CSR InitiativesThird-Party Opinion/In Response to the Third-Party Opinion

Evaluation

Recently, the scope of CSR has been extended beyond corporate social and environmental activities to involve strategies for the entire organization. This is notably demonstrated in the Sustainable Development Goals (SDGs). In that sense, the Kurita Group has acted in line with the broader trend by organizing its management philosophy system and renewing its corporate vision to include a CSR perspective in 2017. The Company has stated its commitment to creating value related to water and the environment and this is clearly reflected in the medium-term management plan, MVP-22, which started in fiscal 2018. We think that the plan aims to further deepen the excellent business model that the Company has followed for 70 years and develop it as a global corporation through a transition from physical sales to providing solutions and the creation of a new business model, among other significant changes. Creating shared value (CSV) is positioned at the heart of this plan, and we highly evaluate this policy because it reflects the Company's role in society.

The Kurita Group's business can be described as contributing to environmental improvements of its corporate customers and creating shared value. However, looking more closely, the Company is also thinking about value that customers don't notice and creation of value with the customer in the future. We think this is visible in the CSV business through the creation and calculation of social value rather than economic value. A new business model is required of the Kurita Group with respect to the solving of social issues, which is the social mission of all companies under the current economic situation.

To approach this through the CSV business, the Company will need indicators for assessing social value. Since shared value is an abstract concept, to form business targets it is important to concretely define the shared value that can be supported by society and stimulate corporate activity, and to index it. We expect the Company to focus primarily on the pursuit of CSV, and to systemize its other CSR activities in terms of their relation to this.

The Kurita Group has also been rapidly expanding its business globally in recent years, and has established its CSR base as a global corporation. Overseas CSR activities of the Company do not seem to be as developed as activities in Japan yet, but those activities are also important for fostering a sense of unity as a Group. We also recommend that the Company promote CSR-oriented management to draw out employees' creativity and innovation, starting at the foundation level, such as penetration of the management philosophy.

Katsuhiko Kokubu

Katsuhiko Kokubu

Professor, Graduate School of Business Administration, Kobe University. Dean of the Graduate School from 2014 to 2016.

Earned a Ph.D. in Business Administration from Osaka City University. He has served on many various governmental committees, including chair of the Committee for Research on Promotion of Development of Environmental Business and for Environmental Accounting appointed by the Ministry of Economy, Trade and Industry, and member of the Working Group for the Revision of the Environmental Accounting Guidelines for the Ministry of the Environment. He also chairs ISO/TC207/WG8.Professor Kokubu is a leading global expert in environmental management and accounting and in CSR management.

In Response to the Third-Party Opinion

Hirohiko Ejiri Director General Manager of Corporate Planning Division Chairperson of the E&S Committee

Kiyoshi Itou
Executive Senior Managing
Director and Representative Director
General Manager of Corporate
Planning Division
Chairperson of the E&S Committee

I would like to thank Professor Kokubu for sharing his valuable opinion.

Fiscal 2017 should really be thought of as the foundation year for the Kurita Group's CSR.We reviewed our philosophy system and after reconsidering the expectations of the Kurita Group's stakeholders and what the Kurita Group ought to value, we formulated our CSR Policy and placed CSR at the core of management. Moreover, in our new medium-term management plan that started in fiscal 2018, we have positioned CSV as the most important management priority.

Having decided on our approach and direction, the next step is implementation. For this we need to transform our awareness and actions so that we can carry out our business activities with a focus on solving social solutions and generate shared value. Also, to promote CSR management and act responsibly as a global company, it is vital that we have a shared awareness within the Group, as Professor Kokubu has pointed out. We will therefore continue efforts to ensure the penetration of our CSR Policy and CSV throughout the Group.

The Kurita Group's corporate philosophy plainly shows the Group's approach to social issues. Going forward, we will continue to use our knowledge about water both to solve social issues and to grow the Kurita Group.