Tosoh Announces Guidelines to Reform Safety Assurance System

June  26,  2012 -

Tokyo, Japan— Tosoh extends its sincerest apologies to residents, customers, associates, and the many other parties affected by the explosion and fire at the No. 2 Vinyl Chloride Monomer Plant in the Nanyo Complex manufacturing facility on November 13, 2011.

The November 13, 2011 explosion and fire at the Nanyo Complex cost the life of one of our employees and resulted in significant inconvenience to local residents, customers, associates, and many other parties. This accident was a very serious incident and, in its wake, I have ordered the implementation of the attached reformed Safety Assurance Guidelines to rebuild Tosoh’s reputation as a safe chemical manufacturer.

- To provide our employees with a safe workplace.

- To ensure that Tosoh is a company in which local residents and others can place their trust.

Dedicated to Safety Assurance

President's commitment
As Tosoh's president, I reaffirm our company's commitment to safety as the central pillar of our business. I will see to it that all necessary resources are deployed to ensure safety and I share the resolve of all of our employees to maintain safety.

Creating a culture of safety
We will overhaul our safety activities and put in place highly effective reforms to ensure that each and every employee proactively performs his or her job in a safe manner.

Disclosure and use of information
Our manufacturing complexes will provide accurate and prompt information to local residents about emergency situations. Safety and accident information will be put to the most effective use.

Comprehensive education and training
Tosoh will implement comprehensive education and training in technology and safety. We will rebuild our employee training system so that it flexibly and responsively matches the employee’s understanding and expertise.

Ongoing reform and improvement
Safety assurance is not a one-time activity: We will ensure that all Tosoh employees remember this accident and work to make safety assurance their ongoing mission.

We pledge that all of us at Tosoh will work together to promote the reformed Safety Assurance Guidelines.

Kenichi Udagawa
President
Tosoh Corporation

Safety Assurance Guidelines Safety Reform Committee June 26, 2012

The serious explosion and fire at the No. 2 Vinyl Chloride Monomer Plant in the Nanyo Complex manufacturing facility on November 13, 2011 cost a person's life. Tosoh immediately established an accident investigation committee joined by outside experts to perform a thorough investigation of the causes of the accident and to establish policies to prevent the recurrence of such accidents in the future.

Moreover, we have established a Safety Reform Committee under the direct supervision of Tosoh's president to ensure that this kind of accident never happens again and to rebuild Tosoh’s reputation as a safe chemical manufacturer. The Safety Reform Committee performed an overall review of the current status of Tosoh's manufacturing activities, facilities maintenance, and environmental safety. This document provides a summary of the reformed Safety Assurance Guidelines.

These guidelines are applicable to Tosoh headquarters, and to the Nanyo and Yokkaichi complexes. Similar activities will also take place in other organizations within Tosoh and in the companies of the Tosoh Group based on these Safety Assurance Guidelines.

The three main goals of Tosoh's safety reform are as follows:

• To ensure that Tosoh is a safe chemical manufacturer in which this sort of accident never happens again.
• To provide our employees with a workplace where they feel safe.
• To ensure that Tosoh is a company in which local residents and others can place their trust.

Tosoh will implement the following guidelines to achieve these objectives:

The company president's resolve is the most important element in promoting the safety of all our activities. Tosoh's president understands that safety is fundamental to superior management. He will allocate all of the necessary management resources and ensure that all employees share the same determination to do their jobs safely.

The basic principles of Responsible Care (RC) strive to bring about awareness that safety is management's most important task. Tosoh views this accident with the utmost seriousness and is once again reminded of the fact that safety is the foundation of good management. Tosoh will go forward with activities to make sure that these principles are fully understood at each and every level of the company.

All measures necessary to achieve the goals of safety reform will be taken. Management resources will be allocated as follows:

• Human resources: Human and other resources will be allocated to make sure that operating systems and training programs are fully staffed.
• Facilities: Maintenance of production facilities, provision of educational facilities, etc.
• Budgets: Budgets will be provided and authority will be delegated in order to implement workplace reforms in a timely manner.

(2) Building a culture of safety

To implement the president's determination to ensure safety, the senior management of our manufacturing complexes (general managers and section managers) will need to reform their safety activities according to their own initiative and actions under the leadership of the senior management of the manufacturing complexes. Our manufacturing complexes will develop more effective safety standards based on the reviews of current activities.

