Annual Report 2017

"...Continuing to operate based on a management philosophy that is uniquely Japanese will not work."

"...We are shifting from corrective to preventive maintenance through an investment of 10 billion yen over three years in facility renovation".

"The company aims to contribute to the development of a sustainable society by continuing to offer value through its business activities."

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From Tosoh's President

 

Tosoh’s Business Environment

Fiscal 2017 saw considerable improvement in terms of trade, attributable in part to a weak yen and the leveling off of crude oil prices. An increasing number of companies in the chemical industry—including Tosoh—recorded strong financial performances. Tosoh achieved record profits and all of its initial sales targets.

Fiscal 2017 was only the first year of our newly formulated medium-term management plan, and yet we accomplished a number of the three-year plan’s overall objectives. Tosoh management, however, places a dual emphasis on commodities and specialties, and the commodity sector is unstable because it is significantly influenced by external, often unclear, factors globally. Performance in commodities therefore will be key to Tosoh’s ability to achieve all of the objectives for the final year of its medium-term business plan.

Management faces five major issues: meeting earnings expectations, implementing safety measures, devising a growth strategy, ensuring governance and compliance, and strengthening on-site capabilities. These issues are all closely tied to CSR activities, and as such management asks that Tosoh employees band together to tackle them with the five principles encapsulating the Tosoh Spirit in mind.

Tosoh Spirit

  1. Eager acceptance of challenges
  2. Calm assessment of situations
  3. Passionate response
  4. Firm resolve
  5. Cooperation and gratitude

The Philosophy behind Tosoh Spirit

Tosoh Spirit was formulated in the flamboyant era of the bubble economy some 30 years ago. The company was reworking its corporate identity and had just changed its name from Toyo Soda Manufacturing Co., Ltd. to Tosoh Corporation. I am very fond of the tenets that Tosoh Spirit comprises, and I believe that even today they are firmly rooted in our corporate ethos.

An “eager acceptance of challenges” represents the willingness to set lofty goals. This requires that we view our situation objectively and unemotionally, applying the second principle: a “calm assessment of situations.”

A “passionate response” symbolizes the courage not to give in regardless of how formidable the path might be to achieving our goals. It signifies the relentless pursuit of our mission, which is not possible without “firm resolve.” I feel that “firm resolve” is synonymous with the word sustainability.

The fifth tenet of Tosoh Spirit, “cooperation and gratitude”—which implies employees working together and showing appreciation for one another—is extremely important. Tosoh exists because this and its other tenets were accepted and practiced by the various stakeholders that established the enterprise, and I want all employees to continue to observe and maintain them.

The Strong Correlation between CSR Activities and Tosoh Spirit

The expression “CSR” was not common in Japan 30 years ago. A company’s contribution to society manifested itself in practices such as donations to its community, cultural activities or sponsorship of sporting events. For the most part, however, the manufacturing sector prioritized profit, and it was not thought necessary to devote much effort or money to other things. Over time, society and corporate culture have matured to where the pursuit of profit alone is insufficient to justify a company’s existence.

Today, a company is assessed based on its relationship with society. It must prioritize existing in harmony with its stakeholders, including its community, its clients, and its shareholders, and with the environment. I believe that Tosoh must develop accordingly. “Cooperation and gratitude,” already a tenet of Tosoh Spirit 30 years ago, has turned out to be a forward-looking idea underpinning our present-day CSR activities.

My View of Tosoh’s Societal Responsibilities

I believe that a company’s essential role is to contribute to society from various perspectives through its business activities. Societal and market needs are changing at a furious pace. As a materials manufacturer, it is vital that Tosoh enhance its technology in line with societal demands and deliver to clients products of unprecedented value. I feel that this is Tosoh’s truest contribution to society. I also feel that natural to this process and crucial to our philosophy in approaching our daily activities is maintaining the highest-possible standards with regard to quality and safety and our impact on the environment.

Tosoh’s products are ubiquitous in daily life, but are often unseen. Our caustic soda and hydrochloric acid, for example, work invisibly to make possible clean tap water for people to drink. From materials essential to electrical appliances, to dental ceramics and bioscience diagnostic reagents, our products play a role behind the scenes in bettering society by supporting comfort and convenience in everyday life.

