Prevention of Pollution

ITOCHU's Environmental Policy states in item (3) that within its business activities, ITOCHU shall prevent and reduce environmental pollution caused by chemical substances and oils, reduce emissions of air pollutants, and reduce and properly process hazardous waste and wastewater. In addition, as stipulated in item (1) of our Environmental Policy, ITOCHU will fulfil its responsibility by enacting the following statement: We shall comply with international declarations, agreements, and treaties, as well as with the laws and regulations of the countries and regions in which we operate. We shall also comply with any other agreements that we have consented to.

Resource Circulation

As per item (4) of our Environmental Policy, ITOCHU "contributes to the formation of a circular society by promoting the sustainable use of resources (such as fossil fuels, minerals, food, animals and plants), resource conservation measures, and waste reduction and recycling across our business investments and the supply chain of our products and services."
On April 2018, we announced material ESG (environment, society, and governance) issues that must be managed for the sustainability of the business and society. Among them, the topic of "stable procurement and supply" stood out as one of our most important issues. We therefore aim to realize a circular society by incorporating environmental considerations, including biodiversity, making effective use of natural resources, and stably procuring and supplying resources in line with the demands of each country.

Ensuring Legal Compliance by the Chemicals Division

The chemicals and synthetic resins handled in the Chemicals Division and the products made with these are used in every aspect of our lives. This means that they are extremely useful. On the other hand, many of these chemicals are toxic or dangerous in nature. Therefore, they are regulated by a great many related laws and regulations in various settings (e.g., manufacture, sales, transportation and storage).
These chemicals are connected to serious problems concerning public health and environmental conservation. Accordingly, the laws and regulations on the trading of chemicals are diverse and extremely strict. The penalties for violating these laws and ordinances are also very heavy. Many chemicals require permission to be handled as products. However, if this permission is revoked as a result of violating laws and ordinances, it could seriously affect the business of the Chemicals Division.
There is an international trend to minimize risks at the level of the entire supply chain of chemicals. Against this background, both advanced nations and developing nations have started to introduce new regulations and to make large-scale revisions to existing regulations. Consequently, the regulatory environment in the handling of chemicals is expected to become ever stricter in the future.
With awareness of the above, we recognize the importance of compliance with laws and ordinances in addition to knowledge of products and the industry as a company that handles chemicals. Our basic policy is that each individual should engage in business in accordance with the requirements of laws and ordinances upon correctly understanding the laws and regulations concerning the products that they are in charge of handling.

Due diligence regarding pollution prevention and resource circulation in business investment projects

We assess in advance the impact on the market, society and the environment by business investment projects in Japan and overseas engaged in by ITOCHU and our Japanese subsidiaries. We do this with the ESG Checklist for Investment, which includes assessment criteria to evaluate performance on pollution prevention and resource circulation among potential investments. We make requests to external specialist organizations to conduct investigations in advance for projects requiring a professional point of view. The project is then only undertaken upon confirming that there are no problems in the results of those investigations.

ITOCHU considers ensuring stable procurement and supply to be a material issue. We work to effectively utilize and to ensure stable procurement and supply of resources according to demand in each country with consideration for the environment (e.g., biodiversity). In doing this, we are aiming for a recycling-oriented society.

Compliance with laws and regulations in the divisions handling chemical substances

At ITOCHU, the Chemicals Division has cross-functional oversight of our management of chemical substances. This includes oversight of the sales departments that handle chemical substances, which sit within the Chemicals Division, as well as relevant subsidiaries that handle chemical substances. In addition, the Chemicals Division has oversight of any sales divisions and subsidiaries outside of their direct control if chemical substances are used.
We strive to comply with laws and regulations through a management method based on a combination of thorough inquiries to specialized external consulting organizations and the use of a centralized management system to track environmental legal compliance. The management system was developed internally in 2016 and allows us to confirm and record applicable laws and measures at the chemical substance level for each product. We also provide training and educational opportunities to relevant sales staffs, supplemented by e-learning materials and handbooks that summarize the main points of relevant laws.
The external consulting organization that we currently employ for chemical substance management is Techno Hill Co., Ltd. (Headquartered in Chuo-ku, Tokyo; Representative Director: Kazuyuki Suzuki). Techno Hill has comprehensive knowledge regarding the field of chemical substances and provides us with informed advice on management systems, applicable laws and regulations for each product, and general trends movements in the industry.

