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Environmental Management
Sustainability Report 2006

Environmental Management
Basic Policy for Environmental Management & Implementation Priorities

The preservation of the global environment is the most important issue shared by all living creatures, and it is our responsibility to ensure that a healthy environment is passed down to future generations. To protect our irreplaceable planet, the Kobe Steel Group has formulated a Basic Policy for Environmental Management designed to help us promote the environmentally responsible management of all of our business operations. In response to the emissions problems recently discovered at our steelworks, we reorganized and strengthened our environmental management system.


Basic Policy for Environmental Management: Increasing Corporate Value Through the Implementation of Sound Group Environmental Management
In our quest to become an advanced, environmentally responsible corporate enterprise, the Kobe Steel Group is committed to:
1)  
Engaging in environmentally friendly production practices
2)
Contributing to the environment through products, technologies and services
3)
Coexisting and harmonizing with society
By these means, we will fulfill our corporate social responsibilities while increasing our corporate value.


Environmental Goals
The Environmental Management Committee decides which specific steps are taken to promote environmentally responsible management for the entire Group.

Currently, the Committee has identified six areas to focus on: 1) thorough pursuit of risk management; 2) thorough commitment to environmentally friendly manufacturing practices; 3) contributing to the environment through our products, technologies and services; 4) disclosing environmental information; 5) coexisting and harmonizing with society; and 6) achieving participation of all employees in environmental programs.

The Environmental Management Committee is also pushing forward to implement countermeasures in response to the emissions problem recently discovered at our steelworks.
Environmental Management Committee
Environmental Management Committee


Diagram of Medium-Term Group Environmental Management Policies
 


Current Status and Evaluation of Medium- and Long-Term Environmental Goals
 
Item Long-Term Policy 2006-2008 Goals
Environmental Management Implement organizational and systematic measures to maintain and strengthen the environmental management system.
Comply with all laws, ordinances and agreements. Strengthen the management system of the overall Group.
Thorough Pursuit of Risk Management Reduce guidance from administrative agencies and complaints from local residents, to zero. Establish environmental management systems in Group companies that run large environmental risks.
Thorough Commitment to Environmentally Friendly Manufacturing Practices Countermeasures Against Global Warming Take various steps to reduce CO2 emissions to help control global warming Encourage the adoption of energy-efficient practices so that action plans can be successfully realized in all business sectors.
Creating a Recycling Society Continue efforts to reduce the generation of landfill waste to zero. By fiscal 2008, achieve a 20% reduction in landfill disposal compared with fiscal 2004 levels.
Reducing the Use of Hazardous Substances Work to reduce hazardous substances on the basis of the Kobe Steel Group's Management Policy for Hazardous Chemical Substances. Establish an appropriate, Group-wide management system for hazardous chemical substances (especially VOCs, asbestos and PCBs).
Reducing the Burden on the Environment Continue working to reduce the burden we place on the environment by thoroughly implementing self-management. Reduce the environmental burden of manufacturing activity by strengthening the functions of pollution control equipment.
Contributing to the Environment through Products, Technologies and Services Take the environment into account whenever products and technologies are developed. Create environmentally friendly products and new business. Give priority to energy savings and new energy sources. Constantly work to strengthen the environmental functions of current products and technologies.
Disclosing Environmental Information Actively disclose environmental information and communicate openly with stakeholders. Use media such as the annual environmental report and Web site to disclose information.
Coexistence and Harmony with Society Work on coexisting and harmonizing with society from an environmental perspective. Continue beautification programs around our operating locations, support environmental activities, promote environmental volunteering, etc.
Participation of All Employees in Environmental Programs

Work on instilling a constant environmental awareness in all Group employees.

Expand environmental training and education to all Group employees.
Broaden the scope of eco-office activities.



