CDP. Module: Introduction. Page: Introduction. CDP 2017 Climate Change 2017 Information Request CC0.1

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1 CDP CDP 2017 Climate Change 2017 Information Request Mitsui Chemicals, Inc. Module: Introduction Page: Introduction CC0.1 Introduction Please give a general description and introduction to your organization. Chemistry is an industry that will be able to realize the dream of creating new wealth for people's lives. Mitsui Chemicals, Inc. (MCI) contributes to society by providing high-quality products and services to customers through innovations and creation of materials while maintaining harmony with the global environment (MCI's Corporate Mission). Here at MCI, we have 7 business sectors* to provide society with various inevitable materials for convenient, confortable and sustainable life. For further details, please refer to attached Corporate Profile and Annual Report. * 5 business sectors: Health Care, Functional Polymeric Materials, Polyurethane, Basic Chemicals, Petrochemicals Business, Mitsui Chemicals Tohcello, Mitsui Chemicals Aglo CC0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(dd)/month(mm)/year(yyyy) (i.e. 31/01/2001).

2 Enter Periods that will be disclosed Fri 01 Apr Fri 31 Mar 2017 CC0.3 Country list configuration Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response. Japan Select country CC0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. JPY( ) CC0.6 Modules As part of the request for information on behalf of investors, companies in the electric utility sector, companies in the automobile and auto component manufacturing sector, companies in the oil and gas sector, companies in the information and communications technology sector (ICT) and companies in the food, beverage and tobacco sector (FBT) should complete supplementary questions in addition to the core questionnaire. If you are in these sector groupings, the corresponding sector modules will not appear among the options of question CC0.6 but will automatically appear in the ORS navigation bar when you save this page. If you want to query your classification, please respond@cdp.net. If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below in CC0.6.

3 Further Information Attachments Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/MCI csr2016web_en.pdf Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/MCI Annual Report 2016_En.pdf Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/MCI Corporate Profile En_ pdf Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board CC1.1a Please identify the position of the individual or name of the committee with this responsibility Committee chaired by the director in charge of Responsible Care and comprising 15 members, including general managers in charge of production, sales and research, and others nominated by the chair. The committee creates companywide policies, strategies, plans and measures related to responsible care activities, including climate change measures, and evaluates performance. The committee s conclusions and the results of responsible care activities are then reported to the Management Committee, chaired by the President. CC1.2

4 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes CC1.2a Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment Board/Executive board Monetary reward Emissions reduction project Emissions reduction target Remuneration paid to the director in charge of climate change is assessed based on analysis of climate change issues, and progress towards GHG reduction targets set out in the company s policies and medium-term management strategy. Director on board Environment/Sustainability managers Monetary reward Monetary reward Emissions reduction project Emissions reduction target Emissions reduction target Energy reduction target Efficiency project All directors and general managers are subject to a system of targets, balanced between the three axes of economic, environmental and social achievement. Appropriate environmental targets are set out for each division, based on reductions in GHG emissions through energysaving countermeasures for instance, or development or sales of products contributing to reduced GHG emissions. Remuneration is then assessed based on progress towards the relevant targets. Remuneration of staff planning and implementing energy management, or implementing energy-saving countermeasures at individual workers is assessed based on progress towards GHG reduction targets, through activities such as energy-saving countermeasures and switching to alternative fuels. All employees Recognition (nonmonetary) Efficiency project Efficiency target Behavior change related indicator There is a system for rewarding improvement proposals or outstanding activities, including reduction of GHG emissions and climate change countermeasures, which applies to all employees. There are different award levels depending on the achievement, including President's Award, Plant Manager's Award, and Section Chief's Award, and they help raise employees' awareness for improvement. Our company also has a system where employees who are highly skilled in areas such as energy management or plant operation management are elected as meisters and seek to invigorate and standardize the workplace, transfer their skills, and endeavor to guide and develop successors.

