other hand, waste disposal cost increased by 13% from the fiscal 2009 level, which was mainly attributed to a rise in PCB disposal cost in fiscal 2010. With the PCB disposal cost excluded, the increase rate was lower than that in waste generation, which indicates the improvement of waste disposal cost efficiency. We continue to make efforts to reduce waste generation mainly through encouragement of conversion of waste into valuable materials by the inspection of the offices as well as production yield improvement.

Cost of environmental organization, ISO 14001 registration and maintenance, etc.

Cleanup of areas outside company sites, external environmental education, etc.

Restoration of contaminated soil and groundwater

● Action ECO-21We have set 60 check items for our sites both in Japan and overseas to audit their activities and progress.

We completed env i ronmenta l aud i t s o f 49 o f the 53 manufacturing sites in Japan by the end of fiscal 2010. While the audits of the remaining four sites were postponed due to damage caused by the Great East Japan Earthquake, they are scheduled to be completed within fiscal 2011. Among more than 30 countries in which the Sumitomo Electric Group operates, we have launched the audi ts in China f i rs t , which has 14 manufacturing bases of the Group (largest among the foreign countries), and completed the audits of 11 of them. In fiscal 2011, we plan to complete the audits of nine sites in total including all four in Thailand and all four in Malaysia in addition to one of the remaining three in China. The other two are located in the premises of a local company and covered by the environmental management of the Chinese company.

Explanation of the Boundary

In promotion of environmental management, Tokai Rubber Industries, Ltd., Nissin Electric Co., Ltd. and Sumitomo Densetsu Co., Ltd., which are listed in the stock exchange in Japan, and their consolidated companies are excluded from the boundaries of the environmental management of the Sumitomo Electric Group although these companies are included in the boundaries of consolidation for financial reporting. When the comprehensiveness of the boundaries is assessed based on CO2 emissions, a representative environmental indicator, the emissions from the boundaries of the environmental management of our Group, 1,259 thousand tons, account for 90% of 1,400 thousand tons, which are estimated CO2 emissions from the boundaries of consolidation for financial reporting in fiscal 2010. In the meantime, out of the 292 consolidated subsidiaries excluding the 3 listed companies mentioned above, the environmental management of our Group covers 150 companies mainly in production units (50 in Japan, 31 in China, 30 in Asia, 15 in the Americas and 24 in Europe and other ) . Our t r ia l ca lcu la t ion ind icates that environmental impact, such as CO2 emissions, of the 150 companies is estimated to occupy more than 99% of that of the 292 subsidiaries

2008 (fiscal year)

0

200

400

600

800

530

2009

530

2010 Target

559

24 24

10

0

20

30

20

25

GHG emissions(thousand tons-CO2/year)

GHG emissionsEmission reduction rate (from the fiscal 1990 level)

Reduction rate (%)

40

2008 (fiscal year)

0

50

40

30

20

10

34.3

2009

33.6

2010

36.1

2010Target

Waste generation(thousand tons/year)

GHG emissions(thousand tons-CO2/year)

20090

200

400

600

800

421

Change dueto boundaries

change

109

Change dueto saleschange

70

Actualchange

▲41

2010

559

(fiscal year)

Waste generation(thousand tons/year)

2009 (fiscal year)

0

50

40

30

20

10

30.5

Change dueto boundaries

change

3.1

Change dueto saleschange

4.5

Actualchange

▲2.0

2010

36.1

(Note 6)

5

0

10

15

Reduction rate（％）

20

25

05.3 1

Waste generationReduction rate per unit of sales (from the fiscal 2009 level)

(Note 1) (Note 5)

Relationship with

the Global Environm

ent


Goals of the Action ECO-21(Phase Ⅳ) Campaign　■ Period: Fiscal 2010 - 2012

Environmental Management (Group-Wide Indicator: Environmental Efficiency)At the start of the Action ECO-21 (Phase Ⅲ) campaign, the Sumitomo Electric Group introduced environmental efficiency, which is defined as the sum of the damages of various environmental impacts (converted into monetary value according to LIME＊, a life cycle impact assessment method based on endpoint modeling) divided by sales, as a Group-wide indicator on environmental management. While environmental impacts in fiscal 2010 recorded a year-on-year increase of 6.2%, sales increased by a higher rate, and environmental efficiency was accordingly reduced by 9.1% to 15.46 from 17.02 in fiscal 2009. We will enhance our efforts to meet the targets for the Action ECO-21 (Phase Ⅳ) campaign.

(Note) With the start of the Action ECO-21 (Phase Ⅳ) campaign in fiscal 2010, the boundaries of data collection was expanded to newly include Sumitomo Wiring Systems, Ltd., Sumitomo Electric Device Innovations, Inc., etc.


Glossary ＊ LIMELife Cycle Impact Assessment Method Based on Endpoint Modeling (LIME) is a method for evaluating the impact of products and services on the environment.

(fiscal year)0

4

8

12

16

20Environmental efficiency（×10－3）

2010

15.46

2009 (base year)

17.02

2012 (target)

16.51

[boundaries of data collection] CO2 and wastes: Group companies in Japan and overseas; Harmful materials, NOx and SOx: Group companies in Japan only(Note) The figure in fiscal 2009 was retroactively adjusted

to the boundaries of data collection for the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010.

Environmental Efficiency＝Monetary value of environmental impacts (CO2, wastes, harmful materials, NOx and SOx) / Sales

DescriptionsItem

Environmentalefficiency

Monetary value of environmental impacts (CO2, waste, harmful materials, NOx and SOx) / Sales

Managementof harmfulsubstancescontainedin products

（1）Enhance the chemical substance management system・Reinforce management of information on substances contained in products

（2）Discontinue use of harmful chemical substances (to comply with the RoHS and ELV Directives)・Meet customer demand for certification that no prohibited substances are contained in products

Expansion of environmentally-

conscious product range

Globalwarmingprevention

Promotion ofresource

conservationand recycling

Reduction ofthe release of

harmful chemicalsubstances

Strengthening ofchemical control

（1）Reduce greenhouse gas emissions (in Japan)・Target to comply with the Kyoto Protocol

（2）Reduce greenhouse gas emissions (in Japan and overseas)・Global target of the Sumitomo Electric Group①Reduce energy consumption per unit of sales through energy saving[Consumption in crude oil equivalent / Sales]

（1）Reduce emissions of volatile organic compounds (VOCs) (in Japan)・For VOCs from the sites whose atmospheric release is 2 tons/year or greater

②Reduce non-energy derived greenhouse gas emissions・Reduction of SF6 and other greenhouse gases (in CO2 equivalent)

③Save energy in the offices of the head offices and branch offices[Consumption in crude oil equivalent / Floor area]

④Reduce greenhouse gas emission in logistics per unit of sales

⑤Reduce CO2 emissions through the Eco-Life Activities

0.5% or less 0.5% or less

（3）Reduce the average zero emission rate overseas

（5）Reduce water use[Water use / Sales]

（2）Reduce emissions of VOCs (overseas)

（1）Reduce the average zero emission rate in Japan

（3）Discontinue use of trichloroethylene etc.

（4）Continuously use no hazardous substances・Mercury (Hg), Cadmium (Cd) and hexavalent Chromium (Cr6+)

（1）Strengthen the control of chemical substances (including poisonous and deleterious substances, etc.)

Targets for fiscal 2012

Reduce 3% from FY 2009

Complete the establishment of the system to comply with the REACH regulations

Complete the establishment of the system to comply with the REACH regulations

Set the target within FY 2010


Discontinue use Discontinue use

Continuously use no hazardous substances


Establish and operate the control system

Establish and operate the control system

Proceed with the discontinuance of harmful substances contained in products (meet each customer's demand)

Proceed with the discontinuance of harmful substances contained in products

Reduce 25%on the average between 2008 and 2012 from the FY 1990 level




（2）Increase the ratio of Eco-products in sales Set the target within FY 2010


（3）Reduce CO2 emissions by products with less CO2 emissions Set the target within FY 2010


（1）Increase registration of “Eco Mind” products (products having undergone product assessment)・The indicator is the registration ratio [Number of registered items / total number of new items]

１００％ Register all of the new products



Reduce 3% from FY 2009Reduce 5,000 tons per year from the FY 2007 level

Reduce 1,000 tons per year from the FY 2007 level


Reduce 25%on the average between 2008 and 2012 from the FY 1990 level








5% or less 20% or less



Targets for fiscal 2010


（2）Reduce waste generation per unit of sales (in Japan)[Waste generated / Sales]

（4）Reduce product packaging material use per unit of sales[Amount of packaging materials used / Sales]



0.5％

Collected information on the regulations

Set the target (Reduced 2% from FY 2010)Started to prepare introduction of the equipment

Continuously use no hazardous substancesCompleted the establishment (started its operation in April 2011)


Increased 3.5%

Set the target (more than 50% in FY 2012)

Set the target (50 thousand tons/year in FY 2012)

100% (49 items were registered)

Reduced 20%

Reduced 4.6%

Reduced 40%

Increased 8.8%

Reduced 1.5%

Reduced 4.7%

Reduced 5.3%

20％

Reduced 7.0%

Reduced 9.1%

Reduced 2.5%

○

○

○

△

○

○

○

▽

○

○

○

△

◎

◎

▼

○

▽

◎

◎

○

◎

◎

◎

Fiscal 2010 results Evalu-ation

Reduced 201 tons per year

Reduction of environmental im

pacts from business activities

Expanding environmentally-conscious

product range and meeting custom

er demand

Legend　◎：Target achieved and performance far exceeding the target (by more than about 50%); ○：Target achieved; △：Target not achieved (performance improved from the previous fiscal year); ▽：Target not achieved (performance similar to that in the previous fiscal year); ▼：Target not achieved (performance deteriorating from the previous fiscal year)

The Sumitomo Electric Group has obtained satisfactory results for 18 of the 23 environmental targets set under the Action ECO-21 (Phase Ⅳ) campaign. We will continue to make efforts to meet the targets in the items in which we failed to satisfy the targets in fiscal 2010.


[boundaries of data integration] Items with ＊ : Sumitomo Electric + domestic affiliates; Items without ＊ : Sumitomo Electric + domestic and overseas affiliates

Materials Flow (Environmental Impacts)

Copper 262 thousand tons

Iron 378 thousand tons

22 thousand tons

55 thousand tons

11 thousand tons

Materials

2,043 million kWh

9 thousand tons

41 million m3

16 thousand kl

11,716 thousand m3

37 thousand tons

1,266 tons

Energy

15 thousand kl

1,235 thousand tons

24 thousand tons

Greenhouse gas emissions

NOX ＊ 499 tons

SOX ＊ 101 tons

Air pollutant emissions

5 tons

Chemical substance emissions

13 thousand tons

46 thousand tons

Wastes

48 thousand tons

10,293 thousand m3

473 thousand tons

40 thousand tons

Products

Design

Manufacture

Use

Logistics

INPUT OUTPUT

111 tons

189 tons

Relationship with

the Global Environm

ent

● CO2 ：CO2 emitted from the use of electricity, gas and fuels

● Greenhouse gases other than CO2 ：SF6, HFC, PFC and other greenhouse gases converted to CO2 equivalent

● NOX ：Nitrogen oxides emitted from the use of gas and fuels

● SOX ：Sulfur oxides emitted from the use of fuels

● General wastes ：Non-industrial wastes (including paper, wood, fibers and other trash) generated through business activities

● Industrial wastes ：Wastes specified in the “Waste Management and Public Cleansing Law,” including sludge, waste oils, waste acids/alkalis, waste plastics, metals, glass, ceramics, cinders and other substances generated through business activities

● Wastewater ：Wastewater discharged from plant production processes, and household wastewater

● Chemical substances ：Substances specified in the PRTR Law and equivalent laws in other countries

● Electricity ：Purchased from electric power companies

● Fuels ：Heavy oil, kerosene and gas oil

● Water ：City water, industrial water and well water (groundwater)

● Product packaging materials ：Corrugated cardboard, paper, resin and wood

● Paper ：Copying paper, computer paper and other types of paper used in plants and offices

● Transportation fuel ：Gasoline, gas oil etc.

Aluminum

Resin

Chemical substances

Electricity

LPG

City gas

Fuels (converted into crude oil equivalent)

Water

Product packaging materials

Paper

Transportation fuel (converted into crude oil equivalent)＊

CO2

Other gases

Into the air

Into the water

As industrial waste

General wastes generated

Industrial wastes generated

Recyclable materials

Wastewater

Product shipments

CO2 emissions ＊

(converted into CO2)

Activities to Prevent Global Warming


Reduction of Greenhouse Gas Emissions

2007Base year

(fiscal year)0

1,000

500

1,500

2,000

2008

Emissions converted to CO2 equivalent(thousand tons-CO2/year)

Domestic and overseas operations Reduction ratio

1,3211,110

2009 2010

1,1341,259

2012Target

1,255

Production Units

(Note 1) Scope 1: Direct emissions from the use of fossil fuels, etc. in our facilitiesScope 2: Indirect emissions from the use of electricity and steam supplied from

outside our facilitiesScope 3: Other indirect emissions from logistics, use of products, travel by

personnel, etc. (Note 2) Scope 3 in the table above covers the data on logistics only.

We continuously responded to questions from CDP＊ in fiscal 2010.Initiative to Provide Environmental Information

Scope 2 1,034Scope 1 225

Scope 3 40

Greenhouse Gas Emissions in Fiscal 2010 (thousand tons-CO2/year)

Our GHG emissions converted to CO２ equivalent in fiscal 2010 increased slightly from the fiscal 2009 level to 559 thousand tons-CO２ due to economic recovery. As a result, the reduction rate from the fiscal 1990 level was 20% and did not reach the internal target of 25%. Still, the rate far exceeded 6%, Japan's reduction commitment under the Kyoto Protocol. In fiscal 2011, we are making efforts to reduce peak power consumption to address the impact of the Great East Japan Earthquake. As we have to deal with the risk of medium and long-term power shortage, we are actively promoting investment in energy saving measures, which also aims to strengthen our corporate constitution and reduce CO２ emissions.

In Japan

The GHG emissions in the whole Group, including overseas companies, increased from the fiscal 2009 level to 1,259 thousand tons-CO２ equivalent. But the emissions were 4.7% lower than those in fiscal 2007, the base year, and we thus achieved the target for fiscal 2010.

In Japan and overseas

20100

Reduction ratio (%)

14160 4.7 5

Europe,etc.

2010

53China

2010

275Japan

2010

559 America

2010

108

Asia

2010

264

(thousand tons-CO2/year)

This fiscal year, we started to publish the results of factor analysis of changes in CO2 emissions. The increase in the emissions by 192 thousand tons-CO2 from the fiscal 2009 level due to an increase in sales was offset by the promotion of various energy saving activities. As a result, we managed to keep CO2 emissions lower than the initially assumed value by 67 thousand tons-CO2.

While emissions from Japan are currently the largest, a large amount of CO2 is also emitted from Asia as shown in the figure above. The energy efficiency in these Asian countries tends to be lower than that in Japan, and we are therefore promoting energy saving activities aggressively there.

1990Base year

(fiscal year)

400

200

0

600

800

1,000

701

2009

530

2010 Average between2008-2012

Target

559

0

24

2008

530

24

2007

605

1420100

30

20 25

Emissions converted to CO2 equivalent(thousand tons-CO2/year) Reduction ratio (%)

526

Domestic operations Reduction ratio

Greenhouse Gas Emissions (Converted to CO2 Equivalent) and Reduction Ratio (in Japan)

Greenhouse Gas Emissions (Converted to CO2 Equivalent) and Reduction Ratio (in Japan and overseas)

(fiscal year)

800

600

400

200

0

1,000

1,200

1,400

Actual change

▲67

Factor Analysis of Changes in CO２ Emissions (in Japan and overseas)

2010

1,259

Change due tosales change

192

374

Change due toboundaries change

760

2009

Emissions converted to CO2 equivalent(thousand tons-CO2/year)

(Note) 2009: emissions in fiscal 2009 from the boundaries of collection for the Action ECO-21 (Phase Ⅲ) campaignChange due to boundaries change: emissions in fiscal 2009 from the scope of collection newly added in the Action ECO-21 (Phase Ⅳ) campaignChange due to sales change: [emissions in fiscal 2009 from the whole scope of collection for the Action ECO-21 (Phase Ⅳ) campaign] x (sales in fiscal 2010 / sales in fiscal 2009 - 1)Actual change: calculated by subtraction2010: emissions in fiscal 2010 from the whole scope of collection for the Action ECO-21 (Phase Ⅳ) campaign

(Note 1) CO2 emission factor for purchased electricity[In Japan] Emission factor for year 2000 published by the power company in

each region(The data in 1990, however, are based on the emission factor for 1990.)

[Overseas] Emission factor in each country for year 2000 mentioned in "Report of a survey to estimate CO2 emission intensity in the power sector in different countries" (2004) by the Japan Electrical Manufacturers' Association(The data in 1990, however, are based on the emission factor for 1990.)

CO2 emission factor for other than purchased electricity[Both in Japan and overseas] Emission factor in "Guidelines for accounting

and reporting of greenhouse gas emissions from industrial commercial sectors" (2003) by the Japanese Ministry of the Environment

(Note 2) The values for the previous fiscal years have been adjusted retroactively to the boundaries of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010.

Glossary ＊ CDPCDP (Carbon Disclosure Project) is a collaboration of institutional investors that request companies to establish strategies against climate change and publish data on GHG emissions.

CO２ Emissions from the Global Operations of the Sumitomo Electric Group by Region

Reduction of Energy Consumption per Unit of Sales through the Promotion of Energy Saving ActivitiesSumitomo Electric established the Energy Saving Office in fiscal 2010 to actively promote the energy-saving diagnosis program by in-house experts both in Japan and overseas. In fiscal 2010, the program was carried out in 10 domestic sites and 10 overseas sites, and 741 energy saving ideas were proposed from the diagnosis results. To take specific measures for equipment improvement based on the proposed ideas, we also initiated detailed diagnosis to measure electricity and other data mainly on compressors with the implementation in five sites in fiscal 2010. As a result of these energy efficiency improvement efforts, although energy use increased, energy consumption per unit of sales decreased by 4.6%. In fiscal 2011, we have to reduce peak power consumption of our divisions and affiliates located in the areas where electricity is supplied byThe Tokyo Electric Power Co.,Inc., Tohoku Electric Power Co.,Inc. and The Kansai Electric Power Co.,Inc. due to the impact of the Great East Japan Earthquake. Accordingly, under the leadership of the Energy Saving Office, Plant & Production Systems Engineering Division makes a concerted effort to support energy saving activities on both hardware and software aspects.


Energy SavingREPORT

Yokohama Works has established its own energy-saving project teamDue to the impact of the Great East Japan Earthquake on March 11, 2011, mandatory curbs have been imposed on total electricity use in the areas served by Tokyo Electric Power Company since July. Manufacturing Management & Engineering Unit is supporting the divisions and affiliates located in the areas in implementing their energy-saving programs to respond to the obligation to cut the peak power consumption by 15% in comparison with the result in fiscal 2010. In Yokohama Works, which mainly manufactures communications cables and optical communications devices, we took initiative and established a “power use reduction council” in April after the earthquake.