Self-evaluation
O: Progressing essentially as planned
: Some issues still to be resolved
X: Plan not achieved
Item 2003-2005 Goals Achievement of
2003-2005 Goals
Self-
Evaluation
Environmental Management Strengthen follow-through efforts to ensure that all in-house operating locations and research laboratories receive ISO14001 certification. All Group companies will establish environmental management systems appropriate to their business circumstances, scale of operations, etc.
Environmental management systems were established in all in-house manufacturing facilities. ISO14001 certification was temporarily suspended at Kakogawa Works and Kobe Works because of emission problems, but was later restored.

Environmental management systems were established in 14 Group companies that place an especially heavy burden on the environment.


X
Thorough Pursuit of Risk Management Reduce environmental risk and maintain stable operation, including Group companies. Surveys were conducted at Group companies to determine environmental risks and confirm administrative conditions. Emissions had exceeded the statutory limits and other problems were discovered at the steelworks. It became clear that the existing risk management system was inadequate.
X
Thorough Commitment to Environmentally Friendly Manufacturing Practices Countermeasures Against Global Warming Establish the foundation for in-house measures against global warming prior to the First Commitment Period (2008-2012) under the Kyoto Protocol.
Use primarily subcommittees to conduct economic evaluations of measures.
CO2 emissions from steelmaking operations were reduced by 1.8% compared with 1990 levels.
Creating a Recycling Society Reduce the volume of final-disposal waste by focusing on hard-to-reuse materials. Conduct a survey of current conditions at Group companies and set numerical targets for zero emission activities. In fiscal 2005, Kobe Steel's total amount of final-disposal waste was approximately 170,000 tons, with a recycling ratio of 96.1%. The amount of waste generated by all Group companies was determined, and plans were laid to reduce that amount.
Reducing the Use of Hazardous Substances Formulate guidelines concerning the management of hazardous substances based both on the current management conditions for hazardous materials specified by Kobe Steel and on customer demand.
A management policy for hazardous chemical substances was formulated, and emergency measures were implemented for asbestos. O
Reducing the Burden on the Environment Improve manufacturing processes effective in environmental protection, introduce the latest equipment or renovate current equipment, and thoroughly implement self-management. We improved the performance of our exhaust gas treatment equipment and reduced the amount of water we use.
Contributing to the Environment through Products, Technologies and Services Provide information that contributes to manufacturing environmental friendly products. Strengthen communication among in-house segments, internal companies and Group companies. Aim to enter new business fields. We formed a study group on hydrogen fuel cells and aggressively promoted technologies owned by the Kobe Steel Group. O
Disclosing Environmental Information Implement a strategic PR campaign using various media, including the annual environmental report. We issued environmental reports that contain more information about Group companies and have sponsored various types of exhibitions as a Group.
Coexistence and Harmony with Society Continue to implement existing measures so that they become well established. We continued our funding and other support programs and dispatched lecturers in environmental education. O
Participation of All Employees in Environmental Programs Implement environmental education programs throughout the Group so that they become well established. Add new elements to eco-office activities and promote them more aggressively We created videos and texts for use in Group-wide environmental education and training programs. In fiscal 2005, we also promoted two eco-office campaigns: the summer Eco-Style Campaign and the Winter Energy-Saving Campaign.


Group Environmental Management System

In the past, the Kobe Steel Group promoted its environmental operations through the Environmental Management Committee. In response to the recent emissions incident, however, we have reorganized and strengthened our environmental management system by establishing a new Environmental Administration Committee, which is dedicated to preventing similar lapses from happening again.

The Environmental Administration Committee includes experts from outside the Group and is charged with ensuring environmental safety by studying the formulation, implementation and management of environmental policie and providing reports and recommendations to the Board of Directors.

Meanwhile, the Environmental Management Committee maintains close contact with the activities of the Environmental Administration Committee. It creates subcommittees dedicated to efficiently studying different designated themes as part of active efforts to promote environmentally responsible corporate operations.