5 Further Information Page: CC2. Strategy CC2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities Frequency of monitoring To whom are results reported? Geographical areas considered How far into the future are risks considered? Comment Six-monthly or more frequently Board or individual/sub-set of the Board or committee appointed by the Board Monitoring is carried out at the areas of domestic and overseas in general.(usa, China, India, Southeast Asia, etc.) 3 to 6 years CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level - At the companywide level, we gather information on changes in policies and consumer demand that could impact the company or our business, both inside and outside Japan, in conjunction with the responsible divisions (policies, etc.: production and technology divisions/consumer demand, etc.: business divisions). Having assessed the level of impact, our Responsible Care Committee (chaired by the Senior Managing Executive Officer) determines the policies to be implemented on a companywide scale and rolls them out to all divisions (facility level). - We determine individual policies at our works (facility level), taking into account the policies implemented on a companywide scale and the results of assessments of individual risks (such as physical risks from typhoons and local requirements).

6 CC2.1c How do you prioritize the risks and opportunities identified? As a rule, we prioritize risks and opportunities based on those requiring the most immediate response, depending on the level of risk to the company, in terms of confidence, reputation and economic performance. We also take into account specific business-related factors when determining additional measures in each division. CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future Main reason for not having a process Do you plan to introduce a process? Comment CC2.2 Is climate change integrated into your business strategy? Yes CC2.2a Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process [1] A description of how the business strategy has been influenced (i.e. the internal process for collecting and reporting information to influence the strategy);our corporate mission here at the Mitsui Chemicals Group is to "contribute broadly to society by providing high quality products and services to customers through

7 innovations and the creation of materials and products while keeping in harmony with the global environment". We regard our climate change strategy as one of those social issues, and have set out appropriate medium- and long-term business and environmental plans, and annual targets, based on our analysis of the associated risks and opportunities. The responsible division consults the Responsible Care Committee and discusses possible policies, strategies and plans. The result of the discussion will be informed to employees. [2] At least one example given of how the business strategy has been influenced;our strategies for climate change problems and our businesses are greatly influenced by risks and opportunities, such as changes in countermeasures against global warming and energy policies/regulations at home and abroad, fluctuations in energy prices and requests from customers to reduce CO2 emissions. For example, they influence our GHG reduction targets, fuel conversion plans, direction of development of innovative technologies and our strategy for the development of environmentally friendly products. [3] What aspects of climate change have influenced the strategy (e.g. need for adaptation, regulatory changes, or opportunities to develop green business);climate change has influenced our business strategy as an opportunity to develop our green businesses, including our photovoltaic power generation business and diagnostics business for photovoltaic power generation facilities. In addition, the expansion of the influence of climate change has led consumers and customers to have better understanding of, and greater demand for, our products and services that contribute to the reduction of GHG emissions and recognize environmental contribution value other than cost, quality and physical properties. This has allowed us to have environmental contribution with our products and services that appeal to consumers and customers. [4] How the short term strategy has been influenced by climate change (or if none, this is stated) Short term can mean current ;We also evaluate our business continuity planning (BCP) concerning short-term business strategies. However, those strategies have not been influenced by climate change because the influence of climate change is within the range of our assumed risks. [5] How the long term strategy has been influenced by climate change (or if none, this is stated);the key management issues for our Long-Term Business Plan (2025) have been determined by identifying opportunities and risks in consideration of the social issues derived from climate change. Therefore, climate change has greatly influenced the portfolio of business domains we should aim for in our Long-Term Business Plan for solving key management issues. [6]How the Paris Agreement has influenced the business strategy (e.g. the process of transition planning alongside the ratcheting of Intended Nationally Determined Contributions (INDCs)); We have set the long-term GHG reduction target of the Mitsui Chemicals Group, with the target year set at 2030, based on the Intended Nationally Determined Contributions (INDC) submitted by Japan to the United Nations in 2015 and the Plan for Global Warming Countermeasures that was formulated based on the Paris Agreement and endorsed by the Cabinet. [7] How this is gaining a strategic advantage over your competitors; The strengths of the Mitsui Chemicals Group include: 1) technological competence in polymer science, precision synthesis and manufacturing process technologies, etc.; 2) diversity of products and services, which range from raw materials to processed materials, parts and services,; and 3) our global network and human resources with manufacturing and sales sites in 27 countries. Our strategy based on strengths 1) to 3) has a competitive edge over other companies. [8] Do you use forward-looking scenario analyses, including a 2oC scenario, to inform your organization s businesses, strategy, and/or financial planning?; We do not use them at the moment. Moving forward, however, we are planning to study the setting of SBT that conforms to the 2 C Scenario. CC2.2b

