Corporate Governance

Corporate Governance Structure

Toyota Industries strives to enhance its corporate value in a stable manner over the long term and maintains society’s trust by earnestly fulfilling its social responsibilities in accordance with its Basic Philosophy. To that end, Toyota Industries endeavors to further enhance its corporate governance in its efforts to maintain and improve management efficiency and the fairness and transparency of its corporate activities.

Basic Perspective on Corporate Governance

Toyota Industries regards the most important managerial task is to earn trust broadly from society and enhance our corporate value on a stable, long-term basis. We aim to do this task based on our Basic Philosophy and earnestly fulfilling our social responsibilities. Our basic focus is on contributing to the creation of an enriched society through business activities, and we believe it is essential to cultivate good relationships with stakeholders, including shareholders, customers, business partners,creditors, local communities and employees.

Accordingly, we strive to enhance our corporate governance in order to maintain and improve management efficiency, fairness and transparency. For example, we have established a structure to quickly and flexibly respond to changes in the business environment and have been working to augment management oversight and ensure the timely disclosure of information.

More specifically, the following basic policies drive our initiatives.

  1. (1) We seek to ensure shareholders’ rights and equality.
  2. (2) We seek to promote appropriate collaboration with stakeholders other than shareholders (including customers, business partners, creditors, local communities and employees).
  3. (3) We seek to conduct appropriate information disclosure and ensure transparency.
  4. (4) We seek to perform the roles and duties of the Board of Directors appropriately in order to make decisions in a transparent, fair, quick and resolute manner.
  5. (5) We seek to promote a constructive dialogue with shareholders.

Implementation Structure

Toyota Industries convenes monthly meetings of the Board of Directors to resolve important management matters and monitor the execution of duties by directors. We appoint outside directors who have a wealth of experience and knowledge such as business management. They attend meetings of the Board of Directors and give opinions and ask questions as deemed necessary based on their individual, wide-ranging experience and insights related to the management of globally operating companies and monozukuri (manufacturing). Through this supervisory function of outside directors, we ensure the legality and validity of the Board's decisions as well as the directors' execution of duties from an objective perspective. Moreover, a variety of issues concerning important management matters, such as our corporate vision, management policies, medium-term business strategies and major investments, as well as crucial projects in each business division, are discussed by the Management Committee, which is composed of directors at the executive vice president level and above as well as relevant senior executive officers and other executives, prior to deliberation by the Board of Directors.

At meetings of the Management Council, directors, audit & supervisory board members and senior executive officers convene to report and confirm the monthly status of business operations and share overall deliberations at Board of Directors meetings and other management-related information.

In addition, issues pertaining to human resources, quality, production, procurement and technologies are discussed at the corresponding functional meetings. We have also put in place committees to deliberate on more specific matters, such as corporate social responsibility (CSR), the environment and export transaction controls. These functional meetings and committees discuss important matters and action themes in respective areas. Moreover, we strive to maintain and improve internal controls by establishing the Audit Department and conducting internal audits of Toyota Industries' business divisions and departments as well as our subsidiaries.

Selection and Dismissal of Senior Management and Appointment of Director and Audit & Supervisory Board Member Candidates

■Policies and procedures for Selection (and Dismissal) of Senior Management and Appointment of Director Candidates

We carry out comprehensive evaluations from the viewpoint of placing the right persons in the right positions. We seek a balance among making sound and quick decisions, managing risk appropriately, monitoring execution of business operations and covering a specific function or business division of Toyota Industries.

In appointing audit & supervisory board member candidates, we also perform comprehensive evaluations from the viewpoint of placing the right persons in the right positions, while ensuring a balance among the financial, accounting and legal insights,knowledge on our business fields and the diversity of perspectives on corporate management.

Based on these policies, we review proposals, exchange views and confirm details at the three-member Executive Appointment and Compensation Committee, which consists of Toyota Industries’ president and two independent outside directors, and submit these proposals to the Board of Directors for resolution.

