Corporate GovernanceManagement
Foundation

Medium-term Goals

Corporate Governance Framework

Build a Strong Management Foundation for Underpinning Our
Business Activities

Tokyo Electron is endeavoring to build a strong and sound management foundation that supports the entire Group's business
operations. Regarding problems of climate change and abnormal weather, which have increased in severity in recent years,
endeavoring to preserve the global environment, we have been working hard to achieve the medium- and long-term environmental
goals for our products, plants and offices in order to preserve the global environment along our entire value chain. In terms ofpractical initiatives for respecting human rights, based on our Human Rights Policy, which summarizes the entire Group's guiding
principles on human rights, as well as implementing extensive education and awareness-raising efforts, we are expanding humanrights due diligence (impact assessment and remediation) and grievance processes. Based on the recognition that people are thesource of a company’s growth, we deeply appreciate the new value created by individual employees exercising their capabilities,
while respecting their individuality and values and encouraging work styles in sync with their respective lifestyles. To ensure that
operational decision-making and supervisory functions are exercised sufficiently, we are striving to build a highly effective corporate
governance system to realize medium- to long-term growth while considering corporate culture and business characteristics, andalso strengthening risk management and thoroughly enforcing compliance. As for supply chains, we are promoting activities incompliance with global standards to achieve sustainable operations together with customers and suppliers.

Tokyo Electron upholds the vision of being “a truly global company generating high added value and profits in the semiconductor
and flat panel display industries through innovative technologies and groundbreaking proactive solutions that integrate diverse
technologies.” With over 80% of our sales coming from overseas, we regard building governance structure as essential in order toachieve success in global competition, realize our vision and achieve sustainable growth. To that end, we have built a framework
to maximize the use of worldwide resources, and have worked to incorporate a wide range of opinions to strengthen ourmanagement foundation and technology base, establishing a governance structure capable of ensuring that we attain globallevel earnings power.
We use the Audit & Supervisory Board System, which consists of a Board of Directors and an Audit & Supervisory Board, andhas achieved effective governance based on the supervision of management by the Audit & Supervisory Board. Furthermore, in
addition to the Board of Directors, whose role is to make major operational decisions and play a supervisory role in the executive
management’s execution, and support appropriate risk-taking by them, we have established systems that facilitate growthoriented governance directed at sustainable growth, including the following: (1) the Nomination Committee and Compensation
Committee to ensure fair, effective, and transparent management; (2) the Corporate Senior Staff (CSS) to formulate and advancecompany strategy; and (3) the Business Execution Meeting, to play a role in deliberations of the executive management.
Diagram of the Corporate Governance Framework, Internal Control System and Risk Management System
Shareholders' Meeting

Management& Supervision

Appointment or Dismissal of Audit &Supervisory Board Members

Appointment or Dismissal of Corporate Directors
ReportNomination
Committee

Audit

Board of Directors

Compensation
Committee

ReportProposal & Report

Business execution

Corporate governanceCorporate governance framework,
Sustainability of a Board of Directors
appropriate for resolution ofmanagement issues, Process forevaluating the effectiveness of the Boardof Directors and management issues, etc.

Risk management
Approach to risk management,
Risk management system and initiatives,etc.

Human resources,
Diversity andinclusion, TEL Values,
Employee growth,Work-life balance
Respect for humanrightsApproach to human rights,
Human rights initiatives

Health and safety
Compliance

Health and productivity, Safety
management framework,
Incident reporting system,
Activities for safety

Approach to compliance,
Compliance system, etc.

Environment
Environmental management
system, Environmental risks
and opportunities, TCFD,
CO2 emission amount in theentire value chain, Mediumand long-term
environmental goals,
Environmental initiatives for
products, plants and offices

■

■
■

33

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Cooperate

Independent
Auditors
Cooperate

Cooperate
ReportRepresentative Director,
President & CEO

Global Audit Center

Audit

Ethics Committee
Internal Control Executive Officer

Risk Management Committee

Risk Management Executive Officer

Information Security Committee

Compliance Executive Officer

Export Trade Control Committee

Audit

Business Execution Organization (All Division/All TEL Group companies)

Composition and Results of the Board of Directors, Nomination and Compensation Committee (In fiscal year 2021)
Composition
Speaker/Chairperson

Number of Times Held

Corporate Directors

Independent Outside Directors

Board of Directors

83

Corporate Director (Non-Executive Director)

12

Nomination Committee

31

Corporate Director

10Compensation Committee

22

Independent Outside Director

7

Supply chain
Principles and system ofsupply chain, Supply chain
initiatives

SDGs initiatives■

Corporate Senior Staff(CSS)

Audit &
Supervisory Board
Audit

Supervision/
Appointment or
Dismissal

Business Execution
Meeting

Main activities

Appointment or Dismissal

Audit

Build a highly effective corporate governance system while strengthening risk management
and thoroughly enforcing compliance in order to build a strong and sound managementfoundation
Promote environmental impact reduction activities and endeavor to preserve the global
environment
Progress sustainability initiatives throughout the entire supply chain
Enhance engagement and build a work environment that respects human rights anddiversity while maximizing individual abilities