8 Please explain why climate change is not integrated into your business strategy CC2.2c Does your company use an internal price on carbon? Yes CC2.2d Please provide details and examples of how your company uses an internal price on carbon Since FY2006, we have included effects of reducing CO2 emissions in the criteria for judging investment effects to promote investments that contribute to the reduction of greenhouse gas (GHG) emissions. With Scope 1 and Scope 2 being the subjects, we determine the CO2 reduction effect in monetary terms by referring to the transaction price of emission rights. The price is reviewed by the division in charge of handling GHG matters, and the accounting division announces it to the company. CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Trade associations CC2.3a On what issues have you been engaging directly with policy makers? Focus of legislation Corporate Position Details of engagement Proposed legislative solution

9 CC2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? Japan Chemical Industry Association Consistent The Japan Chemical Industry Association expresses opinions and makes recommendations on regulations and policy measures through participation in various policymaker and government committees to ensure that feasible policy measures that enable the industry to contribute to a low carbon society are formulated. The company has also signed Keidanren's "Commitment to a Low Carbon Society" action plan and set the CO2 emission reduction targets for 2020 and 2030, respectively. It gathers, reports and publishes data on greenhouse gas reductions in the chemical industry, including records of international contribution and innovative technology development, with the aim of achieving reduction targets. As a key member of the JCIA, we oversee industry-wide efforts as chair, or serve as members, of various different committees, enabling us to offer opinions and submit proposals regarding policies. CC2.3d Do you publicly disclose a list of all the research organizations that you fund? CC2.3e

10 Please provide details of the other engagement activities that you undertake CC2.3f What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? We lobby policymakers through our membership of the JCIA. JCIA examines the essential details of policy proposals via a series of committees. In addition to being a key active member of the JCIA, we share information on proposals and policy trends within the company, and reflect them in our own strategies so they are in line with government policy. CC2.3g Please explain why you do not engage with policy makers Further Information Attachments Change 2017/Shared Documents/Attachments/ClimateChange2017/CC2.Strategy/2025 Long-Term Business Plan_161116e.pdf Page: CC3. Targets and Initiatives CC3.1 Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year?

11 Absolute target CC3.1a Please provide details of your absolute target ID Scope % of emissions in scope % reduction from base year Base year Base year emissions covered by target (metric tonnes CO2e) Target year Is this a science-based target? Comment Abs1 Abs2 Scope 1+2 (marketbased) Scope 1+2 (marketbased) 100% 22% % 25.4% No, and we do not anticipate setting one in the next 2 years No, and we do not anticipate setting one in the next 2 years With regard to the percentage reduction from the base year and base year emissions, the target emissions are calculated by subtracting the electricity and steam sold to other companies from Scope 1+2 emissions (assuming full-capacity operations), with Mitsui Chemicals and its consolidated subsidiaries in Japan as the subjects.*the target was set by excluding NF3. Same as above *The target was set by including NF3. CC3.1b Please provide details of your intensity target

12 ID Scope % of emissions in scope % reduction from base year Metric Base year Normalized base year emissions covered by target Target year Is this a sciencebased target? Comment CC3.1c Please also indicate what change in absolute emissions this intensity target reflects ID Direction of change anticipated in absolute Scope 1+2 emissions at target completion? % change anticipated in absolute Scope 1+2 emissions Direction of change anticipated in absolute Scope 3 emissions at target completion? % change anticipated in absolute Scope 3 emissions Comment CC3.1d Please provide details of your renewable energy consumption and/or production target ID Energy types covered by target Base year Base year energy for energy type covered (MWh) % renewable energy in base year Target year % renewable energy in target year Comment