■Experience and Expertise of Directors and Audit & Supervisory Board Members

Appointment of Independent Members of Management

As a publicly listed company, Toyota Industries strives to ensure the fairness and transparency of management. Following the Securities Listing Regulations stipulated by the Tokyo Stock Exchange and Nagoya Stock Exchange, respectively, to further enhance our corporate governance, Toyota Industries has appointed as independent members of management two outside directors and two outside audit & supervisory board members who are deemed to have no conflicts of interest with our shareholders.

Determination of Compensation for Directors and Audit & Supervisory Board Members

■Matters Related to Policy for Determining Individual Compensation for Directors

●Basic Perspective

・We ensure fairness and transparency.

・We emphasize incentives for achieving better business performance and sustainable growth, link compensation with the business performance of Toyota Industries and reflect individual duties and performance.

●Compensation Structure

・Compensation for directors consists of fixed compensation (basic compensation) and bonuses (compensation linked to business performance) . A bonus is further divided into a portion linked to a single fiscal year indicator and a portion linked to medium-term indicators.

・However, because outside directors are independent of the execution of business operations, only the fixed compensation is paid to outside directors.

●Method of Determining Individual Compensation

・We have established the Executive Appointment and Compensation Committee comprising three members, namely Toyota Industries’ president and two independent outside directors.

・To ensure the Committee's objectivity and transparency, a majority of the members of which are independent outside directors, and the Committee is chared by one of the independent outside directors.

・The Executive Appointment and Compensation Committee deliberates on a policy for determining individual compensation for directors, proposed compensation for each director and important matters related to compensation.

・The Board of Directors votes on the policy based on the results of deliberations made at the Executive Appointment and Compensation Committee.

・From the standpoint of determining directors’ individual compensation amounts flexibly and swiftly, the Board of Directors delegates the related decision-making authority to the president (or to the chairman).

・The president (or the chairman) determines the directors’ individual compensation amounts based on the policy and the results of deliberations made at the Executive Appointment and Compensation Committee.

●Policy for Determining Fixed Compensation, Bonuses and Their Ratio
-Fixed Compensation-

・Fixed compensation for directors consists of monthly salaries,which are paid periodically while in service.

・We determine a reasonable level of individual compensation amounts while giving consideration to other companies’ compensation levels as well as the rank and duties of each director.

-Bonuses-

・We pay a bonus at a certain time after the end of the General Shareholders’ Meeting in each fiscal year.

・For the portion linked to a single fiscal year indicator, we use consolidated operating profit as the indicator and calculate the amount of bonuses for each rank based on the amount of consolidated operating profit for the previous fiscal year.

・For the portion linked to medium-term indicators, we evaluate such management indicators as operating profit ratio of the past three fiscal years and calculate the amount of bonuses for each rank based on the evaluation results.

・We have selected the said indicators because we have determined that they appropriately align with the basic perspective of our policy for determining individual compensation for directors.

・In determining the amount of bonuses, we give consideration to dividends, employees’ and other companies’ bonus levels, past records of bonus payments and execution of duties and assigned work.

-Ratio-

・As a guide, we use the ratio of fixed compensation to a bonus of directors (excluding outside directors) of 60:40, with the portion linked to medium-term indicators accounting for roughly 10% of the bonus. However, this does not preclude us from using another ratio depending on the amount of operating profit for the corresponding fiscal year.

■Compensation for Audit & Supervisory Board Members

Compensation for audit & supervisory board members only consists of fixed compensation, which is determined through discussion of audit & supervisory board members based on certain criteria determined by Toyota Industries.

Breakdown of Executive's Compensation(Excluding OutSide Directors) Compensation for Directors and Audit & Supervisory Board Members

Effectiveness of the Board of Directors and Its Evaluation

Through interviews with outside directors and audit & supervisory board members, Toyota Industries asks them to evaluate the effectiveness of the Board of Directors and collects their feedback. The following summarizes the results of their evaluation.

■Evaluation

1) The Board is operated efficiently with a clear focus depending on the agenda and spends sufficient time to enable focused discussion on important business issues.

2) The Board members include outside directors with extensive experience, and the Board proactively asks them to provide opinions on each item on the agenda for lively and constructive discussion.

3) Appropriate decision-making and management oversight are ensured by reporting and deliberating on important matters several times to make sure that these matters are thoroughly discussed prior to the resolution.