Sustainability of a Board of Directors Appropriate for Resolution of Management Issues
As a leading company in semiconductor and flat panel display (FPD) production equipment, we believe that proactive risk-taking
and a risk management structure to support it are essential for achieving sustainable growth. The Board of Directors guides its
discussions in an appropriate direction by incorporating a wide range of opinions that stem from the extensive knowledge andexperience of independent outside directors and Audit & Supervisory Board members in addition to executive directors who are
well-versed in the business.
We have also established the Nomination Committee and the Compensation Committee as discretionary advisory bodies toensure fairness, effectiveness and transparency in management. Authorized to propose the appointment and dismissal of the
CEO and corporate directors, the Nomination Committee has established guidelines on their required qualities and eligibility, as
well as a trigger for considering the appointment and dismissal of the CEO, and strives to ensure the objectivity, timeliness andtransparency of the procedures for appointment and dismissal. The Compensation Committee, on the other hand, reviews
performance evaluations of the CEO and corporate directors along with the appropriateness of the amount of theircompensation, with reference to advice from external experts.
Under such a system, we strive to operate the Board of Directors in a way that is appropriate for resolving management issues.
In addition, in order to develop the next generation of human resources who will assume management of operations to
support our sustainable growth, the CEO and Representative Directors play the primary role in constantly anticipating successor
candidates, primarily from among executive officers, evaluating their skills, character, dignity and insight from multiple
perspectives in the course of performing day-to-day duties, and continually supporting the education of the candidates throughassignment, training and other opportunities.
TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

34

Management Foundation

Skills Matrix

Policies for Allocation of Earnings

In view of our Corporate Philosophy that “We strive to contribute to the development of a dream-inspiring society throughour leading-edge technologies and reliable service and support,” we are engaged in enhancing our governance structure andin sustainability-focused management in order to respond to changes in the global environment, achieve success in global
competition, and realize sustainable growth and increased corporate value over the medium to long term to respond to the
mandate from our stakeholders. We believe that our corporate directors and Audit & Supervisory Board members have thenecessary qualifications to realize these initiatives. Described in detail below, all of them have knowledge of global business,governance, sustainability and so on. In addition to this matrix of individual skills, we also disclose the overall diversity of our
Board of Directors in an easy-to-understand format.

Our basic stance is for the appropriate allocation of company earnings to all stakeholders. Our dividend policy toshareholders is to link dividend payments to business performance on an ongoing basis and maintain a payout ratio ofaround 50% based on net income attributable to owners of the parent company. Furthermore, we also set theminimum annual dividend at 150 yen per share in light of the stable distribution of dividends. We effectively useinternal capital reserves to raise corporate value through earnings growth by concentrating investment in high-growthareas and provide returns directly to shareholders by linking dividend payments to business performance. Furthermore,
we flexibly consider implementing repurchases of treasury stocks as part of returning earnings to shareholders.
*Expertise and Experience*
Name

Corporate
Directors

Sales/Marketing●●

Corporate
Management

Semiconductor/
FPD

Tetsuo Tsuneishi●●

Toshiki Kawai

●

●

●

●

Sadao Sasaki

●

●

●

●

Yoshikazu Nunokawa

●

●

●

Tatsuya Nagakubo●

Kiyoshi Sunohara

●

●

●

Seisu Ikeda

●

●

●

Yoshinobu Mitano

●

●

●

Charles Ditmars
Lake II

Outside●Michio Sasaki

Outside●Makiko Eda

Outside●Sachiko Ichikawa

Outside●●●●Kyosuke Wagai

OutsideMasataka Hama

OutsideRyota Miura

Outside●●*Corporate
management: Having
experience inmanaging anenterprise (experience
serving as arepresentative director
or chairperson/president)*

Semiconductor/FPD:
Having knowledge ofsemiconductor/
FPD-related industries*

Manufacturing/development: Having
knowledge/experiencein manufacturing anddevelopment at Tokyo
Electron and othermanufacturers*

Sales/marketing:
Having knowledge/
experience in sales andmarketing at Tokyo
Electron and othermanufacturers

●

●

●

The six categories of“expertise andexperience” are defined
as follows:●●●

Kazushi Tahara

Legal Affairs/Risk
Management●●

Yoshiteru Harada

Audit &
Supervisory
Board Members

Manufacturing/
Development

Finance, Accounting/Engagement with
Capital Markets

●

●

●

●
*

●
●

●

●

●
●
*

Expertise and experience of Corporate Directors andAudit & Supervisory Board Members(Unit: persons)

Independent Outside Directors

8

Corporate Management

12

Semiconductor/FPD
8

Manufacturing/Development
Sales/Marketing
Finance, Accounting/Engagementwith Capital Markets
Legal Affairs/Risk Management

Independence and diversity of Corporate Directors

Foreign national/female Corporate Directors
1086Foreign national Corporate Director(Unit: persons)

4/12
3/12

Female Corporate Director

Supervision and Evaluation of Strategic Decision-making
Setting our strategic direction is recognized as the main role of the Board of Directors. It engages in constructive debate ofmanagement strategy, management plans, and other matters. It serves as the venue for supervising progress on theMedium-term Management Plan and other matters. The Board of Directors also seeks reports and explanations on thestatus of deliberations at the Business Execution Meeting to monitor whether decision making by executive management
functions properly in relation to matters for which approval authority has been delegated to executive management. At
Board of Directors meetings, independent outside directors and Audit & Supervisory Board members actively provide advice
and ask questions regarding the matters and reports made by executive directors well versed in business. The combined
perspectives of both parties have enabled the Board of Directors meetings to achieve an appropriate sense of productive
tension and constructive discussions that are essential for business execution decisions and supervision.
To obtain appropriate advice and questions from independent outside directors and Audit & Supervisory Board members,
the administrative office provides them with explanations on proposals in advance of the Board of Directors meeting as
needed. For matters of particular importance, we establish a venue for dialogue between independent outside directors andAudit & Supervisory Board members and executive management, striving to provide sufficient information to, and engage
dialogue with, independent outside directors and Audit & Supervisory Board members.
35 TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Finance, accounting/engagement withcapital markets:
Having knowledge infinancial accounting
and M&A, or
knowledge/experiencein engagement withcapital markets
Legal affairs/riskmanagement: Having
knowledge in legal
affairs, compliance andrisk management

