Interview with the Outside Directors

Enhancing the functionality of plastics, providing value to society, and making dreams for future generations

Business Changes Observed by Outside Directors

How have you worked with the management of the Company over the past year in your respective fields of expertise?  Were there any changes in management that you noticed in particular?

Abe I have long been involved in research and education at universities, and also had roles like providing advice on science and technology policies as a member of government committees. I will be building on this experience and continuing to do my utmost to ensure that my advice is useful for the Company.
The manufacturing sector in Japan has been impacted in so many ways due to the challenges presented by changes in international affairs like the situation in Ukraine. The Company is certainly no exception in this regard. I expect that the Company will continue to face challenging risks in the future, and I hope that it will respond to such changes in a flexible manner.

Matsuda I will be applying the experiences I gained working at business companies in the past to discuss medium- to long-term topics in as much detail as possible. An example that illustrates this is the major investment projects being made in China under the Semiconductor Materials segment. We held extensive discussions with the executives based on strategic perspectives like medium- to long-term market trends, geopolitical risks, and the post-COVID era, and even examined the Company's production capacity forecasts well into the future, before making a decision on these investments. Rather than looking at demand in the immediate future, examining medium- to long-term factors from various angles is such an important aspect of management. Indeed, this year I saw many changes with the approach the Company is taking for management.

Nagashima There are more cases where the attendees at the Board of Directors meetings are asked for their opinion, and I feel that the overall atmosphere is more open. I am also making sure to clarify directly and freely if there are any aspects I feel unsure about, and members respond to my questions in a sincere and professional manner. At the Executive Officers' Meeting held after the Board of Directors meeting, executive officers make presentations highlighting the many ideas they have for the work they are in charge of, and it is very interesting to listen in on them. Some of these executive officers may indeed be appointed as the future President or Directors, so it is a great opportunity to come into direct contact with their respective skills and knowledge for me, as a member of the Nomination and Remuneration Committee. This year in particular, I have felt that the Company's diversity efforts are progressing as two women were made executive officers.

Expanding the Possibilities of Plastics by Providing Functionality

The Company has outlined its commitment to contributing to SDGs in its Mid-term Business Plan, and to this end is focusing on businesses that generate social value through giving functionality to plastics such as raising the fuel efficiency of vehicles, reducing food loss and developing products with minimal environmental impact. What should be the key area to focus on while advancing these measures?

Matsuda Plastics and the environment may seem to have a very paradoxical relationship. Despite this, I firmly believe that plastics will continue to play a key role in so many ways around the world. One solution to overcome this dilemma is conveyed so well with the Company's approach of "giving functionality to plastics." I believe that the Company's partners and employees truly understand the meaning behind this statement. On the other hand, I think the Company needs to outline the benefits of this approach by taking a more familiar stance that is better understood by customers, shareholders, investors, and local residents. As Sumitomo Bakelite is the leading company in the plastics industry, I also hope to see it leading the way in this regard too.

Abe I believe that the ocean plastic issue symbolizes the need to cut back production of plastics to reduce the amount of plastic waste. However, plastics used in high tech are part of the cutting edge that makes Japanese industry competitive and are a field in which the Company excel. I agree that the company needs to more strongly promote initiatives such as the proactive use of biomaterials it is currently pursuing, in order to communicate better with all the stakeholders.

Nagashima I strongly feel that the Company's initiatives towards SDGs in particular are more advanced than those of other companies. There are repeated and earnest discussions about this topic even in the Board of Directors' meetings. Whether it is in the Integrated Report or the Securities Report, the company strives toward an extremely high level of completeness in its information disclosure, but regarding the company's announcements to society as a whole, there are undoubtedly areas that are difficult to understand.

Matsuda How are sustainability and SDGs relevant to the initiative of providing functionality with plastics? It's difficult to explain, right? For example, the Company's freshness retention film, P-Plus®, is just such an item that adds functionality to plastics. By keeping food fresh for a long time, this product helps cut food wastage. Shouldn't the company expand its advertising activities like this, through familiar products whose effectiveness is easily understood even by general stakeholders?

Abe In Japan, major corporations in particular are passionate about addressing environmental problems. The Company is one of the companies in particular that is taking a dedicated, multifaceted stance for tackling environmental issues. While there are varying degrees of enthusiasm among other countries with regard to environmental policies, the Company is focusing on research that allows it to coexist with the environment, such as shifting to the use of plant-derived raw materials for its plastics. The Company has countless customers all over the world. There are concerns over the increasing complexity of policies in other countries, so the I think the Company will need to make even more efforts to gather as much information as possible in order to adapt to global diversity and flexibility.

Nagashima Plastic products are made mainly using petroleum-based substances, which generally have a poor environmental image. Yet the Company is confident that it can address environmental problems and contribute to society by expanding the possibilities of plastics and creating valuable products. I believe the Company can create products that contribute to society by focusing on what it can do right now, and moving forward with research and development from an SDGs perspective. Ensuring that the core values of SDGs are applied at every facet of the Company, and transforming the perspectives of each employee to boost awareness of how they are making a contribution will no doubt help to further advance these activities in the future.

The Key Aspect of the Company Vision - the Possibilities for the Next Generations

The Company's vision is to become a "company that makes your dreams for the future a reality."  What do you think needs to be done to achieve this, and what contributions can you make toward this goal as Outside Directors?

Nagashima The Company operates in three main segments—semiconductor materials, high performance plastics, and quality-of-life products—which at first glance may appear to encompass products in completely unrelated industries, but the characteristics, properties, and customers of these products actually have many things in common.
I think the Company's "One Sumibe Activities" are a great collection of measures that showcase the Company's extensive range of products across different segments. Expanding these activities to a global scale and associating them with one of the key measures of its mid-term business plan of taking on the challenge of new business models will be essential to achieve this vision, and as an Outside Director, I can fully support and back these activities.

Abe The vision of "a company that makes your dreams for the future a reality" has a great deal of significance, and is vital and highly appealing for Japanese society that is suffering from a sense of stagnation, particularly the younger generation. I am anticipating that this vision will take hold throughout the Company, such that employees really feel they are making dreams a reality. If those in the younger generation and children discover more about the Company and become aware of this vision, I believe that it will lead to a brighter future for Japan. As an Outside Director, I want to be part of the push behind the Company's activities.

Matsuda Developing initiatives with the underlying topic of the "next generation" is essential for achieving this vision. As the population continues to get older, what type of dreams is the Company actually able to provide to children who will be the leaders of tomorrow? The Shizuoka Plant of the Company does hold various events for elementary school students, but initiatives aimed at inspiring and enriching the sensibilities of children, like establishing a scholarship foundation or running cross-sector projects like "chemistry classes," may help to create the perfect environment for nurturing monozukuri leaders capable of playing a role on the global stage.
Precisely because the manufacturing process in the chemical industry is difficult to understand, I hope to see a range of initiatives being developed for future generations by building on the Company's distinct presence and history.

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