■Suggestions for Further Improvement of the Effectiveness

1) Amid the changing business environment, the Board's agenda should pay greater attention to matters matched to the demands of the times, such as those related to management focused on environmental, social and governance (ESG) factors.

2) The Board should continue to deepen the discussion on the status of both Group-wide and respective business operations, including direction over the medium to long term.

As shown above, Toyota Industries' Board of Directors has been evaluated as effective. In response to certain feedback calling for further improvement, we will undertake improvement efforts on a continuous basis.

Audit & Supervisory Board Members and Audit & Supervisory Board

Toyota Industries has four audit & supervisory board members, two of whom are full-time members and two of whom are outside members.

The four members attend meetings of the Board of Directors and provide their opinions as appropriate. The full-time members also attend other important meetings and receive reports on the execution of duties by directors and other responsible persons. They work to monitor and provide advice on the management status through on-site audits at the Head Office, major business sites and subsidiaries, thereby contributing to the maintenance and improvement of internal controls. They also collaborate appropriately with the accounting auditor and the internal audit department.

Meetings of the Audit & Supervisory Board are held every month to share information on audits conducted by full-time members with outside members, to receive reports on important business statuses from Board members and responsible persons, and to receive reports from the accounting auditor regarding how key audit matters have been examined and determined.

At these meetings, the members also discuss and make decisions on important matters, such as audit policies and plans, the audit method used by the accounting auditor and the appropriateness of their audit results.

Meetings of the Board of Directors and Relevant Committees
Initiatives for Enhancing Corporate Governance
  • 1971 Introduced a divisional organization system
  • 2006 Reduced the number of directors (from 30 to 17)
  • 2006 Introduced a managing officer system
  • 2010 Appointed independent members of management
  • 2016 Reduced the number of directors (from 17 to 11)
  • 2017 Conducted an evaluation of the effectiveness of the Board of Directors
  • 2019 Revised executive management structure and reduced the number and rank of executives
  • 2022 Revised the composition of the Board of Directors
    (independent outside directors accounting for a third or more of the total number of members)

Cross-Shareholdings

Basic Policy

Cooperative relationships with various companies are essential in expanding business and achieving sustainable growth. From the medium- to long-term perspective of enhancing corporate value, our policy is to determine if cross-shareholdings are needed by comprehensively giving consideration to their importance in terms of our business strategies and relationships with business partners.

Exercise of Voting Rights

While respecting the management policies of individual investee companies, we determine how we exercise our voting rights by checking each item on the agenda from the perspectives of medium- to long-term enhancement of corporate value, policy concerning shareholder returns, corporate governance and social responsibility.

Verifying Appropriateness of Cross-Shareholdings

Each year, the Board of Directors verifies if the purpose of cross-shareholdings is appropriate and if associated benefits and risks are commensurate with capital cost. More specifically, we conduct verification by using both quantitative information, which is based on a comparison of total shareholder return and weighted average capital cost as well as the return on equity (ROE) of each investee company, and qualitative information, such as the transaction status and the outlook of future business relationships. In fiscal 2023, we held shares in 35 listed companies, a decline from 46 in fiscal 2011.

Internal Control System

In accordance with the Companies Act, in May 2006 Toyota Industries’ Board of Directors adopted the Basic Policies for the Establishment of an Internal Control System (Basic Policies) to ensure compliance, risk management as well as the effectiveness and efficiency of business operations by incorporating these policies into each business segment’s annual policies and day-to-day routine management. The CSR Committee, at its meeting held in March, assesses the progress made in implementing the Basic Policies in the year under review and determines actions for the coming year, including reviewing the implementation structure and enhancing day-to-day operational management.

Furthermore, based on the Financial Instruments and Exchange Law (so-called Japanese Sarbanes-Oxley Act (J-SOX)), we have established and appropriately operated an internal control system to maintain the reliability of financial reporting. The system’s status and progress are reviewed by the Audit Department and audited by independent auditors. We determine which Toyota Industries Group companies fall within the scope of J-SOX based on the degree of impact on the reliability of financial reporting. We determined that our internal controls over financial reporting as of the end of fiscal 2023 were effective, and accordingly, submitted an Internal Control Report in June 2023. The report was reviewed by independent auditors and judged fair in their Internal Control Audit Report.

