Environmental Management Sustainability Report 2006

Thorough Risk Management

To minimize environmental risks as much as possible, it is important to recognize the risks inherent in day-to-day work and raise employee awareness of them. The recent emissions incidents at our steelworks made it clear that our risk management system was inadequate. We have therefore strengthened this system through various measures, including the establishment of a new Environmental Administration Committee.

Results of the Fiscal 2005 Environmental Audit

Kobe Steel has customarily performed internal audits at each operating location and submitted to audits by external certification institutions on the basis of ISO14001. In addition, risk management guidelines have been established for all operating locations, which provide the basis for audits conducted by the department responsible for the environment throughout Kobe Steel. Confirmation audits are also conducted at Group companies to ensure that all environmental laws and regulations are strictly followed. With the exception of the emissions incidents discovered at Kakogawa Works and Kobe Works, none of Kobe Steel's operating locations or group companies violated any environmental laws or regulations in fiscal 2005. Administrative guidance was received a total of four times during the year at Kakogawa Works regarding dust emissions and visible smoke. Among Group companies, we also received four verbal guidance notifications regarding water quality and one other warning and guidance notification on a different matter. Example of Administrative Guidance Received in Fiscal 2005 (Group Companies) Content:   An administrative agency tested factory wastewater, discovered that the lead content exceeded acceptable levels, and instructed the factory in question to correct the problem. Countermeasure:   It was conjectured that rain had dissolved the lead in the peelingpaint on the roof, which contaminated the water. The roof was repainted to prevent further lead from dissolving.

Number of Warnings & Guidance Notifications Received from Administrative Agencies (Kobe Steel Operating Locations)

Number of incidents

Air Water Other Fiscal 2002 2 1 1 Fiscal 2003 2 1 1 Fiscal 2004 0 0 0 Fiscal 2005 4 0 0

Number of Warnings & Guidance Notifications Received from Administrative Agencies (Kobe Steel Group Companies)

Number of incidents

Air Water Other Fiscal 2002 1 2 0 Fiscal 2003 0 2 0 Fiscal 2004 1 5 1 Fiscal 2005 0 4 1 Future Environmental Audit System In fiscal 2006, outside experts will participate in our environmental audits and we will work to improve our environmental management by implementing both written and onsite audits. Until now, we have conducted our onsite audits mainly through our environmental control sections in our works and plants, but in the future we will broaden our audits to include environmental control of the operating divisions as a whole.