Establishment of the Director Compensation System
As our basic policies on executive compensation, we emphasize (1) levels and plans for compensation to secure highly
competent management personnel with global competitiveness; (2) high linkage with business performance in the shortterm and medium- and long-term increase of corporate value aimed at sustainable growth; and (3) securement oftransparency and fairness in the decision process of compensation and appropriateness of compensation. Compensation
for inside directors consists of fixed basic compensation, annual performance-linked compensation and medium-term
performance-linked compensation. Compensation for outside directors consists of fixed basic compensation and nonperformance-linked (stock-based) compensation. Compensation for Audit & Supervisory Board members consists solelyof fixed basic compensation in consideration of their role being primarily the audit and supervision of management.
In order to secure transparency and fairness in management and appropriateness of compensation, the Compensation
Committee, which an independent outside director chairs, utilizes advice from an external expert, compares
compensation levels with those of industry peers in Japan and overseas, and analyzes the latest trends and best practices
in Japan and overseas (such as reflecting ESG in compensation). The committee then proposes to the Board of Directors acompensation policy for corporate directors, a compensation system that is globally competitive and the mostappropriate for us, and individual compensation amounts for the representative directors.
Fixed Basic Compensation
Fixed basic compensation is determined in reference to the compensation standards of industry peers in Japan andoverseas. For inside directors, it also depends on the scale of their responsibilities based on the job grade frameworkprovided by the external specialist organization.
Annual Performance-linked Compensation
Annual performance-linked compensation consists of cash bonuses and stock compensation-based stock options at aratio of approximately 1:1. The specific amounts paid and the numbers of stock options granted are determined basedon the results of corporate business performance and individual performance evaluations for the relevant fiscal year.
Net income attributable to owners of the parent and consolidated ROE are adopted as evaluation indicators forcorporate business performance. Evaluation items for individual performance include the degree of contribution toshort-term and medium-term management strategy targets (including ESG).
Medium-term Performance-linked Compensation
Medium-term performance-linked compensation is a performance share (stock-based) compensation to motivate
recipients to contribute to improving medium-term business performance and raise awareness for enhancing
corporate value by sharing the perspective of shareholders through the holding of shares. The number of shares issued
to each corporate director varies according to the payout rate based on their respective responsibilities and level of
performance goal achievement over the relevant three-year period. Consolidated operating margin and consolidated
ROE have been adopted as indicators for measuring the levels of performance goal achievement which are linked to
the Medium-term Management Plan.
Non-performance-linked (Stock-based) Compensation
Non-performance-linked stock-based compensation has been introduced for the purpose of making thecompensation system for outside directors more consistent with their expected role of, in addition to supervising
management, giving advice to management from the perspective of increasing corporate value over the medium tolong term. Under this Stock-based compensation system, shares are granted after the expiration of the applicable
period (three fiscal years), which is set each year.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

36

Management Foundation

Process for Evaluating the Effectiveness of the Board of Directors and Management Issues

Auditing by the Internal Audit Department

To evaluate the effectiveness of the Board of Directors, including the Nomination Committee and Compensation
Committee, we conduct questionnaire surveys of all corporate directors and Audit & Supervisory Board members, as wellas individual interviews with some corporate directors and Audit & Supervisory Board members. We also conduct opinion
exchanges and deliberations with a group comprised mostly of outside directors and Audit & Supervisory Board
members. The results of this questionnaire, summaries of interviews and the content of deliberations are then sharedwith the entire Board of Directors before deliberating and comprehensively evaluating the effectiveness of the Board of
Directors. We appoint a third party to provide advice on setting assessment items and to conduct, aggregate and analyze
the interviews in an effort to increase objectivity.
In terms of the evaluation results in fiscal year 2021, open and dynamic discussions were held at Board of Directors
meetings and off-site meetings. We recognize that the Board of Directors, including the Nomination Committee andCompensation Committee, is functioning in an effective manner.
In light of the results of this evaluation, we will continue our efforts to have fuller discussions regarding medium- tolong-term management strategies, promote diversity, strengthen group governance at a global level, and shareappropriate information with the Nomination Committee, Compensation Committee and Board of Directors.

The Global Audit Center serves as the internal audit department for the entire Group and implements audits based on
the audit plan. Based on the results of these audits, it provides instructions for making improvements as needed,
confirms the progress of these improvements, and provides any necessary support. The Group’s internal control overfinancial reporting in fiscal year 2021 was also evaluated as effective by the independent auditors.