Internal Control Assessment System
(Based on J-SOX)

Internal Control Assessment System (Based on J-SOX)

Compliance

Basic Perspective

We believe that compliance means both adhering to laws and regulations as well as ethics and social norms. As such, it is vital to promote compliance throughout the Toyota Industries Group under the leadership of top management.

To promote compliance, we have established the Compliance Subcommittee (led by an executive responsible for legal affairs) as a subordinate organization to the CSR Committee (led by the president). Every year, the subcommittee formulates an action policy that covers the entire Toyota Industries Group and conducts a follow-up check on the progress of corresponding activities. We have also established a system to report serious violation cases that occur within the Toyota Industries Group, including bribery, corruption and violations of antitrust laws, to the Compliance Subcommittee.

In response to the issue of regulatory violation in certain engines for lift trucks related to Japan’s emissions certification in fiscal 2023, we will thoroughly identify compliance risks, revise our compliance structure and activities and work for improvements while seeking advice from external experts.

Number of serious compliance violations in the Toyota Industries Group
Organization for Promoting Compliance and Information Security under the CSR Committee

Formulating the Employee Code of Conduct and Fully Educating and Instilling the Code

Toyota Industries has formulated and distributed to executives and all employees the Toyota Industries Corporation Employee Code of Conduct, which serves as conduct guidelines that should be observed by employees. It covers such topics as compliance (prevention of bribery, corruption and profit sharing, conformance to antitrust laws and others), respect for human rights, safety and health as well as environmental conservation. Accordingly, we have been working to instill the Code through group training and other means. Consolidated subsidiaries in and outside Japan have formulated their own Code of Conduct appropriate to their respective business lines and corporate cultures and have been implementing Company-wide awareness-raising and educational activities once a year. In April 2023, we held a meeting to raise compliance awareness and communicate both the revisions to the Code as described in the TOPIC section below and our efforts to prevent the recurrence of the regulatory violation related to Japan’s emissions certification for lift truck engines. In addition, we have created and disseminated e-learning materials on 48 topics and compliance mini quizzes on 48 topics (as of March 2023) in order to cultivate a deeper understanding of compliance among employees of Toyota Industries and our consolidated subsidiaries in Japan and to create an environment in which employees learn about compliance on their own.

■Execution rate of Employee Code of Conduct enlightenment and educational activities by Toyota Industries and consolidated subsidiaries in and outside Japan: 100%

Example Topics of e-Learning Materials

Compliance; Antitrust laws; Prevention of bribery; Human rights; Various types of harassment; Safety behavior; Environmental protection; Management of confidential information; Product liability; Accounting process; Quality; Import/export controls

Total number of employees trained through e-learning(TICO)

【TOPIC】Revising the Toyota Industries Corporation Employee Code of Conduct

In fiscal 2022, Toyota Industries formulated the Sustainability Policy and Human Rights Policy to further promote corporate activities whose values are aligned with those of society. In April 2023, we revised the Toyota Industries Corporation Employee Code of Conduct for the first time since 2014 to implement these policies.

The purpose of the revisions was to update the content based on the roles expected of Toyota Industries and turn the Code into an action guideline for every employee amid the growing call for responding to various issues, including those related to the Sustainable Development Goals (SDGs).

We have been making efforts to educate and inform employees about the Code, such as holding Company-wide meetings and distributing enlightenment cards, so that they can practice the Code to fulfill their social responsibilities and contribute to the realization of a sustainable society.

Open this PDF file in a new window.Top Message PDF [181.8KB / 1pages]
Open this PDF file in a new window.Toyota Industries Corporation Employee Code of Conduct PDF [204.3 KB/24 pages]

Efforts for Prevention of Bribery and Corruption

To prohibit and prevent bribery, in 2014 Toyota Industries formulated the Global Guidelines for Bribery Prevention (or individual rules in countries high on the Corruption Perceptions Index in accordance with their respective, applicable laws) and has been conducting activities to familiarize employees with them in each country and region.