Drastic energy-saving measures have been taken based on a wide range of simulationsThe contract power of Yokohama Works, composed of several factories, is 14,900 kW. Therefore, we have to cut the peak power use by 2,230 kW to meet the reduction target of 15%. This is an extremely ambitious target for Yokohama Works because it has been already committed to energy saving. As it is insufficient to simply add more energy-saving measures, we adjusted the operation schedule in a way to reduce power use by sh i f t ing the holidays of employees on a rotational basis from July to early August. In addition, we have been making steady efforts such as integrated use of a freezer, improvement of efficiency of air condit ioners and l ight ing devices, attachment of light-blocking window films in offices and concentration of operations to limited areas. We plan to start the operation of two cogeneration systems in August and four systems in September. The use of these new units is the final measure to address the restriction on electricity use, but it is still unclear how the power supply situation will change. Yokohama Works discloses the power consumption of each division on the website and works to enhance the awareness of energy saving among all employees. We will continue to make a united effort to save energy and overcome this emergency.

Replacement of lamps with LED lights

Integration into a high-efficiency freezer

Website showing the current electricity use

With a concerted effort by Yokohama Works, we are addressing the urgent challenge of reducing our peak power consumption by 15%

38

(fiscal year)0

10,0005,000

15,00020,00025,000

2009 Base year

20,570

Energy Consumption and Energy Consumption Per Unit of Sales

2008

20,489

2007

23,964

2010 2012 Target

Energy consumption(TJ/year)

40

36

38

4038

Energy consumption per unit of sales (kl/100 million yen)

Domestic and overseas operations Energy consumption per unit of sales(Note 1) Energy consumption per unit of sales is based on amount converted to crude oil equivalent.(Note 2) The values for the previous fiscal years have been adjusted retroactively to the boundaries

of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010.

22,946 Relationship with

the Global Environm

ent

Reduction of Non-Energy Derived GHG EmissionsThe Sumitomo Electric Group uses sulfur hexafluoride (SF６) for insulation testing of power cables and accessories for power equipment, and for insulation during production of electron beam-irradiated plastic products. Small amounts of methane and hydrofluorocarbons (HFCs) are also used in product manufacturing and testing. The Group has thus far taken measures to improve the SF６ insulation gas recovery ratio, and has also examined the feasibility of using alternative insulation gases, in order to curb emissions of greenhouse gases. As a result, the entire Group, including domestic and overseas affiliates, reduced SF６ and other greenhouse gases by 24 thousand tons-CO2/year. The fiscal 2010 result was a reduction of 40% from the fiscal 2009 level, which represents considerable improvement in comparison with the target of reduction by 3% in fiscal 2012.

0

10

20

30

40

50393841

24

0

40

0

2040

Emissions converted to CO2 equivalent(thousand tons-CO2e/year) Reduction ratio (%)

38

3

Emission of SF6 and Other Greenhouse Gases in Japan and Overseas

(fiscal year)2009 Base year20082007 2010 2012 Target

Domestic and overseas operations Reduction ratio(Note) The values for the previous fiscal years have been adjusted retroactively to the boundaries

of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010.

Hiroaki Naito (left) Assistant General Manager of Plant Engineering Department, Plant & Production Systems Engineering Division

Ichiro Hatanaka (right) Assistant General Manager of Yokohama Engineering Group, Plant Engineering Department, Plant & Production Systems Engineering Division


Energy Saving in Offices and at Home

Miho Kobayashi Manufacturing Engineering Group, Itami Manufacturing Department, AS BRAKE SYSTEMS, Inc.

An annual event of our family “Candle Night”C S R V O I C E

Energy Saving in Offices(Osaka Head Office, Tokyo Head Office, Chubu District Office and Toyota Branch Office)

The Sumitomo Electric Group has worked to encourage households to participate in Eco-Life Activities since fiscal 2008. As the number of participating families exceeded 5,000 in fiscal 2009, we set the new target of “reducing CO２ emissions from households by 5,000 tons in fiscal 2012 from the fiscal 2007 level” in fiscal 2010. CO２ emissions reductions in fiscal 2010 were 201 tons, much lower than the annual target of 1,000 tons. On the other hand, the reductions in fiscal 2011 reached 400 tons by July as a result of our efforts to introduce the “Eco-Life calculation tool” at internal briefing sessions. Developed by Sumitomo Electr ic to promote the act ive use of the Household Eco-Account Book, this unique tool allows CO２ reductions to be easily calculated just by entering the measures taken in the households. As of July 2011, 7,500 families participate in the program. The families that achieved the goal of reducing CO２ emissions by one kilogram per person per day are provided with potted plants cultivated by Sumiden Friend, Ltd. (refer to P53) as the prizes. We are thus committed to further activation of this initiative.

Energy Saving Activities in Households

We have set the target of reducing GHG emissions in offices by 3% in fiscal 2012 from the fiscal 2009 level. In the head offices, district office and branch office, we have assigned a member and a vice member of the “Workplace ECO Activity Promotion Committee” in each workplace (on a division or group basis). The committee members have taken initiative and established rules to promote the following activities: ① Dressing cool in summer and warm in winter,

to keep air conditioning moderate② Turning off all office lights during lunch break③ Turning off lights in meeting rooms and toilets and

air conditioners when not in use④ Introducing “Eco mode” for PCs⑤ Turning off or down unnecessary lights etc.

Due to the impact of the Great East Japan Earthquake, we have also promoted energy saving measures in the areas where electricity is supplied by Tokyo Electric Power Company and Tohoku Electric Power Company, including energy saving diagnosis in offices and energy saving training sessions, so as to raise awareness of energy saving.

“Today is the day to have dinner with candle lights!” My family enjoys spending the nights of the summer solstice and winter solstice with candle lights instead of electric lights from four years ago. This is an event called “candle night of one million people.” Daylight is longest on the summer solstice and shortest on the winter solstice. On such special days for the earth, with lights off, I think about the earth and its environment with my important family. The thought spreads amazingly wide. I recommend participation in this event. On the other day, I put up posters to disseminate the event in my office as well as the nursery school my children go to. My son says that I do not have to use the car to take him to the nursery school because it emits CO2. I have recently learned that CO2 emissions can be reduced dramatically by shortening shower time by just one minute. So, when I take a bath with my children, I say to them to try to finish washing their hair while I count 30. We have already done almost al l the measures we can take easily since the start of the Eco-Life Activities, but I never t i re of t ry ing to f ind new measures from a child's viewpoint. I hope that the Eco-Li fe Activit ies become more widespread.

(Fiscal year)0

30

20

40

10

2009Base year

27.0

2010

29.326.2

0

2008

23.8

2007

30.60

10

-10-8.8Consumption in crude oil equivalent/floor area

(kl/thousand m2)Reduction ratio (%)

2012Target

3

The scorching heat in the summer of 2010 led to an 8.8% increase in office energy consumption in crude oil equivalent per floor area. We will further promote energy saving measures in offices to improve the energy-use efficiency.

● Changes in Energy Use (in Offices)

Consumption in crude oil equivalent/floor area Reduction ratio

Energy saving training session at Yamanashi Plant, Sumitomo Electric Device Innovations, Inc.

The notice board indicated about turning down unnecessary lights

Activities to Prevent Global Warming

Energy Consumption in Crude Oil Equivalent Per Floor Area in Head Offices and Other Offices


Logistics Units <Green Logistics>

To Reduce CO２ Emissions from Transportation Initiative to Promote Modal ShiftSumitomo Electric is active in promoting modal shift (from truck transportation to rail and marine transportation, which has less CO2 emissions) mainly in the case of heavy-weight long-distance freight transportation (with a distance of 500 km or longer).In fiscal 2009, freight volume declined under the impact of the worldwide recession that occurred in the second half of fiscal 2008, which led to reduction in transport lot size and resultantly less usage rate of rail and marine transportation. On the other hand, in fiscal 2010, we increased the usage rate of rail transportation aggressively with the recovery of production volume. Sumitomo Electric shares 31ft containers with Furukawa Electric Co., Ltd. for round-trip transportation. We deliver wire rod from Osaka to Utsunomiya, Tochigi by containers. Then, the same containers are used by Furukawa Electric to transport wrought copper and copper alloys from its Nikko P lant in Tochig i to Amagasak i P lant in Hyogo, and subsequently returned to Sumitomo Electric in Osaka. We also conduct similar round-trip transportation jointly with Panasonic Corporation. With such joint cargo transportation, we reduced CO2 emissions by 110 tons in fiscal 2010. In addition to this joint transportation, we adjusted delivery t ime for customers, and made the shape and size of packages easier to be loaded in containers, to improve the modal shift rate by 0.5 points from the fiscal 2009 level.

8

9

10

11

12

13

（％）14

2002 2003 (Fiscal year)2004 2005 2006

9.9

11.212.1

12.6 12.9

2007 2009 2010

12.8

0

(Note) boundaries of data collection: Six main works (Osaka, Itami, Yokohama, Kanuma, Kumatori and Shigaraki)

Modal Shift Rate by Year

2008

13.012.0

12.5

(Note) CO2 emissions are calculated on an improved ton-kilometer basis + a fuel-efficiency basis.

Fiscalyear

Sales amount (100 million yen)

CO2 emissions(t-CO2)

CO2 emissions per sales(t-CO2/100 million yen)

2006 3,904 21,493 5.512007 4,238 21,894 5.172008 3,480 18,570 5.342009 3,480 15,182 4.362010 3,761 15,903 4.23

CO2 Emissions from Sumitomo Wiring Systems, Ltd. by Year

(t-CO2/million t-km)

100.0

102.0

104.0

106.0

108.0

110.0

112.0

(Fiscal year)2006

109.7

2007 2009

106.5

0

Per Unit CO2 Emissions by Year

2008

104.5103.0

2010

102.5 3.50

0

4.00

4.50

5.00

5.50

6.00

(t-CO2/100 million yen)

Sumitomo Wiring Systems, Ltd.Sumitomo Electric Group (excluding Sumitomo Wiring Systems, Ltd.)

5.515.17 5.34

4.364.23

Joint cargo transportation with Furukawa Electric Co., Ltd. (31ft container)

(Note 1) boundaries of data collection: Sumitomo Electric + 39 domestic manufacturing companies (excluding Sumitomo Wiring Systems, Ltd.)

(Note 2) CO2 emissions are calculated on an improved ton-kilometer basis + a fuel-efficiency basis.

Fiscalyear

Total cargo transport(million t-km)

CO2 emissions(t-CO2)

CO2 emissions per cargo transport(t-CO2/million t-km)

20062007200820092010

240.7 26,395 109.7260.0 27,690 106.5231.8 24,229 104.5220.9 22,741 103.0234.8 24,068 102.5

Sumitomo Electric is making Group-wide efforts to reduce CO２ emissions. In fiscal 2010, per unit CO２ emissions from the whole Group, including Sumitomo Wiring Systems, Ltd., were reduced by approximately 1.5%(※) from the fiscal 2009 level. In the Group as a whole (except Sumitomo Wiring Systems, Ltd.), both cargo t ransport and CO２ emiss ions recorded a year-on-year increase in fiscal 2010, but CO２ emissions per cargo transport declined by about 0.5% as a result of the following activities to reduce CO２ emissions from transportation: ・We used railway container services to transport more than 80% of the wire rod delivered from the Osaka Works to other domestic sites by changing the order quantity and adjusting the production schedule to make the volume of the delivered wire rod suitable for railroad transportation.

・When cargo is transported from Sumitomo Electric Tochigi Co., Ltd. to the Kyushu region by ship, the sea route that involves the shortest inland route is used more often than before.

・Sumitomo (SEI ) Steel Wire Corp. reduced use of t ruck transportation by shifting steel wire production to the affiliate that can use rail and ship transport efficiently.

Sumitomo Wiring Systems, Ltd. also reduced CO２ emissions per unit of sales by approximately 3.1% in fiscal 2010 from the fiscal 2009 level by, for example, efficient use of regular transport services and increase in the loading ratio.

（※）Among the Sumitomo Electric Group, Sumitomo Wiring Systems, Ltd. adopts CO2 emissions per sales amount while other Group companies use CO2 emissions per cargo transport (t-km). Therefore, the weighted average of each year-on-year CO2 reduction rate is calculated based on the CO2 emissions.

Relationship with

the Global Environm

ent

Modal shift rate (%) = ×100Amount of freight by rail or shipTotal amount of freight in Japan

CO2 Emissions from the Sumitomo Electric Group (Excluding Sumitomo Wiring Systems, Ltd.) by Year

2007※

45.7

34.6

9.7

1.42008※

39.6

30.2

8.7

0.72012Target

2009※

34.9

30.1

4.4

0.42009Base year

42.3

33.2

8.6

0.42010

44.9

35.8

8.8

0.2

Promotion of Resource Conservation and Recycling


(Note 1) The values for fiscal 2009 have been adjusted retroactively to the scope of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010. ※ indicates the figures collected from the boundaries of data collection for the

Action ECO-21 (Phase Ⅲ) campaign. (Note 2) The valuable materials are former wastes that Sumitomo Electric has converted

to valuable materials through its own endeavors since fiscal 2001.

Amount of Waste in Japan and Zero Emission Rate

Incineration and landfill wastesRecycled wasteValuable materialsZero emission rate

0(Fiscal year)

Zero emission rate (%)

50

40

30

20

10

60

Amount of waste (thousand tons/year)

1

2

3

0

1.0 0.5 0.5

Efforts to Achieve Zero Emissions (in Japan)We worked to keep the zero emission rate at 1% or less for many years, and achieved the target of maximum 1% zero emission rate in the Group as a whole in fiscal 2009. Since the start of the Action ECO-21 (Phase Ⅳ) campaign in fiscal 2010, we have expanded the boundaries to include the Sumitomo Wiring Systems Group and other affiliates, and set a more aggressive target of achieving maximum 0.5% zero emission rate in fiscal 2012. In the meantime, with a new target for waste generation per unit of sales, we are also promoting the reduction of waste generation through conversion of waste into valuable materials and other measures. In fiscal 2010, we improved both the zero emission rate (0.5%) and reduction rate of waste generation per unit of sales (5.3%) from the fiscal 2009 levels.

With focus on the sites that failed to meet the target emission rate in fiscal 2009, we promoted recycling of waste including sludge, waste oil, waste plastics, waste glass and ceramics, and waste paper. While first priority in our efforts to reduce waste generation per unit of sales is reduction of the defects that generate waste in the production process, which is an essential task for manufacturers, we also place emphasis on reducing the amount of waste generated. Specific measures include concentration of water-soluble lubricating oil and collection of solvent from waste solvent. We are also promoting conversion of waste into valuable materials through waste separation and consideration of buyers.

Efforts to Achieve Zero Emissions (Overseas)In the Action ECO-21 (Phase Ⅳ) campaign, the reduction of the zero emission rate in overseas Group companies was added to the targets. In fact, the situation on waste disposal is different between countries, and some types of waste are difficult to recycle. Still, they are making efforts including the separation of waste generated from the production process, sales of valuable materials, recycling of sludge for bricks and production of fuel and cement materials from waste plastics. In f iscal 2010, waste generation was 52.2 thousand tons/year, and the zero emission rate was 20%. The overseas companies will promote initiatives to reduce waste, such as the recycling of the waste generated in a large amount like waste oil, aiming to meet the target of keeping the zero emission rate at 5% or less in fiscal 2012.

Heat recovery8,374tons/year

Material recycling27,474 tons/year

Total amount of

waste generated:

44,887tons/year

Waste oil

Waste plastics

SludgeWaste glass and

ceramicsOthers

Waste for landfill and incineration without heat recoveryTotal: 224 tons/year

Waste acid

Waste oil

SludgeWaste alkali

Waste paper

OthersWaste metal

Waste plastics

Recycled wastes　Total: 36,289 tons/year

Breakdown of Waste in Fiscal 2010 (in Japan)

15.10.9

7.1

7.2

14.3

8.71.2

4.4

13.2

6.92.3

4.1

38.1

8.7

19.4

10.0

52.2

12.6

29.1

10.6

Waste Generation and Zero Emission Rate in Overseas Affiliates

0

Zero emission rate (%)

50

60

70

40

30

20

10

Waste generation (thousand tons/year)

10

20

30

0

20

2007※

2008※

2012Target

2009※

2009Base year

2010 (Fiscal year)

26

Valuable materials8,815 tons/year

7,1115,997

5,647

4,7213,215

4,878

2,9751,744

6949

2917

60

5

(Note) The denominator includes former wastes that Sumitomo Electric has converted to valuable materials through its own endeavors since fiscal 2001.

Zero emission rate (%) = ×100Amount of incineration (excluding thermal recycling) waste

+ Amount of landfill wasteAmount of industrial waste generation + Amount of general waste generation

(Note) The values for fiscal 2009 have been adjusted retroactively to the boundaries of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010. ※ indicates the figures collected from the scope of data collection for the

Action ECO-21 (Phase Ⅲ) campaign.

Incineration and landfill wastesRecycled wasteValuable materialsZero emission rate


Reduction of Product Packaging Materials

Water Use Reduction

Waste Treatment in Overseas Affiliates (in Thailand)

In Thailand, waste is separated into hazardous waste and general waste. Hazardous waste is the waste that has to be strictly controlled, including oil, solvent, acid, and alkali. For such waste, disposal by l icensed contractors, prevention of leakage during storage, and the issuance of manifests for consignment of disposal are required. General waste refers to the waste other than hazardous waste, and is mostly landfilled except for recyclable waste. Waste separation and recycling is essential for achieving the target zero emission rate. Among the waste generated in the manufacturing process, WIN-T in Thai land consigns waste lubr icant to a contractor for thermal recycling, in which thermal energy is recovered from the incineration of the waste lubricant and used for power generation. The waste plastics and waste metal generated in connection with products are sold as valuable materials. Hazardous waste is also properly recycled by consigning it to contractors. Trash boxes with different colors are installed in the company premises to facilitate waste separation in accordance with the recycling regulations in Thailand.

Separated waste Trash boxes in the premises

Sumitomo Electric Wintec (Thailand) Co.,Lｔｄ.（WIN-T）

Recycling of Used ProductsAfter delivering our products to customers, we collect used electric wires/cables, optical fiber cables, and cemented carbide indexable inserts for cutting tools and their plastic cases, and recycle them as materials for new products. Our recycling rate for electric wires/cables is nearly 100%. Japan depends on imports for most of its cemented carbide indexable insert materials such as tungsten, cobalt and other rare metals. Tungsten in particular is produced in only a limited number of countries. Once the supply of tungsten is restricted for some reason, we will be confronted with great difficulty in obtaining this metal. The Sumitomo Electric Group has established a rare metal recycling system to ensure a stable supply of rare metals and effective utilization of scarce resources. This system employs two types of metal recycling techniques, zinc treatment and wet-chemical treatment, to process all cemented carbide indexable inserts that the Sumitomo Electric Group sells in Japan.

