Environmental Management Environmental Sustainability Report 2007 President's Message On the Publication of the Sustainability Report 2007 The Kobe Steel Group: Committed to Being Trustworthy and Useful to Society In the more than a century since Kobe Steel was founded in 1905, the Kobe Steel Group has contributed to society through a dedication to skilled manufacturing. Our spirit of craftsmanship has remained unchanged throughout the decades and continues in an unbroken line in the entire Group. It is one of the main pillars supporting our Group Corporate Philosophy, which we formulated last year. We are a diverse corporate entity, with operations in iron and steel, welding, aluminum and copper, industrial and construction machinery, engineering, environmental services, wholesale power supply, real estate, electronic materials, and other fields. By further strengthening our commitment to high-end, "Only One" products and quality manufacturing, we will continue to contribute to the betterment of society though our superior technologies, products and services. In recent years, corporations are increasingly being judged on the basis of the consolidated performance of the corporate group as a whole. They are also being watched closely to see if they are expanding their vision beyond their own profit and seriously fulfilling their corporate social responsibility (CSR) in harmony with society. In our Fiscal 2006-2008 Medium-Term Business Plan, we outlined a vision to maintain profitability and technical capabilities at a high level while setting our sights on further growth. At the same time, we defined the promotion of CSR as a primary Group business policy, and recommitted ourselves to strengthening our environmental conservation activities; thoroughly assuring compliance; ensuring the honest treatment of customers, transaction partners and shareholders; contributing to the well-being of local communities; and creating a pleasant working environment for our employees. Unfortunately, an in-house investigation conducted last year revealed that our Kakogawa Works and Kobe Works had both exceeded permissible air emission standards and that the related data had been inappropriately handled. This resulted in our receiving a stern reprimand from the Ministry of Economy, Trade and Industry and local governments, and seriously inconveniencing and worrying our stakeholders. Today, we are strongly committed to preventing a recurrence and working hard to reinforce our environmental conservation measures. This fiscal 2007 edition of the Kobe Steel Group Sustainability Report explains the status of environmental measures currently being implemented and introduces the CSR programs we have introduced. I hope it serves as a useful guide to our commitment to sustainability. June 2007 Yasuo Inubushi President, CEO and Representative Director Formulation of a Corporate Philosophy The Kobe Steel Group's Corporate Philosophy 1. We provide reliable and advanced technologies, products and services that satisfy customers. 2. We support each employee in developing his or her abilities, while respecting mutual cooperation within the Kobe Steel Group. 3. Through the continuous efforts for innovative change, we aim to enhance our corporate values. The Kobe Steel Group celebrated its 100th anniversary in 2005. In fiscal 2006, as we began our second century in business, we also formulated a new Group Corporate Philosophy, which crystallizes the role we play in society and the values we share since our founding. With the great support of our stakeholders, we have contributed to the development of society and the happiness of working people by meeting societal needs through the advancement of our technologies, skills, products and services. We have also created a workforce composed of people who respect each other, promote Group harmony, and cooperate as they work together toward a common goal. Amid a dramatically evolving business environment, we remain committed to maintaining a sense of challenge while quickly and appropriately responding to change. The Group Corporate Philosophy shown above reflects these concerns. As we develop in step with society, we will work to ensure that these precepts are shared by all Kobe Steel Group employees.