Risk Management Initiatives
We conduct Group-wide reviews to identify the current status of risk management as well as any potential and actual
risks surrounding the Company in the future. Based on the results of the reviews, we have identified the following 13
risks as having potential to cause significant issues to our financial condition, operating results and cash flows, and areworking to address them.
Item

Main Potential Risks

Main Risk Management Initiatives■

1. Market
Fluctuations

Rapid contraction of the semiconductor market could lead to overproduction
or an increase in dead inventory. In addition, a rapid increase in demand could
lead to an inability to supply customers with products in a timely manner
resulting in lost opportunities

2. Geopolitics

Initiatives made by an individual country or region from such perspectives
as industrial policy, national security or environmental policy in shifting todomestic production of semiconductor-related businesses, strengthening
policies prioritizing domestically manufactured products or tightening of export
controls and environmental laws and regulations could lead to restrictions on
business activities

3. Research andDevelopment

Delays in the launch of new products or the mismatch of such products withcustomer needs could lead to a decline in the competitiveness of products

4. Procurement,
Production and
SupplyInterruptions in production due to a natural disaster or delays in component
procurement due to deterioration in the business conditions of a supplier or an
increase in demand that exceeds the supplier’s supply capacity could lead todelays in the supply of products to customers

5. Safety

Safety-related problems with the Company’s products could lead to damages
suffered by customers, liability for damages and a decline in credibility

6. Quality

The occurrence of a product defect could lead to liability for damages, costs forcountermeasures and a decline in credibility

Engagement with Capital Markets
Our management actively engages in Investor Relations (IR) and Shareholder Relations (SR) activities to contribute to oursustainable growth and increase corporate value over the medium to long term. The Chairman of the Board, CEO andcorporate director in charge of finance serve as spokespersons as required at IR conferences in and outside Japan and strive toengage directly with investors. In addition to holding quarterly earnings release conferences, we actively share our businessstrategies and growth story at the Medium-term Management Plan briefings and on IR day. The IR Department, which wasestablished under the direct control of the CEO, also appropriately supplements the explanation through individual interviews
and regularly reports opinions from investors to management so that feedback can be of use in management.
As a part of our shareholder relations activities, company executives play a central role in active and constructive
dialogue with our major institutional investors and proxy-advisory firms. In addition to explaining the Shareholders’Meeting agenda, we continuously engage in dialogue on a wide range of topics, including the business environment, ESG
and sustainability initiatives, and respond to business risks and opportunities, including social and environmental issues, inorder to deepen mutual understanding. To encourage active discussion and facilitate smooth and efficient voting at
Shareholders’ Meetings, we send convocation notices at an early stage and also post the notice in both Japanese andEnglish on our website to provide information to shareholders in a timely manner. In addition, we analyze the results ofthe exercise of voting rights and report to the Board of Directors to further enhance engagement with investors.

■

■

■

■

■

■

■

Establish a quality assurance system and a world-class service system
Resolve technical issues from the product development and design stage
Investigate the cause of any defects and implement measures to prevent thesame or similar defects from occurring
Monitor the quality status of suppliers, conduct audits and provide support
for improvement■

Risk Management
Approach to Risk Management
Reflecting changes in society and the business environment, the risks facing businesses are growing increasingly
complex and diverse. Tokyo Electron considers understanding and appropriately addressing the risks that it may face inits businesses, as well as their impacts, to be essential to its sustainable growth.

Risk Management System and Initiatives
In order to promote more effective risk management, we carry out enterprise risk management1 through a bodyestablished within the General Affairs Department at our headquarters. This body works with the respective
departments responsible for each operation to identify a wide range of risks arising in business activities, such ascompliance risk, human resource and labor risk, and business continuity risk. It then classifies risks with high impact
and probability as our key risks. The body also formulates and executes measures to minimize these key risks, monitors
the effect of said measures, as well as works to understand the status of risk control, and implements the PDCA cycle
for risk management. In fiscal year 2021 we introduced CSA2 and started a risk management committee. We willcontinue these activities going forward. By continuing to strengthen and progress risk management activities
throughout our Group, we will implement risk management that is more effective than ever before.

37

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

1
Enterprise risk
management:Group-wide systems andprocesses related to risk
management activities
2
CSA: Control SelfAssessment. Internalrisks and controls areevaluated andmonitored by those whoare actually performing
the duties with the goalof building andmaintaining anautonomous risk
management system.

Violations of the laws and regulations of the countries and regions where theCompany does business could lead to diminished public confidence in the
Company, fines, liability for damages or restrictions on business activities

8. Intellectual
Property Rights

The inability to obtain exclusive rights to proprietary technologies could lead to
reduced product competitiveness. Furthermore, infringement of the intellectual
property rights of third parties could lead to liability for damages

9. Information
Security

Breaches of information or the suspension of services due to unauthorizedaccess by cyberattack, natural disasters or other factors could lead todiminished public confidence in the Company or liability for damages

10. Human Resources

The inability to recruit and retain necessary human resources on an ongoingbasis or the inability to create an environment where people with diverse
values and expertise can play an active role could lead to diminished productdevelopment capability or customer support quality

11. Environmental
Issues

The inability to respond appropriately to each country’s climate change
policies, environmental laws and regulations, and customer needs could leadto additional related costs such as for developing new products or changing
specifications, as well as to reduced product competitiveness and diminishedpublic confidence in the Company

12. The Novel
Coronavirus(COVID-19)

The spread of COVID-19 could slow the Company’s business activities or lead tothe deterioration of global economic conditions

13. Other Risks

Business could be influenced by global and regional political conditions,
economic conditions, financial and stock markets, foreign exchange
fluctuations and other factors

Formulate business continuity plan, establish alternate production
capabilities, develop multiple sources of important parts, seismically reinforce
plants, etc.
Build a system for the stable supply of products by sharing forecasts based on
demand projections with suppliers to ensure the early procurement of partsand production leveling

■

■

■

Monitor compliance activities at key sites in and outside Japan under the
direction of the Chief Compliance Officer
Have assessments conducted by external experts and report identified issues
to the CEO, Board of Directors and Audit & Supervisory Board for swift andeffective action■