13 CC3.1e For all of your targets, please provide details on the progress made in the reporting year ID % complete (time) % complete (emissions or renewable energy) Comment Abs1 100% 100% 1) 109% (the rate of achievement of initial target excluding NF3) 2) 107% (the rate of achievement that applies where the reduction target was corrected based on the amount of reduction that includes NF3 since FY 2005) Target under the Mid-Term Business Plan for FY2014 to FY2016 *Set as a target that does not include NF3 Abs2 44% 89% Target under the Long-Term Business Plan for the period until FY2030 *Target that includes NF3 CC3.1f Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years CC3.2 Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions? Yes CC3.2a Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions

14 Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment Companywide The Mitsui Chemicals Group works in the material industry. Accordingly, we handle a large proportion of intermediate products and many of our products are embedded in customer products and contribute to CO2 reduction by consumers. Examples of such products are as follows. 1) Products to be used as automotive materials that contribute to fuel efficiency improvement with lightweight: Resins as alternatives to metals such as long glass fiber reinforced Avoided emissions Other: 26% More than 20% but less than or equal to 40% We have established the Mitsui Sustainability Index (m-si) as a measure for assessing environmental impact based on LCA of products and services of the Mitsui Chemicals Group. The m-si, our unique environmental contribution index, includes evaluation criteria such as Saving energy, electricity, fuel, Reduction of GHG emissions and 3R, easy sorting, natural resource conservation. Products and services that lead to the creation of a low-carbon society are certified as exhibiting Blue Value. At the Mitsui Chemicals Group, we regard the Mobility Business Sector as a growth sector and create products that provide solutions by exercising the comprehensive strength of our technologies. In the automotive sector, fuel efficiency improvement with reduced weight, resource efficiency enhancement with higher recyclability, GHG reduction with the use of bio-materials, and other benefits are required of products. We have developed a Mobility Development Center, at which we engage in development that caters to customer needs and propose solutions that lead to a reduction in the environmental impact.

15 Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment Companywide polypropylene and engineering plastics 2) Food packaging products that contribute to reducing food loss by keeping food fresh: Freshness maintaining films 3) Materials related to renewable energy (such as photovoltaic power generation): Materials of solar cell encapsulant 1) Products that contribute to energy-saving in the selfmanufacturing process: PP that is manufactured using a catalyst with a high polymerization activity (metallocene Low carbon product Other: 17% More than 20% but less than or equal to 40% We have established the Mitsi Sustainability Index (m-si) as a measure for assessing environmental impact based on LCA of products and services of the Mitsui Chemicals Group. The m-si, our unique environmental contribution index, includes evaluation criteria such as Saving energy, electricity, fuel, Reduction of GHG emissions and 3R, easy sorting, natural resource conservation. Products and services that lead to the creation of a low-carbon society are certified as exhibiting Blue Value.

16 Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment catalyst), elastomer resin and others. 2) Products that contribute to energy conservation and resource efficiency improvement in customers processing: Nonpaint materials for automobiles, low temperature sealable film, film that reduces white printing and others 3) Products that use biomass materials and reduce the use of fossil resources: Ophthalmic lens materials, sheet materials for automobiles and others 4) Products that lead to significant reduction of GHG:

17 Level of aggregation Description of product/group of products Are you reporting low carbon product/s or avoided emissions? Taxonomy, project or methodology used to classify product/s as low carbon or to calculate avoided emissions % revenue from low carbon product/s in the reporting year % R&D in low carbon product/s in the reporting year Comment NOx reduction agent for automobiles, resource-saving crop cultivation system that enables significant reduction of fertilizer and others CC3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases) Yes CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings

18 Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation 26 To be implemented* Implementation commenced* Implemented* Not to be implemented 11 CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment Energy efficiency: Processes Our GHG reduction activities for FY2016 included the lateral spread of case examples of energy conservation and quarterly follow-up (with the result reported to the Management Committee) by the company-wide energy committee and energy conservation committees of the respective plants. While our target was to reduce GHG by 20,000 tons through Scope 1 Voluntary years <1 year While the subject was Scope 1, the reduction also includes Scope 2 (marketbased)

19 Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment energy conservation and other measures, we achieved a reduction of 25,000 tons by accumulating smallscale but absolute energy-saving activities at plants, such as enhancing exhaust heat recovery, improving the efficiency of refining processes and optimizing plant operations. CC3.3c What methods do you use to drive investment in emissions reduction activities? Method Comment Lower return on investment (ROI) specification As our management policy, the amount for investment and loans of the overall company for the medium term (or fiscal year) is shown by our finance department, and the necessity of investment, ROI, payout time, and other matters are scrutinized and proposed by each department and approved by the person specified in our internal rules on investment and loans (president to general manager). As described in CC2.2d, CO2 reduction effects converted into cost are also used for judging investment effects. CC3.3d

20 If you do not have any emissions reduction initiatives, please explain why not Further Information Page: CC4. Communication CC4.1 Have you published information about your organization s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s) Publication Status Page/Section reference Attach the document Comment In voluntary communications In voluntary communications Underway - previous year attached Underway - previous year attached P13/Value Creation Indicator P117/ Environmental Protection Change 2017/Shared Documents/Attachments/CC4.1/MCI Annual Report 2016_En.pdf Change 2017/Shared Documents/Attachments/CC4.1/MCI csr2016web_en.pdf We referred to IIRC for the framework of our annual reports. The framework of our CSR reports conforms to G4 of GRI. Further Information Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

21 Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments CC5.1a Please describe your inherent risks that are driven by changes in regulation Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Cap and trade schemes As referred to by OECD, carbon pricing is regarded as a cost-efficient policy tool for achieving CO2 reduction targets. Thought to play a central role for implementing the nationally determined contribution (NDC) of each nation in the Paris Agreement, the tool has already been introduced by many national and local governments. In Japan, carbon tax Wider social disadvantages 3 to 6 years Direct More likely than not Medium If cap and trade is introduced, resulting in a regulation requiring an additional 10% reduction from the current level, for example, the Mitsui Chemicals Group will need to reduce approx. 490,000 tons. It is difficult to reduce this amount only through our own efforts, and carbon offsetting with carbon credit or other means will need to be considered. If the We address this risk by implementing two measures. One is saving energy to reduce our GHG emissions directly. Examples include the introduction of equipment with state-of-the-art energy-saving technologies to replace aging equipment, easing of operating conditions and fuel conversion (which resulted in the reduction of 25,000 tons in FY2016). Long- The cost for reducing GHG through energy conservation or fuel conversion differs among projects. In FY2016, we reduced the cost by 740 million yen against a GHG reduction of 25,000 tons. We have invested a total of 30.8 billion yen in the research and development of innovative technologies and products that contribute to GHG

22 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Carbon taxes and emissions trading have been introduced as carbon pricing. Introduction of these measures is also spreading among other countries. As referred to by OECD, carbon pricing is regarded as a cost-efficient Wider social disadvantages 3 to 6 years Direct More likely than not Mediumhigh carbon credit price is 1,000 yen/ t-co2, for example, we will need to bear an extra amount of cost at 500 million yen per year, which will give us significant financial impact. *The transaction price of emission rights in Tokyo, Japan, is 1,000 yen to 2,000 yen/t-co2. We will have to bear an additional cost of 20.5 billion yen/year with the term initiatives are the development of technologies for highly functional catalysts and expansion of products which use biomass materials as alternatives to fossil materials. The other measure is to develop and provide products which contribute to GHG reduction by customers as their users. They include products with low molding temperatures that lead to reduction of processing energy consumed by customers and ones which do not use solvents and therefore omit the drying process, thereby simplifying the work process. To address this risk by reducing fuel and power consumption, we reduction and others. The cost for reducing GHG through energy conservation or

