Operating the OSHMS*Systems and contact points for consultationPromoting local employment at our overseas plants and participating in local communities

Environment

Social

● Examples of responses● Issues

● Examples of responses● Issues

Ⓣ Limestone quarry ● Waste-related facilities, electric generation plant, steel mills, piggeries Ⓣ Cement plant Ⓣ Ash center

Waste heat power generationUsing alternative energy resourcesUsing alternative raw materials

CO₂ emissionsEnergy consumptionResource productivity

● Examples of responses● IssuesCO₂ emissionsResource recyclingConservation of biodiversity

Reducing consumption of natural resources by using wasteEnvironmental impact assessmentProtecting species, and greening

Occupational health and safety and human resource developmentRespect for diversity and human rightsCommunity vitalization

Stakeholder Major Opportunities for Engagement Major Expectations and Demands

Economy Society Environment

Shareholders Shareholders, investors and financial institutions

◦Publication of various reports (financial statements, annual reports and CSR reports, etc.) ◦ Website and IR site ◦IR activities ◦Response to surveys

◦Management stability and growth potential ◦Stable redistribution of profits ◦Information disclosure

◦Effective allocation of management resources ◦Information disclosure

◦Effective allocation of management resources◦Information disclosure

Customers Sales agents, ready-mixed concrete companies, ordering parties and waste disposal companies

◦Sales contact at the head and branch offices ◦User societies and industry associations ◦Technical journal and product catalogue ◦Technical workshop ◦Website

◦Stable supply of products ◦High value-added products ◦Improved economic efficiency of waste disposal

◦Maintenance of product quality and safety ◦Provision of information on product use ◦Technical support for product use ◦Response to complaints ◦Improved resource circulation in the community

◦Provision of environmental products◦Reduced environmental impact from waste treatment

Employees◦Labor-management consultation and briefing sessions ◦Training programs ◦Setting up contact points for consultation and whistleblowing ◦Website and intranet ◦In-house newsletter ◦CSR report

◦Payment of reasonable price◦Respect for human rights ◦Respect for diversity ◦Elimination of discrimination; fair evaluation and equal opportunity ◦Secured occupational safety and improved work environment ◦Support for skill and career development ◦Ensuring opportunities for conversation

◦Promotion of environmentally sound management

Society

Local communities in which we do business

◦Briefing sessions, debriefing sessions, tours and monitoring programs◦Social contribution activities ◦CSR reports ◦Dialog ◦Sharing social costs

◦Contribution to infrastructure development ◦Product quality ◦Maintenance of safety ◦Job creation ◦Respect for human rights and the community ◦Social contribution activities ◦Information disclosure

◦Reduced environmental impact on the community◦Countermeasures to mitigate climate change◦Use of alternative energy ◦Improved energy efficiency ◦Conserving biodiversity ◦Information disclosure

Local governments ◦Notifications to local governments ◦CSR reports ◦Dialog ◦Tax payment

NGOs and NPOs ◦Meetings and gatherings ◦Surveys ◦Dialog ◦Social contribution activities ◦Activity support and sponsorships

SuppliersBusiness partners (procurement) ◦Procurement briefing sessions

◦Payment of reasonable price◦Equal and fair relationships ◦Respect for human rights ◦Secured work safety and improved work environment

◦Fair evaluation of environmental considerations◦Support for environmental measures ◦Promotion of environmentally sound management

Partner companies (facilities operation) ◦The Health and Safety Cooperative Committee

■ Key Stakeholders of the Taiheiyo Cement Group

* Occupational Safety and Health Management System

■ Major Issues and Examples of Responses by the Taiheiyo Cement Group at Each Phase Ⓣ : Taiheiyo Cement Group　● : External organizations

Procurement of Raw Materials Production

The Taiheiyo Cement Group followed the four steps shown to the right to determine the material issues it must address through its business.

Construction site

Material Issues and Approach of the Taiheiyo Cement Group

Key StakeholdersWe strive to fulfill our responsibilities in response to the expectations and demands of stakeholders while directly and indirectly maintaining sound relationships with them. Listed right are the Taiheiyo Cement Group’s key stakeholders, identified through consideration of our business characteristics and environment.

We organized our environmental and social issues based on an overview of our value chain.