Advance the R&D strategy, business strategy and intellectual property
strategy in an integrated manner to build an appropriate intellectual property
portfolio■

Establish an information security system that conforms to global standards
by launching a dedicated security organization and having security
assessments conducted by external experts
Establish globally standardized rules and regulations for information
management■■

Make ongoing improvements to work environments and promote health andproductivity management, including having top management share direction
through regular employee meetings, establishing training plans for the next
generation of human resources, visualizing career paths for employees andoffering attractive remuneration and benefits■

Set industry-leading medium- to long-term environmental goals2
Reduce greenhouse gas emissions from product use. Reduce overall energy
consumption and increase the ratio of renewable energy used at plants andoffices
Provide technologies that help reduce the power consumption ofsemiconductors

■

■

■
■

■

2
Medium- to long-term
environmental goals:
Refer to p. 50

Establish the Corporate Innovation Division, and build a Group-wide
development framework that integrates innovative technologicaldevelopment with the technologies of each development division
Provide highly competitive next-generation products ahead of competitors
through collaborating with research institutions and sharing a technology
roadmap spanning multiple generations with leading-edge customers

Based on the “Safety First”1 approach, thoroughly implement safety design
at the product development stage, promote safety training and establish areporting system in the event of an accident■

1
Safety First: Refer top. 28

Carefully watch policy and diplomatic trends to understand moves tointroduce regulations
Communicate opinions to policy-making authorities such as through publiccomment, and anticipate the impact of different countries introducing
polices and regulations, and consider countermeasures■■

7. Laws andRegulations

Periodically review market conditions and orders received at Board of
Directors and other important meetings, and appropriately adjust capital
investments, personnel/inventory planning and other aspects of businessAccount Sales Division and Global Sales Division to strengthen the sales
framework and customer base by grasping investment trends of customers
and responding to a wide range of customer needs

Establish an Emergency Task Force headed by the CEO
Restrict travel to high infection-risk countries and regions, maintain supply
chains and thoroughly implement infection prevention measures at plants
and offices
Take necessary measures to counter such risks

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Management Foundation

Compliance
Information Security

Approach to Compliance

As the data society develops and the importance of information security increases, we take active measures to use
data including digital transformation and achieve information security effectively.

To practice Tokyo Electron’s Corporate Philosophy, it is vital that each employee performs their daily duties with strong
interest in and a deep understanding of compliance. We established “Tokyo Electron’s Code of Ethics” as a code of
conduct to ensure that our employees are aware of the risks around them and conduct themselves appropriately. We
have built a global system that can directly raise questions and concerns about compliance and business ethics toquickly address potential problems.

Main activities

Compliance System
Creating information security systems

Information security management

Responses to security threats

We established a system centered around theVice President and General Manager,
Information Security, and are implementing
integrated security measures on a global scale.

We identify risks by conducting periodic risk
assessments and internal audits andimplement technological, human,organizational and physical security
measures.

To respond to cyberattacks and information
leaks, which are major security threats inmodern society, we actively introduce
advanced technologies and havespecialized organizations create systems toestablish mechanisms for reliable
monitoring.

In order to effectively promote a global compliance program, we have appointed a Chief Compliance Officer (CCO) andestablished a dedicated Compliance Department at our headquarters. Additionally, people responsible for compliance(Regional Compliance Controllers) have been appointed at key overseas sites, creating a system for direct reporting to
the Chief Compliance Officer and Compliance Department. The primary role of the Compliance Department is toformulate and review our practical compliance programs, establish and implement business ethics, plan andimplement education and training, and establish and operate internal reporting systems. It also cooperates with the
Risk Management Business Support Group established within our General Affairs Department, regularly confirms theobservance of laws and regulations in each country as well as internal company rules at each Group company, andassesses compliance risks. Furthermore, the Internal Audit Department conducts operational audits based on annual
plans, which leads to the improvement of findings as appropriate.

24
Representative Director, President & CEO

Establishment of global rules
We established global standardized
information security rules and regularly
conduct checks on compliance status andprovided education for all relevant parties.

Supply chain security

Increasing resilience

We respond to customer requests andmonitor the status of security at suppliers
so that we can securely use confidential
information and customer information in
our business activities withoutcompromising utility.

To prepare for the occurrence of security
incidents, we established a specialized
incident response organization and haveestablished systems so that we can shareincident information at an early stage andpromptly respond and recover.

General Manager of Legal, Compliance Unit
Chief Compliance Officer
Compliance Department (Headquarters)

U.S.

Europe/Israel

Vice President andGeneral Manager
Information Security

Day-to-day activities implemented globally

Tokyo Electron

Security Monitoring Organization

Information Security Management

Early detection of signs ofpotential attacks

Information Security
Committee

Incident Response Organization
Minimization of damage
when an incident occurs
Human/Organizations

Technology

24

PhysicalStrengthen/Improve39

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

China

Singapore/Malaysia

Systems established in preparation for
emergencies

Responses to security threats

Information Security
Committees at eachcompany

TaiwanRegional Compliance Controllers

Overview of Information Security
Mechanisms that support information
security activities