Cemented carbide indexable inserts

2007※

20.1

2.410.3

6.92008※

15.2

8.41.9

4.52012Target

2009※

15.1

7.51.8

5.42009Base year

32.8

5.4

8.4

17.2

2010

37.4

5.8

10.5

18.9

(Note) The values for fiscal 2009 have been adjusted retroactively to the boundaries of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010. ※ indicates the figures collected from the boundaries of data collection for the


Consumption of Product Packaging Materials

0(Fiscal year)

Reduction rate per unit of sales (%)Consumption (thousand tons/year)

5

10

02.50

3

0.6 0.4 0.4

1.9 2.1

Paper Corrugated cardboardResinWood

50

40

30

20

10

Reduction rate per unit of sales

2007※

5,657

2,443

2008※

5,186

2,178

2012Target

2009※

5,632

2,168

2009Base year

6,276

4,501

2010

6,364

5,352

Water Consumption

Consumption in Japan Consumption in other countriesReduction rate per unit of sales

0(Fiscal year)

Reduction rate per unit of sales (%)

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

Consumption (thousand m3/year)0

5

10

0

7.03

8,100 7,364 7,800

10,776 11,716

We have been actively committed to reducing water consumption as an item of the Action ECO-21 (Phase Ⅲ) campaign since fiscal 2008. While water consumption in fiscal 2010 increased from the fiscal 2009 (base year) level because of production growth, the volume per unit of sales was reduced by 7.0% from the fiscal 2009 level as a result of prevention of water leakage and other water saving efforts. As an example of the efforts in our manufacturing sites, Sumitomo Electric Printed Circuits, Inc. has employed equipment to f i l ter and recycle process water , and reduced water consumption by 20%, or 55 thousand m3/year, in fiscal 2010.

(Note) The values for fiscal 2009 have been adjusted retroactively to the boundaries of data collection in the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010. ※ indicates the figures collected from the boundaries of data collection for the


Relationship with

the Global Environm

ent

We are taking meticulous measures to reduce the use of product packaging materials, such as the decrease of the weight of corrugated cardboard boxes by modifying the design, the development of reusable containers by changing the raw materials, the check of excessive packaging and the reuse of packaging materials. In fiscal 2010, while the consumption of product packaging materials increased by 14% from the fiscal 2009 level to 37.4 thousand tons, the amount per unit of sales was reduced by 2.5% owing to the sales growth. We will continue the efforts to reduce the amount of the materials.

Totalrelease95tons

Reduction of the Release of Harmful Chemical Substances


Reduction of VOC EmissionsSince fiscal 2006, the Sumitomo Electric Group has promoted activities to cut the atmospheric release of volatile organic compounds (VOCs) from Sumitomo Electric and its affiliates in Japan. While this program originally covered any VOC whose emissions from a site were five tons or more per year, we expanded the coverage in the Action ECO-21 (Phase Ⅳ) campaign to include any VOC whose annual emissions are two tons or more with an aim to further reduce VOC emissions. We have also started the reduction efforts in overseas affiliates. In fiscal 2010, although Sumitomo Electric and its affiliates in Japan worked to meet the target of reducing VOC emissions by 3% from the fiscal 2009 level, the emissions were 236 tons, a year-on-year increase of 3.5%, because of the growth in the production of the products using VOCs in their manufacturing process. We also started the initiative in the overseas affiliates that discharge 5 tons or more of VOCs yearly with the target of reducing the emissions by 2% from the 2009 level (calendar year) in 2012 (calendar year) (Note).

Discontinued Use of Trichloroethylene etc.The entire Sumitomo Electric Group, including overseas af f i l iates , is committed to discont inuing the use of trichloroethylene and other chlorinated VOCs that are designated as hazardous air pollutants by the Air Pollution Control Law. As a result of our efforts, trichloroethylene is now used as a detergent by only one company of the Sumitomo Electric Group in Japan. The remaining one company is also making efforts to substitute an alternative detergent for trichloroethylene with an aim to discontinue the use of trichloroethylene within 2011.

(Note) The VOC emissions of overseas affiliates in 2010 (calendar year) were 157 tons.

Soil and Groundwater RemediationWe disclosed the pollution status of three major Works (Osaka, Itami and Yokohama) in August 2001. At those three Works and other domestic sites where pollution has been identified through our surveys conducted thus far, we are continuing soil and groundwater remediation by soil replacement, groundwater pumping and soil gas absorption. We also conduct groundwater monitoring on a regular basis, and have confirmed that the pollution has not spread outside the sites.

Measures against Dioxins and AsbestosThe aluminum alloy manufacturing facility and its exhaust gas purification facility at Sumitomo Electric Toyama Co., Ltd. are subject to the Law Concerning Special Measures against Dioxins. We have ensured that emissions from these facilities remain within regulated standards. At present, the Sumitomo Electric Group produces no products using asbestos.

Toluene 33％

Trichloroethylene 16％

Other 30 substances 2％Hydrogen fluoride and its water-soluble salts 2％

1-bromopropane 11％

Xylene 7％Dichlorobenzene 6％

Ethylbenzene 3％Boron compounds 2％

Cresol 9％

Phenol 9％

(Note) The revision added 186 substances to and excluded 73 substances from the designated substances. Moreover, the number decreased by five substances as a result of the integration of several substances into one group.

Glossary ＊ PRTR LawAct on Confirmation, etc. of Release Amounts of Specific Chemical Substances in the Environment and Promotion of Improvements to the Management Thereof.

＊ REACH regulationsAbbreviation of Registration, Evaluation, Authorization and Restriction of Chemicals.Regulations of the European Parliament and of the Council for protection of human health and the environment in the European Union.

Breakdown of Release of Chemical Substances Specified in the PRTR Law

Release and Transfer of Chemical Substances Specified in the PRTR LawSumitomo Electric and its domestic affiliates, using the PRTR system developed by the Company, identify the amounts of chemical substances specified by the PRTR Law＊ that are handled by these companies on a monthly basis, and also calculate the amount of these PRTR-designated substances released and transferred in order to annually report the same in accordance with the law. A total of 45 plants of Sumitomo Electric's Osaka and Yokohama Works and 29 Group companies submitted such reports for fiscal 2010. The law was revised in November 2008 to add new substances to the Class I Designated Chemical Substances and exclude some of them (Note). As a result, the number of the designated substances increased from 354 to 462. The newly added substances are handled by 12 plants of 8 companies in our Group, which submitted the release and transfer reports. The Sumitomo Electric Group's total release and transfer of PRTR-designated substances in Japan were 95 tons and 169 tons, respectively. The release recorded a year-on-year increase of 1 ton with an increase of 11 tons due to the addition of the designated substances and a decrease of 9 tons due to the exclusion. In the meantime, the transfer increased by 29 tons with an increase of 53 tons due to the addition and a decrease of 5 tons due to the exclusion. Five of our overseas affiliates submitted reports to regulatory agencies in accordance with the applicable local laws equivalent to the PRTR Law. The total release and transfer of designated chemical substances reported in 2010 (calendar year) were 13 tons and 11 tons, respectively.

16995

679

324408

286

429350

263308

294325

236279

202153 159

115 14094

TransferRelease

0

200

100

400

300

600

500

700

Release and Transfer (tons)

2001 2002 2003 2004 (Fiscal year)

2005 2006 2007 2009 20102008

・Revision to the law involved addition and exclusion of the designated substances required to be reported from fiscal 2010. As a result, the number of the substances increased by 108. (Note)

・The boundaries of data collection included the Sumitomo Wiring Systems Group from fiscal 2010.

Release and Transfer of Chemical Substances Specified in the PRTR Law by Year

Management of Chemical Substances

用語解説


＊ RoHS DirectiveRoHS stands for Restriction of the use of certain Hazardous Substances. This EU Directive restricts the use of certain hazardous substances in electrical and electronic equipment.

＊ＳＶＨＣ (Substances of Very High Concern)Chemical substances designated by the EU as substances which may cause serious effects to human health or the environment.

＊ ELV DirectiveEVL stands for End of Life Vehicles. This EU Directive restricts the use of lead and three other hazardous heavy metals in automobiles to reduce the impact of end-of-life vehicles on the environment.

(Note) As the types of products and customer demand vary widely among divisions and affiliates, the divisions adjust the operation of the guidelines to their respective conditions.

Thorough Management of Chemical SubstancesSumitomo Electric and its domestic affiliates manage chemical substances subject to the laws and regulations under the three categories of “Prohibition,” “Elimination,” and “Control.” Sections adopting a new chemical substance must obtain the Material Safety Data Sheet (MSDS) to confirm the substance's management category, as well as its safety and environmental aspects, and then apply for the registration of the substance. We thus seek to prevent the use of banned or discontinued substances, and to ensure their management in terms of environmental risk. We reviewed the management category structure to respond to the revisions to the PRTR Law that became effective in fiscal 2010, which changed the designated chemical substances whose release and transfer have to be identified. In fiscal 2010, a total of 76 registration forms were submitted (including 64 from Sumitomo Electric Osaka Works, 10 from Itami Works, and 2 from Yokohama Works). Of these, a total of 40 items (36 from Osaka Works, 2 from Itami Works and 2 from Yokohama Works) have been newly registered and are managed as substances that fall under the “Control” category.

Compliance with the RoHS and ELV DirectivesThe Sumitomo Electric Group has taken measures to replace the substances listed in the EU RoHS＊ and ELV Directives＊, including the use of lead-free PVC stabilizers and solders. By switching to these substitutes and other measures, our divisions and affiliates are meeting customer demand to contain no prohibited substances in products.We have also established the Guidelines for the Management of Chemical Substances in Products and the Sumitomo Electric Group Green Procurement Guidelines. Through the operation of the guidelines (Note), we are making efforts to ensure proper management of chemical substances contained in our products so that we procure only the products containing no prohibited substances such as lead.

Compliance with REACH RegulationsSumitomo Electric and its affiliates in Japan and overseas completed the pre-registration of all the chemical substances requiring registration to the European Chemicals Agency (ECHA) in accordance with the REACH Regulations, and are now preparing for final registration. While the system to require reporting of the SVHC＊ contained in products was i n augu r a t ed i n 2011 , S um i tomo E l e c t r i c and i t s domestic/overseas affiliates handle no such products. If any of the designated substances are contained in our products as a result of an increase in the designated SVHC, which is planned in the future, we will make sure to respond to the requirements.

Response to the Revised Chemical Substances Control LawHaving establ ished the Chemical Management Task Committee, the Sumitomo Electric Group is working to meet the requirements of the Chemical Substances Control Law, the REACH regulations＊ of the EU and other domestic and overseas laws, and enhance the management of chemical substances contained in products. The Chemical Substances Control Law was revised in May 2009 to mandate the reporting of any chemical substance whose annual production or import was one ton or more in the previous fiscal year, which became effective in fiscal 2011. In accordance with the revised law, Sumitomo Electric and three of its domestic affiliates submitted such reports.

New Chemical Substance Management System

Screen of the New Chemical Substance Management System

Relationship with

the Global Environm

ent

(Note 1) Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc.(Note 2) RoHS and ELV Directives (the use in the products listed in the directives is prohibited)(Note 3) Law Concerning the Protection of the Ozone Layer through the Control of

Specified Substances and Other Measures(Note 4) Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in

the Environment and Promotion of Improvements to the Management Thereof(Note 5) Law Concerning the Promotion of Measures to Cope with Global Warming

Rank DefinitionSubstancegroups

Related laws and regulations

Elimination

Prohibition

Control

93

37

557

Chemical substances whose use is prohibited in products or manufacturing processes

Chemical substances whose use is to be discontinued by the designated deadline

Chemical substances whose use is to be minimized

Chemical Substances Control Law (Note 1)Industrial Safety and Health LawAir Pollution Control Law

EU Directives (Note 2)Ozone Layer Protection Law (Note 3)

PRTR Law (Note 4)

Global Warming Prevention Law (Note 5)

The Sumitomo Electric Group's Chemical Substance Management Ranking

The Sumitomo Electric Group has established a new chemical substance management system to enhance the management of the chemical substances handled in the Group. The new system started operation in Sumitomo Electric's three Works in Osaka, Itami and Yokohama, and our affiliates in the Works in fiscal 2011. The management of the PRTR-designated substances has been transferred from the conventional PRTR system to this new system. The features of this system are as follows:● The storage areas of chemical substances are displayed on the building plan so that the amount of the substances stored in the areas can be checked on the screen.

● Relevant laws and regulations as well as MSDS can be searched and displayed.

● The proper condition for the storage and handling of chemical substances are displayed so that they can be compared with the actual management status in the places of storage and handling to determine whether or not chemicals are properly managed.

● Based on the amount of the materials handled and other data, the amount of the PRTR-designated chemical substances handled, released and transferred can be calculated.

We will introduce this system to our affiliates in Japan and overseas to unify and enhance the management of chemical substances throughout our Group.


Activities to Expand Environmentally Conscious Products For all manufacturing companies, “contribution to the conservation of the global environment through their own products” is a crucial task. The Sumitomo Electric Group has made continuous efforts to develop and disseminate environmentally conscious products since the establishment of the Eco-products (Eco Symbol Program) in 1999. These days, companies are required to meet the social need of offering the products that contribute to prevention of global warming, namely reduction of CO2 emissions. In the Action ECO-21 (Phase Ⅳ) campaign launched in fiscal 2010, Sumitomo Electric created a program on Anti-Global Warming Products, which contribute to reducing CO2 emissions from society. With this new initiative, as well as the conventional programs on “Eco Mind” products and Eco-products, we will further enhance our efforts to expand environmentally conscious products.

① “Eco Mind” Products We perform product assessment when developing new products, as well as when making major design changes to existing products. The products having undergone product assessment are registered as “Eco Mind” products and the registration results are published within the Group, with an aim to make our products more environmentally conscious. By fiscal 2010, a total of 240 items were registered as “Eco Mind” products. In the Action ECO-21 (Phase Ⅳ) campaign, we set the target of maintaining 100% of the registration ratio of new products.

② Eco-products (Eco Symbol Program)Among “Eco Mind” products, the products with particularly outstanding environmental features are examined in accordance with our Eco Symbol Program, which is based on ISO14021, and those that meet the criteria are certified as “Eco-products.” Through this program, we will promote development and market penetration of environmentally conscious products. By fiscal 2010, a total of 73 products were certified as Eco-products. While the number of registered items was used as the indicator, it has been replaced with the sales ratio (sales of Eco-products / sales in the division) in the Action ECO-21 (Phase Ⅳ) campaign. We are working to meet the target of increasing the ratio to 50% in fiscal 2012.

③ Anti-Global Warming ProductsWe have established a new program on “Anti-Global Warming Products.” In this program, we register the Eco-products that especially contribute to the reduction of CO2 emissions from society, and calculate and disclose the reduction effect, in order to contribute to the prevention of global warming. In the Action ECO-21 (Phase Ⅳ) campaign, we aim to achieve CO2 reduction of 50,000 tons per year in fiscal 2012.

Copper was replaced with aluminum alloy to reduce the weight of electric conductorsWith an increase in environmental consciousness in society, cars are required to further improve their fuel efficiency and reduce CO2 emissions. To this end, reduction in the weight of the car is a key challenge. Accordingly, we have made efforts to reduce the weight of wiring harnesses, which can be up to 20kg per vehicle. We initiated a development project to put lighter harnesses to commercial use in September 2007, and then released an “automotive low-voltage wiring harness,” the world’s first wiring harness using thin aluminum wires with a twisted wire structure, to the market in November 2010. This wiring harness is now used in the door panels of the new models of Ractis and Vitz produced by Toyota Motor Corporation, and has been registered as an Eco-product by the Sumitomo Electric Group.

The key to the reduction in weight is the adoption of aluminum materials. The advantage of using aluminum is that it is lighter, less expensive and supplied more stably than copper, but aluminum is soft and the surface is easily oxidized on the negative sides. Especially the door panels of automobiles are subject to harsh condit ions such as bending and water exposure. We had to achieve “twisted wire ,” “connect ion” and “ant icorros ion,” to commercialize the wire, and tackled these three difficult challenges simultaneously through mutual cooperation between different divisions. The electric wire division handled tension and abrasion, while the connection division thoroughly reviewed the shape of terminals. The development of the anticorrosion technology involved all divisions. This product is thus a result of combining such newly developed technologies, and a fruit of the collective strength of the Sumitomo Electric Group that integrates the whole process from raw materials to the manufacturing of harnesses. Although the weight has so far been reduced by only 300g per vehicle, we will keep evolving the technology and apply it to other parts and car models to contribute to the further reduction in the weight of automobiles.

Aluminum wire factory of Suzuka Plant, Sumitomo Wiring Systems, Ltd.

Lightweight wiring harnesses using aluminum wires created with the collective strength of the Sumitomo Electric GroupShigeyuki Yoshida (right) General Manager of Design Department 2,

Development & Engineering Division 1, Western Customers Group Division 1

Hideo Takagi (left) Senior Engineer, Development & Engineering Division 1, Western Customers Group Division 1Sumitomo Wiring Systems, Ltd.

Wiring harness using aluminum

Newly developed aluminum wires

Expansion of Environmentally Conscious Products / Biodiversity

Divisions cooperated with each other to solve the challenges associated with materials

Eco-ProductREPORT


Biodiversity Conservation ActivitiesThe 10th Conference of the Parties (COP10) to the Convention of Biological Diversity was held in Nagoya, Aichi Prefecture in October 2010, and raised awareness of biodiversity among Japanese people. Companies are also required to promote biodiversity conservation activities urgently. Sumitomo Electric is actively involved in sharing information and exchanging experiences through participation in the Japan Business and Biodiversity Partnership (Note), which was established in October 2010 when COP10 was held. Our Group companies are also making efforts to preserve biodiversity.

Tetsunari Shimada, General Manager of Itami Works, receiving the award from Mr. Toshizo Ido, Governor of Hyogo Prefecture

Weeding

Digging holes

Planting seedlings

Watering

Sumitomo Electric's Itami Works participates in the activities of a local association for the protection of Itami's natural environment, which was established to promote the project to restore Koya Pond, a symbol of Itami City. The association is composed of three sections. The river section works to revive firefly habitats around Koya Pond, while the pond section makes efforts to restore prickly water lily, water clover and reed communities. The forest section aims to reforest the “islands of wild bird” (created in the shape of the Japanese Archipelago) in Koya Pond Park because the trees stood dead due to the droppings of cormorants. Itami Works has participated in the forest section and joined the activities to maintain favorable environment together with the citizens. The activities include (1) collection of seeds of various tree species from old trees in Itami and nearby mountains, (2) cultivation of their seedlings in a nursery garden in Koya Minami Park, and (3) planting of the seedlings in the “islands of wild birds” and other parks in the city. Itami Works joined the activities as the first private company in April 2008, and around six staff members, including the Plant Manager from each of the divisions in the Works, have continuously participated since then. A total of 200 employees contributed to the Koya Pond restoration project, whether the weather was hot or cold, in the past three years. Other than the support of the forest section, Itami Works operates a hands-on program to experience the production of chips from pruned branches in partnership with Itami City, and also organizes greenery festivals every year, which are open for the local people. In recognition of these initiatives to promote communication with communities, Itami Works received the 19th Hyogo Prefecture Environment-Friendly Business Award, which is presented to the companies developing excellent environmental protection activities from the viewpoint of the residents, in June 2010.