23 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management policy tool for achieving CO2 reduction targets. Thought to play a central role for implementing the nationally determined contribution (NDC) of each nation in the Paris Agreement, the tool has already been introduced by many national and local governments. In Japan, carbon tax and emissions trading have been introduced as carbon pricing. The rate of carbon tax, which has been set as a measure for controlling energyderived CO2 emissions, is 289 yen/ t-co2e. There is a concern over a possible carbon tax hike and the expansion of the tax to CO2 current level of emissions if a carbon tax is introduced in the future and applied to non-energyderived emissions as well, at a rate of 35USD /t- CO2e shown in IMF data (4200yen/ t- CO2e). save energy, reduce cost, study use of low-price fuels, cooperate with other companies in industrial districts to accommodate each other with energy and optimize energy. On a long-term basis, we are studying the development of innovative technologies. fuel conversion differs among projects. In FY2016, we reduced the cost by 740 million yen against GHG reduction of 25,000 tons. We have invested a total of 30.8 billion yen in the research and development of innovative technologies and products that contribute to GHG reduction and others.

24 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management emissions other than energyderived CO2 emissions. CC5.1b Please describe your inherent risks that are driven by changes in physical climate parameters Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Change in precipitation pattern According to the IPCC Fifth Assessment Report, even with the reduction of GHG emissions, the average global temperature is likely to increase, and in Japan, the Climate Change Adaptation Reduction/disruption in production capacity 1 to 3 years Direct Likely Mediumhigh Losses from the suspension of production, due to flooding caused by torrential rains or typhoons for instance, are estimated to total approximately 2 billion based on the loss amount that resulted from the emergency shutdowns To protect our plants against torrential rains and typhoons, we have taken steps to protect against high waves (in case of a tsunami) and to prevent scattered debris from impacting our facilities for instance. We have also secured the We take measures for our facilities, including inspections, to protect them against various risks such as those from earthquakes, strong winds, high waves, and torrential rains. These measures include securing the safe, stable operations of our plants, and costs for new measures

25 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Plan was formulated. It is anticipated that there will be more damage caused by extreme weather and climate phenomena, in other words, an increase in the frequency of short-term torrential rains and the severity of tropical cyclones (typhoons) in Japan and Southeast Asia. There are growing concerns that these phenomena will cause flooding, damage to production facilities, or even, in the worst case, production across all plants due to power failures at the major plants in Japan in If production were to remain suspended, due to the impact on the supply chain, such as damages to facilities and delays with the procurement of raw materials, the additional loss of revenue would come to approximately 1 billion per day. capacity to drain facilities and pipes, carried out periodic inspections and cleaning and taken operational measures to guard against the risk of typhoons, including a tiered alert system based on the scale and proximity of typhoons, anti-wind measures to prevent falling objects or damage, antitidal and flooding measures and the employment of security staff. We also maintain adequate inventory levels to enable us to reliably secure raw materials. and maintenance are generated every year. However, it is impossible to separate the cost of countermeasures against climate changes from those other costs.

26 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management suspensions and will have potential impacts throughout the supply chain, from securing raw materials to supplying finished products CC5.1c Please describe your inherent risks that are driven by changes in other climate-related developments Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Changing consumer behavior Sales of material products made from fossil-based resources and fuels account for as much as 47percent of our business. Shortages of resources needed to Reduced demand for goods/services 3 to 6 years Direct About as likely as not Mediumhigh Assuming a 1% decrease in the sales of our petrochemical division as the worst case for the impact on products with a great CO2 impact, the amount of the In our Long-Term Business Plan, we are focusing our management resources on the mobility, health care, and food & packaging domains to innovate our business portfolio, and we plan to In FY2016, we spent a total of 30.8 billion on innovative technologies and research and development for products to help reduce greenhouse gas emissions.