【TOPIC】Formulating the Toyota Industries Group Anti-Bribery Policy

In March 2023, we formulated the Toyota Industries Group Anti-Bribery Policy to clarify our stance both within and outside the Toyota Industries Group. We have positioned the policy above our Global Guidelines for Bribery Prevention and have been working to communicate and thoroughly implement the policy in each region and country.

Open this PDF file in a new window. Toyota Industries Group Anti-Bribery Policy PDF [220.3KB / 1pages]

Efforts for Ensuring Compliance with Antitrust Laws and Competition Laws

As for antitrust laws, we operate a system to conduct a check and review before and after employees of Toyota Industries contact competitors and have been cultivating awareness among employees for not acting in a manner that may possibly constitute a violation of antitrust laws. Moreover, we have designated a particular month as “Antitrust Law Compliance Month” since fiscal 2016 to carry out enlightenment activities at relevant departments for clarifying our relationships with competitors and ensuring fair transactions with business partners (e.g., the need to hold sincere dialogue with business partners to deal with changes in the business environment caused by rises in various costs). Consolidated subsidiaries in and outside Japan have also been working to educate and raise awareness of employees for preventing violations of antitrust laws and competition laws, such as forming cartels, in accordance with local laws and regulations.

Early Detection and Prevention of Issues via Whistle-Blower System

The Toyota Industries Group has in place a whistle-blower system to report and seek consultation on compliance-related issues. In Japan as well as key countries in North America, Europe, Asia, Oceania and South America, we operate a compliance hotline (external helpline) that allows employees and other relevant parties to seek advice from external experts on compliance-related matters with a sense of security and without being exposed to negative consequences. In Japan, in response to the revisions to the Whistleblower Protection Act, which went into effect in June 2022, we have revised our related rules and communicated the revisions among employees while stepping up our efforts to thoroughly protect whistle-blowers and ensure the early resolution of problems. In fiscal 2023, we received 70 reports and inquiries from within Toyota Industries and from its consolidated subsidiaries in Japan on such matters as labor management, working environment and ethics. After verifying each report and inquiry, we have taken appropriate action regarding each case. Our responses have been reviewed and judged appropriate by external lawyers.

In fiscal 2017, we also set up a hotline for our major suppliers to report and inquire about possible compliance violations by Toyota Industries employees. Through these initiatives, we ensure the early discovery and prevention of issues and intend to become a “company on which society places greater trust.”

Number of reports and inquiries via Whistle-Blower System (TICO & consolidated subsidiaries in Japan )

Compliance Awareness Survey

Toyota Industries periodically conducts an employee compliance awareness survey to check how compliance activities have taken root among employees and how well they know about the Code of Conduct and whistle-blower system. By identifying the actual status and adding improvements, we have been working to make our compliance structure more effective. In the most recent awareness survey, we confirmed that the degree of recognition of both the Code and whistle-blower system was more than 95%. To maintain such a high level, we will continue to make efforts for further improvement.

Activities in the Toyota Industries Group

Each consolidated subsidiary of the Toyota Industries Group has set up a compliance committee (in Japan) and appointed a compliance officer (outside Japan) to lead and promote autonomous activities in respective communities. In North America, Europe, China and Asia/Oceania, compliance officers regularly hold conferences and facilitate collaborative activities within each region.

Main compliance officer

In fiscal 2023, compliance officers from nine bases in China attended the Compliance Officer Conference held in the country. They shared information about the compliance activities of each company and updates to relevant laws and exchanged views. After the conference, these bases have been conducting activities in a mutually coordinated manner.

Compliance Officer Conference in China
Compliance Officer Conference in China

Compliance Officer Conference in China

Tax Governance

Basic Perspective

The Toyota Industries Group regards the most important managerial task is to earn trust broadly from society and enhance its corporate value on a stable, long-term basis. We strive to contribute to society and maintain and enhance corporate value by complying with the applicable tax laws and regulations of each country and region, as well as by paying the appropriate level of taxes.

Tax Policy

Under the basic perspective described above, Toyota Industries has formulated the Toyota Industries Group Tax Policy.

The Toyota Industries Group will educate its employees as necessary through tax and accounting training and e-learning programs so that we are able to pay the appropriate level of taxes and take the proper tax measures in accordance with the Code of Conduct.

