Corporate Social Responsibility (CSR) / Environmental and Social Report 2015

Toward the final year of Ortus Stage 1

In 2014, we announced a new long-term vision, the targets of which are consolidated net sales of ¥1 trillion, an operating margin of 10%, a return on capital employed (ROCE) of at least 10% and an overseas sales ratio of 50% or higher, by fiscal year 2023, ending March 31, 2023. We also embarked on a new medium-term business plan, Ortus Stage 1, which we have positioned as the first step in our drive to attain the targets of our long-term vision. Since then, we have reported consistently robust operating results, with both operating income and net income attributable to owners of the parent reaching record highs in fiscal year 2016, ended March 31, 2016, the second year of the plan.

Fiscal year 2017, ending March 31, 2017, is the final year of Ortus Stage 1. We continue to press ahead with a variety of initiatives in line with the plan’s transformation and growth strategies (the latter summarized simply as “innovation,” “globalization,” and “M&A”), with the aim of further enhancing corporate value.

Owing to an increase in the stake held by Mitsubishi Chemical Holdings Corporation (MCHC) to 50.6%, in November 2014 our relationship with MCHC changed from that of equity-method affiliate to that of consolidated subsidiary. Looking ahead, we will maintain our status as a listed company with independent management, while at the same time capitalizing on our role as a member of the MCHC Group, which we expect to yield broad synergies.

President CEO

Yujiro Ichihara

President CEO

Reinforcing corporate governance, the foundation of effective corporate management

From the perspective of ensuring sustainable growth for the Taiyo Nippon Sanso Group and increasing corporate value over the long term, we continue striving to fortify our system of corporate governance. In October 2015, we formulated our own internal corporate governance principles.

To strengthen the Board of Directors’ management supervisory function, in April 2016 we introduced a framework whereby the Board is chaired by a director who does not have representative rights. We also continue to promote efforts to enhance the transparency and fairness of processes involved in nominating and determining remuneration for directors. In June 2016, we established the Advisory Committee on Appointments and Remuneration, a discretionary advisory body that includes independent outside directors, which is charged with advising the Board of Directors on these matters.

Recognizing compliance as central to robust corporate governance, we have created the position of Chief Compliance Officer (CCO) and in July 2015 established the Internal Control Office. We are also reinforcing systems designed to facilitate the swift detection, tracing and correction of compliance violations, as well as the formulation of measures to prevent their recurrence. Additionally, we have appointed persons to promote compliance in individual divisions in an effort to bolster compliance training Groupwide and promote the observance of laws and regulations.

Addressing key social imperatives by ensuring safe and stable supplies of industrial gases

Industrial gases are crucial to customers in a wide range of areas, from core industries such as steel and chemicals to electronics, medicine and other cutting-edge industries. To ensure safe, stable supplies of such gases, we enforce the stringent management of technological risks associated with security, product quality and safety, the environment and intellectual property, while at the same time working to address key social imperatives by leveraging the distinctive gas technologies we have amassed over the years, allowing us to provide our many stakeholders with solutions that help them minimize their impact on the environment, reduce energy consumption and improve production efficiency.

Industrial gases also include medical-use oxygen and nitrogen used to prevent explosions at chemicals plants and other such facilities. We have established a supply configuration that prioritizes the delivery of products that save lives in the event of a disaster.

The MCHC Group is implementing a diverse range of initiatives in line with its KAITEKI concept, which describes “a sustainable condition which is comfortable for people, society and the earth.” Going forward, we will continue working to ensure sustainable growth and increase corporate value not only by assisting customers who use industrial gases to resolve the challenges they face, but also by doing our part to tackle the challenges facing our planet and society.

It is my hope that readers find this report on the Taiyo Nippon Sanso Group’s environmental and social initiatives both informative and interesting.

October 2016

Yujiro Ichihara
President CEO

President’s Basic Policy on Technological Risk Management

To fulfill the responsibilities implied in our corporate slogan, “The Gas Professionals,” we recognize that we have an obligation to ensure stringent compliance with pertinent laws and regulations and to prioritize the management of key technological risks, i.e., risks related to security, product quality, product safety, the environment and intellectual property. Accordingly, we have formulated the President’s Basic Policy on Technological Risk Management.

We will continue taking steps to minimize such risks and to enhance customer satisfaction across all areas of our operations. These include ensuring the President’s Basic Policy on Technological Risk Management is fully understood and applied by every Taiyo Nippon Sanso Group employee, as well as formulating and implementing a Groupwide technological risk management system and effective business continuity planning (BCP) to guarantee critical operations are maintained in the event of a disruption caused by an earthquake or other major disaster. At the same time, we will work to contribute to greater public safety and environmental preservation, thereby earning the trust of society at large, ensuring the sound growth of our businesses and building greater corporate value.

Safety: Implement decisive, practical measures to ensure the safety of our operations, in line with our belief that selling gas is commensurate with selling safety and peace of mind.
Product quality: Accurately grasp the increasingly sophisticated and diverse customer needs and social imperatives and respond by ensuring optimum product quality.
Product safety: Minimize safety risks at all stages of the product life cycle to ensure the safety and security of the products we supply.
Environment: Take steps to reduce the negative impact of our operations on the global environment and to prevent pollution.
Intellectual property: Obtain and make use of intellectual property rights as necessary to preclude competition with other companies.

(As of June 27, 2014)

Corporate Philosophy "Market-driven collaborative innovation:improving the future through gases"
Corporate Guidelines Progressive United in creativity Forward looking

We pledge to listen to the views of stakeholders and to contribute—through both our gas technologies and collaboration with partners in all industries—to the creation of a spiritually and materially wealthy society.

Corporate Slogan The Gas Professionals

Striving tirelessly to fulfill our potential as industrial gas professionals and as the global leader in this field in terms of both market position and expertise

Corporate Logo
TAIYO NIPPON SANSO The Gas Professionals

Taiyo Nippon Sanso’s corporate logo represents the seamless integration of state-of-the-art technology and nature, as well as the Company’s business domain, founded on its advanced technologies for controlling oxygen, nitrogen, argon and other gases. The logo also evokes the Company’s resolve to achieve growth through superior quality and transparency and to ensure a future that is clean, safe and healthy.