Company-Wide Environmental Management System
 


Composition of the Environmental Administration Committee

Committee for Following Up Measures
To ensure that no further lapses occur, we established five new subcommittees. The Committee for Following Up Measures is in charge of making sure that each subcommittee makes progress in its assigned tasks.
(1) Education Subcommittee
Plans and promotes compliance education, environmental education and training, and similar programs.
(2) Organization & Regulation Subcommittee
Reviews organizational restructuring, operational regulations, etc., and formulates and enforces operational standards that reflect environmental policy.
(3) Personnel Subcommittee
Increases the number of employees working in environmental administration in the Head Office and in environmental administration departments in other operating locations.
(4) Facility & Technology Subcommittee
Implements measures related to the installation and technology of incineration facilities.
(5) Information Disclosure Subcommittee
Plans and implements information disclosure programs to regain the trust of local communities.

Environmental Administration Committee
Works with operating locations to restructure the environmental administration system and improve the level of administration.

Environmental Audit Committee
Being partly comprised of outside consultants, this section conducts environmental audits in conjunction with the Environmental Control & Disaster Prevention Department and the Audit Department.



Environmental Management in the United States

Kobe Steel USA Inc. (KSU) serves as the headquarters for Kobe Steel companies in the United States. Every November, it holds an Environmental, Health and Safety (EHS) meeting in which member companies report on their activities and experts give lectures. In 2005, participants from Japan also attended and explained the importance of pursuing environmental management as a unified, coherent Group. Opinions were also exchanged concerning the Kobe Steel Group's environmental policy and the policies established by KSU.

The Japanese participants later visited six KSU companies to confirm their environmental management practices.



Hiroshi Sato
Executive Vice President, Kobe Steel, Ltd.
Responsible for the Environmental Control & Prevention Department
Placing Our Highest Priority on the Environment, Promoting Environmental Management from all Angles

The Kobe Steel Group's Fiscal 2006-2008 Medium-Term Business Plan identifies one of the Group's fundamental policies as increasing corporate value through the implementation of Group environmental management. Using our cooperative networks we have already created, we are disseminating a basic awareness of the environment throughout the Group with the aim of increasing corporate value.
In May of 2006, however, we discovered that emissions at our steelworks exceeded the regulatory limits, and we are now working in various ways to regain the trust of local residents and administrative agencies.
Returning to our starting point of giving top priority to environmental protection, we are diligently working to prevent a recurrence of infractions while rebuilding our control systems, with an emphasis on ensuring that all Kobe Steel Group employees understand the importance we place on the environment.
As the chairman of the Environmental Management Committee, I am personally committed to ensuring that environmental awareness and sensitivity are firmly rooted in all Kobe Steel Group employees, and that we fulfill our corporate social responsibility through the promotion of sound environmental management.


Environmental Management Based on ISO14001

The Kobe Steel Group has obtained ISO14001 certification, as well as certification through the Japanese Ministry of Environment's Eco-Action 21 program*1 and the Kobe Environmental Management System (KEMS)*2 of the Kobe Environmental Forum. As such, we are engaged in continuous and effective efforts to improve the environment. In fiscal 2004, we succeeded in establishing our environmental management system in all of Kobe Steel's manufacturing locations.

In February 2005, the Kobe Office of Kobelco Logistics, Ltd. received KEMS certification, followed by ISO14001 certification for its Marine Transport Department in February 2006. This company has been especially effective in cutting distribution costs and raising environmental awareness. Similarly, the Head Office of The Kansai Coke and Chemicals Co., Ltd., received Eco-Action 21 certification in November 2005.

Because of the excessive emissions discovered at our Kakogawa Works and Kobe Works, certification at these two facilities was temporarily suspended on May 24, 2006, but was later reinstated on November 16, 2006.

*1. Eco-Action 21 is a certification and registration system for environmental management established by the Ministry of the Environment. Based on ISO14001, it provides a more convenient approach to environmental management.
*2. The Kobe Environmental Management System (KEMS) was established by the Kobe Environmental Forum to make it easier for companies to take concrete steps to protect the environment while reducing costs.