Korea

Plan

Do

Act

Check

Supply Chain
Security
Customers

Suppliers

Compliance Initiatives
Business Ethics
In addition to establishing the Code of Ethics as the standard of conduct by which all executives andemployees should abide, we have also established an Ethics Committee to promote and raiseawareness of compliance and business ethics more effectively within the company. We have also set
up the Disciplinary Committee as a subordinate organization of the Ethics Committee for the
purpose of ensuring that reasonable and appropriate disciplinary action is taken and proper
procedures are followed.
To ensure awareness of the Code of Ethics, we have translated it into five languages, including
Japanese, and have distributed it in the form of a booklet to all executives and employees. In fiscal
year 2021, the Code of Ethics was revised. In addition to reflecting standards required as a global
Code of Ethics
company, we added a number of new provisions on such important issues as personal dataprotection, information security, and money laundering. In addition, in pursuit of clarity andusability, we have made changes to the booklet design and adopted a bullet point format. We arealso striving to raise awareness of compliance and corporate ethics by regularly obtaining
confirmation from all executives and employees that they understand and comply with the revised content.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

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Management Foundation

Human Resources
Human Resource Management

Initiatives for Anti-Bribery and Corruption and for Competition Laws
In fiscal year 2021, we established the company-wide Basic Policy on the Prevention of Bribery and Corruption, andthrough regular education, we are working to promote understanding and awareness. Based on this basic policy, we
have prepared the Guidelines for Gifts, Hospitality and Entertainment, which stipulate specific, practical procedures
and standards on monetary amounts, and we have established a thorough process requiring prior approval for cases
outside these standards. Using questionnaires that we have prepared, we also regularly check the status of our
suppliers' efforts to prevent corruption and provide them with feedback on the results and areas for improvement as
required.
We have also established the company-wide Basic Policy on Competition Law Compliance, and have prepared,
disseminated and enforced guidelines that summarize different types of violations in an easy-to-understand format,
based on applicable laws and regulations in the countries and regions in which we operate.
Compliance Training
We conduct online and face-to-face training adapted to different levels for all employees1. We will systematically expand ourcomprehensive training program and multilingual support, and reinforce efforts to foster compliance awareness and practice inthe company.
Internal Reporting System
Preventing problems from occurring and resolving them before they become significant requires a system that allows
employees to raise questions and concerns about business ethics and compliance without reservation or hesitationand to discuss them fully. For this reason, we have established an internal reporting system that ensures complete
confidentiality, anonymity and the prohibition of retribution so that employees can safely and reassuringly provide
information and seek redress outside the chain of command about behavior that is, or may be, in violation of laws,
regulations or business ethics.
Specifically, we have established and are operating the Tokyo Electron Group Ethics & Compliance Hotline—a global
common internal point of contact that uses a third-party system that is also accessible to our suppliers—as well as anexternal point of contact that allows direct consultation with an outside law firm. The internal point of contact can beaccessed via phone or a dedicated website 24 hours a day, 365 days a year, and accommodates all languages used by
employees.

For Tokyo Electron, corporate growth is about people. Employees are a foundation for creating value. Our aim is forboth the company and employees to grow together by engaging each employee at work and linking this to increased
productivity for the company as a whole. Specifically, we are taking initiatives focused on: (1) improving employee
development and engagement, such as through promoting support for career development, encouraging them tostretch themselves and providing opportunities for skill and leadership development, (2) improving productivity
through developing the workplace environment, such as by using IT for better operational efficiency and promoting
smart work and (3) attracting outstanding talent such as through employer branding, strengthening partnerships with
universities and labs and promoting internships, including international ones. To expand these initiatives effectively,
human resources function has deployed a team supporting business on a global level.

Employee Engagement
1
Training and seminar
topics include basics ofcorporate ethics andcompliance, anticorruption, export
compliance, insider
trading prevention, theAct for Subcontracting
and the prevention ofharassment. Sometraining is limited tocertain employees.

Information
Providers

Progress/Results Report
Follow-up

Internal Pointof Contact

Planning
for measures

Confirmationof effects

Implementationof measures

UP 12 points

Progress/Results Report

External Pointof Contact(Outside Law Firm)

Report/Consult

At Tokyo Electron, diversity and inclusion are management pillars that lead to the continuous generation of innovationand increased corporate value. We are actively pursuing them with the strong commitment of our management.
Although the areas of emphasis for diversity and inclusion vary by country, we have taken on gender and nationality as
major themes and put the following goals and initiatives in place based on the characteristics of each region.

Representative Director, President & CEO

ReportCompliance
General Manager of Legal, Compliance Unit
Department/
Chief Compliance Officer
Legal, Compliance
Division of Each
Overseas
Subsidiary
Request for Investigation/
Corrective and Preventative Action■

Relevant Divisions, etc.
Report/Consult

Progress/Results Report■

Reports and consultations received via these points of contact are handled with sincerity, and investigations areundertaken in accordance with internal regulations. If a compliance violation is found, disciplinary action is taken inaccordance with the Rules of Employment2, and preventive measures and corrective measures, such as improvements
to the workplace environment, are implemented as necessary.
In fiscal year 2021, a total of 82 cases were received via the internal reporting system, of which 6 were recognized ascompliance violations. The reports and requests for advice primarily related to harassment, but some concerned theimproper reporting of attendance and breaches of internal procedures. As a result, we have conducted regulareducation programs for our employees to prevent harassment and have provided thorough follow-up with thoseconcerned or involved. There were no reports or cases of non-compliance that could have had a serious impact on ourbusiness or on local communities.