(Note) This network was established to promote the activities of the private sector for biodiversity. It is the core of Private Sector Engagement Initiative on Biodiversity, a voluntary program launched under the initiative of the business community such as Nippon Keidanren in May 2010 to encourage private entities to participate in the activities for the execution of the Convention of Biological Diversity.

Relationship with

the Global Environm

ent

● Community-oriented environmental protection activities

Activities of the forest section of the local association for the protection of Itami's natural environment

Yutaka Nishide

Development of ＱＲ-１ CampaignAs the Sumitomo Electric Group's business activities consist mainly of business-to-business (B2B) transactions, we believe that above all further quality improvement for our products will lead to greater customer satisfaction. Thus, we launched the “reliabi l i ty improvement campaign” throughout the Group in 1975 based on our customer-oriented and quality-oriented policies. Since then Sumitomo Electric has carried out the campaign with the priority subjects selected according to the needs of the times. We launched the QR-1 campaign in fiscal 2002, aiming to improve quality from the viewpoint of customers, prevent quality risk and establish its structure for quality and reliability to overtake the competition.

“Own Process Quality Assurance Activities” Aiming for Zero ComplaintsSince fiscal 2010, we have promoted “Own Process Quality Assurance Activities” as Phase Ⅳ of the QR-1 campaign. Returning to the basics of “Not to cause defects, or not to send defects to the following process” in each process, we are committed to the establishment of defect-free process conditions and the clarification of criteria for judging good or bad products for various types of products. In fiscal 2010, which was the first year of Phase Ⅳ, we provided “intensive training” for all units to launch the campaign as well as “practical training” to cultivate practitioners, and each unit also developed its system to promote the campaign and selected its own themes for the activ it ies. We continuously share the information about the progress in the themes through on-site consultations, and provide follow-up support. In addition, we have organized exchange meetings with leading units and published booklets introducing good practices so as to revitalize the campaign activities. As a result, the units reduced defects and complaints to certain levels in their model cases. We will expand the scope of their activities in fiscal 2011 and beyond to identify more defects in processes and promote measures to eliminate defects from the sources such as product design and production engineering. The campaign will be also developed in our global bases.

Implementation of “Global Quality Assurance System Audits” and Enhancement of “Quality Management Education”With g lobal izat ion of the market and product ion bases , reinforcement of quality management at overseas sites has become an important issue. In view of this, we have carried out “Global Quality Assurance System Audits” in full swing since fiscal 2010, and have completed the audits in 17 domestic bases and 2 overseas bases . Audit of one s i te takes t ime because the audit is all-embracing, but with audit check sheets prepared in Chinese and English, we will start full-scale audits at overseas sites in fiscal 2011. At the same time, in the “Quality Management Education” of employees who practice improvement activities and maintain quality assurance systems, we cultivate the culture of “Quality First” through all employee quality management education, developed on both job experience and job function, and through key-personnel training program such as MKP＊ and GKP＊. Thus, in the Phase Ⅳ of the QR-1 campaign, we will continue to make efforts to eliminate complaints with three main pillars of “Own Process Quality Assurance Activities,” “Grobal Quality Assurance System Audits,” and “Reinforcement of Quality Management Education.”

● Reduce complaints by 20% from fiscal 2009●Promote “Own Process Quality Assurance Activities” (first year)

Main Targets for FY2010

● Reduced complaints by 8% from fiscal 2009●Promoted “Own Process Quality Assurance Activities” (first year)

● Provided intensive education on “Own Process Quality Assurance Activities” (19 sessions for 535 persons) and practitioner training program (1 session for 30 persons)

● Each division performed theme-based activities (88 themes in the first half and 101 themes in the second half)

Results in FY2010

● Reduce complaints by 20% from fiscal 2010●Continue to promote “Own Process Quality Assurance Activities” (second year)



Responsibility for Customers

QR-1 campaign logo

QR：Quality & Reliability

Seeking further quality improvement to delight customers

Glossary ＊ MKPAbbreviation of “MONOZUKURI-KAKUSHIN professional training Program” that is the practical training program to develop key-personnel (engineers) who are to drive manufacturing innovation.

＊ GKPAbbreviation of “GENBA-KAIZEN professional training Program” that is the practical training program to develop key-personnel who are to promote shop-floor improvement.

General Manager, Quality Management Division


Quality Management

Global Quality Assurance System Audits and Support

For product safety, we organize technical seminars yearly on the Product Liability Act and the revised Consumer Product Safety Act in partnership with the Legal Department. Practical training sessions are provided to all divisions to deepen their understanding of the laws, and cover subjects such as recent cases, product safety review and warning labels to ensure product safety, collection of product safety information, and response to accidents.

Initiatives for Product Safety

Sumitomo Electric has provided employees with training programs at the "SEI University". With that, to improve and ensure the quality of products and services at higher levels, it is essential for individual employees to develop their operational capabilit ies. Every year, we make annual education plans required to improve quality at the beginning of the fiscal year, and provide position-based education for all employees, function-based/administrative-position-based educat ion according to d iv is ions or pos i t ions , and needs-based education to learn knowledge. Furthermore, Sumitomo Electric has dispatched instructors to relevant departments upon request, to deliver “on-site seminars” to teach how to make use of quality management tools and improve the ability to identify problems and real causes.

Education to Develop Employee Capabilities

Number of complaints

(Note) The data cover Sumitomo Electric and its manufacturing affiliates in Japan and overseas (including the Sumitomo Wiring Systems Group)

Fiscal year

2008 67

2007 100

2009 54

2010 50

Changes in the Number of Complaints (results in 2007 = 100)

Group-wide Quality Management Convention (November 2010)

Training Session

Thanks to our ongoing quality management activities, the number of complaints has been decreasing every year. In fiscal 2007 we began to collect data on a global scale including from overseas affiliates, and as shown in the table below, the number of complaints has halved over the past three years. However, a lot of complaints have occurred yet. With the current trend of increasingly stronger market demand for better quality, we are carrying out further improvement and structural reinforcement with a mainstay of “Own Process Quality Assurance Activities” in the QR-1 Phase Ⅳ campaign commenced in fiscal 2010.Our customers evaluate our quality structure from various viewpoints, and we reflect such evaluation in our operations during the following fiscal year. As a result, the performance of activities of our Group is valued by our customers in various fields.

Outcomes of the Quality Management Activities

We are encouraging all employees of the Sumitomo Electric Group to understand the top management's approach to quality and thereby raise their own quality awareness. Sumitomo Electric held Group-wide Quality Management Conventions on June 8 and November 2,2010 for this purpose, and displayed banners with slogans on quality management. In November, which is specified as “Quality Month” every year in the Japanese indust ry , each o f our Works d i sp lays quality-related flags and posters. Messages from the President are disseminated through in-house magazines, in-plant broadcasting, and other media at the beginning of each half -year term (Apri l and October) , and inspection of manufacturing sites by the top management is organized, to enhance quality management awareness among employees. Sumitomo Electric also established Quality Achievement Awards to commend divisions implementing activities that set a good practice for other divisions, and individual employees who have created excel lent posters and slogans that encourage awareness of qual i ty improvement at the Group-wide Quality Management Conventions.

Activities to Enhance Employee Awareness

Responsibility for Custom

ers

The Sumitomo Electric Group adopts the Business Unit System, where individual business unit divisions and affiliates have managerial autonomy in principle. Also on quality issues, the divisions and affiliates have their own quality assurance departments and guarantee the products under their control. We conduct company-wide audits to evaluate these quality control activit ies based on customers' assessment so as to improve weaknesses of their quality management activities and systems. Specifically, we promote “Global Quality Assurance System Audits,” which are intended to enhance the quality assurance systems according to the plan at the strategic centers of the business units. Every time a serious complaint occurs, we perform an audit of the relevant unit. In the Global Quality Assurance System Audits, we identify weaknesses of each unit in terms of management , des ign and manufactur ing to g ive an opportunity to improve its quality assurance system, and support to overcome the weaknesses.

Quality Control


Sumitomo Electric is committed to the improvement of logistics quality in concert with transport companies delivering our products, in order to prevent product damage,/fouling and other accidents of products during transportation and ensure proper delivery of products to our customers. In particular, nearly half of the accidents of products during transportation are damage caused by a forklift truck. To reduce such accidents, we prepared a visual training text “Hirameki KYT,” which presents the issues to be considered on the basic operation of forklift trucks, and distributed it to our group companies and transport companies. We have also taken various other measures including a forklift truck basic operation competition, which aimed to improve the abilities of forklift truck operators. As a result of these activities, the number of accidents of products during transportation was reduced from 99 in fiscal 2007 to 25 in fiscal 2010. We will continuously make efforts to improve the quality and reliability of logistics.

Activities for the Improvement of Logistics Quality

Our Group ' s bus iness ac t i v i t i es cons i s t ma in l y o f business-to-business (B2B) transactions, and we therefore believe that the proper identification of the opinions and demands from customers (companies) through daily sales activities and further quality improvement of products will lead to greater customer satisfaction. Based on this recognition, a 360-degree survey has been conducted since fiscal 2002 for, persons in charge of sales. Specifically, the sales capabilities of the sales persons are determined and assessed with a questionnaire administered to themselves, their superiors and clients (3 to 5 companies). The assessment results are fed back to the sales staff and their superiors to encourage the staff to enhance their sales capabilities. In addition, the overall results are used to review the education and instruction methods so that Sumitomo Electric can strengthen its sales capabilities and further improve customer satisfaction.

Customer Satisfaction Improvement Activities by the Sales Group

Activities for Improvement of Business (Office Work) Quality

In the business quality improvement activities of the Public Relations Department in f iscal 2010, we focused on the improvement of the department's website operated in our corporate intranet. When engaging in improvement, in addition to the enhancement of the speed and accuracy of office work, we, as a corporate staff section, paid attention to provide better services to other departments, a user-friendly way of presentation and strengthening of information transmission. Although we started the improvement activities with no guidelines, we have received pleasant words from the users such as “it is easy to understand” and “it became user-friendly,” which encourage us to make more efforts. Through these activities, we realized the significance of continuous small improvements involving all members for the enhancement of the business quality. We would like to continue the business quality improvement activities. At the 11th Group-wide Business Qual i ty Improvement Convention, we made a presentation in front of President Matsumoto and many executives and employees. We were very nervous but finished the presentation and Q&A session without a problem, which gave us confidence.

Mari Sakai (right) 　Mitsuyo Tsuruta (left) Osaka Public Relations Group, Public Relations Dept.　

We have realized that business quality can be upgraded through continuous accumulation of small improvements.

C S R V O I C E

Forklift Truck Operation Competition

11th Convention November 2, 2010

10th Convention June 8, 2010

460 participants (total in 6 sites)

450 participants (total in 6 sites)

Group-wide Business Quality Improvement Convention

Office Work Kaizen Team

(fiscal year)

20

40

60

80

100

120

0

99

61

3649

50

22

39

1917

2007 2008 2009

25

1312

2010

The Number of Accidents of Products during Transportation by Year(accidents) Accident by other than a forklift truck

Damage by a forklift truck

The Sumitomo Electric Group believes that manufacturing quality and business quality are inseparable on business execut ion and equal ly focuses on bus iness qual i ty improvement activities, aiming to eliminate critical office work mistakes and update the base of business. Specific activities are: (1) thorough implementation of measures to prevent recurrence of mistakes to eliminate critical office work mistakes, and the use of “Hiyari-Hatto” memos, or near-miss reports, to prevent mistakes as part of the “Quality Assurance in Own Process Activities,” (2) development and periodical review of relevant documents such as company regulations, BRs (business rules) and office work instructions to update the base of business and (3) improvement of office work productivity by “Kaizen” at office. These activities are promoted mainly by the “office work Kaizen team” formed in each workplace, and also used to encourage communication and create a lively workplace. In order to further stimulate the activities of these study groups, good examples are introduced at the “Group-wide Business Q u a l i t y I m p r o v e m e n t Conventions” held twice a year.

Relationships with Suppliers

●Familiarize employees in overseas affiliates with the Basic Procurement Policies at the overseas regional liaison committees of procurement staff

●Disseminate the CSR Procurement Guidelines among suppliers● Evaluate suppliers with the supplier evaluation sheet

● Familiarized employees in overseas affiliates with the Basic Procurement Policies at the liaison committees of procurement staff in China and Thailand

●Distributed the CSR Procurement Guidelines at a Partners’ Meeting and asked suppliers to take measures to follow them

●Also sent the CSR Report and the CSR Procurement Guidelines to 500 main suppliers and asked them to take necessary measures

● Performed the evaluation for fiscal 2010 with the supplier evaluation sheet in part of the Procurement Divisions

● Expand and improve the education program that supports compliance

●Make requests based on the CSR Procurement Guidelines to individual suppliers


The Great East Japan Earthquake on March 11 caused damage to many of the suppliers of the Sumitomo Electric Group. Some of them still face a tough situation. We would like to again express our heartfelt sympathy to those who suffered from the earthquake. At the same time, we are also very grateful to our suppliers that provided great support for us to restore the affected production facilities of our Group companies and deliver necessary materials despite such difficult circumstances. Many of our Group's products are related to infrastructure, and therefore have to be delivered continuously to the affected areas for rehabil i tat ion and reconstruction as soon as possible. We will continue to deal with this situation in cooperation with our suppliers.

As the procurement sect ion of a manufacturer , we have traditionally made efforts to ensure stable procurement because it is our main duty. The earthquake made us realize the importance of stable procurement once again. Cooperation between the procurement departments of our Group companies worked better than expected, but we also identified some problems. One of them was that it took much time to confirm the impact on secondary and tertiary suppliers and secure goods other than main materials such as indirect materials. Based on the lessons learned from the earthquake disaster, we will review our activities for stable procurement.

The Sumi tomo E lec t r i c Group a l so e s t ab l i s hed t he CSR P rocu remen t Guidelines in fiscal 2010. The Guidelines contain our CSR-related requests to the suppliers from a more global viewpoint in consideration of social conditions and environmental problems. For example, we request our suppliers to comply with the related laws and social norms of the countries and regions in which business is operated and respect their cultures and customs, and to promote activities to contribute to social and economic development. Through over 100 years of its business, the Sumitomo Electric Group has established relationships or trust with many suppliers in its procurement activities. These activities were the very CSR procurement based on the Sumitomo Spirit, which had been established by our predecessors. Actually, there is a gap in awareness of CSR procurement between different divisions in Sumitomo Electric due to the diversified business areas. Still, cooperation of the suppliers across the world is essential for our Group to continue corporate activities because its production sites are rapidly spreading on a global scale. Therefore, we now need to promote CSR procurement not only with Japanese standards, but also with global standards, and in the future, Group-wide familiarization of the standards will be necessary. We asked main partners to follow the guidelines established in the previous year at a Partners’ Meeting and have also started to communicate the guidelines to many other suppliers via the Internet. Mutual trust and cooperat ion wi th suppl iers are keys to CSR in the procurement, and we will continue to promote CSR activities in partnership with our suppliers.

Thorough Implementation of the “CSR Procurement Guidelines” in a More Global Scale

Relationships with

Suppliers

Toward the thorough implementation of CSR procurement from a global perspective


Results in FY2010


Satoshi Maegawa General Manager, Group Procurement Division The Sumitomo Electric Group

CSR Procurement Guidelines


Group Procurement SystemIn Sumitomo Electric, Group Procurement Collaboration Office established in the Group Procurement Division, which is composed of the staff in charge of procurement and outsourcing in 24 divisions and affiliates in the Sumitomo Electric Group, promotes Group-wide activities and measures based on the Basic Procurement Policies. In addition, the Group Procurement Division regularly publishes e-mail magazines for procurement and outsourcing staff in the Sumitomo Electric Group, which contains timely articles on practical topics such as compliance and environmental initiatives and related advice to enhance awareness among the staff in charge across the Group. Since the first issue in April 2005, this magazine reached the 168th issue by March 2011, and is now distributed to 423 persons across the Group.Overseas , we wi l l expand establ ishment of l ia ison committees of procurement staff on a regional basis under the initiative of the international purchasing offices of the Group Procurement Division. The liaison committees of procurement staff ensure thorough implementation of the Basic Procurement Policies through development of measures on procurement across the Group and training to staff.

Regional Partners' Meeting

Procurement

CSR Procurement GuidelinesWhile there is growing demand for CSR these days, cooperation of suppliers is essential for us to further promote our commitment to CSR in the procurement activities. We identified the issues for which our supplies are asked to take active measures based on the Sumitomo Spirit and the Sumitomo Electr ic Group Corporate Pr inciples, and established the Sumitomo Electric Group CSR Procurement Guidelines in August 2010.

In fiscal 2010, at the Sumitomo Electric Group Partners’ Meeting held with the representatives of 88 suppliers, we asked them to promote CSR based on the newly established CSR Procurement Guidelines. Additionally, regional partners’ meetings were held at Sumitomo Electric's major Works, and we presented the Guidelines and asked suppliers to take measures to improve their CSR activities. The CSR Procurement Guidelines were also sent to other major suppliers by mail or other means together with the CSR Report. We will make efforts to disseminate the G u i d e l i n e s i n t o t h e suppliers, and promote CSR i n i t i a t i ves i n the procurement activities in partnership with them.

Sumitomo ElectricGroup

No. of participating suppliers 88

OsakaWorks

36

ItamiWorks

36

YokohamaWorks

38

Partners' Meetings

Basic Procurement PoliciesThe Sumitomo Electric Group considers procurement to be a “service that supports the foundation of its business activities,” and in May 2006, established Basic Procurement Policies in line with the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles. In November 2006, we also formulated concrete procurement action guidelines to implement each of the Basic Procurement Policies. We have distributed the Basic Procurement Policies to our main suppliers, along with our Group companies, and have sought their understanding and cooperation.

The Sumitomo Electric Group aims to contribute to creating a better society and environment, with a firm awareness of our social responsibility. To this end, the suppliers that directly or indirectly provide their products and services for us are also required to work on the activities together with us. Therefore, we have summarized our requests to the suppliers of the Sumitomo Electric Group in these guidelines, and the suppliers are requested to promote compliance with them. Our suppliers are also asked to request their suppliers to comply with the guidelines.

1. Provision of Useful and Safe Products and Services2. Improvement of Technological Capabilities3. Promotion of Sound Business Management4. Contribution to Preservation of the Global Environment

5. Compliance with Laws and Social Norms and Fair and Proper Business Activities

6. Social Contribution and Elimination of Antisocial Forces

7. Respect to Human Rights and Considerations of Occupational Health and Safety

8. Disclosure of Information and Promotion of Communication with Society

9. Maintenance of Confidentiality and Information Security

Sumitomo Electric Group CSR Procurement Guidelines (extracted)

1．Promoting procurement activities that contribute to creative and global corporate activities

The starting point of our social contribution is to conduct corporate activities that provide excellent products and services that meet customer demands. In this recognition, we will promote procurement activities that continuously sustain “creative and global corporate activities” that enable us to offer such products and services.

