September 2013 REPRESENTATIVE DIRECTOR PRESIDENTIAL EXECUTIVE OFFICER Tamotsu Sato

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2 In the course of its day-to-day business activities, the Daiso Group strives as a corporate group to exercise its social responsibilities in various proactive ways, including greenhouse gas reductions and workplace improvements for employees, based on the Responsible Care (RC) concept. In Fiscal 2012, in the area of environmental efforts, we continued to implement our Cost Reduction & Environmental Burden Reduction Project. We continued to work to establish a low-carbon, recycling-oriented society, establishing environmentally aware business activities by applying our environmental technologies to biodiversity conservation and other environmental issues. This year, the project reduced emissions of soot and dust more effectively than in the previous year. However, emissions of other atmospheric pollutants, such as SOx and NOx, remained largely unchanged from last year. While total volumes of industrial waste fell, waste recycling rates remained at a lofty 84%, on par with the figure achieved during the preceding fiscal year. We will continue to take every possible action to maximize the recycling of industrial waste, thereby contributing to a recycling-based society. As in the previous year, nationwide energy shortages continue to generate social issues, primarily due to the number of nuclear plants no longer operating. As a corporate group in an energy-intensive industry, we will continue to explore more energy efficient equipment and technologies. In the area of safety efforts, the Group reaffirms that ensuring safety is the most important task for a manufacturer and is working to nurture a safety-oriented corporate culture. Specific measures to prevent accidents and disasters include not just hard measures for example, making production equipment safer but actions to strengthen soft elements, including employee safety training to promote widespread understanding of the principles and fundamental rules of factory equipment. Through these initiatives, all Group companies are working side by side to equip each employee with greater safety awareness in their day-to-day activities, thereby making the Group s Safety Strategy Intended to Prevent Serious Accidents ever more effective and moving us closer toward the goal of zero accidents and zero injuries. This year marks the final year of DYNAMIC ACTION 13, the Group s mid-term management plan. We are rebuilding the production structures of our core businesses and achieving dramatic cost reductions to accelerate the development of a structure to counter rising costs around the world. To this end, we have been constructing new facilities and expanding production capacity for allyl chloride and epichlorohydrin. We will renew efforts to further strengthen safety management across the board as these projects approach completion. This report is now in its ninth year. Moving forward, the Group remains dedicated to its basic policy on Responsible Care (RC) and its commitment to become a corporate group trusted by society. September 2013 REPRESENTATIVE DIRECTOR PRESIDENTIAL EXECUTIVE OFFICER Tamotsu Sato 1

3 Contributing to a more affluent society Responsible Care activities (preserving the environment and ensuring safety through total life cycle care of chemical substances) Preserving the environment by implementing the ISO standard Creating technologies and products that are trusted worldwide Implementing quality assurance through the ISO 9001 standard and GMP system Providing unique products with high functionality Developing eco-friendly products and technologies By focusing on chemicals as a means of creating a sustainable environment and contributing to society, the Daiso Group is: Conducting business with enthusiasm and in good faith Introduction of enterprise resource planning package (ERP) Implementing a compliance program with the goal of earning public trust as a reliable company The directors and employees of the Daiso Group stringently comply with all relevant laws and regulations and always uphold proper corporate ethics in accordance with our Compliance Program as a business entity governed by our corporate philosophy. In order to continue growing our business and increasing our corporate value, each of our employees works diligently and maintains his or her confidence and responsibility as a professional. On the other hand, we recognize the individuality and diversity of our employees, and above all, we acknowledge that we must all spare no effort in achieving our targets. Compliance System Stakeholders Auditors Corporate Philosophy Action Guidelines President Code of Conduct Audit Group Internal Controls Compliance Committee Education & Training Internal Reporting Crisis Management Expert Committee Directors & Employees 2