27 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management produce products and negative opinions regarding CO2 emissions could therefore have a real impact on business continuity. It is also possible that, as a result of consumer awareness about climate change and regulatory changes, products with a large carbon footprint will be given a wide berth by the marke. impact (in FY2016) would be 5.7 billion. increase the sales component ratio of base materials to 15% by In the mobility domain, we are enhancing the lineup of our polymeric products including PP compounds and elastomer, which will help reduce the weight of vehicles to create vehicles with a low environmental impact, as well as polymeric metal casting and the development of next generation lithium ion batteries. We are also promoting the development of plant-derived material for eyeglass lenses with a high refractive index and a plan to build a new bio-polyol plant. Moreover, we will also engage in lobbying activities as a representative Further, we will need to make additional investments of at least billions of yen if we are to build new commercial production facilities.

28 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management of the industry to help reduce greenhouse gas emissions throughout the entire lifecycle of chemical products. CC5.1d Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1e Please explain why you do not consider your company to be exposed to inherent risks driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1f Please explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

29 Further Information Page: CC6. Climate Change Opportunities CC6.1 Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Opportunities driven by changes in regulation Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments CC6.1a Please describe your inherent opportunities that are driven by changes in regulation Opportu nity driver Descript ion Potential impact Timefra me Direct/Indi rect Likelih ood Magnit ude of impact Estimate d financial implicati ons Management method Cost of manage ment Internatio nal agreeme nts Tighten ing of laws and regulatio ns related to the Increased demand for existing products/ser vices 1 to 3 years Direct Very likely High In our Long-term Business Plan, we have set an environm In consideration of opportunities related to climate change, we have set environmental and social targets towards 2025 in our Long-Term Business Plan. The environmental target is to achieve a specific ratio of Blue Value sales of products and services as our environmental products and services. Blue Value certification is granted to our products To increase the ratio of sales of Blue Value products

30 Opportu nity driver Descript ion Potential impact Timefra me Direct/Indi rect Likelih ood Magnit ude of impact Estimate d financial implicati ons Management method Cost of manage ment reduction of GHG, which is the cause of climate change, is likely due to the increasin g frequenc y of abnormal weather, the resultant water crisis, increase d occurren ce of disasters and the level of achieve ment of each nation s target in the Paris Agreeme ental target towards Specificall y, we aim to increase sales of Blue Value products and services, our environm ental products and services, to approx. 30% of the total sales of the company. and services which contribute to realizing a lowcarbon, recycling-based, symbiotic society, and we aim to increase the ratio of their sales to 30% of the total company sales by In addition, we also certify products and services that contribute to improving QOL in society as exhibiting Rose Value and have set a target for increasing the sales of products and services that will solve food problems (e.g., products and services that contribute to increasing food production, reducing food loss, etc.). *Business Results & Outlook df? and services, we need to develop and increase the sales of products that contribute to building a lowcarbon society by reducing GHG. For this purpose, we need to invest in research and developm ent and manufact uring facilities. We are planning to invest aggressiv ely in

31 Opportu nity driver Descript ion Potential impact Timefra me Direct/Indi rect Likelih ood Magnit ude of impact Estimate d financial implicati ons Management method Cost of manage ment nt. It is therefore conceiva ble that demand will grow for products and services that lead to GHG reduction througho ut their lifecycles and sales opportuni ties for products aiming toward a lowcarbon society will increase. three growth domains (Mobility, Health Care and Food & Packagin g) and the amount of the investmen t for the three years from 2017 to 2019 will be approx. 230 billion yen. CC6.1b

