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Corporate Social Responsibility and Corporate Governance

All of the Kobe Steel Group's activities are underpinned by a fundamental desire to fulfill our responsibilities to the environment and society.

Basic Approach to Contributing to a Healthier Environment and a Better Society

We at the Kobe Steel Group take our corporate social responsibility (CSR) very seriously as an important element in our business policy. We therefore pursue a number of environmental and social-contribution projects based on our Corporate Code of Ethics. Committed to strengthening our compliance measures and protecting the environment, we will continue our mission to develop sustainably along with society by providing our diverse stakeholders with even greater levels of satisfaction.

CSR Promotion System

In 2006, we established a CSR Committee, which is responsible for determining policies related to corporate social responsibility and providing centralized implementation.

To facilitate discussion, make proposals and conduct follow-up verification, we have also established a Compliance Committee to advise the Board of Directors.

The CSR Committee's Report Production Subcommittee compiles information concerning the CSR activities and publishes it each year in the form of this Sustainability Report.

CSR Promotion Structure

Strengthening and Enhancing Corporate Governance

Based on the understanding that executive decision-making and day-to-day operations are inseparable, Kobe Steel has adopted a system that places corporate officers in charge of company operations. These officers bear legal responsibility toward shareholders and business partners for the business operations pursued by all major business divisions in the Kobe Steel Group.

The Board of Directors currently consists of executives from senior management, including directors in charge of major operations at headquarters, heads of divisions that have an important impact on Group operations, and others at a comparable level. To ensure transparency and fairness, and to reinforce oversight functions, two of the eleven board members are outside directors. Corporate officers in charge of company operations are appointed by the Board and are entrusted by the President and CEO to fulfill their duties.

Kobe Steel has also adopted an auditing system that employs five corporate auditors, three of whom come from outside the company. Internal audits are conducted by auditors who maintain their autonomy by belonging to an independent Audit Department. By further strengthening auditing functions in this way, we have heightened the efficacy of corporate governance.

Note: Shareholders were consulted concerning the appointment of outside directors at the 157th General Meeting of Stockholders.

Corporate Governance System

Corporate Code of Ethics

Kobe Steel adopted its Corporate Code of Ethics in June 2000, and has refined and modified them as needed in the years since. Comprised of three parts: Corporate Ethical Principles, Standards of Corporate Conduct, and Implementing the Corporate Code of Ethics. The Corporate Code of Ethics contains principles and specific policies that help to ensure that we operate as an ethical corporation in strict compliance with all laws, ordinances and social norms. All of the main companies in the Kobe Steel Group also abide by these principles.

Excerpt from Kobe Steel's Corporate Code of Ethics Kobe Steel will:

1.	Operate business fairly and honestly and comply with applicable laws, rules, and principles of society.
2.	Contribute to society by offering excellent products and services; in particular, pay particular attention to product safety and protection of personal information of customers and partners.
3.	Create a safe, comfortable and productive workplace and respect the individuality and differences of employees.
4.	Respect the interest of stakeholders. Maintain a friendly and healthy relationship with its stakeholders including customers, suppliers, employees and shareholders.
5.	Be a good corporate citizen that contributes to local communities.
6.	Devote itself to protecting the environment and creating a comfortable society.
7.	Respect the culture and customs of other nations and contribute to the growth and development of their communities.

Corporate Ethical Principles

The Corporate Ethical Principles define a set of guidelines that Kobe Steel Ltd., including all officers and employees, must follow when conducting its diverse business activities. The Principles express our commitment to corporate compliance and concern for the environment, and is intended to help us fulfill our corporate social responsibility by governing our interaction with our many stakeholders, including customers, business partners, shareholders, employees and society.

Senior company executives in particular play an especially important role in implementing the Principles and are expected to both take the initiative and set an example for others. As such, they are responsible for doing everything in their power to ensure understanding of and adherence to the Principles. We are also committed to listening to suggestions by people both inside and outside our organization to create an effective in-house system that thoroughly enforces ethical behavior. If at any time we discover that public health and safety are being threatened by our business activities, we pledge to quickly and accurately provide the public with all pertinent information.

Standards of Corporate Conduct

The Standards of Corporate Conduct provide specific standards that underlie particularly important company activities in the course of day-to-day operations. To ensure that all employees fully understand these standards, we have also developed manuals that provide detailed explanations of all cited items.

Implementing the Corporate Code of Ethics

The section on Implementing the Corporate Code of Ethics defines the systems that are needed to implement both the Corporate Ethical Principles and the Standards of Corporate Conduct.

We have built our compliance system, established our internal reporting system, and implemented our compliance education program in accordance with these guidelines.

Compliance System

Kobe Steel has a Compliance Committee that advises the Board of Directors. Three of its members are company directors; five come from outside the company in order to maintain fairness and neutrality. The Committee proposes recommended plans, checks on progress, and deliberates cases reported through the internal reporting (whistleblowing) system.

In addition, one of the company directors is placed in charge of corporate compliance, and we have established the Compliance Planning & Administration Section in our Legal Department. This section maintains contact with administrative departments in the business segments and compliance leaders (i.e., line general managers) in the departments.