Management Structure for Emergency Response and Accident Response

ITOCHU responds as below in accordance with our accident and emergency response regulations.
If an accident occurs during the handling or storage of toxic or hazardous substances, we respond as follows in line with the Pharmaceutical Key Toxic and Hazardous Substance Risk Prevention Procedures Manual.

• We will make reports as necessary according to the emergency contact network in the above manual. In addition, we will take prompt action to limit the risks caused by toxic and hazardous substances.
• In the event of splashing, leaking, outflow, seepage or penetration underground, we will immediately notify the health care center, police station or fire department to that effect when there is a fear of a risk to the health of an unspecified or large number of people. At the same time, we will take measures to prevent risks to health.

Acquisition of ISO22301 Certification Aiming for a Safe, Secure and Resistant-to-Disaster Tank Terminal

Nagoya Chemport, which is managed and operated by Chemical Logitec Co., Ltd., plays an important part in the supply chain that includes Nagoya and its environs. Its main business is to receive, store and dispense liquid chemicals at Nagoya Port No. 9.
The company spent two years educating and training its employees, enhancing its facilities and developing its structures with the aim of ensuring a safe, secure and resistant-to-disaster chemport. This has been done in preparation for the Nankai Trough Earthquake predicted to strike in the future based on lessons learned from the Great East Japan Earthquake that occurred on March 11, 2011. As a result of these initiatives, the site acquired initial ISO22301:2012 certification on May 1, 2014; it was then re-certified on June 15, 2017.
ISO22301 is a management standard to minimize the impact on stakeholders, including customers, and elevate the abilities of organizations to continue providing services by promptly recovering from disasters and accidents that interrupt and hinder business. Nagoya Chemport broke ground to become the first company to acquire this certification in the chemical tank industry in Japan and among ITOCHU Group companies.
We are continuing to review issues inside and outside the organization and working to improve them. In FYE 2016, we provided safety measures training with a scenario of accidents occurring when there are few people to deal with them (e.g., at night and on holidays) in the presence of shippers. We also held night training again in FYE 2018 following on from FYE 2017 to check whether there were any problems with the support for that. We are continuing to work on ensuring safety in the event of a disaster with respect for human life as our number one priority. In addition, we repeatedly hold education and training for organizations and strive on a daily basis to respond to the trust placed in us by our customers.

Food Recycling

ITOCHU makes regular reports on the amount of food we discard and the amount we recycle in Japan to comply with the Food Recycling Law. We are striving to suppress the generation of waste and to promote recycling (e.g. conversion into feed) in line with the reference rate (recycling rate target).

• In FYE 2018, 1,001.0 tons were discarded due to a warehouse fire.
• FYE 2021 recycling rate target: 79.8%

Number One Trader in the World for the Cement Substitute of Blast Furnace Slag

Blast furnace slag is a by-product of the steelmaking process. Mixing and using it with cement as a cement substitute makes it possible to save natural resources (e.g., limestone – the raw material of cement). It is an environmentally friendly product that can reduce the CO₂ generated during manufacturing by about 40%* compared with when making concrete only with cement.
It is highly durable against seawater and the steel material in it is less likely to suffer corrosion over a long period of time. Therefore, it is widely used in large civil engineering projects at ports.
We have been selling blast furnace slag produced in Japan and overseas in around 10 countries since about 20 years ago. We handle of volume of blast furnace slag that makes us the number one trader in the world for it. In the future, we will build continuous and stable distribution channels and consider investing and participating in the slag business.

* Calculated at a 55:45 ratio for cement and blast furnace slag

Project to reduce our environmental burden with the introduction of side shrink wrap packaging

ITOCHU PLASTICS INC. (CIPS) is supporting the introduction of side shrink wrap film in all stores operated by FamilyMart Co., Ltd., its domestic area franchise company locations stores (collectively "FamilyMart") as an initiative to reduce our environmental burden. Side shrink wrap film covers only the area where the lids and containers meet for boxed lunch, sushi and noodle products.
FamilyMart completed the introduction of side shrink wrap packaging across Japan in February 2015.
The change from full shrink wrap packaging — which involves entire containers being packaged in wrapping — to side shrink wrap packaging makes it easier to open products, makes it easier to see their contents and offers a strong barrier performance. In addition to this, it reduces garbage, the plastic raw materials used in the packaging and also CO₂. This greatly contributes to a reduction in our environmental burden.