4 Responsible Care is a voluntary management initiative for implementing improvements and procedures in support of health, safety, and environmental preservation. Through this initiative, management policies are adopted to protect the environment and uphold safety over the entire product life cycle from the development, manufacture, and distribution of chemical substances to their application, final consumption, and disposal. This approach is based on the Responsible Care principles of self-direction and acceptance of responsibility as applied to enterprises engaged in the manufacture or handling of chemical substances. Under Responsible Care, Daiso Co., Ltd. operates as an enterprise friendly to both people and the environment by advocating the corporate philosophy of contributing to the emergence of a more affluent society through chemical-focused operations. This Environmental & Safety Report (Report on Responsible Care Activities) summarizes our Responsible Care code, which encompasses health, safety, and environmental preservation as well as process safety and accident prevention. This report was compiled according to the Environmental Reporting Guidelines (Fiscal Year 2007 Version) of the Ministry of the Environment of Japan. Scope of Report Reporting period: April 1, 2012 March 31, 2013 (Data on occupational safety cover the calendar year.) Reporting entities: Head Office, Tokyo Office, R&D Div. Research Center, Kokura Plant, Amagasaki Plant, Matsuyama Plant, and Mizushima Plant While strictly complying with relevant laws and regulations, Daiso shall make continuous progress with voluntary management initiatives by setting voluntary criteria related to integrated safety management of chemical substances in keeping with the spirit of Responsible Care. We shall develop and maintain this management system. All directors and employees shall act with purpose and address targets indicated by our policies. We shall expand our public communication efforts and strive to gain further public trust. We shall provide training and education for practical application and better understanding of our policies. 1. Environmental Preservation (1) Promoting environmental preservation by ensuring harmony with the natural environment (2) Taking steps to reduce environmental impacts during the development of products and processes while promoting conservation of energy and resources (3) Communicating to maintain harmony with the local community while seeking conservation and improvement of the living environment 2. Process Safety and Disaster Prevention (1) Prevention of accidents and disasters (2) Maintaining a crisis management system (3) Implementing thorough management of high-pressure gases and hazardous materials and the like (4) Implementing process safety controls for facilities and equipment 3. Occupational Safety and Health (1) Eliminating work accidents (2) Enhancing and improving the work environment (3) Taking steps to maintain and promote good health 4. Distribution Safety (1) Ensuring the safety of product transport by strictly complying with legal and other requirements (2) Reducing safety risks during the product transport and distribution stages 5. Quality Assurance and Chemical & Product Safety (1) Providing customers with excellent products according to our corporate philosophy (2) Giving top priority to product safety under our stringent quality management system (3) Reducing costs while placing a priority on quality 6. Dialogue with the Public (1) Reporting our Responsible Care activities and other initiatives to relevant groups and organizations. (2) Proactively engaging in dialogues and activities with local communities. After implementing our RC activities, we officially announced this policy both inside and outside the company. April 1, 2003 President Daiso Co., Ltd. Reports Reports RC Internal Audit ISO Internal Audit Measures to prevent serious accidents Follow-up Checks President RC Committee Chairman: Director Responsible for RC Members: Divisional managers, general manager of labor union Office: RC & Quality Assurance Department Reports & Proposes Instructs RC Promotion Conference Measures to prevent serious accidents Follow Instructs & Promotes Workplace RC Committee (Occupational Safety & Health and Process Safety &Disaster Prevention Committee) Chairman: General Manager of workplace We are continuously improving our RC activities including Occupational Safety and Health and Process Safety & Disaster Prevention by adopting the PDCA cycle. PLAN DO CHECK ACTION RC Committee Workplace RC Committee Workplaces RC Internal Audit RC Committee RC Promotion Conference RC targets and measures for the fiscal year and adoption of the RC action plan Adoption of the RC action plan at workplaces Activities based on the RC action plan and campaigns to prevent serious accidents Audit and report on RC action status Review of plan and incorporation of changes in the plan for the subsequent fiscal year according to the RC action report and legal requirements 3

