CSR Materiality

Under the Toyoda Precepts (corporate creed), Toyota Industries has been undertaking a broad range of businesses by upholding the philosophy of contributing to society since its founding. In keeping with recent changes in the business environment, we have clarified which social issues we should tackle as our CSR material issues, and will work for the resolution of these issues. We use part of the evaluation on target achievements for initiatives on key CSR materiality items as a reference index for calculating bonuses for executives.

Process to Determine CSR Materiality

Action Policies, Targets and Results of "Resolving Social Issues through Our Business"

Contribution to Vision 2030 (Aspiration)：Clean/zero emissions
Mitigating global warming and achieving a circular economy through such initiatives as reducing CO₂ emissions and waste in our business activities and expanding the lineup of environmentally friendly products in our efforts to contribute to maintaining and improving the global environment over the long run

Action Policies	Action Targets and Activities	Targets for FY 2026	Results for FY 2024
Reducing CO2 emissions from production activities	Reduce production-derived CO2 emissions Total emissions	-25% *1 (vs FY14 level)	-35%
	Adopt renewable energy sources Introduction rate	15%	22%
Reducing CO2 emissions from production-related logistics	Reduce logistics-derived CO2 emissions Emission volume per unit of production (non-consolidated)	-11% (vs FY14 level)	-9%
Reducing CO2 emissions through product and technology development	Develop technologies that contribute to an even greater level of energy efficiency	-	-
Effective resource utilization in production activities	Reduce waste generation volume Emission volume per unit of production (non-consolidated)	-12% (vs FY14 level)	-25%
	Promote water conservation activities corresponding to the water situations in each country and region	-	-
Implementing initiatives to promote 3R(reduce,reuse and recycle) design for effective resource utilization	Reduce use of resources and promote reuse and recycling of resources	-	-

*1　As a more ambitious target, we are aiming for a 50% reduction by fiscal 2031 from the fiscal 2014 level.

Main Initiatives

Example: Reducing CO₂ Emissions by Eliminating Liquid Waste Treatment Processes That Use Steam

The Kariya Plant, a production base of car air-conditioning compressors in Aichi Prefecture, has been striving to reduce CO₂ emissions by selecting its two plant buildings as a model for achieving carbon neutrality.

Reducing the use of city gas is essential to achieving carbon neutrality. To do so, it is necessary to abolish the co-generation system that uses city gas to create electricity and steam. The abolishment, however, will make the equipment using steam from the system unserviceable. Thus, the plant initiated efforts to eliminate the use of steam in its plant buildings as a first step.

In fiscal 2024, the plant turned one of the two buildings steamless by eliminating the corresponding processes. Previously, to reduce the amount of liquid waste from production processes, the plant used a concentrating device, which applies steam to heat liquid waste and cause moisture to evaporate. Instead, the plant adopted electric membrane filtration equipment, which efficiently filters and concentrates liquid waste without using steam.

To reduce the amount of liquid waste discharged from the production process, the plant had previously used concentrating equipment that heated the liquid waste with steam to evaporate the water content. In this case, the plant optimized the amount of chemicals used in a dehydrator to reduce the amount of sludge after dehydration and succeeded in eliminating the drying process and, hence, the use of steam. The building becoming steamless led to reduced steam transmission loss from the piping. As a result, the plant was able to reduce its annual CO₂ emissions by about 633 tons and abolish the co-generation system. In the future, the plant intends to continue its efforts to go steamless, such as applying electrification technology to similar steam-using devices, as it has done with the adoption of membrane filtration equipment.

Example: Achieving Zero Wastewater from Production Processes by Recycling Wastewater

In July 2023, TD Automotive Compressor Kunshan Co., Ltd. (TACK), a compressor production subsidiary in China, completed the construction of a new plant to increase its production capacity of electric compressors. The new plant has implemented a range of environmental measures to ensure legal compliance and reduce its environmental impact. One such measure is to promote the effective use of water resources.

The plant's wastewater treatment system applies biological treatment or low-temperature distillation depending on the type of wastewater discharged from various production processes. The wastewater is then treated through a reverse osmosis (RO) membrane process for recycling in these processes. In this way, the plant achieved zero wastewater from production processes.

TACK also applies the RO process to remove impurities from tap water and recycles wastewater from the process as supplementary water for a cooling tower, leveraging it to reduce the use of supplementary water.

Through these efforts, TACK expects to reduce its annual water consumption by about 16,930 m³. In addition to reducing the use of water resources, these efforts have led to a lower risk of contaminating the local environment with wastewater from production processes.

Contribution to Vision 2030 (Aspiration) ：Creation of innovative value, smart
Contributing to achieving a “smart” society and more enriched lifestyles by resolving social issues through technological advancement and innovation that create new values

Action Policies	Action Targets and Activities	Targets for FY 2031	Results for FY 2024	Targets for FY 2025
Promoting development of new technologies that create new values	Ratio of R&D expenses for electrification and automation	Over 70%	55%	59%
Improving core technologies and utilizing the new knowledge of business partners to enter into peripheral fields of existing businesses while developing and offering technologies and products in new business fields	Expand peripheral fields and new business fields Net sales	Over ¥1 trillion	-	-
	-Develop new technologies and products that contribute to resolving environmental and social issues
	-Develop new technologies and products for logistics automation and expand sales (Materials Handling Equipment) Sales of automation products (growth rate)	Twofold (100%) (vs FY2021)	Up 70%	Up 76%

