<Third-Party Comment>

Comments on Reading the Kobe Steel Group's Sustainability Report 2017

Masato Tahara

Masato Tahara
General Manager,
Sustainability Planning & Support
Department, Development Bank
of Japan Inc.

Masato Tahara

Masato Tahara graduated from the University of Tokyo's College of Arts and Sciences in 1991 and entered the Japan Development Bank (currently Development Bank of Japan) that same year.

Before assuming his current position, he served as a manager in the Corporate Finance Department, Division 1, Business Development Department, and the Business Planning & Coordination Department. He was also a manager of the Industrial Research & Customer Solution Planning Office in the Economic Research & Industrial Research Department, and general manager of CSR and Environmental Affairs. He has served on committees including the Ministry of the Environment's low-carbon investigation commission and the Energy Supply Working Group to create a low-carbon society, as well as the Tokyo Promotion Council for Realization of a Hydrogen Society.

The Sustainability Report 2017 contains a strong message from Kobe Steel on contributions to society through its corporate activities based on the Group's core values and pledges to society.

In particular, this year's report was characterized by a strong focus on what has been a central theme of the company's reports for several years, that is to say on the people who are the wellspring of its corporate value. The KOBELCO Way of Work Style Reform section at the beginning of the report presented efforts to change workstyles, employments rules and work practices very skillfully through use of employee testimonials, going beyond a simple plan overview to show that initiatives are taking root throughout the company and leading to improved organizational strength. Displaying the effectiveness of reforms quantitatively through use of KPIs (key performance indicators) of topics such as reductions in total overtime and regular meeting hours was also an excellent touch, in line with the growing trend to disclose more non-financial information. Content such as this is more persuasive precisely because it is coming from a company with a diverse workforce such as Kobe Steel, which displays synergy across divergent business fields focused on the three core areas of materials, machinery and electric power.

The environmental and social sections also included very informative reports in accordance with the sustainability report format that Kobe Steel has developed over the past several years, describing the company's three visions as a "leading environmental Group," and the ongoing environmental initiatives and strategic social action that the company has incorporated directly into its business operations.

Additionally, sections on the value Kobe Steel realizes directly through its business operations—such as sections on environmental consideration in the Welding Business's supply chain and recognition from outside organizations—were structured so as to be easily understandable for stakeholders.

As a company that has been ahead of the curve in engaging in CSR through its businesses, I believe it would be worthwhile in the future for Kobe Steel to account for the time axis in disclosure of non-financial information as well, and consider a more experimental approach to disclosure which would display the manner in which the company's CSR activities develop in tandem with business operations. For instance, by utilizing quantitative KPIs to explain contributions to resolving environmental and social issues in Japan and overseas, such as the creation of value and transfer of technology to developing nations through the technical development at the heart of corporate value, the notion that Kobe Steel's business activities benefit a wide range of stakeholders could be more effectively conveyed, which in turn would lead to further strengthening the value of the Kobe Steel brand.

Considering Kobe Steel's release of the Core Values of KOBELCO Next 100 Project, and its pursuit of long-term sustainable development for both the company and society, I believe such an approach to disclosure is in line with Kobe Steel's momentum and goals. As the shared Group values mentioned at the beginning of the report—the "Core Values" and "Six Pledges"—permeate throughout the Group, I look forward to seeing the continuing story of how Kobe Steel achieves growth and contributes to the creation of a better society in future sustainability reports.

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