KSA Sustainability Report

KSA Sustainability Report

2011-2012

Photograph by Hidetoshi Nomoto

TABLE OF CONTENTS

Welcome Statement 3

Management Culture 7

Conservation 11

Community 14

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Kao Specialties Americas

WELCOME STATEMENT

Kao Specialties Americas made a monumental shift in 2011 when we issued our first Corporate Social Responsibility Report demonstrating our commitment to supporting activities that enhance the overall corporate values of Kao Corporation. In 2013 as we issue our second bi-annual report, I’m proud to say that our commitment towards a sustainable society has not changed. We continue to focus on activities that “enrich the lives of people” by reducing our carbon footprint, sourcing alternative materials for our products that are environmentally friendly, and seeking philanthropic activities that benefit charities and local community programs. It is our goal to continue earning the respect and trust of you, our stakeholders, by building on the principles of Yoki-Monozukuri, innovation, and integrity – the values defined in The Kao Way. This commitment runs deep within all members of Kao Specialties Americas, and this report provides numerous examples of our dedication to our corporate values and long-term sustainability activities of 2011-2012.

The Kao Way (TKW)

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Kao Sustainability Statement

Kao’s mission is to strive for the wholehearted satisfaction and enrichment of

the lives of people globally and to contribute to the sustainability of society.

By developing innovative products and services, we work to conserve the

environment and foster well-being in the communities we serve now and in

the future.

To do this, in partnership with our stakeholders, we promote a culture of

integrity in everything we do and we provide a workplace that maximizes the

potential of each and every one of our employees.

To advance our business responsibly and sustainably, we are focusing our

efforts on the three key areas of Conservation, Community and Culture.

Day-to-Day Work / Basic Activities Page | 4

Kao Specialties Americas

Company Profile…

Kao Specialties Americas LLC (KSA) is a wholly owned subsidiary of Kao Corporation, Tokyo, Japan. Established in 1887, Kao Corporation is a global company that develops, manufactures and markets personal hygiene, laundry, food, cosmetic, and specialty chemical products. The majority of our global product lines are based on surface active or “surfactant” chemistries.

KSA’s manufacturing facility is located on a 60-acre site in High Point, NC. The site houses administrative and sales offices, R & D labs, warehousing, a biological waste treatment plant and three manufacturing plants:

Performance Chemicals Production Unit (Plant 1)

Surfactant Production Unit (Plant 2)

Toner Binder Production Unit (Plant 3)

Our business is as diversified as our chemistries. As a chemical company, we are constantly expanding our capabilities and developing new markets to help build a sustainable society.

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“Committed to the values and principles of its corporate culture.”

Statement of Commitment

Kao Specialties Americas LLC is a specialty chemical manufacturing company located in High Point, NC and is a proud member of the Kao Corporation family. As part of the Kao global family, our actions are guided by our commitment to The Kao Way philosophy of Yoki-Monozukuri, which can be defined as providing products of excellent value for customer satisfaction. Quality, health, safety and protection of the environment are all integral parts of our Integrated Management System.

We embrace Kao’s environmental philosophy of ‘eco together.’ We will design products and processes that minimize the impact to our environment and protect the health and safety of our employees, neighbors and consumers.

As a team, we will continuously improve in all aspects of our business by measuring performance against objectives and targets.

We will comply with the guiding principles of Responsible Care® and all other legal and

agreed to requirements.

Our employees are committed to this policy and we are proud to share our quality, health, safety and environmental commitment with the public.

Hideaki Fujioka - President Kao Specialties Americas LLC

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Integrated Management System

Management Culture

Management Culture

Corporate Governance

KSA’s position on corporate governance directly reflects Kao Corporation’s basic philosophy and

interpretation. KSA positions corporate governance as a key management subsystem and

operates the fundamental governance systems by: 1) The development and use of a robust

management operating system, 2) The development and operation of a strong internal control

system, and 3) The subsequent audit/ governance by an internal audit function to make sure all

operating systems are functioning as outlined. KSA believes that investment in strong

management systems and internal controls will contribute to increasingly transparent

management and will continually increase shareholder value.

The foundation of the internal control system at KSA is a comprehensive set of operating policies

and procedures as well as through the interpretation of the Kao Global and KSA local policy

manual and approval level policy. These operating policies are reviewed and tested on an

annual basis to ensure that the policies continue to apply to the current operating environment.

The approval level policies are reviewed on a monthly basis for any necessary changes and to

make sure the policy continues to reflect and apply to the current operating environment.

