Shin-Etsu Group Key ESG Issues

The Shin-Etsu Group recognizes the challenges, risks, and opportunities of all key ESG issues and addresses them accordingly.

Key ESG Issues Awareness of Issues Major Risks and Opportunities Policies and Approaches
The foundation of all activities: legal compliance, fair corporate activities The Group's business principle states that "the Group strictly complies with all laws and regulations, conducts fair business practices and creates unrivaled value for society and industry through the provision of key materials and technologies." Compliance with laws and regulations and fair corporate activities are the foundation of all of our activities.
We are working on the long-term development of the Group by not only legal compliance, but also the efforts of each employee to engage in their daily work with a strong sense of ethics as a code of conduct.
Risks Policy
・Impact of legal violations and improprieties on corporate management.
・Damage to corporate value due to loss of trust from society.
The Group will fully comply with all laws and regulations and conduct business fairly.
Opportunities Basic Approach
・Ensuring thorough legal compliance and fair corporate activities leads to:
(1) Formation of the foundation of corporate value
(2) Elimination of risks
(3) Building of customer trust and expansion of business opportunities
(4) Hiring and retaining of excellent human resources
・Demand thorough compliance awareness among officers and employees through training, etc.
・No provision of unfair benefits or demands thoroughly with the aim of preventing corruption
・Regarding the prevention of bribery, ensure No provision of unfair benefits or demands thoroughly, and establish internal rules at each overseas group company
・Cutting ties with anti-social forces
・Compliance with sound business practices with suppliers and service providers
・Support for the
" Declaration of Partnership Building "
Employees and contractors health and safety The Group places top priority on safety. For that, we have created a work environment in which employees can work safely and comfortably. The operations without accidents and disasters protect employees, fulfill our responsibilities as a supplier to customers, and lead to the sustainable development of the company. In recent years, many natural disasters have occurred, and we are addressing them as an important issue. Risks Policy
・Impact of accidents and environmental problems on local communities and employees.
・Damage to equipment caused by typhoons, earthquakes, or other natural disasters.
・Impact of an infectious disease outbreak on operations.
The Group will work to create a comfortable and safe workplace with the goals of achieving "zero accidents" and "zero lost-time accidents."
Opportunities Basic Approach
・Implementing measures to prevent accidents and developing new production processes enable the creation of a safe working environment and the improvement of stable production and higher productivity
・Hiring and retaining excellent human resources
・Continuing operations, shutting down operations, and resuming operations safely by designing the plant in anticipation of a natural disaster and taking measures against risks
・Promoting employee health, achieving a work-life balance, and cultivating a sense of motivation and fulfillment in work
・Safety education for employees through disaster prevention drills and workshops
・Environmental control and safety audits
・Improvement of the workplace environment and promotion of employees' health
Energy-saving, resource-saving and reduction of the environmental impact We recognize that specific measures to combat climate change, the efficient use of limited resources, and a circular economy1 are key issues that companies face.
The Group is committed not only to contributing to the global environment, but also to enhancing our competitiveness and achieving sustainable development through efforts to conserve energy, effectively use resources, and reduce the environmental impact of our manufacturing processes.

1 Circular economy
Economic activities to recycle and circulate existing resources, such as converting waste after use into resources for another business

