Environmental Protection

The number of environmental incidents was essentially flat in the Americas year-on-year. However, government-reportable environmental incidents were down over 50% from 2006 and 75% from 2005. Environmental incident reporting was up 23% globally overall in fiscal 2007 versus the prior year, as we continued to standardize definitions and internal reporting format for environmental exceptions across all regions of the world. The number of Notices of Violation from agencies rose slightly globally. Environmental fines paid in 2007 totaled $42,000, down 53% from the prior year, and remain very low for our industry.

In October 2007, we successfully implemented SAP Compliance Management software to enhance our environmental compliance management work processes at our largest, most complex operating facilities in the U.S. The software tool comprehensively defines applicable regulatory requirements at each site, assigns programmed compliance tasks, and tracks compliance history. We are in the process of deploying the tool at the balance of our plants in the US this year and plan to expand it to other regions of the globe in 2009.

Toxic Release Inventory (US)

(click on the image below to view larger size) (click on the image below to view larger size)

We continue to measure, track and actively manage TRI on-site and off-site releases to air, water and land as a key performance indicator. This includes direct releases to the environment, which is a subset of the total releases and transfers reported annually to the US EPA.

Our total on-site and off-site releases decreased from 2.98 million pounds in 2005 to 1.30 million pounds in 2006, our lowest level since TRI reporting began. A reduction of 1.59 million pounds was realized as a result of portfolio actions (sale of our Amines operations in 2006). We otherwise saw a year-on-year reduction of 7% in TRI on-site and off-site releases across the balance of our existing operating facilities.

We expect to report further reductions in TRI releases in the future, associated with the sale of our Polymers business this year. In addition, we continue to look for tangible release reduction opportunities to further drive down the numbers at the remainder of our facilities.

Hazardous Waste (US and Europe)

We continue to measure and report hazardous waste shipments that are treated off-site or recycled. There are opportunities for improvement with total shipments, which increased 6% over last year to 41 million pounds. The increase is a result of higher production levels at many of our facilities, changes in product mix, and process equipment cleaning events which occurred during 2007. Our longer-term trends have been good on a relative basis (pounds of waste per pounds of product), but overall have increased slightly year-to-year on an absolute basis because of increased production levels.

Our corporate goal is to reduce hazardous waste shipments in Europe and the US by 20% from 2005 levels. In addition, we will begin to measure and report hazardous waste in Asia in calendar year 2008. We have identified waste reduction projects to be implemented in order to achieve our goal.