To ensure compliance and continuous improvement against these operating policies and

procedures internal audits are performed on a routine basis by the corporate audit staff

(organization formed by Kao in 2008) as well as monthly audits by internal KSA staff.

Hideaki Fujioka

President and

Chief Executive Officer

Terry Singleton

Executive VP

Kenji Omori

Vice President

Oleo & Specialties

Peter Gursky

Vice President,

Operations andEngineering

Gerald Sykes

Vice President,Finance and

Administration

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Management Committee

Improvements and Innovation


Management Culture

Integrated Management System

KSA’s Integrated Management System (IMS) is a comprehensive program that includes KSA’s

environmental, health, safety, security, and quality management systems. KSA is currently

certified in both ISO9001 and RC14001. ISO9001 is the standard for quality management.

Certification indicates a company’s commitment to quality, meeting customer needs, and

focusing on continuous improvement. RC14001 is the standard related to environment, health

and safety and security. Prevention of injuries, legal compliance, increased security and waste

minimization are some of the benefits to RC14001. Both the ISO9001 and RC14001 standard

have been combined in KSA’s IMS to take advantage of the synergy designed in both

standards.

The IMS is applicable to all departments within KSA, and employee participation is essential to

the success of KSA. External auditors are welcomed each year to review conformity to the

ISO9001 and RC14001 standards. Thanks to the employees, KSA once again was

recommended to maintain the certifications. KSA has established the IMS as its foundation for

continual improvement and organizational excellence.

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Management Culture

Customer Satisfaction

KSA strives for 100% customer satisfaction. However, in those cases where we do not fully

meet customer expectations, we capture the issue in our customer complaint system. In 2011,

KSA adopted the Kao Global ECHO tool for managing the root cause identification and

corrective action processes, and in 2012 we modified our local compliance

processes/documents around this intranet tool. Now we have the advantage of a sophisticated,

process driven system to address our customers’ issues as well as a global tool where we can

interact with our affiliates and share corrective actions across regions. Moreover, we now

review customer issues across the entire company and look for trends before they become a

problem for other customers.

Historical Customer Complaint Rate (% of Orders):

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Management Culture

Product Quality

At KSA our ultimate goal is 100% right-first-time product quality. The High Point site has three manufacturing plants:

Plant 1: Performance Chemicals Production Unit

Plant 2: Surfactants Production Unit

Plant 3: Toner Binder Production Unit

Over the recent years, an intensive program has been implemented to improve the right-first-time product quality that includes:

Capital Investment

Operator Training and Certification

Technical Staffing Expansion

Root Cause Analysis

Corrective and Preventive Action

Weekly Product Quality Meetings

Inclusion of product quality into company and personal goals

Comprehensive new product introduction procedures

As shown in the graph, the right-first-time product quality for Plants 1 and 2 has increased from

97% in 2007 to greater than 99% in 2012.

This accomplishment results in greater customer satisfaction, reduced use of natural resources,

lower energy consumption and a safer work environment.

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Management System

Conservation

Health, Safety, Environment & Security

KSA is committed to the principles outlined in The Kao Way and the Kao Sustainability

Statement. The Health, Safety, & Environmental (HS&E) department is responsible for

ensuring that our corporate activities do not present a risk to the health and safety of our

stakeholders which include our employees, customers, community, and the environment.

Concurrently, KSA’s safety and environmental programs must implement the requirements

specified in the many regulatory standards to which we are responsible, including OSHA

Process Safety Management, EPA Risk Management Program, and the Department of

Homeland Security Chemical Facility Anti-Terrorism Standards. The principles of The Kao Way

and Kao’s Sustainability statement integrate seamlessly with these regulations, resulting in a

robust, well-defined HS&E program.

To most effectively manage our HS&E program, the primary tool in use at KSA is the RC14001

environmental management system. RC14001 incorporates employee safety, site security, and

network security with environmental stewardship, resulting in an effective environmental

management system. By adhering to the guidelines of RC14001, we are able to incorporate

Sustainability into our daily activities at KSA, protecting our employees and community while

striving to ensure that KSA is contributing to a sustainable future. RC14001 requires well-

defined procedures to manage Sustainability and requires that KSA implements a rugged Plan-

Do-Check-Act cycle to continually measure and improve our environmental performance.

To further enhance our RC14001 program, KSA participates in the Environmental Stewardship

Initiative (ESI), a voluntary program administered by the North Carolina Department of

Environment and Natural Resources. The mission of ESI is “to promote and encourage

superior environmental performance by North Carolina’s regulated community” by developing

programs which go beyond the requirements of any permit or regulation. The ESI mission is

met by a combination of technical assistance from the ESI staff at NCDENR as well as

networking with other members within the ESI community to identify innovative Best

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Reducing environmental impacts of our business activities

Conservation

.