• Our manufacturing complex senior general managers will exercise strong leadership in directing and guiding the manufacturing complex management and administrative departments. At the same time, they will leverage their talents in the deployment of safety activities based on vigorous debate and discussion.

ii. Increasing awareness of manufacturing complex management

• General managers and section chiefs will be tenacious in their efforts to improve their own skills and to enhance general awareness of safety.
• Through activities and training plans deployed laterally across the organization, general managers and section managers will extend the discussion of safety and its implementation to increase awareness about safety issues.

iii. Reinvigorating activities from the bottom up

• A thorough review of existing safety practices and standards will be performed and employees will be encouraged to propose more effective practices, including the revision of those activities or standards that are not effective.
• The safety practices and standards undertaken by all employees will be changed into activities whose results can be seen and that can be implemented in a timely manner.

We recognize that, to earn the trust of local residents, Tosoh must be the kind of company that provides accurate information in a timely and appropriate manner. To that end, we will improve our communication with local residents. Further, we will be sure to make the best use of valuable lessons learned from safety and accident information based on experience both within Tosoh and that of other companies, to improve our safety technology, and we will reestablish a platform to make the most effective use of this information.

• We will undertake a comprehensive review of our public information organization and contact system to ensure that information in times of emergency is provided promptly and appropriately.
• Although Tosoh has been holding periodic informational meetings with local residents, we will make further improvements to ensure that there is adequate communication about the risks associated with Tosoh's operations and the way those risks are being handled.

ii. Analysis of safety and accident information, and cross-organizational deployment

• We will clarify the departments responsible for gathering all safety and accident information and construct a system that seamlessly collects this information.
• The departments responsible for managing information will rebuild their organizations so they can reliably keep track of the cross-organizational deployment of instructions to related departments and safety-related facility improvements.

New generations of operating and maintenance personnel are assuming their responsibilities in Tosoh's plants. We will make improvements in the safety education and training in our manufacturing departments, facilities management departments, and among our contractors. We will put flexible PDCA (plan-do-check-act) cycles that are commensurate to the level of understanding and expertise of our people.

• Tosoh will undertake a review of both the quality and quantity of our current education and training systems in connection with technology and safety as they relate to our manufacturing departments, facilities management departments, and our contractors.
• We will undertake revisions of important educational materials such as operating manuals so that these materials convey comprehensive information that is easy-to-understand.
• Educational programs will be implemented to provide our people with the knowledge and expertise they need for unscheduled work and important tasks that are performed infrequently (such as operating plant sectional startups and complete shutdowns).

ii. Assessments of understanding and expertise

• We will improve our organization so that it can more quantitatively assess our people's understanding of Tosoh education and training programs as well as their level of expertise with regard to technology and safety with a view to improving their technical capabilities and awareness of safety.
• Not only will we improve the education programs we implement for newly-assigned personnel, we will also provide in-service training in basic process and operating technology for our mainstay and veteran personnel.

iii. Improvements in the education promotion organization

• We will strengthen the organization that provides practical education and training to disseminate fundamental education with the objective of improving human resources development, which is one of our most important tasks.

Tosoh will ensure that safety reform activities are an ongoing and fundamental element of our mission, and not a transient phenomenon. Each and every one of our employees must remember this accident so we can all build an organization in which safety reform is positively implemented and in which reforms and improvements are made continuously.

i. Activities to sustain institutional memory

• November 13 will be designated a company-wide "Safety Day" to ensure that all of our employees share in Tosoh's determination to create safe workplaces and that none of us forget the lessons of this accident. On November 13, a variety of activities will be held with the objective of creating a culture of safety.

ii. Job Analysis

• Periodic job analysis will be held in all departments to adjust workloads and to ensure safety reform.

iii. Establishment of a safety reform promotion organization

• An organization will be put in place to support and follow-up on the safety reforms that are specifically implemented in each department on the basis of the Safety Reform Guidelines to make sure that Tosoh establishes and maintains a culture of safety.

iv. Improved audits

• RC audits will be performed to make sure that RC activities are implemented in the PDCA cycle. These auditing items will incorporate "checks of the status of progress of safety reforms," and the company will systematically assess the state of progress of safety reforms.
• Third parties will conduct reviews of the implementation of RC audits, and will provide objective assessments of the degree to which Tosoh has established and is maintaining a culture of safety.

v. Resource allocation systems

• Separate budget lines will be established for the independent and timely implementation of workplace reforms at Tosoh manufacturing and facilities management departments, and the manufacturing complexes will be given budgetary authority over these budget lines.
• Methods will be reconstructed and the system for budget allocation will be reviewed to minimize the problems associated with facility maintenance.

An action plan will be drafted to clarify the action items and schedule in order to achieve the safety reform objectives on the basis of these guidelines.

• Implementation plan will determine the responsible departments and priorities of each action item.
• The promotion organization responsible for providing continuous support of safety reform activities will manage and follow-up on the action plan.
• The action plan will be revised at least annually on the basis of activity audit results through RC audits and the like.

TOSOH CORPORATION