Open this PDF file in a new window. Toyota Industries Group Tax Policy PDF [376.4KB / 1pages]

Information Security

Basic Perspective

We recognize that the personal information of customers, employees and suppliers as well as information concerning our technologies and sales activities are assets that need to be protected. Accordingly, with the aim of safeguarding our information assets and strengthening their management, we have formulated the Basic Policies for Information Security.

Basic Policies for Information Security

(1) Legal compliance
We comply with laws and regulations related to information security while fostering awareness of them among employees.
(2) Maintaining a stable business foundation
We safeguard and manage information assets appropriately, carry out information security-related education and enlightenment activities on an ongoing basis and seek to maintain a stable business foundation.
(3) Providing safe products and services
We provide safe products and services to customers and society by implementing information security measures in our business activities, including development, design and manufacture of products and services.
(4) Information security management
We build a governance structure to enforce and manage information security and continue to promote and refine the structure.

Implementation Structure

Toyota Industries has set up the Information Security Subcommittee (led by an executive in charge of the IT Digital Promotion Department) as a subordinate organization to the CSR Committee to reduce information security risks.
To thoroughly implement the initiatives adopted by the subcommittee, we appoint information security managers*1and information security administrators*2 at each department of Toyota Industries.

For consolidated subsidiaries around the world, we regularly hold meetings of information technology (IT) managers in each region to share information on security incidents and countermeasures both in and outside the Toyota Industries Group and to disseminate relevant policies. Through these and other measures, we are increasing the levels of security and security awareness throughout the Group.

*1:Head of each department
*2:A person within the department, appointed by the head

Information Security Management

■Information Security Monitoring and Incident Response

To ensure the early detection of and prompt action against cyberattacks, we have in place systems to monitor the security of PCs and all other terminals used within the Toyota Industries Group and to respond to incidents 24 hours a day, 7 days a week. We also share threat information with our consolidated subsidiaries and affiliates in and outside Japan to swiftly alert each company.

■Number of serious incidents occurred: 0

■Providing Education on Information Security

Cybersecurity awareness website logo
Cybersecurity awareness website logo
Cybersecurity White Paper
Cybersecurity White Paper

In addition to our ongoing training on targeted attacks via e-mail and a cybersecurity awareness website, we created a Cybersecurity White Paper to further reinforce our efforts to raise awareness of information security. The white paper compiles past incidents that occurred within the Toyota Industries Group, the current state of our security measures and tasks ahead. It is also available in English and is distributed to consolidated subsidiaries and affiliates around the world with the aim to increase awareness throughout the Group.

■Preventing Leakage of Confidential Information

As an effort to reinforce workplace activities led by information security managers and information security administrators, we have created and distributed the Information Security Managers/Administrators Guidebook, which describes the roles of each, the risk of damage caused by leakage of confidential information and response details. In the future, we plan to distribute the guidebook to our consolidated subsidiaries around the world.

■Conducting Information Security Audits

In accordance with the All Toyota Security Guidelines (ATSG)*3, we annually inspect the implementation status of information security at Toyota Industries and our consolidated subsidiaries and affiliates around the world in order to maintain and improve the level of information security on a continuous basis. In performing ATSG-based inspections, we also check the rationale for implementing certain measures to upgrade the level of our activities.

*3: Security guidelines of the Toyota Group, which conform to the Cyber Security Framework of the National Institute of Standards and Technology (NIST CSF) and ISO 27000 series of standards for information security management systems

Primary Activity Examples

Activities in fiscal 2023
  • Conducting an emergency security inspection on consolidated subsidiaries and affiliates in and outside Japan
  • Formulating a three-year action plan for improving the security level of affiliated companies in Japan and obtaining their agreement for the implementation
  • Creating and issuing a Cybersecurity White Paper
  • Opening a cybersecurity awareness website
  • Checking the actual security levels of suppliers and requesting corrective actions
  • Creating and issuing the Information Security Managers/Administrators Guidebook
  • Incorporating security requirements into the quality control rules for product development

Risk Management

Basic Perspective

Based on the Basic Policies for the Establishment of an Internal Control System in compliance with the Companies Act, Toyota Industries is working to strengthen regulations and a structure to promote risk management. We regard the following aspects as the basics of risk management and implement initiatives accordingly.