2．Promoting fair and impartial procurement activitiesThrough fair, impartial and open transactions on the basis of rational processes and judgments, we will promote procurement activities that support proper corporate activities.

3．Promoting compliance-based procurement activitiesWith cooperation from suppliers, we will promote procurement activities on the basis of compliance with relevant laws and regulations, as well as social norms.

4．Promoting procurement activities based on mutual trust and cooperation with suppliers

To realize our management philosophy, it is essential to establish strong relat ionships of trust with suppl iers . In promoting procurement activities, we will therefore prioritize suppliers who agree with our management philosophy.

5．Promoting procurement activities friendly to the global environment

Environmental protection is a global challenge to be addressed. We will promote procurement activities to support the provision of products that can help customers in their efforts toward environmental protection, while helping us realize corporate activities of low environmental impact.

Basic Procurement Policies


Initiatives to Ensure Compliance with Laws Related to Procurement and OutsourcingIn our efforts toward compliance, procurement divisions must pay special attention to observing the Act against Delay in Payment of Subcontract Proceeds etc. to Subcontractors (Subcontract Act) and to making appropriate payment of customs duties on items we import directly from overseas. In fiscal 2010, Sumitomo Electric also organized Group-wide training seminars to ensure full compliance with such laws and regulations:

In fiscal 2010, we were visited by customs inspectors, and underwent post-entry auditing regarding correctness of the amounts in custom reports and maintaining of confirmation documents. As a result of the audit of about 12,000 declarations submitted during the two preceding years, the investigation was completed without special indications. We will disseminate the proper custom clearance method at training sessions to ensure the thorough implementation of proper custom declarations, and also focus on the issues indicated in the past post-entry auditing in the inspection tours organized once a year.

Education SystemFor the purposes of “development of reliable procurement staff” and “handing down of procurement ethics, knowledge and expertise,” the Group Procurement Division has developed and provided an OFF-JT＊ program for working staff, which is combined with existing OJT＊ to improve purchasing skills with the multiplier effect. The OFF-JT＊ program in fiscal 2010 was composed 7 courses including “procurement-related laws and regulations” and “CSR, environment and ethics,” each of which was provided by an expert in the Group Procurement Division. The experts used textbooks they prepared, and gave lectures through the teleconference system connected to sites in Japan and overseas. In total, 366 persons from 29 companies attended the lectures. Overseas, local staff members in the international purchasing offices of the Global Procurement Division also participated in the courses. Additionally in China, training seminars for staff of the affiliates in charge of procurement and outsourcing were provided at the liaison committee meetings of procurement staff organized by the international purchasing offices. In the future, we will organize training seminars regularly to further disseminate the Basic Procurement Policies and consider the addition of new sites to hold such seminars.

Contribution to Preservation of the Global EnvironmentTo promote environmentally-friendly procurement activities, the Sumitomo Electric Group has made efforts to eliminate the use of banned substances in its products and enhance control of other harmful substances contained in products, based on the “Sumitomo Electric Group Green Procurement Guidelines.” As a part of promotion of init iat ives to contr ibute to preservation of the global environment through the joint efforts between the Sumitomo Electric Group and suppliers, our company introduced the “ECO Factoring System” developed in collaboration with Sumitomo Mitsui Banking Corporation from fiscal 2009. As of the end of March 2011, 28 suppliers made use of the System. In this system, suppliers who meet our original criteria with regard to the environmental conservation activities are certified to be applied to a favorable interest rate when the suppliers convert accounts receivable into cash before the due date. With this System, we encourage our suppliers to perform environmental conservation activities. Some of our procurement divisions have begun to use the supplier evaluation sheet involving the assessment of their environmental management level.

I would like to express my heartfelt sympathy to those who suffered from the Great East Japan Earthquake. My heart aches when I think of the affected people and areas. Nevertheless, with a refreshed mind, we have to fulfill our responsibility to supply products to our clients as usual and propose alternatives to unavailable items because it is our social contribution. Taking this opportunity, our company has also decided to continuously make a donation to Japanese Red Cross Society, which our former president used to do every year. I think that “to continue” is important. Our company has delivered packaging materials, logistics materials and physical and chemical appliances to Sumitomo Electric for many years. We recognize that the current goods will not remain the best forever and the demand changes according to the needs of the times. Having acquired the Eco-Action 21 certification, which is advocated by the Japanese Ministry of the Environment, we consider environmentally-friendly business operation, which is mentioned in it, as one of our missions. Our related initiatives include proposal of recyclable and returnable products, proposal of biodegradable buffer materials and promotion of green purchasing. In the recent partners’ meeting, I learned the CSR activities of Sumitomo Electric, which play a central role in the company's business activities. I reaffirmed that we contribute to society by continuously supporting a globally active company l ike Sumitomo Electric through the supply of products.

Ms. Hiroko Higashino President, Higashino Corp.

We will continue to contribute to society through the supply of products

C S R V O I C E

Date

Education program

1st half of FY20102nd half of FY2010

No. of courses

77

No. of lectures

29 in total29 in total

Total participants

189177

No. of participating companies

1823

Training seminars at overseas liaison committee meetings of procurement staff

China

Thailand

1st : 22 persons from 8 companies; 2nd: 24 persons from 9 companies

7 persons from 6 companies

Results of Education

Relationships with

Suppliers

Glossary ＊ OJT and OFF-JTOJT (On-the-Job Training) is education and training received while the trainees perform daily work. On the other hand, trainees receive OFF-JT (OFF the Job Training), such as group training sessions, when they are temporarily away from daily work.

Subcontract Act Customs Law

Training seminars

Locations

Details

ParticipantsSelf-examinationInspection tour

11 sites in Japan3 courses: a basic/beginner course, a course designed for the practice of procurement and outsourcing, and a course designed for the practice of purchase requests

1,193 in total44 divisions + 49 affiliates3 divisions + 12 affiliates

16 divisions + 6 affiliates16 divisions + 6 affiliates

SWITCH Plus CampaignMeanwhile in Japan, we promote the employment of the physically or mentally challenged in Sumiden Friend, a special subsidiary＊, and also support women in playing important roles. We are committed to the enhancement of diversity in all aspects. Furthermore, following the completion of the SWITCH Campaign in March 2011, a three-year program inaugurated in 2008 to reduce working hours, we launched the SWITCH Plus Campaign in April this year. In addition to reduction in working hours, this new program aims to raise the activity level of the organization in a comprehensive manner through the establishment of a lively work environment.

Recruitment of Global Human ResourcesSince the establishment of its representative office in New York in 1960, Sumitomo Electric has developed overseas business operations for approximately 50 years. Our Group currently has 325 bases in over 30 countries around the world with more than 180,000 employees. In particular, over the last five years, our Group has increased the number of employees with rapid globalization mainly in the segment of automotive parts. Acquisition of major businesses and establishment of local manufacturing firms in partnership with overseas companies are also increasing, which have added diverse human resources with various backgrounds to the members of the Sumitomo Electric Group. In such a situation, we also have to promptly globalize “people,” which are a vital part of the business. One of our efforts is the Global Leadership Program (GLP), which aims to develop executives in Japan and other countries. In the GLP, the executives participating from various countries have direct communication with top management members and learn the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles directly from them. We also organize the Action Learning program for executives. While the Action Learning had been given to executives in Japan, the session in fiscal 2010 involved, for the first time, American executives from our Group companies in the U.S. to form a U.S. group together with Japanese employees assigned to the U.S., who made a proposal for strengthening our manufacturing capacity in North America. Thus, we are actively promoting exchanges between global human resources. We have also developed and introduced “GEC-Net (Global Communication Network),” a web tool that enables interactive communication between executives of business units and personnel with leadership potential in Group companies outside Japan , f o r sha r i ng g loba l i n fo rmat ion and p romot ing communication on a daily basis. We are thus committed to Group-wide activities for human resource development and communication on a global scale to respond to expansion of our overseas operations. Still, we need to further accelerate the globalization of our organizations and human resources in consideration of our business development plan. Therefore, in addition to the development of tools, we have stipulated the Global Human Resource Management (HRM) Policy and will communicate it to the whole Group around the world to promote the diversification of our personnel in earnest by offering various career opportunities and placing the right person in the right position regardless of nationality, race, ethnicity, religion, age or gender. We plan to prepare universal guidelines on cross-border exchange, as well as the treatment, cultivation and placement of personnel, in order to realize the Policy. Through these efforts, we will seek to become a truly global company, and eventually a Glorious Excellent Company.

●Develop the communication platform and organize regional human resources meetings to enhance global communication

● Improve the MONOZUKURI (manufacturing) training programs in Asian countries and provide the training in more countries

●Develop a company-wide campaign for the improvement of work efficiency and productivity as part of the SWITCH Campaign

●Developed a global communication tool “GEC-Net”●Held the Global Leadership Program (GLP) for the executives from Sumitomo Electric Group companies across the world

● Launched a campaign to enhance work efficiency as part of the SWITCH Campaign

●Announcement of the Global HRM Policy● Start full-scale operation of GEC-Net● Launch and develop the SWITCH Plus Campaign


Relationships with Employees

Yoshitomo Kasui General Manager, HR & Administration Department

Glossary ＊ Special subsidiaryThe subsidiary that a company establishes for the purpose of hiring disabled persons under the Law for Employment Promotion etc. of the Disabled.

Becoming a truly global company through cross-border activities


Results in FY2010


Global Magazine


Diversity

Announcement and Adoption of the Global HRM PolicySumitomo Electric will familiarize its Group companies across the world with the Global HRM Policy stipulated and announced in September 2011. With this Policy, we will enhance recruiting activities on a regional or company basis, employment of local persons and offer greater career opportunities to promote the activation of human resources and organizations in our Group.

Development of Global Communication Tool “GEC-Net”We have developed an internal SNS system cal led “GEC-Net” (Global Communication Network) in order to support interactive communications between the executives of business units in Japan and global executives of Group companies outside Japan. This system features electronic conference rooms (communities) as well as blogging services and it has started operation on our intranet since February 2011. Executives of our Group companies all over the world can join the network and enter their profiles and career plans. GEC-Net members can browse messages from the President and business unit executives which are posted regularly and can also set up networking communities on various themes to send out information and exchange opinions. At present, we have approximately 120 members joining the GEC-Net from around the world and we have started to hold global communications using English as the common language.

● We provide workplaces where all the employees can work actively, grow both personally and profess ional ly through work, achieve sel f -actualization, and contribute to the society.

● We offer various career opportunities and pursue global ly “right person in the r ight posi t ion” regardless of nationality, race, ethnicity, religion, age, or gender.

● We value and promote diversity in the workplace in order to enhance the creativity of the organization and to sustain the growth of the business.

● We develop global leaders who lead and give energy to our global business. Global leaders are those who understand and share the Sumitomo Spirits and the Corporate Principles and can lead highly diversified teams.

Global Human Resource Management (HRM)Policy

Distribution of Global Magazine“Global Magazine” was f i rst publ ished in 2008 as a communication tool for the employees of Sumitomo Electric Group working outside Japan. This Global Magazine conveys the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles, which serve as the common value for our Group, messages of executives and information on our business conditions, as well as business activities and social contribution activities of overseas companies. We use this magazine to allow Group employees to share information and create the sense of unity. The quarterly Global Magazine is published in seven languages for the employees o f a l l G r o u p companies in the world.

0

200,000

150,000

100,000

50,000

No. of employees (persons)

Number of Group Employees in the World by Year

(Fiscal year)20062005 2007 2008 2009 2010

Europe/Africa Southeast Asia China JapanAmericas

2005

Americas

2006 2007 2008 2009

Europe/Africa

Southeast Asia

China

Japan

2010

Total

20,449 18,201 23,962 15,744 13,852

23,448 27,634 31,406 32,667 33,834

23,365 25,766 27,167 34,792 34,310

24,483 29,367 34,939 33,808 37,843

32,905 32,885 36,251 35,536 37,364

15,164

41,230

37,538

51,887

36,954

124,650 133,853 153,725 152,547 157,203 182,773

※Sumitomo Electric and its consolidated subsidiaries

Numbers as of March 31 of each year

Relationships with

Employees

Fiscal year


Diversity

Promotion of Employment of the Physically or Mentally ChallengedSumitomo Electric has been constantly working to promote employment of physically disabled persons. To further promote employment of such persons and increase their employment rate, we established a special subsidiary, Sumiden Friend in July 2008 (certified as a special subsidiary in February 2009). Currently, 12 mentally challenged persons are working with nine staff members, engaged in greening company sites, stuffing bags with buffer materials for packaging, shredding waste paper, and converting paper documents into electronic files. In the future, we will expand types of services and create new jobs for them.

Recruitment of Diverse Human ResourcesIn fiscal 2010, we hired 102 new graduate employees as general is ts , 10 of whom were female and one was non-Japanese. We also hired two Japanese graduates from foreign universities and 15 mid-career workers. To support our diverse business development in global markets and new fields, we continue to actively recruit various personnel.

Sumiden Friend started its operation with five disabled persons in October 2008. With seven new employees hired in May 2011, the company now has 21 employees, of whom 12 are handicapped. We aim to train all employees with disabilities to master all jobs in the company. Therefore, we do not divide new employees into those who can work well and those who cannot and give the appropriate roles to each of them. Instead, we try to increase the jobs they can perform by adopting effective tools and work procedures so that all of them can learn how to work. As a result of these efforts, they can work in turn, which enables us to keep the delivery date more easily. More importantly, the employees feel joy and sense of satisfaction. We make efforts to instruct and cultivate employees in a way suitable for their individual characters without a biased mind. This way, they improve their skills little by little. Instead of leaving behind those who need more time to learn their jobs, we are committed to our jobs with belief that it is important to go forward together with all employees regardless of their learning speed or whether the employee is handicapped or not.

Yutaka Dairaku　President, Sumiden Friend, Ltd.

Each employee feels joy and sense of satisfaction

C S R V O I C E

(Fiscal year)

50

100

150

200

250

300

350

400

500

0

148

250

24

39

124211

2005 2006

401

79

322

2007

Number of Male/Female Employees Hired(Persons)

434

92

342

2008

31449

265

2009 2010

FemaleMale

22045

175

Ratio of male/female administrators

Total number ofadministrators inSumitomo Electric:3,210Male

97.9%

Female2.1%

Ratio of Male/Female Employees and Ratio of Male/Female Administrators

As of March 31, 2011

Ratio of male/female employees

Male88.5%

Total number ofSumitomo Electric

employees:10,653

Female11.5%

20

15

10

5

0

30

25

35

40(Persons)

Number of Non-Japanese Employees Working for Sumitomo Electric (excluding affiliates)

(Fiscal year)2005 2006 2007 2008 20102009

11

18

2529

33 33

As of March 31 of each year

Number of Non-Japanese Employees Working for Sumitomo Electric (excluding affiliates) by country

China 27

Thailand 2Malaysia 1Taiwan 1

Indonesia 1Vietnam 1

33

1.81.71.61.5

1.92.02.12.2

(year)2006

1.87

2007

2.02

2008

2.01

Legally required percentage

0

Employment Rate of the Physically or Mentally Challenged by year（％） Employment rate as of June 15 of each year

2009

2.06

2010 2011※

2.031.91

(Note) Above graphs cover personnel data for Sumitomo Electric employees, including those on loan to Sumitomo Electric affiliates and other organizations.

Glossary ＊ Exclusion rateFor enterprises engaged in specific types of business that have difficulty in employing persons with disabilities, a number of employees corresponding to the stipulated exclusion rate will be deducted from the total number of workers when calculating the number of regular employees. The exclusion rate is being reduced in a phased manner, and is going to be abolished in the future.

※The decrease in the employment rate of the physically or mentally challenged in 2011 to 1.91% was partly attributed to the reduction in the exclusion rate＊ by 10 points from 15% to 5% in July 2010.


Commitment to Human Rights Enlightenment and EducationSumitomo Electric strives to employ more diverse human resources regardless of race or nationality, which is an essential approach for globally operating companies, and respects the human rights of each employee in its business operations. T h e S um i t omo E l e c t r i c G r oup Comp l i a n c e Manua l , wh i c h i s distributed to all employees, stipulates respect for human rights and prohibits discrimination in the chapter on the maintenance o f sa fe and sound workplaces. The Manual also specifies the prohibition of sexual harassment and power harassment as well as strict control of employee information. We are also making continuous efforts for human rights enlightenment and education to solve a wide range of human rights issues including discrimination. Various internal training programs are systematically organized every year, including position-based training for all classes from executives to newly-hired employees, education at the worksites provided mainly by Human Rights Task Committee members, cross-sectional training by subject, and in-house contests for human rights slogans. In fiscal 2010, the total number of participants in the human rights seminars was 6,266, which accounted for about 60% of all employees.In addition, we have set up counseling service in regard to sexual harassment as well as internal and external sections in charge of consultation and reporting by the Compliance Committee (Speak-Up System). Sumitomo Electric has also established a system to quickly gather information on any human rights violations and take appropriate measures against them.In Japan, we also participate in human rights organizations including the Osaka Enterprise Liaison Committee for Social Integration and Human Rights. In cooperation with relevant governmental agencies and other organizations, Sumitomo Electric works toward the realization of a society in which human rights are guaranteed for all.

Implementation of the Survey to Create a Lively Working EnvironmentSumitomo Electric has been conducting “Survey to Create a Lively Working Environment,” a questionnaire survey to investigate the attitude of employees, since fiscal 2006. In fiscal 2010 as well, about 15,000 employees were surveyed in May, including those of Group companies. As in the figure below, the survey results show continuous improvement in most items although the scores leveled off when compared with the results for the previous fiscal year. While the scores slightly decreased in “Communication with Subordinates/Managers” and “Mot ivat ion ,” steady improvement was made in “Business Spirit and Corporate Principles” and “Management of General Manager,” which indicates the effect of our enlightenment activities including training sessions and the efforts in the workplace to meet the targets of VISION2012. Overall trend in the Company based on the survey results is communicated through the in-house magazine. The results are also fed back to each organization, and the workplaces examine their specific challenges implied by the results and promote remedial measures. Thus, the survey is used for the establishment of a lively work environment.

Discussion between Labor and ManagementSumitomo Electric believes that the development of a company goes hand-in-hand with the improvement of the living standards of its labor union members. On the basis of this belief, Sumitomo Electric strives to address various relevant issues by thorough discussion between labor and management, each party appreciating the other's standpoint. The Central Management Counci l Meeting, in which representatives of labor and management meet for opinion exchange concerning business environments and managing conditions, is held four times a year. This meeting has been organized 260 times in its history of more than 60 years as of May 2011. We have also set up task forces of various kinds, such as the Working Time Reduction Task Force and the Health and Welfare Task Force. To facilitate adaptation to diverse work styles and create an environment where all employees can work lively with smiles, we are improving various working systems and reinforcing monitoring functions.