R&D Generates Value for Society

Lifestyles are becoming increasingly diverse, such that the demand for materials and products offering value is accelerating. To stay in step with this transformation, it is vital that we ascertain future market needs and societal issues. Tosoh looks ahead to determine what fields of business show promise and focuses its R&D on them. An internal corporate selection committee narrows our focus to materials and functions that it deems to be of greatest potential. In recent years, we have concentrated on life sciences, the environment and energy, and electric materials. In anticipation of the adoption of sustainable development goals by the United Nations in 2015, we also began mapping out our R&D theme.

Simply undertaking activities pursued by other companies, however, is not how Tosoh will produce anything of unprecedented value. We are trying to look at things from a perspective different to other companies and to develop products that no company but Tosoh could develop. This, of course, is easier said than done. To this purpose, however, we have reorganized our R&D structure into seven facilities, each focusing on a particular field. We are also about to rebuild certain R&D facilities to consolidate and thereby enhance synergies and to provide our researchers with environments that inspire them.

Meanwhile, we are reviewing our fiscal 2017 CSR activities and pursuing enhanced productivity. In addition, we are shifting from corrective to preventive maintenance through an investment of ¥10 billion over three years in facility renovation. And we continue our transfer of skills to young researchers in the interest of safety, as this generated tangible results in the way of no serious accidents in fiscal 2017.

In our environmental activities, we have as a goal low-energy manufacturing. As such, we are reviewing our production methods under the theme of enhanced energy efficiency. We have for many years been improving our energy efficiency per unit of production, but we are nearing the limit to the benefits of innovation at the production site. We aim to achieve further reductions in environmental loading by establishing entirely new production processes. We are also developing increasingly environmentally friendly materials that, in turn, improve the environmental performance of our customers’ products. In this way, we are contributing directly and indirectly to the preservation of the global environment.

Since fiscal 2016, we have expanded our efforts in establishing systems and enhancing awareness of governance and compliance from a focus on our Tokyo headquarters to encompass Tosoh Group companies worldwide. Business practices and cultures may differ between Japan and other countries, but we intend to continue our efforts toward unity in governance and compliance.

Earning Society’s Trust

Governance—the establishment of systems necessary to overseeing corporate operations—is exceedingly important. But it extends beyond the tangible. An executive’s management style will not be successful if it does not satisfy employees. At Tosoh, the chief intangible element is Tosoh Spirit. Only if our management team is able to construct systems of imagination and spirit and of an all-encompassing nature am I convinced that it will succeed in fostering a positive atmosphere companywide.

In this era of global business, continuing to operate based on a management philosophy that is uniquely Japanese will not work. I feel that as executives it is our responsibility to boldly adopt new and broader methods of management.

My Role as the Leader of the Organization

As the president of the company, it is my responsibility to champion and coordinate our efforts to revitalize our CSR activities. I want at the appropriate time to share company issues and plans with employees and thereby inspire them. If such sharing does not come from the top, our CSR activities will seem mechanical and soulless. To ensure that Tosoh can continue to enjoy a positive atmosphere, I must lead by example and in this way show that we are not merely paying lip service to CSR.

To Our Stakeholders

Tosoh's 2017 CSR Report provides a clear, easy-to-digest summary of financial and nonfinancial information, descriptions of Tosoh activities, and commentary concerning the direction Tosoh must take going forward. We ask our stakeholders to read through this report so that they may evaluate Tosoh from numerous perspectives, and we welcome any and all opinions and comments.

Toshinori Yamamoto
Tosoh Corporation
President


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Developing a Sustainable Society by Promoting CSR

In recent years, the demand for the disclosure by corporations of information related to their development of a sustainable society has become more pronounced. How corporations work to meet that demand and the other expectations of their stakeholders is also drawing considerable attention.

Tosoh’s corporate philosophy serves as the foundation for its CSR activities. The company aims to contribute to the development of a sustainable society by continuing to offer value through its business activities. We believe that our societal responsibility is to continuously provide unprecedented value to the world.

Chemical companies are assuming an increasingly large role in resolving numerous global and local issues. Tosoh will strive to maintain a unique presence and character in that role.

Keiichiro Nishizawa
Tosoh Corporation
Director, Executive Vice President
Chairman, RC Committee

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