Third-Party Comments Regarding CSR Report 2011

Following on from last year, I would like to offer the following third-party comments about the Mitsui Chemicals Group's CSR activities as I understand them based on this report, in my capacity as someone who provides financial institutions with corporate information for the purposes of socially responsible investment.

Last year, I encouraged the Mitsui Chemicals Group to set out a specific scenario for the long-term reduction of greenhouse gases. To its credit, the Group has responded by setting itself the groundbreaking target of reducing overall greenhouse gas emissions by 500,000 tons, compared to levels in fiscal 1991, by the end of fiscal 2014, as part of its Mid-Term Business Plan from fiscal 2012 onwards.
In light of the Group's power-saving measures, including generating all of the power needed to run its Ichihara Works in-house and supplying any surplus to the local power company, achieving this target will be no easy matter. Nonetheless, I have high hopes that the Group will be able to achieve its overall target in the future, through initiatives such as the practical application of CO2 fixation technology (synthesizing methanol from CO2), via its test plant, and biomass-based chemical synthesis using E. coli bacteria.
In terms of chemical management, the report states that the Group intends to conduct risk assessments in fiscal 2012, starting with high priority products. Given that the general view around the world is that we need to minimize the harmful effects of chemicals on people and the environment by the year 2020, this is clearly a major priority for the chemical industry. I would encourage the Mitsui Chemicals Group to take this as an opportunity to integrate its efforts to protect biodiversity into risk assessments.
The fact that the Group was unable to meet its target for the number of accidents in the workplace during fiscal 2011 is cause for concern. I was fascinated by the contents of STORY 01 however, which openly acknowledged the “contradiction between evolving plants and manufacturing on the shop floor” and carefully outlined efforts to organize training for operating staff. Providing details of the impact of such initiatives, in terms of raising awareness amongst operating staff for instance, would give readers a better understanding in the future.
The detailed section on the number of days off due to illness is excellent, and really sets the Group apart from other companies. I couldn't help noticing however that the number of days off has remained at a fairly high level in recent years. Outlining the underlying reasons and measures being taken would help to make this section more reassuring.
Finally, I would like to point out that the Group's overseas operations have grown in scale since last year, with overseas sales now accounting for over 40% and employees at consolidated subsidiaries in other countries accounting for over 20%. Bearing that in mind, there is a sense that the scope of this year's report is weighted somewhat towards Mitsui Chemicals on standalone basis. Also, there is no mention of factors such as nationality in the section on “Respect for Diversity and Individuality”. From next year onwards, I would like to see more detailed information about matters such as initiatives in overseas markets, activities at consolidated subsidiaries in other countries, and the Group's philosophy on global human resources.

These comments draw no conclusions regarding the accuracy of this report, including whether or not figures have been recorded and calculated in accordance with generally accepted environmental reporting standards, and whether or not any material facts have been omitted.

This is the second year that I have provided third-party comments regarding the Mitsui Chemicals Group's CSR Report. I feel that the Group has made significant improvements in the following two areas compared to last year's report.
First, as mentioned in the opening message from the President, the Group has changed its greenhouse gas emissions targets from specific consumption to overall emissions, as part of its new Mid-Term Business Plan starting in fiscal 2012. The Group has set itself the new target of reducing greenhouse gas emissions by 9% (500,000 tons), compared to levels in fiscal 1991, by fiscal 2014. As it is common practice to measure greenhouse gas reductions based on specific consumption in the chemical industry, this really underlines the Mitsui Chemicals Group's determination to help reduce emissions throughout society, by promoting energy saving initiatives, developing innovative processes and technologies, and expanding its range of environmentally friendly products. The Group deserves the utmost praise for introducing targets based on overall emissions, especially given that it has already surpassed its existing specific consumption targets.

Second, the Group has revised its CSR reporting policy, opting to publish a detailed report on its website and restrict its printed version to priority areas that are of particular interest to stakeholders. Whereas it is common for companies to publish an online report accompanied by an abridged printed version, this approach runs the risk of failing to sufficiently disclose information. If a company is really thinking about CSR communication with its stakeholders, then it is a far better approach to keep its printed CSR report separate from its online version, so that it is worth reading on its own. It is clear that the Mitsui Chemicals Group has thought long and hard about the purpose of communication, as reflected in the fact that it has changed the title of its printed report to “CSR Communication 2011”.
Elsewhere, the Group has taken steps such as publishing figures for the number of male employees taking childcare leave, in response to comments regarding last year's report. Although this is a detail, it still worthy of recognition because it reflects the Group's commitment to two-way communication. It is also worth noting the Group's focus on frontline operations and determination to contribute to society through its main business activities are once again evident throughout, as with last year's report.

On the other hand, I would like to make recommendations in the following two areas.
Firstly, I would like to see the Group providing specific guidance and more in-depth advice regarding the selection of suppliers based on CSR credentials. That is an essential step in order to build stronger partnerships with suppliers. As part of the selection process, the Mitsui Chemicals Group currently asks suppliers to complete a 20-question CSR Procurement Survey, and then provides feedback and suggestions regarding improvements based on the results. The Group's suppliers however presumably include some companies whose operations are on a smaller scale. In some cases, companies like that struggle to put in place the necessary management systems to ensure legal compliance and implement CSR initiatives, as a result of limited human resources and expertise. Although the process of selecting suppliers based on their CSR credentials is important, it would also be beneficial to the Mitsui Chemicals Group's CSR activities to take things a step further, by reaching out to potential suppliers with insufficient CSR capabilities and working with them to come up with specific improvements. I would like to see the Group taking action along those lines in the future.
Second, as I recommended last year, I would still like to see the Mitsui Chemicals Group setting out a roadmap for employment diversity, even if it just a broad outline. The Group has once again achieved the legally required rate of disabled employment this year and is continuing to increase the number of female employees in managerial positions every year. Although these are worthy achievements, still there is not much information relating to employment diversity in this year's report. There are some points that are unclear, such as what career development support for female employees actually entails, and what level targets are set at. I hope to see improvements in this area in next year's report.