Human Rights and Lively Working Environment

Satisfaction in Working

Communication withSubordinates

Career

Evaluation System

Workplace Atmosphere

Workplace Discipline

Management ofGeneral Manager

Business Spirit andCorporate Principles

Management of Manager

Motivation

Devotion to Job

Culture and Resourcesat Workplace

Communication withManagers

2 2.5 3 3.5 4

200820092010fiscal

Results of the Survey to Create a Lively Working Environment

Relationships with

Employees

The Sumitomo Electric Group Compliance Manual

Bad Good5-grade scale

Work & Life


When I started to work for Sumitomo Electric in autumn 2008, my daughter was 2 years old. I remember that I worried so much about whether I could work while taking care of her. After two and a half years since then, I have got used to the job and learned to balance work and life to some extent. Still, I am struggling with time management. For example, I feel sorry for my colleagues when I have to go home early for sickness of my daughter or other reasons, and feel sorry for my daughter when I work late. So, the programs such as the Anniversary Holiday Program and SWITCH Campaign are very helpful to me. I am also thankful for the understanding and cooperation of my colleagues and family. I would like to do my best to balance work and life positively and spend the limited time in a more efficient way.

Kaori Morikawa-Wilson　Sumitomo Electric Networks, Inc.

I appreciate the support for balancing work and life

C S R V O I C E

To support its employees in balancing work and life, Sumitomo Electric is committed to promoting the work style that makes a clear distinction between work and life and has also developed child and family-care related systems actively. For example, the Company attained the goals set under its three Action Plans, which were formulated on the basis of the Law for Measures to Support the Development of the Next Generation. Consequently, Sumitomo Electric has been certified by the Ministry of Health, Labor and Welfare as a business that helps its employees balance work and childcare. These efforts have been generating positive results, as exemplified by the fact that many female employees who have given birth take childcare leave, and return to work. We have also improved the system so that male employees, as well as female employees, can take childcare leave and are allowed to take leave when their spouses give birth, in order to encourage male employees to participate in childcare. We are also making various efforts to establ ish a work environment for balancing work and life by distributing handbooks, building a homepage, and organizing a company-wide forum in order to enhance understanding by all employees.

Support for Balancing Work and Life Various Support Programs① Reemployment SystemIn April 2008, Sumitomo Electric introduced a scheme to reemploy employees retiring due to circumstances beyond their control such as childbirth, childcare and nursing care. In the scheme, we organize interviews and reemploy eligible persons when they are able to return to work (within three years from their retirement) and, as a general rule, assign them to their former workplaces.

② Daycare Centers for ChildrenAs a measure to foster a supportive environment for employees working full-time while raising children, Sumitomo Electric opened daycare centers at its Yokohama and Osaka Works in March and April 2008 respectively, and added a third center in Itami Works in March 2009. As of March 31, 2011, these three centers take care of 61 children in total. For employees who cannot use our daycare centers, we are taking other supportive measures such as subsidizing their use of other day care centers.

③ Expansion of the Holiday ProgramSumitomo Electric introduced the “Anniversary Holiday Program,” which allows employees to take two paid days off per year as they wish, on their birthday or other anniversary as designated by the employees. In addition, Sumitomo Electric has adopted the “Life Support Holiday Program,” which allows employees to take five consecutive paid holidays after having completed a certain length of service with the Company, so as to support creating a working environment in which employees can take days off more easily. We also introduced a volunteer holiday system, which allows employees to use the expired paid holidays for performing volunteer activities, in order to help them participate in social contribution activities.

Mark Certifying Corporate Support for Parenting, Kurumin＊

FY2008① No. of the employees who

took childcare leave(The number in brackets indicates the number of the employees who took the leave for the first time in the fiscal year)

③ No. of the employees who used the short-time work system

② No. of the employees who took leave when their spouses gave birth

Male

Female

Total

MaleFemaleTotal

44

3 （3）

119 （50）

122 （53）

7183190

FY2009

68

4 （3）

106 （56）

110 （59）

7172179

FY2010

61

3 （3）

100 （51）

103 （54）

14205219

Scheme Main items Description

Nursing care leave

Childcare leave

The period when the leave can be taken

Until the time when the child becomes three years old

Reemployment system Program to reemploy retired employees

Short-time work, exemptions from and limitations on overtime, limitation on night work

Until March 31 of the year when the child is a sixth grade elementary school student

Encouragement of fathers to take the leave

①Male employees can take leave when their spouses give birth (five days)

②The first three days of the childcare leave are treated as paid holidays

Childcare/education menu in the cafeteria plan

Doubling or quadrupling of the points earned from the use of the menu

The period when the leave can be taken One year

Daycare centers for children Established at three sites

Nursing care support service Financial support

Short-time work, exemptions from and limitations on overtime, limitation on night work

The period when the nursing care is needed

Overview of the Childcare and Nursing Care Leave Schemes of Sumitomo ElectricMany of our schemes exceed the legal requirements.

Glossary ＊ Mark certifying corporate support for parenting, KuruminThe Ministry of Health, Labor and Welfare granted this mark to Sumitomo Electric for achieving the goals set under its First Action Plan (April 2005 - March 2007), Second Action Plan (April 2007 - March 2009), and Third Action Plan (April 2009 - March 2011) based on the Law for Measures to Support the Development of the Next Generation.


Start of SWITCH Plus Campaign Mental HealthcareS u m i t o m o E l e c t r i c i s committed to company-wide management of mental health ca re f o r emp loyees . Fo r e x a m p l e , w e i s s u e d a “Mental Health Handbook” i n S ep t embe r 2008 a nd distributed it to all employees t o d i s s e m i n a t e b a s i c knowledge regarding mental h e a l t h c a r e . W e a l s o implemented relevant trainings mainly for administrators. We stat ion counselors at major operating sites, and have also established a system since May 2008 by which employees and their family members can consult external counselors. Thus, we have set up a system that helps us through daily communication to remain aware of employees and their family members with mental health issues, and enables us to take early measures to address these issues. As part of our support activities, all employees can also have their stress levels tested. Counselors offer advice on appropriate methods for communicating with employees who are on leave or absent from work. To help these employees return to work, we design and implement measures to provide step-by-step support, by establishing coordination among workplaces, industrial physicians and other specialists, and personnel staff members for close communication with employees and their family members. We are striving through such careful measures to improve employees’ mental health.

Mental Health Handbook

(Note) In addition to the counselors mentioned above, the employees and their family members can consult external counselors by phone or e-mail.

No. of Counselors Stationed at Major Operating Sites

Head Office

Head Office (Tokyo)

Osaka Works

Itami Works

Yokohama Works

Kanto Works

Kumatori Works

1 (2 times/month, 5.0 hours/day)






1 (4 times/month, 3.0 hours/day)Poster of the SWITCH Plus Campaign

Training Session

Year 2006

22.6 hours

Average overtime hours per month

11.5 days

Average number of paid holidays taken by employees per year

2007

22.1 hours

11.4 days

2008

21.0 hours

12.1 days

2009

14.2 hours

12.4 days

2010

19.1 hours

11.5 days

Average Overtime Hours and Average Number of Paid Holidays Taken by Employees by Year

2,0002,0202,0402,0602,0802,100

1,9001,9201,9401,9601,980

2,073 2,0682,049

1,965

(Year)2006 2007 2008 2009 20100

Average Total Working Hours by Year(Hours)

2,031

(Note) The personnel data presented above cover Sumitomo Electric employees, including those on loan to Sumitomo Electric affiliates and other organizations. Relationships w

ith Employees

Sumitomo Electric promoted the SWITCH Campaign for three years from April 2008. The objective of the campaign was to encourage people to make a clear distinction between work and life, or in other words, “to work in a concentrated manner when it is time to work, and completely rest when it is time to rest.” The main efforts were to enhance awareness through the company-wide campaign, to set days to go home without overtime hours on a workplace basis, to take paid holidays according to plans, and to improve work efficiency. As a result, the campaign achieved positive results as shown in the table below, including the steady decrease in total working hours per year, although the figures for fiscal 2009 were extraordinary due to the global financial crisis in September 2008. Based on these achievements, we started a new initiative named “SWITCH Plus Campaign” in fiscal 2011. In addition to reduction of working hours and improvement of work efficiency, this Campaign integrates closely related measures such as support for the development of the coming generations, support for nursing care and mental health measures. With the common target of “promoting the establishment of a workplace where the employees can have mental and physical power to work efficiently, exercise their best abilities with a sense of responsibility for their jobs, and work with smiles even more ‘lively’ than before,” we will develop this Campaign on Group-wide and global scales.

Number of the Employees Who Took Mental Health Training Course

Fiscal year

Number of the employees who took the course (persons)

2008

605

2009

285

2010

215

Human Resource Development

Well-developed Training Programs, SEI UniversityUnder the concept of “SEI University,” various training programs have been provided across the Group to increase the value of human resources. The number of training programs conducted in fiscal 2010 was approx. 270, and the total number of participants was approx. 30,100 (sum of participants in each program). The average length of training received by employees was 22.6 hours.

Also in fiscal 2010, we organized and developed a number of training programs. For example, in the programs on quality, which is a component of SEQCDD＊, we actively provided training on office work quality in addition to manufacturing quality. In the training on manufacturing quality, we improved the quality management education for newly promoted personnel, from administrators to young employees, in order to develop the culture of “Quality First” in their respective companies. We also added a new program for intensive education on “Own Process Quality Assurance Activities,” which is a key factor in the company-wide qual i ty management activities. The programs provided on office work quality included “flowchart training” to identify problems by putting the workflow into a chart, and training on ways to identify real causes of office work mistakes and prevent recurrence by the “5-why” root cause analysis. Since our business fields are wide ranging, we established a new training program “Let's learn Sumitomo Electric!” to familiarize young employees with a wide range of products and technologies of the Company. The subjects include business activities of other than their own divisions as well as leading-edge research activities. We hope that the training program enables young employees to broaden their perspectives and draw on the lessons for their jobs, and also promotes cooperation between different divisions.

Addressing GlobalizationPersonnel to be DevelopedSumitomo Electric defines personnel to be developed as “personnel who honor the Sumitomo Spirit, understand management policies, possess high levels of skill and knowledge rooted firmly in the basics, and can play active roles in the global community.”

Basic Idea of Human Resource Development


In January 2011, I attended a two-day trainer training course on the job instruction method. In the course, I learned to consider the instruction method in a logical and systematic manner. I can now picture the job instruction method more easily with a step-by-step approach and teach trainees much more efficiently. After taking the training course, I strongly realized the need of disseminating the “job instruction method” in our company promptly. To teach the proper way of teaching jobs to all team and group leaders in the company, they were divided into five groups and provided with internal training sessions. As a result, all of them understood the scientific way of teaching jobs. The training did not only make the participants acquainted with the method but also improved my skills as a lecturer. Thus, I directly learned that skills cannot be enhanced without practice. I will make continuous efforts to use the knowledge learned in the course and instruct trainers in the manufacturing sites in order to introduce the proper job instruction method to our company.

Douyu Zuo　Zhongshan Sumiden Hybrid Products Co., Ltd. (China)

I took a trainer training course on the job instruction method

C S R V O I C E

600

400

500

300

200

100

0

Total number of participants (persons)

46

280353

288

10

204

10(fiscal year)2006 2007 2008

308

20102009

575

China Southeast AsiaUSA

66

46

271

36

15

430

130

245

63

Glossary ＊ SEQCDDSEQCDD stands for safety, environment, quality, cost, delivery and research & development, which are fundamental components in the business activities of the Sumitomo Electric Group.

Fundamental Principles of SEI UniversitySEI University will serve as a venue for:① Disseminating the Sumitomo Electric Group's corporate philosophy,② Sharing the Sumitomo Electric Group's management strategies and vision, and③ Developing employees' abilities, skills and knowledge so that they

may play active roles in the global community.

● Human resource development according to the corporate philosophy and management strategy

● Human resource development based on “employee motivation” and “instruction by and dialogues with superiors in the workplace” supported by “training in each division” and "Group-wide training"

Self-developmentInstruction by and dialogues with superiors

Group-wide trainingTraining by the Human Resources Development Dept. / Training by

corporate staff divisions

Training in each division

The Sumitomo Electric Group has promoted global human resource development which has become more important with the globalization of our business. In fiscal 2010, we were committed to the improvement of education programs for employees in China, where many of our divisions are conducting their business activities, with focus on training to teach the basics of manufacturing. For example, we added new courses such as “Kiban Kyoka training program (KKP),” which develops personnel in charge of safety promotion in each manufacturing site, and “training on the job instruction method,” which cultivates internal trainers by teaching the points to be considered when instructing new employees and newly appointed employees. The development of common training programs across the Sumitomo Electric Group supports dissemination of the basic concept of the Group, development of a sense of unity and creation of networks between Group companies. We are now planning to develop a similar training system in other countries, mainly in Southeast Asia.

Number of Participants in Training Programs for Employees in Overseas Affiliates


It is my honor that I participated in the GLP as a member of the Sumitomo Electric Group. Through the lectures given by the executives of Sumitomo Electric and discussions with other participants from various countries, I learned the history of the Sumitomo Electric Group, and its business spirit, important principles and sense of value. The GLP also gave me opportunities to have dialog with the executives of Sumitomo Electric. I believe that this program is a solid step for the Sumitomo Electric Group to be a more global company. To reach its future goals, it is essential to understand the status and level of the Sumitomo Electric Group and each Group company. The GLP was not just training but also served as a trigger to change our way of thinking and take new initiatives.

Anton Muhtar Rosyidin P.T. Sumiden Serasi Wire Products (Indonesia)

Solid step toward globalization

C S R V O I C E

The GLP gave me a significant opportunity to think deeply about the Sumitomo Spirit together with other participants from around the world and imagine the way to go for our company to become a truly global company. Through the exchange of frank opinions with people from a wide range of backgrounds for three days, I was convinced that the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles represent a universal sense of value that anyone can easily agree with. The group discussions involved a process of creating better ideas based on various opinions, and I acquired new knowledge from the presentations of other groups many times. Our company has diverse product groups, customer bases and human resources. If we can have synergy effect using such diversity as a catalyst, we will be able to produce better results.

Hiroyuki Watanabe　Sumitomo (SEI) Electronic Wire, Inc.

To become a truly global company

C S R V O I C E

After taking the GLPIn the GLP, a total of 41 trainees (30 non-Japanese executives and 11 Japanese administrative

members) took lectures on various subjects such as the Sumitomo Spirit, the Sumitomo Electric Group Corporate Principles and VISION2012, and then formed groups of a few persons to make discussions on the theme “business management in the global age” in English. On the final day, they made a presentation in the presence of the Company's top management. We believe that the Program enabled the formation of a consensus among the Program participants and the Company's top management as to what constitutes “management that is suited to Sumitomo Electric.” It is hoped that, with participants of various nationalities and work duties getting together, mutual cross-cultural understanding will deepen among all Group personnel, creating ever greater centripetal force within the Group. We plan to organize this program continuously in the future.

Development of Future Leaders Including Human Resources in Foreign CountriesAt present the Sumitomo Electric Group has about 180,000 employees, about 80% of whom are working in the overseas Group companies. In view of this fact, the Company recognizes that one of its most urgent tasks is to train leaders who can work globally, regardless of their nationality. Until the previous fiscal year, Sumitomo Electric organized Global Manager Development Program in Japan (GMJ) for executives of overseas Group companies three times to deepen their understanding of the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles, increase their motivation, and promote interaction between them and the management through dialogs and group discussions. In fiscal 2010, the Company organized the Global Leadership Program (GLP), instead of the fourth GMJ, by reorganizing and developing the GMJ. In the first GLP, which was held for four days from February 14, 2011 mainly at Minami Hakone Seminar House, executives of overseas Group companies and Japanese administrative managers of Sumitomo Electric jointly attended seminars.

In addition, we provide an executive training program “Action Learning (AL)” for the executive officers and general managers of Sumitomo Electric and its Group companies. This training involves assigning management-related themes to groups of 5 or 6 members. They investigate and discuss the specific measures to be taken on the themes for six months, and propose the measures to the top management. The sixth session in fiscal 2010 was attended by five persons including executives from U.S. Group companies, who made a proposal on the theme of manufacturing personnel development in U .S . SE I Group companies. We hope that our future leaders learn a more managerial perspective through GLP and AL.

Action Learning

Relationships with

Employees

With regard to occupational accidents during fiscal 2010, we had 8 accidents resulting in lost work time and 24 no lost work time accidents, which were similar figures with those in fiscal 2009 (9 accidents resulting in lost work time and 23 no lost work time accidents). We thus failed to reduce the accidents mostly due to an increase in occupational accidents of employees in our Group companies in Japan while we had less occupational accidents of employees in overseas Group companies as well as temporary workers and subcontractor employees. The causes of the accidents can be roughly divided into two types: management-related ones, such as non-standard operations, equipment failure and delay in the development of the work environment; and unsafe actions, such as unconscious and omissive actions. Based on these results, we will promote review of standards and improvement of the accuracy of risk assessment through KKP and others. We will also promote the prevention of unsafe actions through position-based safety and health education and inspection of and safety measures for facilities and equipment in fiscal 2011. With these initiatives, we will enhance our activities to meet the targets.


●Complete the Manufacturing Foundation Reinforcement Program (KKP) for the intended trainees in three years (initiative in the second year)

●Accidents resulting in lost work time: 8, and no lost work time accidents: 24

●2,591 persons in total participated in the KKP from January 2009 to March 2011

●Reduce to zero the number of accidents resulting in lost work time, and reduce the number of no lost work time accidents to 12 or less

●Complete the Manufacturing Foundation Reinforcement Program (KKP) for the intended trainees in three years (initiative in the third year)

Relationships with Employees


Group-wide Safety Convention (chanting a safety slogan in unison)


Results in FY2010


Keeping strong belief that “We can surely eliminate occupational accidents”

Akinobu Kohara General Manager, Safety & Environment Department

Basic Approaches to No Occupational AccidentsWe inform that our basic approaches to eliminating occupational accidents are the same as before, while they are also mentioned in our CSR Report for the previous fiscal year. One of them is to perform safety activities with belief that “we can and will surely eliminate occupational accidents.” To this end, managers should bear respons ib i l i ty for occurrence of occupational accidents, and persons who have subordinates have to recognize that (1) safety of employees must be prioritized over production-primary and efficiency-first policies, (2) the responsible persons are no one but themselves and (3) they are responsible not only for the employees but also their families and society. They should also set a good example to inspire others. When these principles are communicated well, the stance of “prioritizing safety above all else” will take root in each position, which will lead to the further development of safety and health activities. The other approach is, instead of depending on mental power and just saying “Pay attention” to workers, to promote tangible safety measures. It is said that occupational accidents occur due to any single or combination of personal “unsafe actions,” “unsafe conditions” of material goods, and “insufficient management” that leads the unsafe actions and unsafe conditions. Thus, as the basic measures, our Group promotes implementation of intrinsically-safe facilities and the improvement of working environments, aiming to eliminate “unsafe conditions” and create environments where “unsafe actions” are not taken. We also place emphasis on the reduction of “unsafe actions” by el iminating “insufficient management” caused by lack of sufficient education and rules. Although we failed to reduce occupational accidents in fiscal 2010, it is crucial to continue these activities and we still have strong belief that we can surely eliminate occupational accidents. In fiscal 2011 as well, we will promote the activities based on the efforts made in fiscal 2010 with the keyword of “everyone should be problem-conscious and make improvements with teamwork.”