Identification of Issues1

STEP

▶G4-2, 11, 12, 18, 19, 20, 21, 24, 25, 26, 27, 48, DMA

Steel millPower plant

Cement plant

Limestone quarry

Water supply and drainage treatment plant

Ash center and recycling center

Waste disposal company

Waste incineration plant

By-products including coal ash and gypsum from coal-fired power plants and slag from steel mills, construction soil, household waste, and water and sewage treatment sludges are respectively used as alternative raw materials and fuels for cement and cement constituents.

Limestone, the main raw material of cement, and other resources are quarried.

TAIHEIYO CEMENT CSR REPORT 201512

Ⓣ Group companies Ⓣ● Ready-mixed concrete plantsⓉ● Transport of raw materials, fuels and products by land and sea Ⓣ Service stations

Strengthening the management of each mode of transportation and improving transportation functionsMitigating impacts on traffic by using rail

Providing products and technical services that contribute to social infrastructure developmentProviding technical support; training engineers in developing countries

● Examples of responses● Issues ● Examples of responses● IssuesStable supplyMitigation of impacts on traffic

Building safe and secure social infrastructure

Transportation by land: round-trip transportation, eco-drivingTransportation by sea: electric propulsion ships and energy-saving operationsService stations: reusing cement as a cement material

Providing environmentally sound products, technologies and servicesReusing waterRecovering aggregates from concrete returned from construction sites

CO₂ emissionsEnergy consumptionWaste generation

Creation of a recycling-based society

● Examples of responses● Issues ● Examples of responses● Issues

Stakeholder Major Opportunities for Engagement Major Expectations and Demands

Economy Society Environment

Shareholders Shareholders, investors and financial institutions

◦Publication of various reports (financial statements, annual reports and CSR reports, etc.) ◦ Website and IR site ◦IR activities ◦Response to surveys

◦Management stability and growth potential ◦Stable redistribution of profits ◦Information disclosure

◦Effective allocation of management resources ◦Information disclosure

◦Effective allocation of management resources◦Information disclosure

Customers Sales agents, ready-mixed concrete companies, ordering parties and waste disposal companies

◦Sales contact at the head and branch offices ◦User societies and industry associations ◦Technical journal and product catalogue ◦Technical workshop ◦Website

◦Stable supply of products ◦High value-added products ◦Improved economic efficiency of waste disposal

◦Maintenance of product quality and safety ◦Provision of information on product use ◦Technical support for product use ◦Response to complaints ◦Improved resource circulation in the community

◦Provision of environmental products◦Reduced environmental impact from waste treatment

Employees◦Labor-management consultation and briefing sessions ◦Training programs ◦Setting up contact points for consultation and whistleblowing ◦Website and intranet ◦In-house newsletter ◦CSR report

◦Payment of reasonable price◦Respect for human rights ◦Respect for diversity ◦Elimination of discrimination; fair evaluation and equal opportunity ◦Secured occupational safety and improved work environment ◦Support for skill and career development ◦Ensuring opportunities for conversation

◦Promotion of environmentally sound management

Society

Local communities in which we do business

◦Briefing sessions, debriefing sessions, tours and monitoring programs◦Social contribution activities ◦CSR reports ◦Dialog ◦Sharing social costs

◦Contribution to infrastructure development ◦Product quality ◦Maintenance of safety ◦Job creation ◦Respect for human rights and the community ◦Social contribution activities ◦Information disclosure

◦Reduced environmental impact on the community◦Countermeasures to mitigate climate change◦Use of alternative energy ◦Improved energy efficiency ◦Conserving biodiversity ◦Information disclosure

Local governments ◦Notifications to local governments ◦CSR reports ◦Dialog ◦Tax payment

NGOs and NPOs ◦Meetings and gatherings ◦Surveys ◦Dialog ◦Social contribution activities ◦Activity support and sponsorships

SuppliersBusiness partners (procurement) ◦Procurement briefing sessions

◦Payment of reasonable price◦Equal and fair relationships ◦Respect for human rights ◦Secured work safety and improved work environment

◦Fair evaluation of environmental considerations◦Support for environmental measures ◦Promotion of environmentally sound management

Partner companies (facilities operation) ◦The Health and Safety Cooperative Committee

Use of ProductsLogistics and Supply

Headquarters: management of activities under our Long-term CSR Vision Central Research Laboratory: research and development for each phase of our value chain

Taiheiyo Cement’s value chain, the flow of our business activities from raw material procurement through to production, transportation and distribution of products, and including disposal and recycling, is expanding worldwide. To fulfill our responsibilities in response to public expectations and demand throughout the value chain we are addressing various environmental and social issues toward realizing a sustainable society.