Main Initiatives

Contribution to Vision 2030 (Aspiration) ：Safe/reliable, comfortable
Contributing to creating a compassionate society by offering products and services that anticipate the needs of customers and various stakeholders and that are safe, reliable and comfortable to use while fulfilling our responsibilities as a member of society to thrive together

Action Policies	Action Targets and Activities	Targets for FY 2031	Results for FY 2024	Targets for FY 2025
	Expand sales of electrification-related products (all businesses) Ratio of electrification-related products to net sales	Over 70%	46%	48%
Enhancing electrification-related products and services that are highly functional, ecologically sound and adaptable as social infrastructure	-Offer highly efficient and energy-saving electric compressors that are excellent in terms of quiet operation and comfort (Automobile Business) -Offer clean and high-quality fuel cell units and on-board batteries (Automobile and Materials Handling Equipment businesses) -Offer power source-related products, on-board or otherwise, that can also be used as social infrastructure during disasters and other occasions (Automobile Business)
Offering high-quality and safe products and services and maintaining and improving the structure to realize this goal	Conduct product risk assessment (target products) Implementation rate (non-consolidated)	100%	100%	100%
Continuously promoting grassroots activities in local communities and thrive together as a member of Society	Promote quality education Training participation rate (non-consolidated)	100%	92%	100%
	Promote social contribution activities Expenditure/number of participants	-	¥1 billion/ 26,005 persons	-
	-Contribute to biodiversity conservation of local communities -Promote other community contribution activities

Main Initiatives

Contributing to the World with Electrified Vehicles

Toyota Industries has developed and manufactured power electronics products such as on-board chargers, DC-DC converters and AC inverters for electrified vehicles sold by TMC and other automakers, accumulating and advancing its power electronics technologies along the way. Leveraging these technologies and experiences, we developed a bidirectional charger for PHEVs, which integrates the functions of an on-board charger and AC inverter. This integrated charger, which is 20% smaller compared to mounting the two devices separately, is installed in TMC’s new Prius PHEV released in March 2023. The AC inverter for electrified vehicles can supply 1,500 W of electricity, equivalent to household power outlets, allowing almost all 100-V home electrical appliances to be used. It has been highly recognized by customers for its use in outdoor activities and as an emergency power source during disasters. Moving forward, toward the realization of a carbon-neutral society, we will continue to support the widespread use of electrified vehicles through the provision of power electronics products.

Winning the Grand Prize in Aichi Prefecture Commendation for Invention at the Aichi Invention Award and an Invention Prize in the National Commendation for Invention 2023

The back pressure adjustment mechanism adopted in our electric compressors has won the Grand Prize in Aichi Prefecture Commendation for Invention at the Aichi Invention Award and an Invention Prize in the National Commendation for Invention 2023. Our electric compressors are a scroll type because this type excels in quietness of operation, size and efficiency. In this compressor structure, however, compression force causes a movable scroll to move away from a fixed scroll, necessitating the application of back pressure from behind the movable scroll to achieve efficient compression. Our invention adopts a thrust valve that utilizes the axial migration of the movable scroll itself to introduce back pressure directly from the compression chamber into the back pressure chamber and constantly apply optimum pressure to the movable scroll against the fixed scroll. The two awards have highly recognized the ability of the mechanism to achieve greater efficiency and save electricity as well as its high adoption rate in electric compressors. Toyota Industries will continue to contribute to the realization of a recycling-based society through the development of electric compressors.

Tours of Our Biodiversity Sites for Elementary School Children

Action Policies, Targets and Results of "Foundation Supporting Our Business Operations"

Action Policies	Action Targets and Activities	Targets for FY 2031	Results for FY 2024	Targets for FY 2025
	Eliminate serious accidents
	-Number of serious accidents	0	1	0
	-Frequency rate of lost workday injuries (non-consolidated)	0.00	0.16	0.00
Fostering safe and healthy workplaces for everyone	Utilize diverse human resources
	-Ratio of female managers (non-consolidated)	3.6%	2.0%	-
	-Ratio of employees with disabilities (non-consolidated)	Over 2.7%	2.56%	Over 2.5%
Creating the environment for everyone to get a fair share of opportunities to develop and demonstrate their potential	Maintain sound transactions and strengthen structure throughout the supply chain -Implementation rate of Sustainability checks on target suppliers (non-consolidated)	100%	100% (1,156 companies)	100%
Establishing the foundation to remain a company that is trusted and needed by society	Eliminate serious compliance violations Number of violations	0	1	0
	Promote risk management activities taking a risk-based approach -Improve BCP effectiveness
	-Respond to cybersecurity risks Number of serious incidents	0	0	0

Initiatives for Persons with Disabilities

We respect the idea of people with and without disabilities working together and sharing life and work values. Under this basic policy, we continue to employ persons with disabilities every year. Before hiring, we offer them the opportunity to gain work experience (internship) so that they can feel reassured about joining Toyota Industries. After employment, we implement various measures to ensure that they receive fair opportunities for achieving growth and taking active roles. These include dispatching sign language interpreters when they receive training, providing tools to support communication, such as Boogie Board digital writing pads and UD Talk (a real-time speech-to-text app), having supervisors and senior members pay special attention to them and assigning counseling staff in the General Affairs Department at each plant, bachelors dormitories and the Human Resources Department in the Head Office. Through these efforts, we have established a system to support their workplaces.

Moreover, we invite persons with disabilities as lecturers to each of our grade-based training programs to foster a deeper understanding of persons with disabilities and nurture a supportive workplace culture.