Corporate Governance

Basic Perspective on Corporate Governance

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.

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 by 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 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.

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. 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 the president, chief officers and audit & supervisory board member as well as relevant senior executive officers and other executives, prior to deliberation by the Board of Directors.

At the Executive Officers' Meeting, the president, chief officers and senior executive officers convene to report and confirm the monthly status of business operations and discuss business and functional issues.

In addition, issues pertaining to quality, production and human resources are discussed at the corresponding functional meetings. We have also put in place committees to deliberate on more specific matters, such as compliance, risk management, sustainability, the environment, safety and health as well as export transaction controls. These functional meetings and committees discuss important matters and action themes in respective areas.

Furthermore, in response to the engine certification issue, we established a Restart Committee to promote recurrence prevention measures.

Moreover, we strive to maintain and improve internal controls by establishing the Internal Audit Office and conducting internal audits of Toyota Industries' business divisions and departments as well as our subsidiaries.

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. However, following our legal violations related to engine certification in Japan, we initiated efforts to prevent recurrence while going back to the basics and making a fresh start, vowing never to commit such misconduct again. At the same time, we decided to revise our Basic Policies, and the decision was approved by resolution of the Board of Directors in April 2024.

In order to never repeat the same mistake, we will foster a culture of noticing and always pausing when something is wrong and make improvements by engaging all employees. We will also establish an organization and system to respond to risk appropriately and make optimum allocation of management resources. In executing actual business operations, we will remain sincere and conduct proper manufacturing, incorporate a mechanism, including a check function, into our corresponding processes, and simultaneously work to nurture human resources to practice such sincere, proper manufacturing.

We assess the implementation status at the end of each fiscal year and determine actions for the coming year, including reviewing the implementation structure and enhancing day-to-day operational management.

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.

As part of these efforts, we established the Compliance Committee in July 2024. Chaired by the Global Chief Compliance Officer (GCCO), the committee is composed of management executives, including the Chairman and President. Its purpose is to oversee the consolidated Group’s compliance program and ensure its effective and sustained implementation on a global scale.

In addition, as one of our key initiatives, we are undertaking the global transformation of our compliance program to ensure that employees conduct business with integrity based on measures to prevent recurrence of the engine certification issue in Japan that we announced in March 2023. Specifically, we are implementing timely and appropriate measures such as developing and implementing compliance-related rules applicable across the entire Group; holding compliance training; gathering information on legal trends including new laws and revisions as well as on sample cases at other companies; and identifying and assessing compliance risks.

We are also working to foster a culture in which employees feel comfortable raising questions or concerns. For matters requiring investigation, we ensure that prompt and appropriate investigations and corrective actions are carried out. Furthermore, we have established a framework whereby serious issues—such as violations of certification regulations or antitrust laws, as well as bribery and corruption—are promptly reported to the Board of Directors through the GCCO and the Compliance Committee.

Establishing a Global Compliance Organization

TICO’s global compliance promotion is led by the Enterprise Risk and Compliance Management Department, established as part of our broader compliance program transformation. This department is responsible for implementing, monitoring, and continuously enhancing the compliance program. In Japan, Compliance Ambassadors have been appointed within each business division and domestic subsidiary. Under the direction of the Enterprise Risk and Compliance Management Department, these Ambassadors work to raise compliance awareness and support the execution of related activities. Additionally, Compliance Leads have been assigned within the Enterprise Risk and Compliance Management Department for the TOYOTA Material Handling Company, Engine Division, and Compressor Division. Taking into account the engine certification issue and each division’s risk profile, these Leads guide and support compliance efforts across both the divisions and their respective domestic subsidiaries.

Overseas, a Regional Chief Compliance Officer (RCCO) was appointed at the subsidiaries overseeing our Group’s operations in North America in May 2024 and in Europe in August 2025 to promote, manage, and oversee the compliance program across the region. In China, Compliance Ambassadors were appointed at each subsidiary in February 2025, as well as Compliance Lead in July 2025 to oversee compliance activities for all local subsidiaries. We also plan to designate Compliance Leads and Ambassadors in other regions based on their respective risk profiles.

Responsibilities of Officers

We have added compliance-related provisions to the prohibitions outlined in the regulations for senior executive officers and executive officers. We have also clearly stated the potential impact on remuneration in the event of violations. These measures are intended to promote the prevention, detection, and response to business activities that violate laws, regulations, and company policies.

Formulating Ethics & Compliance Declaration and Toyota Industries Group Code of Conduct, and Strengthening of Training and Awareness Activities

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

Compliance Proposal Desk

In February 2025, we established a Compliance Proposal Desk to internally collect improvement suggestions, observations, and ideas related to compliance. To raise compliance awareness and encourage active participation, we also plan to recognize and reward outstanding suggestions that will lead to actual improvements.

Efforts on Export Control for Security Trade

For overseas exports, we have established a system that, in accordance with Company-wide rules, reviews each export transaction to determine whether the items fall under export control regulations and whether the intended use at the destination is related to military uses.

We ensure strict compliance with these laws by holding annual employee training to raise awareness and by monitoring the operational status through audits.

These measures are deployed across Group companies in and outside Japan to ensure a global response.

Efforts for Prevention of Bribery and Corruption

To reflect and demonstrate our commitment to conducting business activities with integrity, in alignment with our values -the Toyoda Precepts, and in compliance with all applicable anti-bribery and anti-corruption laws in all jurisdictions in which Toyota Industries Group operates and/or transacts business, we established the Global Anti-Bribery and Anti-Corruption Policy.