(1) Incorporating measures to prevent and reduce potential risks into daily routines and following up on the progress of implementation
(2) Ensuring quick and precise actions to minimize the impact on business and society when a risk becomes apparent

Implementation Structure

Risk Management Structure
Risk Map

Business divisions and other departments at the Head Office develop and promote annual action policies that integrate measures to prevent and control risks related to safety, quality, the environment, personnel, export transactions, disasters and information security. Progress is assessed and followed up by each functional management entity such as the CSR Committee and the Environmental Committee. We created the position of risk supervisor within the CSR Committee. By doing so, we promote activities to identify priority risks from among risks concerning Toyota Industries as a whole and make sure to implement measures at each functional management entity as well as measures to counter emerging risks spanning multiple functions. In fiscal 2023, we newly added geopolitical risk to our list of priority risks, and relevant functional management entities are working together to implement a range of initiatives.

At the same time, functional departments at the Head Office such as those responsible for safety, quality and the environment formulate rules and regulations and create manuals from a Group-wide perspective, encompassing consolidated subsidiaries. By confirming and following up on the progress through operational audits and workplace inspections, they provide support for raising the level of risk management, including the ability to respond to the identified priority risks, at each business division and consolidated subsidiary.

We have also formulated the Risk Response Manual, which defines basic rules for risk management activities under normal circumstances and for our initial response to an emergency when a risk becomes evident. The aim is to ensure quick reporting to top management, perform an accurate assessment of the impact on society and business activities and minimize damage through appropriate actions. The content of the manual is reviewed and revised as deemed necessary in response to changes in businesses and the surrounding environment.

Response to Possible Major Earthquake

We consider the impact of a major earthquake as one of the most significant risks and have accordingly formulated a business continuity plan. Based on the three basic policies of placing maximum priority on human life, placing top priority on the recovery of local communities and ensuring the quickest possible recovery, we are making Company-wide efforts in three relevant areas, specifically, “precautionary, pre-disaster mitigation,” “initial response to be followed immediately after the disaster” and “restoration of production.”

Disaster Prevention Structure

We strive to reinforce our disaster prevention structure to enable a smooth transition from the initial response stage to the production restoration stage.

The Disaster Prevention Response Headquarters, consisting of representatives from the functional departments at the Head Office, is responsible for collecting information from plants and other relevant parties and making Company-wide decisions based on the information collected.

Disaster Prevention Structure

Efforts to Cultivate Personnel to Engage in Disaster Prevention Activities

Training at Disaster Prevention Response Headquarters

FC buses
HEV・BEV
Drill to use electrified vehicles as part of our emergency power source

One important role assigned to the Disaster Prevention Response Headquarters that oversees Company-wide disaster response is to collect information on damages to both inside and outside the company premises, swiftly make decisions and disseminate these decisions throughout Toyota Industries. In fiscal 2023, we again conducted training remotely as in the previous fiscal year to collect damage information of each plant and report the information to the Disaster Prevention Response Headquarters. At the same time, we conducted a drill on using electrified vehicles (HEVs, BEVs and FC buses) of each plant as part of our emergency power source. We will continue to implement measures to ensure that the headquarters can function under any circumstances.

Simultaneous All-Company Disaster Prevention Training

Drill to evacuate to an indoor secondary evacuation site, assuming stormy weather
Drill to evacuate to an indoor secondary evacuation site, assuming stormy weather

In fiscal 2023, we extended the duration of our training and conducted more effective, simultaneous all-Company disaster prevention training.

The training at the Kariya Plant assumed stormy weather, and participants first evacuated the building to an outdoor primary evacuation site, and after checking the safety of the building, went inside to a secondary evacuation site. We will continuously conduct training to ensure higher safety and security for our colleagues, customers and business partners while dealing with new issues found through the training.

Individual Training at Each Plant

■Power Restoration Drill

Based on the procedures to restore power supplies, including electricity and gas, which are essential in restoring production activities, each plant conducts genchi genbutsu (go and see for yourself) training on a periodic basis. Through the training, we are identifying problems and making improvements to step up our efforts to ensure quick restoration activities.

