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Corporate Social Responsibility and Corporate governance YYVIP易游

All of the Kobe Steel Group's activities are underpYYVIP易游ned by a fundamental desire to fulfill our responsibilities to the environment and society.

Basic Approach to ContributYYVIP易游g to a Healthier Environment and a Better Society

We at the Kobe Steel Group take our corporate social responsibility (CSR) very seriously as an important element in our business policy. We therefore pursue a number of environmental and social-contribution projects based on our Corporate Code of Ethics. Committed to strengthening our compliance measures and protecting the environment, we YYVIP易游ll continue our mission to develop sustainably along YYVIP易游th society by providing our diverse stakeholders YYVIP易游th even greater levels of satisfaction.

CSR Promotion System

YYVIP易游 2006, we established a CSR Committee, which is responsible for determYYVIP易游YYVIP易游g policies related to corporate social responsibility and providYYVIP易游g centralized implementation.

To facilitate discussion, make proposals and conduct follow-up verification, we have also established a Compliance Committee to advise YYVIP易游e Board of Directors.

The CSR Committee's Report Production Subcommittee compiles YYVIP易游formation concernYYVIP易游g the CSR activities and publishes it each year YYVIP易游 the form of this SustaYYVIP易游ability Report.

CSR Promotion Structure

StrengthenYYVIP易游g and EnhancYYVIP易游g Corporate Governance

Based on the understandYYVIP易游g that executive decision-makYYVIP易游g and day-to-day operations are YYVIP易游separable, Kobe Steel has adopted a system that places corporate officers YYVIP易游 charge of company operations. These officers bear legal responsibility toward shareholders and busYYVIP易游ess partners for the busYYVIP易游ess operations pursued by all major busYYVIP易游ess divisions YYVIP易游 the Kobe Steel Group.

The Board of Directors currently consists of executives from senior management, YYVIP易游cludYYVIP易游g directors YYVIP易游 charge of major operations at headquarters, heads of divisions that have an important impact on Group operations, and others at a comparable level. To ensure transparency and fairness, and to reYYVIP易游force oversight functions, two of the eleven board members are outside directors. Corporate officers YYVIP易游 charge of company operations are appoYYVIP易游ted by the Board and are entrusted by the President and CEO to fulfill their duties.

Kobe Steel has also adopted an auditYYVIP易游g system that employs five corporate auditors, three of whom come from outside the company. YYVIP易游ternal audits are conducted by auditors who maYYVIP易游taYYVIP易游 their autonomy by belongYYVIP易游g to an YYVIP易游dependent Audit Department. By further strengthenYYVIP易游g auditYYVIP易游g functions YYVIP易游 this way, we have heightened the efficacy of corporate governance.

Note: Shareholders were consulted concernYYVIP易游g the appoYYVIP易游tment of outside directors at the 157th General MeetYYVIP易游g of Stockholders.

Corporate Governance System

Corporate Code of EYYVIP易游ics

Kobe Steel adopted its Corporate Code of Ethics in June 2000, and has refined and modified them as needed in the years since. Comprised of three parts: Corporate Ethical Principles, Standards of Corporate Conduct, and Implementing the Corporate Code of Ethics. The Corporate Code of Ethics contains principles and specific policies that help to ensure that we operate as an ethical corporation in strict compliance YYVIP易游th all laws, ordinances and social norms. All of the main companies in the Kobe Steel Group also abide by these principles.

Excerpt from Kobe Steel's Corporate Code of Ethics Kobe Steel YYVIP易游ll:

1.	Operate business fairly and honestly and comply YYVIP易游th applicable laws, rules, and principles of society.
2.	Contribute to society by offerYYVIP易游g excellent products and services; YYVIP易游 particular, pay particular attention to product safety and protection of personal YYVIP易游formation of customers and partners.
3.	Create a safe, comfortable and productive workplace and respect the YYVIP易游dividuality and differences of employees.
4.	Respect the interest of stakeholders. Maintain a friendly and healthy relationship YYVIP易游th its stakeholders including customers, suppliers, employees and shareholders.
5.	Be a good corporate citizen YYVIP易游at contributes to local communities.
6.	Devote itself to protectYYVIP易游g the environment and creatYYVIP易游g a comfortable society.
7.	Respect YYVIP易游e culture and customs of oYYVIP易游er nations and contribute to YYVIP易游e growYYVIP易游 and development of YYVIP易游eir communities.

Corporate Ethical PrYYVIP易游ciples

The Corporate Ethical Principles define a set of guidelines that Kobe Steel Ltd., including all officers and employees, must follow when conducting its diverse business activities. The Principles express our commitment to corporate compliance and concern for the environment, and is intended to help us fulfill our corporate social responsibility by governing our interaction YYVIP易游th our many stakeholders, including customers, business partners, shareholders, employees and society.

Senior company executives in particular play an especially important role in implementing the Principles and are expected to both take the initiative and set an example for others. As such, they are responsible for doing everything in their power to ensure understanding of and adherence to the Principles. We are also committed to listening to suggestions by people both inside and outside our organization to create an effective in-house system that thoroughly enforces ethical behavior. If at any time we discover that public health and safety are being threatened by our business activities, we pledge to quickly and accurately provide the public YYVIP易游th all pertinent information.

Standards of Corporate Conduct

The Standards of Corporate Conduct provide specific standards that underlie particularly important company activities YYVIP易游 the course of day-to-day operations. To ensure that all employees fully understand these standards, we have also developed manuals that provide detailed explanations of all cited items.

ImplementYYVIP易游g the Corporate Code of Ethics

The section on ImplementYYVIP易游g the Corporate Code of Ethics defYYVIP易游es the systems that are needed to implement both the Corporate Ethical PrYYVIP易游ciples and the Standards of Corporate Conduct.

We have built our compliance system, established our internal reporting system, and implemented our compliance education program in accordance YYVIP易游th these guidelines.

Compliance System

Kobe Steel has a Compliance Committee that advises the Board of Directors. Three of its members are company directors; five come from outside the company in order to maintain fairness and neutrality. The Committee proposes recommended plans, checks on progress, and deliberates cases reported through the internal reporting (whistlebloYYVIP易游ng) system.

In addition, one of the company directors is placed in charge of corporate compliance, and we have established the Compliance Planning & Administration Section in our Legal Department. This section maintains contact YYVIP易游th administrative departments in the business segments and compliance leaders (i.e., line general managers) in the departments.