Process PrioritizationIdentifi cation of Issues Validation Review2

S T E P

1S T E P

3S T E P

4S T E P

Ready-mixed concrete plant

Coal transport

Overseas sites

Service station

Headquarters and Central Research Laboratory

Group companies and society

Sea transport

Land transport

The word Taiheiyo means “Pacific Ocean” in Japanese and the Taiheiyo Cement Group has business bases quite literally all around the Pacific Ocean, including the West Coast of the U.S., China and Southeast Asia.

TAIHEIYO CEMENT CSR REPORT 2015 13

We identified sustainability issues while referring to international guidelines and stakeholder feedback in the context of our business. Through internal meetings we then determined our priorities based on a materiality analysis of stakeholder impact and importance for the group, resulting in 15 priority aspects of the material issues.

The review has been implemented every fiscal year for the report issued.We confirmed the Principles of Completeness and Stakeholder Inclusiveness are applied to finalize the identification of the report content.

➡ Discussion at the CSR report editing task force meeting

➡ Reporting and approval at the CSR Management Committee

●Internally

➡ Report booklets are distributed to all employees of the Taiheiyo Cement Corporation and a questionnaire survey is conducted

➡ CSR report briefing sessions are held at all business sites and plants (26 sessions in fiscal 2014)

● Externally

➡ Third-party opinion by experts

➡ CSR report questionnaire survey

➡ Review by external advisors

Prioritization

Review

2STEP

■ Material Issues and Approaches of the Taiheiyo Cement Group

Categories Material AspectsBoundaries of Major Impact

Management ApproachesReport PageInternal External

EconomicEconomic Performance Policy: • Conducting business activities in accordance with our 14 Medium-term

Management Plan (fiscal 2012 to fiscal 2014)07,

60–64Indirect Economic Impact Areas around plants

Environmental

Materials Industry and regional waste-related facilities Policy:

System:

Evaluation:

• Environmental management policy• WBCSD-CSI “CSI Charter”• All plants, head office, branches and the Central Research Laboratory are operating in

compliance with ISO 14001 under the Environmental Management Committee• Setting up the Mitigating Climate Change Countermeasures Committee• CSR Objectives for 2025• Group environmental targets and KPIs based on the CSI Charter

34–47

EnergyBiodiversity Areas around plants

EmissionsProducts and Services Society

Compliance

Social

Labor Practices and Decent Work

Occupational Health and Safety Partner companies

Policy:System:

Evaluation:

• Occupational Health and Safety Policy• The Health & Safety Committee has been set up and the OSHMS has been running in

all plants and mines• CSR Objectives for 2025• Data on health and safety including information from partner companies

58–59

Diversity and Equal Opportunity

Policy:

System:

Evaluation:

• The Basic Policy Concerning the Development of Human Resources• The Basic Policy Concerning Diversity• Development of a long-term human resource development system, a fair evaluation

system and comfortable working environments• CSR Objectives for 2025 • Quantitative targets for diversity• Monitoring various kinds of personnel data

54–57

Human Rights Investment

Policy:

System:

Evaluation:

• Identifying human rights as a material issue in the Mission of the Taiheiyo Cement Group and the Basic Policy of CSR

• Promoting company-wide activities under the Human Rights Committee• Contact points for counseling• Managing progress according to the company-wide action plan and facilitating the

exchange of opinions and negotiations at labor-management consultations

24–25,

54

Society

Local Communities Areas around plants

Policy:

System: Evaluation:

• Identifying Communication with Communities as a material issue in the Mission of the Taiheiyo Cement Group and the Basic Policy of CSR

• Promoting company-wide activities by the Stakeholder Communication Committee• Managing progress and sharing information under the company-wide action plan

24–25,

60–64

Compliance

Policy:

System:

Evaluation:

• Basic Compliance Policy • Compliance Stipulation• Implementing company-wide activities by the Risk Management & Compliance

Committee • Strengthening the system through whistleblower programs• Activity evaluation (audit) system as part of our internal control systems

29–33

Product Responsibility

Customer Health and Safety

Cement usersSociety

Policy:System:

Evaluation:

• Quality Policy• A unified ISO 9001-based management system for product development, design

and production• Technical support in the framework of Taiheiyo Brand Cement/Concrete (TBC) activities• Analyzing suggestions and inquiries related to quality• Regularly disclosing safety-related data on our website