5 Targets for Fiscal 2012 Results for Fiscal 2012 Long-term Targets Environmental Preservation To ensure proper operation of environmental impact reduction equipment and to improve the recycling rate To reduce CO2 emissions and energy consumption to 80% or less of the fiscal 1990 level CO2 emissions were 77.2% compared to the fiscal 1990 level. The energy consumption rate (crude oil equivalent) was 70.5% (decrease of 3.6% compared to the previous fiscal year). To reduce environmental impacts during the development of products and processes while promoting conservation of energy and resources To seek harmony with the local community while preserving and improving the living environment To reduce the energy consumption rate to 80% of the fiscal 1990 level as an average for the period from fiscal 2008 to fiscal 2012 Process Safety and Disaster Prevention To promote ongoing measures to prevent serious accidents and disasters The achievement rate for implementing measures to prevent serious accidents was approximately 100%. To prevent accidents and disasters To maintain a crisis management system To implement stringent management of high-pressure gases and hazardous materials and the like To implement process safety controls for equipment Occupational Safety and Health To eliminate work accidents Number of work accident in fiscal 2012 : 3 (5 in previous year) Target not achieved. To eliminate work accidents To enhance and improve the work environment To maintain and promote good health Distribution Safety To maintain safe transport and eliminate in-plant truck loading accidents Distribution accidents increased to 3 incidents (compared with 1 incident in the previous fiscal year). To ensure the safety of product transport by strictly complying with legal and other requirements To reduce safety risks during the product transport and distribution stages Chemical, Product Safety and Quality Assurance To ensure stringent compliance with laws targeting chemical products Appropriate procedures in accordance with REACH and the other laws about chemistry articles were carried out. To provide our customers with excellent products according to our corporate philosophy To give top priority to chemical and product safety under our stringent RC, quality, and environmental management system To reduce costs while placing a priority on quality Dialogue with Society To publish an RC activity report and submit it to the government and to promote communication with society Submitted reports to the government and to the Japan Chemical Industry Association. To respond appropriately to requests for investigations and to provide reports on our business operations Environmental Preservation Process Safety and Disaster Prevention Occupational Safety and Health Distribution Safety Chemical, Product Safety and Quality Assurance Dialogue with Society To ensure proper operation of environmental impact reduction equipment and to improve the recycling rate To reduce CO2 emissions and energy consumption rate to 80% or less of the fiscal 1990 level To promote ongoing measures to prevent serious accidents and disasters To eliminate work accidents To maintain safe transport and eliminate in-plant truck loading accidents To ensure stringent compliance with laws targeting chemical products To publish an RC activity report and submit it to the government and to promote communication with society 4

6 In fiscal 2012, our production volume increased, which is same as in decreased the preceding fiscal year. And water consumption decreased by about 10.7%, too. Generation of wastewater, which has an environmental impact, decreased by about 3.5%. Atmospheric emissions decreased from the preceding fiscal year, since the operation of a boiler powered by alternative forms of energy such as hydrogen and city gas were suitably performed. The material balance resulting from our production activities during fiscal 2012 is shown below. (Data covers the Kokura Plant, Amagasaki Plant, Matsuyama Plant, and Mizushima Plant) INPUT Water Energy consumption 23, m 3 (crude oil equivalent) 117,000 kl Raw materials 260,000 t Five Plants of Daiso Co., Ltd. Packing voluntarily collected 81 t Production of goods 542,000 t Packing used for shipment* 523 t OUTPUT *Packing used for shipment represents the weight of the paper bags, plastic bags, and polyester containers used as packaging materials for our products. CO2 250,000 t SOX 1 t NOX 19 t COD 240 t Nitrogen 70 t Phosphorus 6 t Wastewater Waste 24,684,000 m 3 Total 24,000 t Landfilled 3,500 t PRTR released 28 t transferred 68 t OUTPUT The chemical industry has adopted the goal of achieving an average energy consumption rate of 80% compared to the fiscal 1990 level for the period from fiscal 2008 to 2012; moreover, it has also voluntarily adopted environmental preservation activities on a global scale. Daiso is taking steps to reduce its environmental impacts through initiatives to conserve energy, reduce wastes, and prevent global warming while strictly complying with legal and other requirements; moreover, we respond to emergencies in our business operations as one of our RC activities. Our three mainline plants have acquired certification of registration with ISO 14001, the international standard for environmental management systems, and are continuously adopting improvements. Workplace Date of Acquisition Certification Body Registration Number Amagasaki Plant May 2001 Japan JQAEM1558 Matsuyama Plant June 2001 Quality Assurance JQAEM1631 Mizushima Plant October 2000 Organization JQAEM1051 5

7 daiso. co. jp About This Report Under Responsible Care, Daiso Co., Ltd. operates as an enterprise friendly to both people and the environment by advocating the corporate philosophy of contributing to the emergence of a more affluent society through chemical-focused operations. This Environmental & Safety Report (Report on Responsible Care Activities) summarizes our Responsible Care code, which encompasses health, safety, and environmental preservation as well as process safety and accident prevention. This report was compiled according to the Environmental Reporting Guidelines (Fiscal Year 2007 Version) of the Ministry of the Environment of Japan. Reporting Entities Head Office, Tokyo Office, R&D Div. Research Center, Kokura Plant, Amagasaki Plant, Matsuyama Plant, and Mizushima Plant Reporting Period April 1, 2012 March 31, 2013 (Data on work accidents cover the calendar year.) RC & Quality Assurance Dept , Awaza, Nishi-ku, Osaka , Japan Tel. +81-(0) Fax. +81-(0) January 2014 Pub

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