Safety and Health

Main Initiatives for Promotion of Safety and Health<Group Global Safety & Maintenance assessment Activities>We have conducted Group Global Safety & Maintenance assessment Activities since fiscal 2009. The purposes are:● To evaluate in terms of both soft and hard aspects in order to eliminate unsafe conditions and unsafe actions. To promote implementation of intrinsic safety through the safety inspection for facilities.

● To evaluate and assess manufacturing sites in Japan and overseas by common standards in order to identify weak points, improve them, and share strong points (spread throughout the Group).

We assess 121 manufacturing sites of the Sumitomo Electric Group in Japan and overseas once every two years. The evaluation items are as described in the following table.

Enhancement of Safety Education<Kiban Kyoka training Program (KKP, or Manufacturing Foundation Reinforcement Program)>We launched K i b a n K y o k a t ra in ing Program (KKP) , a manufacturing foundation reinforcement rrogram, for mid-level employees at production sites in January 2009.Divided by position, the trainees take lectures and exercises on the basics of safety and health, and attend training seminars on inspection on the manufacturing foundationfor five days.

Then, the practitioners perform activities to practice specific themes for roughly one month. The themes are selected so that the participants can prepare the results which contribute to achievement of “What it should be,” and changes between before and after the practice can be seen well, as presented below.

＜Themes of safety＞● Creation and review of working standards● Creation and review of risk assessment criteria, etc.

＜Themes of manufacturing＞● Activities to keep work areas clean and tidy, and to ensure that items are stored in the specified places and in the specified amounts

● Visualization of equipment management conditions, etc.At the end of practice activities on the theme, we hold a meeting to report the activities, and provide a certificate.

We summarize the assessment results in a report, fed back the results to the evaluated sites, and trace the items which are required to be improved. Since the beginning of fiscal 2009, the evaluation has been completed at 108 sites as of March 31, 2011.

Outcomes of Safety ActivitiesIn fiscal 2010, we carried out safety promotion activities with targets of reducing to zero the number of accidents resulting in lost work time and reducing the number of no lost work time accidents to 12 or less under the slogan of “Prioritize safety above all else 'Stop, Call and Wait'.” The number of occupational accidents in the Sumitomo Electric Group as a whole in fiscal 2010 is as shown in the following table.

The total number remained at the same level in comparison with the figure in fiscal 2009. While we saw an increase in the accidents of employees in our Group companies, the number of accidents of temporary workers leveled off, and the accidents of employees in overseas Group companies and subcontractors decreased.

Schedule

Training DetailsIntended trainees: ① Manufacturing division chief/plant manager; ② Person in charge of promotion (manager/supervisor); ③ Practitioner

Category

Safety &

Health

Quality, Manufacturing

Practice

Day 1

Day 2

Day 3

AM PM Intendedtrainees

Approach to and how to implement safety management

KTY (Kiken Yochi Training: Risk Prediction Training) exercise

RA (Risk Assessment) exercise

KY, Standards (Safety Standards)

RA, Safety inspection①②③

②③

②③

（①）②③

②

③

Preparation of standards (Safety Standards) Exercise

Exercise of effective safety inspection

Day 1How to implement inspection on the manufacturing foundation

Introduction to quality control, Key points of quality control activities

Day 2 Exercise of inspection on the foundation for manufacturing

1 month Practice at participant's own workplace + Report meeting (Completion ceremony)

Relationships with

Employees

Glossary ＊ Frequency rateNumber of deaths and injuries caused by industrial accidents per million working hours. Used to express accident frequency. The formula is: Number of deaths and injuries caused by industrial accidents / Total working hours x 1,000,000.

Evaluation Item Purpose How to proceed

Maintenance Skill Evaluation (39 items)

● Improving weak points by evaluation

● Improving the skill by supporting education

①Evaluate facility procurement and maintenance skill

②Promote improvement based on the evaluation results

③Check the state of buildings, utility facilities, etc. and give instructions

Safety & Health Evaluation (132 items)

● Visualization of strong and weak points

● Improving quality of activities

①Evaluate compliance and safety & health promotion self-disciplined activities

②Determine improvement policy based on the evaluation results

③Share excellent activities in the Group

On-site Safety Inspection(on actual facilities)

● Inspection on safety measures

● Preventing injury due to personal unsafe actions

①Inspect through a series of operation to pick up items to be improved

②Trace improvements and measures③Share the improvements and measures for similar facilities in the division

JapanTotal

Accidents resultingin lost work time 2 8No lost worktime accidents

Fiscal2010 18 24

Total 20 32

Overseas

1

2

3

Temporaryworker(Japan)

4

3

7

1

1

2

0 9Fiscal2009 13 23

13 32

2

1

3

3

9

12

4

0

4

Subjects: 71 sites in Japan, 41 sites in overseasGroup employees

Subcontractor

Accidents resultingin lost work timeNo lost worktime accidents

Total

(Note) The boundaries of data compilation for fiscal 2010 covers Sumitomo Electric and its 71 affiliates in Japan

0.5

1

1.5

2

(Fiscal year)

0

(Frequency rate)

All industries Sumitomo Electric GroupManufacturing industry

1999 2000 2001 2002

1.8 1.82 1.79 1.77

2003

1.78

2004

1.85

2005

1.95

2006

1.9

1.02 1.02 0.97 0.98 0.98 0.99 1.01 1.02

0.10.27

0.12 0.14 0.1

0.540.29 0.24

2007 20092008 2010

0.14 0.07 0

1.81.59

1.83

Figures for the Sumitomo Electric Group as a whole after fiscal 2004

Figures for Sumitomo Electricalone until fiscal 2003

1.09 1.120.96

0.04

Frequency Rate＊ of Injuries with Lost Days for Employees in Japan by Year

In 2007, on the occasion of the 110th anniversary of its founding, Sumitomo Electric stipulated the Sumitomo Electric Group Basic Policies on Social Contributions, which are in line with the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles, and announced them in Japan and overseas. To develop global operations and grow in a sustainable manner, the Sumitomo Electric Group has to seek coexistence with local communities as a member of them through autonomous social contribution activities, in addition to social contribution through business operations, in the areas where we pursue our operations. Based on this idea, we have established the policies to clearly present the solid philosophy of our Group. Since then, under the Basic Policies, we have been committed to the social contribution activities suitable for the Sumitomo Electric Group, which is aiming to be a “Glorious Excellent Company,” with focus on contributions to local communities, promotion of research and learning, human resource development, and support of volunteer activities.

In fiscal 2010, the SEI Group CSR Foundation, a public interest incorporated foundation＊, enhanced all of the three principal programs of (1) monetary contributions to university courses, (2) support of academic and research activities and (3) supply of scholarships, in comparison with the programs in fiscal 2009. In particular, in response to the indication made last year by Professor Naoto Yamauchi ( foundat ion trustee) of Osaka School of International Public Policy, Osaka University that the activities must be advertised more proactively (P55-56 in SEI CSR Report 2010), we invited applications to the programs that provide monetary contributions to university courses and support academic and research activities. We selected 6 university courses and 16 research projects among approximately 70 applicants and gave contributions and subsidies to them. The recipients of our scholarships also increased significantly both in Japan and overseas.

We are also making steady efforts to perform community-oriented social contribution activities in a stable and sustainable way at our bases both in Japan and overseas. As an initiative to encourage the activities, our Public Relations Department set up a blog “Smile Relay” in May 2011. This blog introduces scenes of “smiling exchanges and communication” born through corporate citizen activities conducted by Group employees all over the world. Following the advice given by Professor Yamauchi last year that ”Secret acts of charity are not good,” we would like to publicize our Group's social contribution activities more proactively. We had discussions to give support to environmental NPOs as advised by Professor Yamauchi, but have only participated in “Morino Chonai-Kai (Forest Neighborhood Association),” an environmental NPO that promotes the widespread use of the “Forest Thinning Support Paper,” and offered no support or collaboration to other such organizations. As the targets for fiscal 2011, we are working to (1) further upgrade the programs of the foundation and enhance the PR activities, (2) promote the planning and examination of Group-wide initiatives to encourage activities to contribute to local communities, and (3) realize collaboration with NGOs/NPOs within fiscal 2011 by, if necessary, including non-environmental organizations. In addition to these initiatives, we will enhance support to the volunteer activities of our employees as part of the SWITCH Plus Campaign, which aims to improve both private and business life by making a clear distinction between work and life. We also plan to design and discuss a program that symbolizes the social contribution of the Sumitomo Electric Group.


● Consider specific measures for the activation of local contribution activities● Take concrete actions to support environmental NPOs

● Increase monetary contributions to university courses, scholarships and grants to academic and research activities supplied through the fund

●Consider and take specific measures for the activation of local contribution activities of the Sumitomo Electric Group

● Take concrete actions to support NPOs mainly in the environmental field


Substantial Increases in the Numbers of the Monetary Contributions, Subsidies and Scholarships Supplied

Promoting Community-oriented Social Contribution Programs in Japan and Overseas

Relationship with Society

Glossary ＊ Public interest incorporated foundationIn accordance with the law enacted on December 1, 2008 as a result of the reform of public interest incorporations, the general interest incorporated foundations operated for the specified 23 kinds of business for public interest purposes may be authorized as public interest incorporated foundations.

To promote more active and visible social contribution activities


Results in FY2010


Kazunori Tokuda Manager of the CSR Promotion Office, HR & Administration Department

● Expanded the activities of the SEI Group CSR Foundation● Increased monetary contributions to university courses to 84 million yen in total for 6 courses

● Increased the recipients of scholarships to 8 persons in Japan and 40 persons overseas● Provided subsidies of 20 million yen in total for 16 academic and research programs

● Launched “Smile Relay” in May 2011●Continuously supported an environmental NPO “Morino Chonai-Kai (Forest Neighborhood Association)”


Social Contribution

Activities of the SEI Group CSR Foundation, a public interest incorporated foundation

Stipulation of the Sumitomo Electric Group Basic Policies on Social ContributionsSumitomo Electric stipulated the Sumitomo Electric Group Basic Policies on Social Contributions on the occasion of the 110th anniversary of its founding in 2007. Under the Basic Policies, we are committed to the social contribution activities suitable for the Sumitomo Electric Group, which is aiming to be a “Glorious Excellent Company,” with focus on contributions to local communities, promotion of research and learning, human resource development, and support of volunteer activities.

DonationsOther than the monetary contributions to the SEI Group CSR Foundation, Sumitomo Electric is also making donations in a wide range of fields such as school and education, industrial and academic development, research and development, arts and culture, welfare, local development, environmental conservation and sports. In fiscal 2010, we offered monetary support to art and cultural activities including an orchestra and opera performance, and donations to a university foundation and the establishment of a university hall. We also donated to important social activities such as the renovation of relief and rehabilitation facilities and other welfare projects, and to environmental conservation programs including the project to conserve the Tadasu-no-Mori forest in Shimogamo Shrine (World Heritage site).

In fiscal 2010, the SEI Group CSR Foundation received contributions of 533.5 million yen in total from Sumitomo Electric and Sumitomo Wiring Systems (400 million yen appropriated for its endowment and 133.5 million yen for operation), and (1) donated 84 million yen in total to university courses, (2) supplied subsidies of 20 million yen in total to academic and research activities, and (3) provided scholarships of approximately 10 million yen in total for 8 foreign students learning in Japan and 40 local students studying at overseas universities. We started to invite applicants to 2 of the 3 programs in fiscal 2010, namely the programs to provide monetary contributions to university courses and to support academic and research activities, and received about 70 applications. Out of them, we have selected the 6 university courses (listed below) that are significant for the solution of key challenges in the modern era such as environmental problems, food crisis and aging of the society, and 16 research programs including basic science research that needs research funds and embryonic research by young researchers, and offered donations and subsidies to them.

● “Laboratory of plant Bioengineering for Bioenergy” and“Manufacturing engineer and researcher training course” at Osaka University

● “Solution stady of plant biomass” and “Nano-Interface Photonics Institute” at Kyoto University

● “Power frontier course” at the University of Tokyo● “Research on neuroimaging” at Tohoku University

Volunteer ActivitiesIn April 2007, we introduced a volunteer holiday system, which allows employees to take cumulative paid holidays＊ (up to 10 days in a year) for performing volunteer activities. Furthermore, in September of the same year, we adopted a system in which employees can make monetary donations through our welfare system (cafeteria plan) to welfare- and environment-related public utility corporations, such as the Japanese Red Cross Society, and towards support for the victims of disasters including earthquakes. At the same time, we also adopted a matching gift system to concurrently donate an amount equal to the donation made by an

Total number(persons)

UNICEF 424,152 66Japanese Red Cross Society 2,322,180 183

World Wide Fund for Nature (WWF) 152,028 29

New Zealand Earthquake 3,187,256 336

Great East Japan Earthquake 22,051,238 1,621

Total 28,136,854 2,235

Donation amount(yen)

Amount of Donations by Category (Sumitomo Electric alone)

Total527,643,344 yenThe SEI Group

CSR Foundation433,500,000 yen

Industrial and academic development44,955,000 yen

Welfare projects17,974,344 yen

Schools and education12,170,000 yen

Environmental conservation4,000,000 yen

Sports, arts and culture4,140,000 yen

Local development2,642,000 yen

Other8,262,000 yen

Other than the foundation94,143,344 yen

Relationship with

Society

Glossary ＊ Cumulative paid holidaysThis system allows employees to use expired paid holidays, up to 10 days in a year (up to 50 days in total), for the reasons specified by the company rules including sick leave, childcare and nursing of sick family members.

The Sumitomo Electric Group will proactively address voluntary social action programs, as a member of society, focusing on “respect for human resources,” “attaching importance to technology,” and “creating a better society and environment” in accordance with the Sumitomo Spirit and the Sumitomo Electric Group Corporate Principles, as well as widely contributing to society through its business activities, including the provision of products, technologies and services that benefit society.● Globally promote efforts toward the development of human resources, the promotion of research and learning and environmental conservation.

● Promote community-oriented social contribution activities in the Group's business locations all over the world.

● Provide continuous support to employees' voluntary social contributions.

The Sumitomo Electric Group Basic Policies on Social Contributions

Results of contributions through the cafeteria plan in fiscal 2010

Social Contribution


(Note) Sumitomo Electric + 65 Group companies in Japan (including Tokai Rubber Industries, Ltd., Nissin Electric Co., Ltd. and Sumitomo Densetsu Co., Ltd. and 10 companies to which the equity accounting method is applied)

Supporting education and training

Sumitomo Electric (Osaka Works): Organizing a little league baseball tournament in July and a ground golf competition in OctoberSumitomo Electric (Osaka Works) and Sumiden Material Processing Co., Ltd.: Supporting the management of the 2nd International Disabled Table Tennis Tournament by Class in NovemberSumitomo Electric (Itami Works): Jointly organizing athletic practice sessions for junior high school students in Itami City (four sessions in a year), and organizing a nine-player volleyball tournament in NovemberSumitomo Electric (Yokohama Works): Supporting a basketball championship for persons with intellectual disability (five times in a year)Sumitomo Electric Fine Polymer, Inc.: Supporting the management of the 21st Kumatori Road Race in Kumatori Town in March 2011Bay Communications Inc.: Organizing the Bay Com Junior Soccer Competition in November

Contributing to local sports activities

Nine-player volleyball tournament

Contributions to Local CommunitiesTo build harmonious relations with local communities, the Sumitomo Electric Group implements various activities at each domestic site. Main activities in fiscal 2010 include the following:

Promoting community support activities

● Inviting local residents and students (from elementary, junior high and high schools) on plant toursPerformed by 9 companies including Sumitomo Electric Wintec, Inc. among the 66 participating companies

● Opening company sites to the publicSumitomo Electric (Osaka Works): Rose garden excursion to invite approximately 100 people from local community associations and neighboring local communities in NovemberHokkaido Sumiden Precision, Co., Ltd. and Hokkaido Electric Industries Ltd.: Organizing Shibazakura Festival in May

● Supporting and participating in regional events in neighboring local communitiesSumitomo Electric (Itami Works): Support of Danjiri Mikoshi Festival in Itami City in October

● Publishing local community magazinesSumitomo Electric (Osaka, Itami and Yokohama Works)

Strengthening communication with local communities

On-site science class “Assemble a battery” at Baika Junior High School

Rose garden excursion

Local cleaning activities by Sumiden Electronics, Ltd.

● Accepting participation of students and teachers in hands-on training programs at our worksitesNippon ITF, Inc.: Accepting participation in a hands-on learning program at the worksite in November 2010 and February 2011SEI Optifrontier Co., Ltd.: Accepting participation in a hands-on training program at the worksite in July and OctoberAccepted by 18 of the 66 participating companies including the companies mentioned above

● Holding on-site science classes at schools and accepting off-campus classes at our worksitesSumitomo Electric (Osaka Works): “Assemble a battery” at Baika Junior High School in Osaka City in DecemberSumitomo Electric (Itami Works): Hands-on class for 26 junior high school students in Itami City in AugustSumitomo Electric (Yokohama Works): “Principles of Optical Communications” at Kanai High School in Kanagawa Prefecture in March 2011Sumitomo Wiring Systems, Ltd.: On-site science class at Nishiasake Junior High School in Yokkaichi City in January 2011Nissin Electric Co., Ltd.: Science class at Matsuo Elementary School in Kyoto City in August

● Local cleaning activities, promotion of greening, environmental conservation activities, etc.Sumiden Electronics, Ltd.: Cleanup of prefectural and city roads around the company in OctoberSumiden Fine Conductors Co., Ltd.: Monthly cleanup of public roads and side ditches around the companyCleanup activities are performed in 33 of the 66 participating companies (Note) including the companies mentioned above.

● Supporting local disaster-prevention and safety activitiesSumitomo Electric (Yokohama Works): Participation in an emergency drill by 3 neighborhood associations of Sakae Ward in January 2011Axismateria Ltd.: Participation in a private fire brigade competition organized by Ono Fire Protection Association

● Opening corporate facilities (sports grounds, gyms etc.) to the publicSumitomo Electric (Itami Works): Offering the gym to the volleyball teams of five local autonomies in the neighborhoodA.L.M.T. Corp.: Offering the sports ground to little league baseball teams, etc. from April to October


Pray for Japan from South AfricaSouth Africa

At SEWS South Africa, soon after the Great East Japan Earthquake on March 11, employees of the company proposed sending donations to help disaster victims, and launched fund-raising activities. They also purchased charity T-shirts (about 80% of the sales are used as aid money) for all employees to wear the shirts on casual days. Combined with payment to the charity T-shirts, the company and its emp loyees donated approximately 280,000 yen i n tota l to he lp victims of the earthquake and tsunamis.