41

Improvementof measures

Diversity and Inclusion

Report

NoticeFollow-up
Redress
Report/Consult

Reviewingof circumstances

Diversity and Inclusion
Board of Directors
Audit & Supervisory Board Member

Third-party system

Progress/Results Report

Continued Implementation of Engagement Surveys

Score

Response to Internal Reports

Report/Consult

Improving employee engagement is essential to maximize corporate
performance and achieve sustainable growth. Recognizing that employees
both create and fulfill company values for us, we have been regularly
conducting engagement surveys since fiscal year 2016 to assess the current
state of employee engagement and identify issues. Based on the results of thesurveys, our management takes the lead in making improvements to foster abetter workplace environment and culture. These initiatives resulted in an
increase in the employee engagement score of 12 points from fiscal year 2016
to fiscal year 2021 and a turnover rate of 2.5%. We plan to continue these
initiatives since we believe that improving employee engagement leads toproviding increased value to our stakeholders.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

2
A leniency system has
been introduced
whereby any
disciplinary action may
be reduced or
exempted in the eventthe employee involvedin a complianceviolation has made areport or sought advice
on his/her own volition.

■■

In terms of succession planning, we conduct a diversity-conscious talent pipeline (plan for developing humanresources) and strive to increase the ratio of women in management positions
Taking into consideration that many of our employees are engineers, we actively invest in the use of recruiters
and branding to hire women at a level that is equal to or greater than the ratio of women in each region (or theratio of women majoring in science and engineering in the case of engineers)
We create an organizational structure where even those from outside of Japan can take on corporate roles
through the use of technology and shared global human resources systems
We organize events such as talks on diversity and inclusion from internal and external experts and leaders,
generate networking opportunities for employees with similar characteristics and experience, and hold roundtable discussions regarding careers before and after taking maternity/paternity leave and childcare leave

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

42

Management Foundation

TEL Values
Systems and Initiatives for TEL Values

Support for Career Development
We are expanding programs designed for employees to quickly acquire basic skills according to their different levels
and goals through our global human resources system. Effort is being put into providing information and tools so that
employees can gain a more concrete image of their own learning, experience and career development.

A total of 14,479 employees are working at the 76 Tokyo Electron sites located in 18 countries and regions of the world, and webelieve that each of them maintaining a high level of engagement and demonstrating their full potential will lead directly to ourcompany’s growth. By sharing with our employees the direction toward which management is aiming and providing platforms
for direct dialogue through the employee meetings and discussions held every year at each site, we are striving to build mutual
trust between the organization and individuals. Furthermore, to realize our Corporate Philosophy, we established TEL Values,
which delineate Tokyo Electron’s values, the mindset that each employee must possess, and the codes of conduct to be passed
on to the future. The TEL Values—pride, challenge, ownership, teamwork, and awareness—are being put into practice by our
employees all over the world.

Leader Programs
In nurturing the next generation of leaders to support our future, we are globally expanding our succession programs
to identify and systematically nurture staff to take on the role of realizing medium- to long-term improvement ofcorporate value. Selected next-generation management candidates are provided growth opportunities with an eye tothe future through participation in events such as external training, building networks outside the company, andcultivating a broader perspective.

TEL Values
Pride

We take pride in providing high-value products and services.

Challenge

We accept the challenge of going beyond what others are doing in pursuing our goal of becoming
number one globally.

Ownership We will keep ownership in mind as we think things through, and engage in thoroughimplementation in order to achieve our goals.

Provision of Global Learning Opportunities
For employees to acquire skills related to their duties and to gain a broader insight, we encourage them to actively
participate in both internal and external seminars. We are also moving to standardize our core programs on a global
basis so that employees are able to learn using our consistent group content and guidelines regardless of whether they
are in Japan or overseas.

Teamwork

Corporate Education System (TEL UNIVERSITY)

We respect each other's individuality and we place a high priority on teamwork.

Awareness We must have awareness and accept responsibility for our behavior as respectful members ofsociety.

Management

Executives

Leaders

Junior Employees
New Employees

Mid-level Employees*
OJT: On the job training

Introductory programs (new graduates, mid-career recruits)OJT* programs (new graduates, mid-career recruits)
Level-based Programs

Employee Growth
The global human resources system introduced in fiscal year 2018 clarifies each employee's roles and responsibilities tosupport talent management effectively. In coordination with development programs, Tokyo Electron supports the careerdevelopment and growth of our employees by presenting the skills required for a variety of jobs in the company, theknowledge they should/can acquire and a description of expected duties at higher levels. We are also working to build
workplaces where diverse individuals can flourish by conducting talent assessments across all countries and regions, realizing
fair total rewards for employees and utilizing a performance management system and a global common human resource
system.

Business skills
Goal-based Programs

Global communication
Employee life support
Technical programs (seminars, workshops)

Work-life Balance
Work Styles
Tokyo Electron recommends work styles that incorporate work-life balance and continuously develops work
environments to enable this. We are promoting efficient ways of working suited to our employees' lifestyles and social
situations so that our employees can make the most of their work hours by utilizing a teleworking system in addition
to a flextime system.
Karuizawa Training Center

Provision of Personalized Learning Opportunities
Since each employee’s growth is different, we are putting effort into the practice of on-demand education* as amechanism that allows individuals to learn as they want, when they want, and according to their own needs. In
addition to group training, by proactively utilizing e-learning programs, we are providing opportunities for employees
to learn from any location.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Junior employee programs

Compulsory web-based training

Human Resource Concept at TEL UNIVERSITY

43

Mid-level employee
programs

Leader programs

Global Human Resources System

We have established TEL UNIVERSITY as an in-house educational
establishment, helping employees to independently build theircareers and realize their personal goals for their growth anddevelopment. Our aim is to stand shoulder to shoulder with each
employee, supporting their self-growth and fruitful careerdevelopment throughout their working life, and create a foundationthat enables the organization and individuals to trust each other andgrow. TEL UNIVERSITY plays an important part in helping employees
realize our vision of being “a truly global company generating highadded value and profits in the semiconductor and flat panel display
industries through innovative technologies and groundbreaking
proactive solutions that integrate diverse technologies”. Through thefollowing four initiatives, we are focusing on employee growth that
leads to corporate growth.