Operating Locations That Have Received Environmental Management System Certification
 
Sector/Company Operating Location Date of Certification
Iron and Steel
Kakogawa Works February 1998
Kobe Works February 1998
Takasago Works*1 March 1999
Welding Ibaraki Plant July 2001
Saijo Plant*2 February 2005
Aluminum & Copper Moka Plant December 2000
Chofu Plant March 2001
Daian Plant December 2002
Machinery & Engineering Takasago Works*1 March 2002
Harima Plant June 2002
Machinery & Engineering Head Office June 2002
List of companies that have received ISO14001 certification
*1. In 2002, Takasago Works received expanded certification.
*2. Received Eco-Action 21 certification.



Group Companies That Have Received Environmental Management Certification
 
Group Company Scope of Certification Date of
Certification
The Kansai Coke and Chemicals Co., Ltd. Kakogawa Plant, Head Office*2 March 1998
Kobelco Logistics, Ltd. Kobe Office*1, Amagasaki Office*1, Marine Transport Department February 2005
Shinko Kobe Power, Inc. Shinko Kobe Power Station August 2002
Sumitomo Titanium Corporation Head Office in Amagasaki, Hyogo Prefecture March 1999
Shinko Engineering & Maintenance Co., Ltd. Within Kobe Steel's Takasago Works March 1999
PRO-TEC Coating Company Head office, plant December 1996
Kobe Welding Wire Co., Ltd. Former Fukuchiyama Plant October 2002
Shinsho Kobe Welding Co., Ltd. Osaka Head Office (expanded certification for Shinsho Corporation's Osaka Head Office) July 2001
Kobelco & Materials Copper Tube, Ltd. Hatano Plant June 2000
Shinko Fab Tech, Ltd. Within Shinko Chofu Plant March 2001
Shinko Leadmikk, Ltd. Head Office (Moji) April 2005
Toyotsu Nonferrous Center Corporation Head office, Anjo Plant (acquired through Toyota Tsusho Group) December 2001
Niko-Aluminum Industries, Ltd. Within Kobe Steel's Moka Plant December 2000
Shinko-North Co., Ltd. Head office, plant (CHECK), Tokyo Branch July 2005
SINGAPORE KOBE PTE.LTD. Head office, plant July 2005
EarthTechnica Co., Ltd. Within Kobe Steel's Takasago Works March 1999
Yachiyo Plant September 2000
Kobelco Sanki Service Co., Ltd. Within Kobe Steel's Takasago Works March 1999
Shinko Techno Engineering Co., Ltd. Within Kobe Steel's Takasago Works March 1999
Shinko Inspection & Service Co., Ltd. Within Kobe Steel's Takasago Works March 1999
Shinwa Wood Works, Ltd. Within Kobe Steel's Takasago Works March 1999
Kobelco Research Institute, Inc. Within Kobe Steel's Takasago Works (chemical analysis, material testing) March 1999
Within Kobe Steel's Takasago Works (Sputtering Target Division) February 2004
Kobelco Construction Machinery Co., Ltd. Development & Production Division (Hiroshima) November 2001
Kobelco Cranes Co., Ltd. Okubo Plant March 2001
Kobelco Eco-Solutions Co., Ltd. Head office, Tokyo and Osaka branch offices, technical research laboratory, Harima Plant December 1999
Shinsho Corporation Head offices in Osaka and Tokyo October 2000
Shinko Engineering Co., Ltd. Head office (Ogaki) February 1999
Shinko Electric Co., Ltd. Toyohashi Plant December 1998
Ise Plant (including Toba) January 1999
Genesis Technology, Inc. Nishiwaki Plant, Tokorozawa Plant, Kyushu Plant March 2004
List of companies that have received ISO14001 certification
*1. In 2002, Takasago Works received expanded certification.
*2. Received Eco-Action 21 certification.