48–51Product and Service Labeling Cement users

In the process of Steps 1 and 2 we referred to: ◦GRI Sustainability Reporting Guidelines [G4] ◦ ISO 26000 ◦AA1000SES (AA1000 Stakeholder Engagement Standards) ◦SRI Survey ◦ Internal questionnaire and feedback surveys ◦Stakeholder dialog ◦CSR report questionnaire survey ◦Opinions and advice from outside experts and advisors

Validation3STEP

4STEP

Materiality for Taiheiyo Cement(contribution to the issue and our growth)

Economic PerformanceIndirect Economic Impacts

MaterialsEnergyBiodiversityEmissionsProducts and ServicesCompliance

Compliance

Occupational Health and SafetyDiversity and Equal OpportunityHuman Rights (Investment)Local Communities

Customer Health and Safety Product and Service Labeling

Economic

Environmental

Society

● Material Issues

Materiality for stakeholders

(level of public expectations)

HighLow

High

TAIHEIYO CEMENT CSR REPORT 201514

In May 2015 we formulated the CSR Objectives for 2025 as a driving force for addressing material CSR issues toward the group’s ultimate goal of becoming a pioneer in creating a sustainable future.

In 2007 we created the Long-term CSR Vision which describes the goals we have been working to achieve for ten years into the future. After facing a number of challenges, however, including a lack of indices for evaluating achievement, we began to consider revising this vision. Following a series of task force discussions we decided to abolish the Long-term CSR Vision and set long-term quantitative targets for realizing our goals for the future.

CSR Objectives for 2025 are the long-term quantitative targets we intend to achieve in the course of becoming a “pioneer in creating a sustainable future for the earth,” as stated in our mission, and represent a vision of the future of the group. They are positioned as strategic targets for strengthening our management foundation under the 17 Medium-Term Management Plan.

CSR Objectives for 2025

Formulating the CSR Objectives for 2025

Positioning

Reviewed the VisionHeld review meetings (nine) and a stakeholder dialog

Established CSR Objectives for 2025 (May 2015)Approved by the CSR Management Committee and Board of Directors and established

Formulating CSR Objectives for 2025

17 Medium-Term

ManagementPlan

Strengthening ourmanagement foundation

Business strategies

CSR objectivesfor 2025

Taiheiyo Cement Group

Formed the Task Force (October 2014)Comprised of secretariats of specialized committees under the CSR Management Committee

management foundation

Mission ofthe group

Goals and future

direction

Business principles

Established on May 1, 2015

Target fi scal year: 2025

Ⅰ. Prevention of AccidentsTarget: Zero fatalitiesPolicy for achieving the target: (1) Promote safety activities that ensure all employees of the group, affiliated companies and partner companies can independently

implement PDCA cycles within each company.(2) Improve working environments to eliminate incidents of workers being caught by or sucked into equipment or falling.

Scope of implementation: Employees of the Taiheiyo Cement Group including overseas business sites and partner companies

Ⅱ. Reduction of Greenhouse Gas EmissionsTarget: Reduce the specific net CO₂ emissions per tonne of cementitious product by at least 10% from fiscal 2000 levels by fiscal 2025.Policy for achieving the target: (1) Further contribute to creating a recycling-based society.

• Promote the global expansion of our recycling technologies for producing cement with conventional waste and by-products.• Promote the development of technologies for handling wastes that are difficult to recycle, with a focus on reusing them as

alternative energy resources.(2) Promote further energy saving.

• Introduce energy efficient equipment and install additional in-house power generation equipment such as waste heat power generation systems.

• Promote further energy saving by using mainly new renewable energy sources.(3) Promote R&D activities that contribute to reducing global environmental impact, including R&D into innovative cement

production technologies.• Promote the development of new technologies for practical applications.

Scope of implementation: Cement production sites of Taiheiyo Cement and group companies, including overseas sites

Ⅲ. Workplace DiversityTarget: Increase the ratio of female employees under “G Course” categories to at least 30%.

Build an appropriate portfolio of human resources by increasing the ratio of female employees to at least 10%.Promote the appointment of female employees to management positions with the objective of raising the ratio of newly appointed female managers to 10%.

Policy for achieving the target: (1) Build an appropriate portfolio of human resources and actively promote attraction and retention strategies for recruiting and keeping talented women, while also implementing initiatives to achieve this goal.

(2) Improve productivity and promote work-life balance management toward building an organization in which a variety of human resources can fully demonstrate their abilities in the workplace, while also implementing initiatives to achieve this goal.

Scope of implementation: Non-consolidated

TAIHEIYO CEMENT CSR REPORT 2015 15