32 Please describe your inherent opportunities that are driven by changes in physical climate parameters Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Induced changes in natural resources Demand of those products will be increased that apply or mitigate temperature warming and droughts. For example, in case certain bugs increased, the demand of insecticide effective for such specific bugs while less affects the envirinment. Also, the change of cultivation area and period will be the deployment of new market. Further, reduction of cultivation area will increase the demand of yield of crops and then demand of agrochemicals good for the yield and environment. Increased demand for existing products/services 1 to 3 years Direct Very likely High As part of our Mid-Term Business Plan, we have selected three domains in which to contribute to society through our business activities. One of these domains is food & packaging, which includes agrichemicals. In agrichemicals, we are focusing on strengthening global operations and developing and marketing new active ingredients to contribute to global food issues and the agricultural industry. In FY2015, sales were 50 billion yen, up 6% from the previous year, and we are We will take this as an opportunity to expand our agrochemical business for adapting to or easing the impact of climate change. For example, we will expand our commercial territories through capital participation in agrochemical distributors in overseas countries such as Thailand, Vietnam and Brazil and expand the business globally through measures such as sales expansion through the development of market-oriented formulated products. Further, we will n the three-year period of the Mid-Term Business Plan (FY2014 to FY2016), we prioritized growth domains in allocating investments and loans whose amount was slightly more than 70 billion yen. To accelerate the growth strategy, for the next three years (FY2017 to FY2019), we have increased the amount of investment to slightly less than 230 billion yen. Investments in the research and development of new agrochemicals and M&A are necessary for acquiring new business opportunities,

33 Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management making steady progress towards the 2022 sales target of 100 billion yen. launch into market new products that cater to needs, through launch of the tolprocarb fungicide, joint development of new pesticides with chemical companies in Europe and research and development of future formulated products and others. and we believe that we can recover our investments even though the amount is large. CC6.1c Please describe your inherent opportunities that are driven by changes in other climate-related developments Opportu nity driver Descripti on Potential impact Timefra me Direc t/ Indire ct Likeliho od Magnit ude of impact Estimated financial implication s Managem ent method Cost of management Changing consume r behavior It is conceiva ble that an Increased demand for existing products/ser 1 to 3 years Direct Likely High Under our Long-Term Business Plan Under our Long- Term Business In our Long-Term Business Plan towards FY2025, we aim to achieve an operating income of the overall Group at 200 billion yen. As for the input of management resources aimed at achieving this

34 Opportu nity driver Descripti on Potential impact Timefra me Direc t/ Indire ct Likeliho od Magnit ude of impact Estimated financial implication s Managem ent method Cost of management increase in disasters, food shortage s and an increase in various social problems such poverty, which are associate d with climate change, will raise consume rs awarenes s of the reduction of CO2 emission s and lead products with lower CO2 emission s to be selected more frequentl vices towards FY2025, we aim to create a cohesive society that is in harmony with the environmen t and an aging society with health and happiness as elements of the future society to which we aim. To achieve these elements, we need to solve the social issues triggered by climate change. In the Long- Term Business Plan, we aim for sales for Plan towards FY2025, in the Mobility segment, we will create consumer value by making the most of the Group s internal and external resources, with a focus on automotiv e materials that have strong customer bases at home and abroad. We will thereby implement strategies for expanding production target, we plan to increase the amount of investment in growth domains such as Mobility and Food & Packaging to approx. 1 trillion yen, which is about three times larger compared to the past 10 years. We plan to spend 70 billion yen on the research and development of products. This is nearly double the amount for FY2016, and we plan to accelerate the creation of new products significantly and increase products which respond to changes in consumers preferences and customer demands.

35 Opportu nity driver Descripti on Potential impact Timefra me Direc t/ Indire ct Likeliho od Magnit ude of impact Estimated financial implication s Managem ent method Cost of management y by consume rs. We believe that our products that will enjoy demand growth and increase in sales opportuni ties include compone nts of solar cells, electric vehicles, and hybrid vehicles, compone nts which contribut e to creating lighter vehicles, and products which use non at 2 trillion yen and operating income for the year at 200 billion yen. Business domains as the driving force for achieving these targets include Mobility and Food & Packaging. We aim for FY2025 operating income from these businesses at 100 billion yen or more. We believe that to achieve the FY2025 target of operating income, we need to sites and creating new products for respondin g immediate ly to changes based on customer value. Further, we will also proceed with the sales promotion of products with lower lifecycle CO2 emissions and the reduction of costs for such products. In Food & Packaging, we will accelerate overseas