Ms. Brenda (left) and Ms. Eustacia (right), who played central roles in the activities

Courtesy visit to old people's homeZhongshan City, Guangdong Province, China

On the day of the Chung Yeung Festival (Respect-for-Senior-Citizens Day in China) in September 2010, voluntary Zhongshan Sumiden Hybrid Products Co., Ltd. employees visited the old people's home in Zhongshan Torch High-tech Industrial Development Zone. They performed songs and dance for about 40 of the residents in the home.

Occupational experience program for junior high school studentsSingapore

In October 2010, four Sumitomo Electr ic Group companies in Singapore each accepted a second-year junior high school student from a local Japanese school, for occupational experience. At one of the companies, Sumitomo Electric International (Singapore) Pte. Ltd., the s tudent s ta r ted her wo r k i n g da y w i t h a briefing at 9:00, followed by invoice issuance and o the r du t i e s i n t he Accounting Department. The students seemed to be enjoying their first work experience.

Bon festival dance together with local peopleKentucky, USA

Many employees of Sumitomo Electric Wiring Systems, Inc. participated in the International Festival held in September 2010 in Bowling Green City, Kentucky, enjoying the Bon festival dance with local people.

Our Activities around the World

http://global-sei.com/smile/URL

Relationship with

Society

Sumitomo Electric opened “Sumitomo Electric Group Citizenship Activity Smile Relay,” a blog to introduce community-based corporate citizen activities performed by our Group companies and their employees, on our website in May 2011. This blog reports various efforts in Japan and other countries and also introduces characteristic features of each country and region in the words of personnel working there, as well as their opinions and comments. Some of our overseas activities published in the Smile Relay blog and our Group Newsletter are presented below.


■ GRI Content Index

1. Strategy and Analysis

GRI Section No. Description Page No.

1.1 3-6

Description of key impacts, risks and opportunities1.2 3-6,13-16

2. Organization Profile

3. Report Parameters

4. Governance, Commitments and Engagement

Name of the organization2.1 9Primary brands, products and/or services2.2Operational structure of the organization2.3 10

11-12

Location of organization's headquarters2.4Number of countries where the organization operates, and names of countries that are specifically relevant

2.5 109

Nature of ownership and legal form2.6Markets served2.7 9-10

9-10

Scale of the reporting organization2.8Significant changes during the reporting period2.9 No change

9-10

Awards received in the reporting period2.10 66

■ Report profileReporting period for information provided3.1 1Issued date of most recent previous report3.2 1Reporting cycle3.3Contact point for questions regarding the report or its contents3.4 Back cover

1

■ GRI content indexTable identifying the location of the Standard Disclosures in the report3.12 65

■ AssurancePolicy and current practice with regard to seeking external assurance for the report3.13 67

■ Report scope and boundaryProcess for defining report content3.5 25-26Boundary of the report3.6 1Limitations on the scope or boundary of the report3.7Basis for reporting on other entities3.8 1

1

Data measurement techniques and the bases of calculations3.9 Noted in each tableExplanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

3.10 N/A

Significant changes from previous reporting periods3.11 No change

■ GovernanceGovernance structure4.1 17Whether the Chair of the highest governance body is also an executive officer4.2 17The number and gender of members of the highest governance body that are independent and/or non-executive members

4.3 17

Linkage between compensation for members executives and the organization's performance

4.5 17

Processes in place for the highest governance body to ensure conflicts of interest are avoided

4.6 17

Statements of mission or values, codes of conduct, and principles4.8 7-8

Processes for evaluating the highest governance body's own performance4.10 23

Process for determining the composition, qualifications and expertise of the members of the highest governance body and its committees

4.7 17

Procedures of the highest governance body for overseeing the organization's economic, environmental and social performance

4.9 23

Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body

4.4 21,51

■ Commitments to external initiativesThe precautionary approach or principle addressed by the organization4.11 18,30-44Economic, environmental and social charters, principles or other initiatives4.12 44Memberships in associations and/or national/international advocacy organizations

4.13 KeidanrenJapan Association of Corporate ExecutivesKansai Economic FederationInternational Wrought Copper CouncilJapan Wrought Copper CouncilJapanese Electric Wire & Cable Makers’ AssociationJapan Productivity Center

■ Stakeholder engagementList of stakeholder groups4.14 25Basis for identification and selection of stakeholders4.15 25Approaches to stakeholder engagement4.16 25

4.17 25-26

Economic

■ Economic performanceManagement Approach 3-6,9

Direct economic value generated and distributedEC1 9-10Financial implications and other risks and opportunities due to climate changeEC2 31-32

■ Indirect economic impactsInfrastructure investments and services provided for public benefitEC8 62-63

EnvironmentalManagement Approach 27-31,33,50

■ MaterialsMaterials used by weight or volumeEN1 34

■ WaterTotal water withdrawal by sourceEN8 34,40

■ BiodiversityStrategies, current actions and future plans for managing impacts on biodiversityEN14 44

■ ComplianceNon-compliance with environmental laws and regulationsEN28 31

■ TransportEnvironmental impacts of transporting products and other goods and materials and transporting members of the workforce

EN29 35,38

■ OverallTotal environmental protection expenditures and investments by typeEN30 31-32

■ EnergyDirect energy consumption by primary energy sourceEN3 34.36Indirect energy consumption by primary energy sourceEN4 34,36-37Energy saved due to conservation and efficiency improvements 36Energy-efficient or renewable energy based products and services 13-16,43Initiatives to reduce indirect energy consumption and reductions achieved 38

EN6EN7

EN5

■ Emissions, effluents and wasteTotal direct and indirect greenhouse gas emissionsEN16 34-37Other relevant indirect greenhouse gas emissionsEN17 35,38

■ Products and servicesInitiatives to mitigate environmental impacts of products and servicesEN26 13-16,43Percentage of products sold and their packaging materials that are reclaimedEN27 40

Initiatives to reduce greenhouse gas emissions and reductions achieved 13-16,34-38,43Emissions of ozone-depleting substances 34,36NOx, SOx and other significant air emissions 34Total water discharge 34Total weight of waste 34,39Total number and volume of significant spills 41

EN19EN20EN21EN22

EN18

EN23

Labor Practices and Decent Work

■ EmploymentManagement Approach 48-52,54,57-58

Total workforce by employment type, employment contract and regionLA1 52-53

Human Rights

■ Investment and procurement practicesDisclosure on Management Approach 48-50,52,54

■ Training and educationAverage hours of training per year per employeeLA10 57

■ Diversity and equal opportunityComposition of governance bodies and breakdown of employeesLA13 53

■ Occupational health and safetyRates of injury, occupational diseases, lost days and absenteeism, and total number of work-related fatalities

LA7 60

Assistance programs regarding serious diseasesLA8 56Health and safety topics covered in formal agreements with trade unionsLA9 54

Significant suppliers, etc. that have undergone human rights screeningHR2 48-50Total hours of employee training on policies and procedures concerning aspects of human rights

HR3 54

Society

■ CorruptionManagement Approach 23,61-64

Percentage and total number of business units analyzed for risks related to corruption

SO2 19-20,22

Percentage of employees trained in organization's anti-corruption policies and procedures

SO3 19-20,22

■ Marketing communicationsAdherence to laws, standards and voluntary codes related to marketing communications

PR6 21

Total number of incidents of non-compliance concerning marketing communications

PR7 N/A

Product Responsibility

■ Customer health and safetyDisclosure on Management Approach 23,45-47

Health and safety impacts of products and servicesPR1 42,46■ Product and service labeling

Practices related to customer satisfactionPR5 46-47

■ Public policyPublic policy positions and participation in public policy development and lobbyingSO5 N/A

■ Anti-competitive behaviorLegal actions for anti-competitive behavior, etc.SO7 19

■ ComplianceNon-compliance with laws and regulationsSO8 19

■ ComplianceNon-compliance with laws and regulations concerning the provision and use of products and services

PR9 N/A

This report complies with Global Reporting Initiative (GRI) Sustainability Reporting Guidelines Versions 3.1 (G3.1). It corresponds to GRI Application Level B+, and has undergone a third party assurance process.

Report Application Level

G3 Performance Indicators & Sector Supplement Performance Indicators

Report on:1.12.1- 2.103.1- 3.8 3.10 - 3.124.1- 4.4 4.14 - 4.15

Report on all criteria listed for Level C plus:1.23.9 , 3.134.5 - 4.13 4.16 - 4.17

Same as requirement for Level B

Not Required

＊Sector supplement in final version

C C+ B+ A+B A

G3 ProfileDisclosures

G3 Management Approach Disclosures O

UTPUT

OUTPUT

OUTPUT

Report fully on a minimum of 10 Performance Indicators, including at least one from each of: Economic, Social and Environmental.

Stan

dard D

isclos

ures

Repo

rt Externa

lly Assured

Management Approach Disclosures for each Indicator Category

Management Approach Disclosures for each Indicator Category

Report on a minimum of 20 Performance Indicators, at least one from each of: Economic, Environmental, Human rights, Labor, Society, Product Responsibility.

Repo

rt Externa

lly Assured

Respond on each core G3 and Sector Supplement＊ Indicator with due regard to the Materiality Principle by either: a) reporting on the Indicator or b) explaining the reason for its omission.

Repo

rt Externa

lly Assured

GRI Section No. Description Page No.

Statement from the most senior decision maker about the relevance of sustainability to the organization and its strategy

Key topics that have been raised through stakeholder engagement, and how the organization has responded to those key topics


■ Commendation

Date Description

We organize “Top Spinning Championship” to encourage children, who will shoulder the future, to become more interested in manufacturing. This initiative received the Award for 2010 Excellent Performance from Japanese Society for Engineering Education. In “Top Spinning Championship,” students craft spinning tops with using three sizes of paper, matches and toothpicks, and compete by measuring the spinning time of their tops. Spinning tops are familiar “industrial products” for junior high school students. In this program, by producing the tops in teams by trial and error and competing for their performance, the students can naturally learn the joy of using ingenuity, the significance of analyzing results and taking countermeasures and competitive spirit as a team member. These aspects were recognized as worthy of the award.

Ken-ichi Sato, research fellow of Sumitomo Electric, received Excellence Award of Ninth Japan Innovators Award of Nikkei BP

Received the 55th Shibusawa Award from the Japan Electric Association for the development of high voltage module

Won “Osaka Branch Award” at the Kinki Local Commendation for Invention for composite wire for wire harnesses and its manufacturing method

“Manufacturing method of composite magnetic materials” won the Osaka Outstanding Invention Award

Masayoshi Matsumoto, President and CEO of Sumitomo Electric, received a Medal of the Dynasty from the Kingdom of Morocco

August

October

November

Won the Quality and Delivery Awards of Honda Automobile (Thailand) Co., Ltd.April

Yokohama Works of Sumitomo Electric received Class-2 Zero-Accident Record Certificate from Ministry of Health, Labor and Welfare

Won “Excellent Quality Award” of Huawei Technologies Co., Ltd. (China)

Itami Works of Sumitomo Electric received the “19th Hyogo Prefecture Environment-Friendly Business Award”

Received Volkswagen Group Award 2010 from Volkswagen AG (Germany)

June Received Excellence in Quality Award 2009 from Fiat Automoveis s.a. (Brazil)

Received a letter of appreciation from the Kansai Branch Office of West Nippon Expressway Co., Ltd., in recognition of the traffic information equipment installation project we undertook for the section between Hirakata East and Kadoma Junction of the Second Keihan (Kyoto-Osaka) Expressway

January

May

2010

2011

Information Processing Month Promotion Committee (Ministry of Economy, Trade and Industry, Cabinet Office, Ministry of Internal Affairs and Communications, Ministry of Finance, Ministry of Education, Culture, Sports, Science and Technology and Ministry of Land, Infrastructure, Transport and Tourism) gave Information Processing Month Promotion Committee Chair's Award 2010 to “Rakuraku Framework II” of Sumitomo Electric. “Rakuraku Framework II” is web application development infrastructure that allows the improvement of quality and productivity and cost reduction in a wide range of phases from system design to maintenance, and has been introduced by 220 companies, most of which are large firms. Its high safety, reliability and productivity have been demonstrated. The product was honored with the award for these reasons.

Won Effort Prizes of Japan Powder Metallurgy Association Awards 2010

Received a letter of appreciation from the Safety Council in the jurisdiction of the Kansai Branch Office of West Nippon Expressway Co., Ltd., in recognition of the traffic information equipment installation project we undertook for the section between Hirakata East and Kadoma Junction of the Second Keihan (Kyoto-Osaka) Expressway as well as the quality control

Masayoshi Matsumoto, President and CEO of Sumitomo Electric, selected as the Copper Man of the Year 2011

JuneThe Award was presented for his significant contribution to the development of the copper industry. More specifically, he has established a supply system in order to respond to global needs, and increased copper usage in automotive, electronics and electric wire and cable applications. He is also recognized for his strong leadership in the industry, serving as the vice chairperson of the International Wrought Copper Council (IWCC).

The honor was presented in recognition of Sumitomo Electric Group's remarkable contribution to Morocco's industrial development. The Group has operated its wiring harness business in Morocco for 10 years, and now has 7 factories and 15,000 employees in total in the country.

“Hands-on Manufacturing Class program for junior high school students” received the Award for 2010 Excellent Performance from Japanese Society for Engineering Education

“Rakuraku Framework II” received the Information Processing Month Promotion Committee Chair's Award 2010


■ Independent Assurance Report


■ Comments from an External Expert

Professor,Faculty of Economics,

Sophia University

Yoshinao Kozuma

● Establishment of the NEXT CenterWith an aim of creating a sustainable society, even more strict environmental policies are being introduced in the world, especially in Europe. Under this situation, the market is being transformed and creating new demand. The NEXT Center is an i n nova t i v e a t t emp t t o f o r e ca s t t he t r end o f s u ch environmentally- fr iendly market. I highly evaluate the establishment as a novel and unique approach typical of Sumitomo Electr ic , which continuously develops new technologies and put them into production for the realization of a sustainable society.

● Diversification of CSR communicationThe President's blog is now in its fifth year. It would be unprecedented that the head of a large company continues to send personal information for such a long term while spending extremely busy life. In addition, Sumitomo Electric launched a blog called Smile Relay as a PR vehicle to introduce the corporate citizen activities of its employees on a global scale. These CSR communication means are good because they show “human faces,” which tend to be unclear in corporate activities.

● Enhancement of the competition law compliance system

The report mentions that the competition law compliance system has been strengthened to eliminate violations of the Antimonopoly Act. Based on the description, Sumitomo Electric seems to be seeking to establish a more rigid organizational structure through internal rules to restrict contact with competitors, formation of dedicated organizations, and development of an auditing system, in addition to general measures such as the formulation of action guidelines and enhancement of training of employees. Nevertheless, it may take a longer time to evaluate the effectiveness.

● Improvement of the work environmentAmong the labor-related initiatives, the SWITCH Plus Campaign is notable. The disclosed data show the solid results of the program such as the decrease in average overtime working hours over time. But the Campaign is not just a corrective measu re aga ins t work ing long hou r s bu t pa r t o f a comprehensive labor management program also aimed at maintaining a good balance between work and private life. It will therefore be necessary to supplement the measurement of the effect with quantitative indicators such as the satisfaction level and turnover rate of the employees.

● Issues related to the initiativesThe number of the key performance indicators (KPIs) on which the Company failed to meet the targets has increased. For example, the performance in the five CSR priority categories dropped in fiscal 2010 with the targets not reached in 9 of the 17 items (5 of the 15 items in the previous fiscal year). Although the items in which the targets were not reached decreased in some initiatives like the Action ECO-21 (Phase Ⅳ) campaign, the performance in the campaign was also insufficient because the goal was to meet the targets in all of the 23 items. In addition, the CO2 emissions reduction rate, which is an important KPI, is on the decrease both in Japan and the whole Group. Furthermore, in the “Survey to Create a Lively Working Environment,” the score leveled off or deteriorated in eight items, which increased from the previous fiscal year's two items. Although the Company started to disclose activities for biodiversity, the content needs to be improved because the important issues cannot be identified without the assessment of biodiversity risks associated with business activities. It is necessary to assess the risks with a view to the entire value chain.

● Issues related to information disclosureIn terms of information disclosure, the report shows progress exemplified by the increase in the number of pages, the increase in disclosure items in the new environmental accounting approach, and more detailed performance evaluation in the five CSR priority categories and the Action ECO-21 (Phase Ⅳ) campaign. However, there is little progress in the disclosure of global labor-related information, to which I also referred last year. As the Global HRM Policy was stipulated in this fiscal year, I hope that Sumitomo Electric also considers the disclosure of information on a Group-wide scale as to such important items as provision o f g loba l oppor tun i t i es , promotion of diversification and cultivation of leaders.

Commendable points Aspects needing improvement

We thank Professor Kozuma for providing suggestive opinions on our Group's CSR activities and information disclosure. The high mark for the establishment of the NEXT Center and the President's blog and the Smile Relay as good CSR communication tools, as well as the high evaluation of our stance in the enhancement of the competition law compliance system and the SWITCH Plus Campaign, is very encouraging for us. On the other hand, Professor Kozuma has also indicated that the number of the KPIs on which we failed to meet the targets has increased. The reason why we started to use the five-point scale, instead of the conventional three-point scale, in the performance evaluation this fiscal year was to reflect our performance on the scores more accurately. We are now working to strengthen our activities to improve quantitative performance such as efforts to improve the CO2 reduction rate and the Survey to Create a Lively Working Environment, which were specifically pointed out by Professor Kozuma. We will also start risk assessment on biodiversity according to the advice. With respect to information disclosure, we received favorable remarks on the increase in the number of pages and the increase in disclosure items in the new environmental accounting approach among others. On the other hand, Professor Kozuma made the same comment on expansion of the scope of disclosure of labor-related information as last year. We will accelerate the development of various personnel systems with the stipulation of the Global HRM Policy, and also continue to make efforts to disclose personnel data as a basis for the development.

Sumitomo Electric's Response to the Findings

My findings on the CSR activities and information disclosure by the Sumitomo Electric Group are as follows:

Hiroyuki Takenaka Executive Vice President and Chairperson of the CSR Committee

The Findings by an Independent Third Party in this English version are a translation of the original text in the Japanese version.

［Published November 2011］

A-（2）-060002

Easy to read universal design fonts that are used

This report is printed using vegetable oil ink

Pr inted on env i ronmenta l ly friendly FSC-certified paper using wood from properly managed forests

Printed on paper made with wood f r om fo re s t t h i nn i ng . “Mor i no Chonai-Kai” (Forest Neighborhood Association) _Supporting sound forest management

Printed by waterless p r i n t i n g me t hod , which produces no hazardous wastes

S um i t omo E l e c t r i c supports an initiative to p rese rve fo res t s by promoting the use of domestic timber

HR & Administration Department (CSR Promotion Office) 3-9-1, Shibaura, Minato-ku, Tokyo, 108-8539 JAPAN Phone: +81-3-6722-3126 Fax: +81-3-6722-3109［URL］http://global-sei.com/csr/　［E-mail］[email protected]

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