Global Anti-Bribery and Anti-Corruption Policy PDF [237.9KB / 7pages]

Efforts for Ensuring Compliance with Antitrust 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 to preventing violations of antitrust laws, such as forming cartels, in accordance with local laws and regulations.

Early Detection and Prevention of Issues via Whistleblower System

The TICO Group operates a whistleblower system (helpline) and a reporting and consultation desk for business partners in each region, through which employees, business partners, and others can anonymously report and seek consultation on compliance-related matters at their convenience. We accept reports and inquiries through law firms, dedicated external websites, and other means. In FY2025, we received 586 reports and inquiries from within TICO and from its consolidated subsidiaries in and outside Japan on matters such as labor management and work environment issues. All cases received are handled confidentially by the department in charge of the whistleblower system and other relevant parties in accordance with company rules. Appropriate investigations are conducted to ascertain the facts, and necessary measures are taken. Additionally, any adverse treatment due to reporting or consultation is strictly prohibited.

Going forward, we will continue to promote awareness and improvement of the whistleblower system and foster an environment where employees and others feel comfortable speaking up. Through these efforts, we aim to facilitate early discovery and prevention of issues and strive to become a “company on which society places greater trust.”

Compliance Awareness Survey

The compliance awareness survey, which was issued once every three years, will be conducted annually from FY2026 onward to assess the effectiveness of the compliance program and facilitate its continuous improvement.

Tax Governance

Basic Perspective

The TICO Group regards the most important managerial task as earning trust broadly from society and enhancing its corporate value on a stable, long-term basis in accordance with our Basic Philosophy and by earnestly fulfilling our social responsibilities. 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, where we undertake business activities, as well as by paying the appropriate level of taxes.

Tax Policy

Under the basic perspective, 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 Toyota Industries Group Code of Conduct.

Toyota Industries Group Tax Policy PDF [376.4KB / 1pages]

Risk Management

Basic Perspective

Based on the Basic Policies for the Establishment of an Internal Control System in compliance with the Companies Act, TICO 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

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 quality, safety, the environment, personnel, export transactions, disasters and information security. Progress is assessed and followed up by each functional management entity. Previously, the CSR Committee was responsible for risk management of the entire Company. However, in order to further strengthen our risk management efforts, we newly established the Risk Management Committee, chaired by the risk supervisor (executive in charge of enterprise risk and compliance management), on April 1, 2024.

The Risk Management Committee promotes activities to identify priority/material 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.

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/material 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.

Information Security

Basic Perspective

Under the Basic Philosophy and the Sustainability Policy, we recognize that the personal information of customers, employees, and business partners as well as information concerning our technologies, sales activities, facilities, and products 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 the 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 Risk Management Committee (led by a risk supervisor^*1) as a subordinate organization to the Information Security Meeting (chaired by an executive in charge of promoting information technology (IT) and digitalization) to reduce information security risks.

To thoroughly implement the initiatives adopted by the Information Security Meeting, we appoint Confidentiality Management Champions^*2 and Confidentiality Management Supporters^*3 at each department of Toyota Industries.

For consolidated subsidiaries around the world, we regularly hold meetings of 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: Executive in charge of enterprise risk and compliance management
*2: Head of each department
*3: 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 in and outside Japan to swiftly alert each company.

Number of serious incidents occurred: 0

Strengthening Information Security Governance within the Group

In accordance with the All Toyota Security Guidelines (ATSG)^*4, 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.

We are also promoting the achievement of a uniform, more sophisticated level of security in all Group companies by sharing information on related initiatives through liaison meetings of affiliated companies in Japan and the TICO Group Cyber Security Summit meetings. We also visit individual Group companies to support their efforts.

*4: 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

Reinforcing Efforts to Enhance Information Security Awareness

With the aim of establishing a structure under which each department voluntarily promotes information security according to the risks associated with its operational characteristics, we are working to raise the level of security awareness among all employees through grade-based education and training.

Primary Activity Examples

Activities Related to Intellectual Properties

Basic Perspective

One tenet of the Toyoda Precepts, which encapsulates the spirit of our founder, Sakichi Toyoda, states, “Always be studious and creative, striving to stay ahead of the times.” Carrying on this spirit, we actively engage in research and innovation. We leverage the resulting intellectual property rights, including inventions and know-how, to support the strategies of each business. Furthermore, by securing intellectual property rights in and outside Japan and preventing infringement, we strive to enhance corporate value through the effective management of intellectual property.

Intellectual Property Activities Aligned with the Technology Roadmap

Technological development is becoming increasingly important to achieving our 2030 Vision. As such, we review what intellectual property is necessary for our business based on the technology roadmap formulated by each technology development department. We also formulate strategies to establish competitive advantages by monitoring competitors’ business strategies.

Our business domains are expanding into new technology fields such as IoT, AI, autonomous driving, and carbon neutrality. We maintain a keen awareness of these emerging technologies and strengthen our competitiveness by actively creating intellectual property and intangible assets, including know-how and software, in addition to conventional intellectual property rights. To support this, we have established a dedicated IP landscape team that explores industry trends and prospects. This team timely disseminates intellectual property information that accelerates development and supports our business efforts, ensuring we continue to contribute to society.

Visualization of Patent Asset Value