Risks Policy
・ Additional costs of stricter regulations related to greenhouse gas emissions
・ Price increases and difficulty in procuring raw materials for the quantity needed
・ Increased water risks, such as water depletion and flooding
The Group will further promote energy conservation and the effective use of resources, and work to resolve a variety of environmental issues for the future of the Earth.
Opportunities Basic Approach
・The constant challenge of technological innovation leads to the enhancement of "manufacturing ability".
・Increasing competitiveness by conserving energy and resources, reducing environmental loads, and improving productivity
・Increasing the demand for products that contribute to the environment
・Developing technologies that recycle water, thus contributing to business continuity
・Promoting the reduction of environmental impact
・Waste reduction
・Pollutant countermeasures
・Response to climate change
・Resource recycling
・Water resource conservation and water pollutant elimination
・Conservation of biodiversity initiatives
Product quality improvements and product safety control The Group is working to achieve "zero quality problems."
The superior quality of general-purpose products as well as high-value-added products will lead to non-price competitiveness. In order to ensure a stable supply of products, it is essential that the sales, research, production, quality assurance, and shipment departments fulfill their respective roles. In addition, not only in terms of characteristics, but also in terms of environmental and health safety is an important factor for product quality.
Risks Policy
・Loss of trust due to product quality issues
・Direct or indirect impacts on product safety
The Group will stably provide high-quality products to customers.
Opportunities Basic Approach
・The track record of continuing to deliver products of the promised quality on time will lead to increased customer trust.
・ Sincere efforts to ensure product safety and accumulation of achievements will lead to the trust of customers and society.
・Quality control
・Quality audits and support
・Product safety control
・Promote automation of quality inspections and assurance (reduce personnel involvement)
・Verification of the statistical validity of inspection variations and standard ranges
Promoting CSR procurement and the diversification of supply sources Environment issues and human rights infringement by raw material suppliers are important management risks. We have been working on CSR procurement more than ever before, and we check the fairness of our suppliers' activities based on our CSR Procurement Guidelines. We also recognize that the stable procurement of high-quality raw materials at reasonable prices leads to stable production and high-quality products. Risks Policy
・Impact from not being able to procure raw materials, such as discontinuation of manufacture and shipment delay to customers
・Problems arising in the supply chain
The Group will build a supply chain to conduct fair procurement and to consider the environment.
Opportunities Basic Approach
・Dversifying suppliers enable stable procurement, purchasing at optimal prices, and procurement of raw materials through fair transactions
・Thorough CSR procurement will lead to the trust of customers and society
・Create "Shin-Etsu Group CSR Procurement Guidelines" and revise them as appropriate
・Ensuring compliance with subcontracting laws by attending seminars and conducting internal audits
・Implementing initiatives to eliminate the use of conflict minerals
・Implementing the supplier CSR procurement survey
・ Participation in RSPO "Roundtable on Sustainable Palm Oil"
Respect for human rights, the development of human resources and the promotion of diversity The Group respect for human rights as the basis for all business activities.
Amidst rising global interest in human rights, it is important to comply with this policy and respect the human rights of the Group and all stakeholders. Furthermore, we believe that the development and diversification of human resources is indispensable for the growth of our business and the sustainable development of the Group.
Risks Policy
・Occurrence of human rights infringements in the Group's business activities and supply chain
・Inconsistent effectiveness of human resource development through on-the-job training depending on the department
・Negative impact of performance-based operations, which are closely related to human resource diversity
The Group will respect human rights in all business activities, and promote the development and diversity of human resources.
Opportunities Basic Approach
・Recruitment and stable employment of talented people through business activities based on respect for human rights
・Training employees with excellent practical skills through on-the-job training
・Providing vitality with a corporate culture in which employees set their own goals and take on the challenge of achieving them
・Providing equal opportunities and creating a performance-based evaluation system, thus enabling the recruitment, development, and selection of capable personnel, which leads to business growth and the cultivation of new businesses
・Supporting employee growth through a training system
・Increasing employee motivation through a performance-based personnel evaluation system and equal opportunities
・Promoting diversity
・Enhancing the work-life balance system
・Implementing human rights due diligence
Respect for and protection of intellectual property The Shin-Etsu Group believes intellectual property such as products and technologies developed in-house are important information assets and they need to be controlled strictly. At the same time, we think it is important to respect the intellectual property of other entities.
We are adequately controling information in our possession such as intellectual property, business information, and technology information, and are taking utmost care for measures to counter potential information leakage and cyberattack incidents.
Risks Policy
・The adverse effect on product sales due to infringement of our intellectual property
・Restrictions on our product sales and business due to the patents of other entities
・Impact of cyber-attacks on production, sales, and R&D activities
・Loss of trust in the company due to information leakage
The Group will protect and respect intellectual property and manage information assets appropriately and strictly.
Opportunities Basic Approach
・Promoting product development and unique manufacturing methods by protecting and utilizing our intellectual property
・Contributing to the development of industry and the society by publishing inventions
・Implementing technology innovation and operational reforms by utilizing digital technologies while thoroughly protecting and managing information assets and taking measures against cyber attacks
・Intellectual property management
・Initiatives for information asset management
・Protection of personal information
・Initiatives for cyber security
Contribution to industry and social initiatives In addition to obtaining the understanding of local communities, it is important to develope together with local communities in order to conduct business activities, including manufacturing at our plants. To this end, we are conducting various social contribution activities, such as volunteer activities, at our plants and offices around the world.
At the same time, we support to resolve global issues that cannot be addressed by the Group alone, such as by providing ongoing donations to the UN's refugee support activities.
Risks Policy
・Loss of trust from local communities due to social contribution activities not meeting local needs
・Impact on the world development due to the delay in achieving a sustainable world that the SDGs aim to achieve
The Group will participate in a variety of activities in local communities and work to resolve global issues.
Opportunities Basic Approach
・Creation of employment opportunities, stable employment and tax payment due to business stability
・Building relationships of trust with the local community through dialogue and continuous activities
・Contributing to a better world by addressing SDG issues through business operations
・Contribution to SDGs goals and targets
・Fundraising for the U.N. World Refugee Day
・Summer school for elementary school students
・Traffic safety activities
・Donation of protective clothing and antiseptic solution to local medical institutions
・Social contribution activities at overseas Group companies
Accurate and timely information disclosure and communication with stakeholders The Group recognizes that it is important to gain an accurate understanding of its business and management by disclosing information and communicating with stakeholders. At the same time, we also understand the importance of incorporating the opinions of our stakeholders into our management. We continue to pursue these goals and strive to achieve sustainable growth and increase corporate value. Risks Policy
・Impairment of corporate value through the non-disclosure and inadequate disclosure of information
・Loss of trust from stakeholders and the society due to failure to fulfill accountability
The Group will continue to hold dialogue with stakeholders at every opportunity.
Opportunities Basic Approach
・Creating a fair market evaluation and improving corporate value
・Earning the trust of stakeholders and the society
・Appropriate and timely disclosure of company information
・Communication with stakeholders
・Dialogue with mass media including conference calls with analysts and investors after the announcement of financial results
・ Holding an online exhibition to prevent infection with the COVID-19

Performance and Outcome