Management Practices. KSA has been a member of the ESI community since 2006. Further

information can be found at the ESI website (http://portal.ncdenr.org/web/deao/outreach/esi)

KSA has continued to build on our previous successes in HS&E management. In December

of 2012, KSA surpassed the 1,000,000 man-hours without a lost-time injury, representing over

3 years of continuous safe operations. In addition to our success in employee safety, KSA has

implemented improvements in our Process Safety Management program by introducing a

more robust Management of Change system and revitalizing our Mechanical Integrity program.

The changes introduced are reflected in a reduction of the number of HS&E incidents recorded

in 2011 and 2012 (2011: 25% reduction relative to 2010; 2012: 54% reduction relative to

2010). KSA has also increased focus on environmental objectives and targets, resulting in

improvements in recycling, reduction of water consumption, and reduction of material wastage.

Historical OSHA Recordable Injury Rates

Historical Water Consumption Rate

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Conservation

.Global Warming Prevention

Kao Specialties Americas is committed to doing its part to prevent and sustain our environment by

implementing environmentally-conscious strategies directed at minimizing the effects of global

warming in our day-to-day operation. Our “eco action” strategies have included but not limited to the

following: installation of high efficiency steam boilers, installation of an economizer, improvement of

hot oil boiler system, usage of high efficiency motors, installation of dissolved oxygen meter for

waste water treatment plant, reduction of steam leaks, and minimization of unnecessary energy

usage.

As a result of our “eco action” strategies, we have made significant progress. In 2012, our natural

gas consumption per production was reduced by 45% over 2005. Moreover, electricity consumption

per production volume was also reduced by 78% over 2008. These are just some examples of

KSA’s commitment to seeking solutions designed to minimize our impact on global warming.

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Community

Kao Specialties Americas LLC works to establish itself as a responsible corporate citizen. In

2012, KSA and its employees participated in many community activities and supported many

organizations with their generous giving.

Kao Specialties is a responsible corporate citizen by our effort to recycle materials at work

such as paper, Styrofoam, batteries, aluminum, and plastic bottles. In addition, we have

adopted a portion of a local roadway through the “Adopt-A-Highway” program. Approximately

twenty employees participate by going out once a quarter to pick up trash that has been thrown

out by motorists along the roadway. KSA has also supported the City of High Point in their

environmental revitalization of several city neighborhoods through a tree-planting project.

Employees gathered to help plant trees in several locations throughout the city.

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Partnering with Local Community

Adopt-A- Highway

Community Tree Planting Project

Community

In November 2012, Kao Specialties Americas responded to help those in need after the

destruction left by Hurricane Sandy. It was the deadliest and most destructive hurricane of the

2012 Atlantic hurricane season. The severe and widespread damage the storm caused in the

United States, as well as, its unusual merge with a frontal system, resulted in the nicknaming

of the hurricane by the media and several organizations of the U.S. government as

"SuperStorm Sandy". KSA sent “Flood Buckets” to help residents of the area clean up after

the storm. The five gallon buckets were filled with cleaning supplies, bug spray, air fresheners,

dust masks, work gloves and scrub brushes.

KSA began a new volunteer opportunity in 2012 by supporting the Miracle League of High

Point. This organizations’ vision is to see that every child has an opportunity to play baseball.

Their mission is to provide children with special needs a place to play baseball regardless of

their abilities, increase community awareness, and maintain funding for the league. KSA

employees volunteer to be a buddy to the children during their games.

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Sandy Flood Buckets

Miracle League of High Point

http://en.wikipedia.org/wiki/Tropical_cyclone

http://en.wikipedia.org/wiki/2012_Atlantic_hurricane_season

Community

In addition to these CSR activities, KSA also supports the local United Way, the U.S. Postal Service Food

drive, volunteering at a local school to teach origami, and annually participates in the 5K walk for the

Juvenile Diabetes Research Foundation (JDRF).

Please forward any inquires to:

Kao Specialties Americas LLC 243 Woodbine Street PO Box 2316 High Point, NC 27261 USA TEL: 800.727.2214 FAX: 336.884.8786 CSR Report is also available at http://chemical.kao.com/us/. Issued: September 1, 2013

Local NASCAR Racing

JDRF


http://chemical.kao.com/us/

KSA Sustainability Report

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