Third-Party View

This year's Aichi Steel report fully conforms to the GRI's G4 Sustainability Reporting Guidelines. Its main feature is the clear defining of priority issues in six categories, the importance and basic policies for which are expressed in the president's message, with related management indices systematically noted.

Mr. Satoshi Chikami
Executive Officer and Professor,
Faculty of International Welfare Development
Nihon Fukushi University

Setting of priority issues and supporting statements

The major change (improvement) in this year's report is the specification of six priority issues for the Aichi Steel Group to address through its business activities, and using the "Core" level method, the systematic listing of the main management indices related to these issues, adopted in response to the identification of the issues involving engagement with stakeholders in the value chain that was noted in the fiscal 2015 report. The clear expression from top management as to why the Company considers these important and their basic position is particularly praiseworthy. In the presentation of priority issues the basic policies for resolving issues are clearly indicated, and the broader CSR strategy has been made clear by bringing the entire report into conformity with G4 guidelines. It is a report easy for stakeholders to understand. Going forward, I hope Aichi Steel will share these priority issues throughout the Company, and further expand its efforts based on the social meaning, significance, and responsibilities of these corporate activities.

Clear development and growth potential based on 1S

The management policies to achieve Vision 2020 through "4S Re-Engineering" process reforms and company-wide ZZZ200 activities are clear. In particular, the energy recovery from electric furnace exhaust heat and power generation business, one of the initiatives for steelmaking reengineering, is especially promising as a new development from energy reduction to energy creation. Also, from the lessons of the accident, the report reaffirms the "1S Culture" centered on honesty and indicates that it is being implemented globally, and I hope that it will continue to be the root of Aichi Steel's corporate culture, and the center of its various activities.

Evolution of the report over three years

Examining this report for three years since 2014, it has steadily evolved in favor of ease of understanding and readability. This year's report clearly indicates a stance to build a solid business foundation, including in the president's message a vision for the new Aichi Steel, and on the pages regarding the accident, the Step Up Plan to overcome the Company's weaknesses and ensure that such an accident does not happen again. Comparing the covers, the globe depicted in the illustration has been rotated, depicted with more green and showing a world filled with a rich abundance of life, and telling the story of the success of steady efforts toward full G4 compliance.

Clear notation of results and issues in the Medium-Term CSR Plan

Like last year's edition, this year's report presents a concise summary of priority agenda items based on the CSR Vision, strategies for attaining them, targets, results, and assessments. Also noteworthy are the statements regarding items for which targets have not yet been attained, with clear a reflection on the issues and problems.

Environmental Action Plan 2015 nearly achieved

The initial targets of the five-year Environmental Action Plan 2015 have mostly been reached, including improvements in transport efficiency, and global CO2 management. While this is commendable, direct landfill volume and reduction in overall CO2 emissions continue to be issues. I hope the next environmental plan will address new challenges, such as reform of the overall production process.

Conclusion

In response to the accident, Aichi Steel has identified issues company-wide and is implementing improvement measures, and I hope they will fully implement the Step Up Plan, and preserve yearly growth. Based on these expectations, I am looking forward to how the report will further evolve next year.

* This Third-Party View was written based on interviews with management and related parties.

Response to the Third-Party View

I would like to express my appreciation to Professor Chikami for the valuable opinions and suggestions he has given us each year since fiscal 2010.

This year, for full compliance with GRI's G4 Sustainability Reporting Guidelines, we set six priority issues for the entire corporate group to address, and based on the accident that occurred on January 8, 2016, we have made efforts as a major focus toward further strengthening our CSR system and rebuilding our management foundations. Professor Chikami provided valuable opinions for achieving strategic CSR management, including basic policies for resolution of issues. Professor Chikami commended our systematic statements regarding key issues, management policies for achieving Vision 2020, global implementation of the "1S Culture," and our efforts regarding the Step Up Plan. We consider this encouragement for future activities, and will make sincere efforts for sound execution.

Regarding the issues Professor Chikami noted of direct landfill volume and reduction in overall CO2 emissions, we will continue to make a concerted effort as a company and consider ways to achieve these targets. Also, through the steady implementation of the Aichi Steel Environment Initiatives Plan 2020 newly formulated this year, we will further broaden the scope of our environmental measures, and make proactive contributions to the environment to establish a new era.

Looking ahead, Aichi Steel will continue to maintain a feeling of appreciation toward stakeholders, place importance on regular communication, and pursue our CSR activities through a concerted groupwide effort. Further, to realize CSV (creating shared value), all employees will work together for better manufacturing, and aim ever higher to be a company that remains a welcome part of the community.

Ichiro Murakami
Senior Executive Officer
General Affairs Div.