• FYE 2020 results (comparison with conventional wrap film): Approximately 533 ton reduction in plastic raw materials and an approximately 1,904 ton reduction in CO₂.

The corporate philosophy of CIPS is as follows: "Providing lifestyle comfort and convenience with chemical and plastic materials. A corporate culture of integrity propelling us forward, together. ITOCHU Plastics." CIPS is promoting corporate activities, including support for the introduction of shrink wrap film, that aim to balance a better global environment and economic growth. The firm is striving to conserve the environment and to contribute to the realization of a sustainable society.

Compliance with the Containers and Packaging Recycling Law

ITOCHU understands our own manufacturing and import volume of containers and packaging every year to recycle containers and packaging. We then pay a recycling fee to the Japan Containers and Packaging Recycling Association. The aim of this is to contribute to promoting the formation of a recycling-orientated society as a specified business operator prescribed by the Containers and Packaging Recycling Law.

The recycling fee we pay every year is as below.

Initiative Participation (Activities Through Business and Industry Groups)

We are participating in the Global Environment Subcommittee of the Committee on Environment and Safety – an environment and energy related committee of the Japan Business Federation (Keidanren). We are working to realize an environmental policy compatible with the economy (e.g., through promotion of voluntary action plans, and measures for global warming, waste and recycling and environmental risks including water management). We are also participating in the Global Environment Committee of the Japan Foreign Trade Council. We are striving to build a low-carbon society, construct a recycling-orientated society, and to support environmental related laws and regulations.

Paper Consumption

The table below gives our paper consumption for FYE 2016 to FYE 2019 (This is for the Tokyo Headquarters in FYE 2016 and for the total of all ITOCHU bases in Japan from FYE 2017 to FYE 2019). Our Tokyo Headquarters has set a target of reducing its paper consumption by 3% compared with FYE 2011 levels. We are working on reducing our paper consumption by going paperless and ending the use of unnecessary paper.

Waste Volume

The table below gives the waste volume generated in the Tokyo Headquarters, group companies in Japan, overseas offices and overseas group companies from FYE 2016 to FYE 2019. ITOCHU promotes the separation of garbage. Our Tokyo Headquarters has set a single year target of reducing its waste volume by 10% compared with FYE 2011 levels. We are working to reduce our waste volume through initiatives such as 2-in-1 and double-sided printing. The Tokyo Headquarters won the Minato Ward Waste Reducing Business Operator Commendation in FYE 2015.

Waste Recycling Rate

Hazardous Waste

Emissions of NOx, SOx, and VOC

Scope of Aggregation

1. The other business facilities cover business facilities owned or leased by ITOCHU (except facilities for residences).
2. The group companies in Japan and overseas cover consolidated subsidiaries directly invested in by ITOCHU (as of March 31, 2017) for FYE 2016 to FYE 2017. All consolidated subsidiaries are covered since FYE 2018 (coverage 100%).

Independent Assurance

Independent Assurance Report (1.5MB): The data below marked with a ❖ is independently assured through KPMG AZSA Sustainability Co., Ltd. This assurance conforms to the International Standard on Assurance Engagements (ISAE) 3000 and 3410 of the International Auditing and Assurance Standards Board (IAASB).
❖: Total electricity consumption and total CO₂ emissions attributable to the domestic bases of ITOCHU corporation (business facilities of the Tokyo Headquarters, the Osaka Headquarters, branches in Japan, domestic branches and other business facilities), and the waste volume, waste non-recycled, waste recycled, recycling rate, water consumption, gray water production volume and wastewater volume for the Tokyo Headquarters.

E-learning concerning compliance with chemicals-related laws and regulations

Handbook on chemical-related regulations

The first edition was issued in 2012, and a revised edition was released in 2016 and is currently being distributed. There are 32 laws and regulations covered in this handbook, each of which outlines important aspects of compliance requirements. The purpose of this handbook is to educate our employees, especially new recruits and sales personnel, on the laws and regulations specific to the chemical industry.