■System Restoration Drill

We conduct system restoration drills jointly with Toyota Industries IT Solutions, Incorporated, a consolidated subsidiary engaged in the development and operation of information infrastructures and systems, and work to improve our readiness for quick restoration.

Promoting Disaster Prevention at Home and Related Enlightenment Activities

Starting from fiscal 2017, we have been undertaking enlightenment activities for employees and their families as a measure to promote disaster prevention and avoid disasterinflicted damage at home. Specifically, we encourage them to take three actions: preventing the overturning of furniture and securing an evacuation route; deciding how to contact and where to meet with family members in a disaster; and stockpiling emergency goods, food and other necessities. In fiscal 2023, we focused on disaster prevention measures for when we are outside the home and worked to increase disaster preparedness by creating and distributing material on how to ensure safety when an earthquake occurs while we are in a car or using public transportation.

Future Activities

In the face of frequent wind and water-related disasters and earthquakes in recent years, we believe it is important to be prepared to make a smooth initial response and maintain the function of the Disaster Prevention Response Headquarters no matter when or how much we sustain damage from a disaster. Based on this belief, we will continue our ongoing efforts to increase the effectiveness of our disaster prevention scheme.

Toyota Industries’ Activities Related to Intellectual Properties

Basic Perspective

One tenet of the Toyoda Precepts, which serves as our corporate creed, states “Always be studious and creative, striving to stay ahead of the times.” Under this tenet, Toyota Industries proactively makes investments in research and development, protects and uses the resulting intellectual properties, such as inventions and know-how, and leverages them in the strategies of each business. In addition, we make sure to acquire rights on intellectual properties both in and outside Japan and seek to prevent infringement of these rights while working to increase our corporate value by holding intellectual properties.

Implementation Structure and the Number of Patent Applications

Toyota Industries’ businesses span various fields from textile machinery to materials handling equipment and automobile-related products. In accordance with business strategies tailored to the characteristics of each business, we comprehensively analyze information on our own and other companies’ intellectual properties, covering our position in the respective markets and competitive relationships, and based on the results, formulate an intellectual property strategy.

At our internal Invention Review Meeting between the technical department and IP department of each business division and other occasions, we identify and encourage inventions that pay attention to certain technological domains. At the same time, we operate a system to survey risks of infringing other companies’ intellectual properties, report the survey results to a meeting of the Review and Approval Committee for Research and Development held during each development phase and have the responsible executives review and approve each development project. We also make joint efforts with consolidated subsidiaries in and outside Japan possessing the development function to acquire intellectual properties and promote the sharing of information to avoid risks of infringement, both from the viewpoint of Toyota Industries Group as a whole.

Under this implementation structure, we filed some 1,000 patent applications in fiscal 2023. As of March 31, 2023, Toyota Industries holds about 6,000 patents across the world.

Patent applications and Patents held(TICO)

Investment in Intellectual Capital toward Electrification and Automation

Figure 1. Number and Ratio of Patents for Electrification-Related Technologies Held by Toyota Industries
Figure 2. Number and Ratio of Patent Applications for Automation-Related Technologies (Japan)

Toyota Industries has diverse technologies and know-how cultivated in various businesses and provides a variety of solutions to customers. Leveraging this strength, we have promoted research and development in the electrification and automation fields, which will help realize a decarbonized society and resolve labor shortages while actively encouraging inventions in these fields.

Our patents related to electrification, such as those for batteries, electronics products and electric compressors, account for more than half the number of patents held by Toyota Industries around the world (including those under review) in the past five years (See Figure 1).

Additionally, the ratio of inventions related to automation in the Materials Handling Equipment Business has been increasing year by year (See Figure 2). Going forward, we will work to secure competitive superiority through intellectual properties.

External Evaluations of Patents Held by Toyota Industries

Recent Award Won by Toyota Industries

Toyota Industries has been proactively applying for the National Commendation for Invention sponsored by the Japan Institute of Invention and Innovation and has received higherranking awards, including the Minister of Economy, Trade and Industry Award. By receiving these awards, we make our excellent technological capabilities known internally and externally and increase the “inventive” motivation of employees who work at the forefront of our development activities.