Manager programs

Leave System
Based on the belief that taking appropriate leave and properly
Refreshment leave
managing work hours also contributes to better employee
productivity, we strive to correct long work hours and aim to enhance
the leave system and promote taking leave.
Since fiscal year 2019, we have set an annual target of 70% annual
paid leave use and have promoted employee awareness for planned
use of leave. We are also promoting regular monitoring of leave use status and urging management to improve leave
use rates, ensuring that five days of compulsory annual leave are taken as required by law since April 2019. In fiscal year
2021, the leave use rates were 62.5% in Japan and 75.3% overseas, affected by COVID-19. We will continue to encourage
our employees to take annual paid leave.

1,235 employees*
On-demand education:
Education programs
that allow employees tolearn at their own
convenience, anywhere,anytimeTOKYO ELECTRON SUSTAINABILITY REPORT 202 1

44

Management Foundation

Our goal is to provide refreshment for employees and thereby boost their motivation to work. The system grants
special (paid) leave from two weeks to one month per five years of service to employees who have worked for morethan 10 years. In fiscal year 2021, 688 employees in Japan and 547 employees overseas took refreshment leave.
In addition, to the system made available by existing laws, we are independently building a substantial frameworkthat allows employees to adopt a flexible approach to work that accords with diverse life events such as raisingchildren or caring for family members. With regard to the situation in Japan, we have acknowledged the maximum
extension of the childcare leave period to the day a child reaches three years of age, as well as expanding our provisionof a reduced working-hours program for childcare to include employees rearing children as far as graduation fromelementary school. In addition to nationally mandated leave to care for a sick or injured child, we enhance our support
system by establishing our own childcare leave, nursing care leave, etc.

Supplier Human Rights Risk Survey Results
The results of human rights risk surveys conducted at suppliers showed that 35% of those with 500 or more
employees had potential/actual risks. Among these risks, the major risks are health and safety issues related tohuman rights, followed by labor issues. Based on these results, we continued to request those suppliers tocomply with domestic laws and regulations and social norms related to health and safety. We will work to
reduce human rights risks by promoting corrective actions together with our suppliers.
Meanwhile, inside our company, we identified potential human rights risks in the areas of labor, and healthand safety. To mitigate these risks, we are renewing our efforts to fully manage working hours and also taking
steps to improve operational efficiency further.
■ Percentage of companies considered to have potential/actual risks■ Percentage of companies considered to have low risks

Respect for Human Rights■■

Conscious of our corporate social responsibility, Tokyo Electron recognizes that it is important to conduct ourselveswith a strong sense of integrity. Based on this recognition, we have firmly upheld human rights since our founding, as
reflected in the spirit of our Corporate Philosophy and Management Policies. For us, respecting human rights means asignificant undertaking, not only to fulfill our responsibility for eliminating adverse impacts on people caused throughbusiness activities, but also to respect those people who support our business activities, and contribute to therealization of a sustainable, dream-inspiring society. We incorporate the concept of respect into every aspect of ourbusiness activities, and strive to nurture a dynamic corporate culture where each person can realize his or her fullpotential.

Human Rights Initiatives
In fiscal year 2018, we formulated our Human Rights Policy1, summarizing our approach to human rights. We have specified thehuman rights we believe are particularly important in business activities as Freedom, Equality & Non-Discrimination; Freely
Chosen Employment; Product Safety & Workplace Health and Safety; Freedom of Association; and Appropriate Working Hours& Breaks/Holidays/Vacations. In preparing the Human Rights Policy, we referred to the United Nations’ Guiding Principles on
Business and Human Rights and the International Bill of Human Rights and the ILO Declaration on Fundamental Principles andRights at Work referred to therein, the Ten Principles of the United Nations Global Compact, and the RBA Code of Conduct2.

Assessment

Remediation

Commitment to respecting
human rights

Assessment of human rights risks
in business and supply chains

Actions to reduce risks basedon assessment results■

Human Rights Policy publication
Awareness and implementation■ Education■

CSR assessment
Human rights risk assessment■ Human rights impact assessment

■

■

■

■

Feedback sheet publication
Program development and review
according to issues

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

35%

■

■

■

■

1
Human Rights Policy
www.tel.com/csr/
employee/diversity/
2
RBA Code of Conduct:
The RBA establishes a setof standards for supply
chains in the electronics
industry for a safe labor
environment to ensurethat workers are treatedwith respect and dignity
and that companies takeresponsibility forenvironmental impact inthe manufacturing
process.

Sustainability Report publication
Disclosures on the website

3
CSR assessment: Refer
to Supply Chain
Management on p. 54

Reporting system

Health and Safety■

65%

Regular disclosure of
information■

Working hours
Burden of
employmentrelated fees■

ReportWe ensure that our executives and employees, as well as suppliers, are fully aware of this content. Specifically, we
publish the Human Rights Policy on our website to make it available to everyone inside and outside the Company, andalso implement online human rights training targeting all of our executives and employees.
In fiscal year 2021, as in the previous fiscal year, we conducted human rights due diligence, as well as risk surveys,
and identified and assessed impacts. As part of the surveys, we utilized a self-assessment questionnaire (SAQ) forinternal use, based on the RBA Code of Conduct, and also reviewed the results of a CSR assessment3 for suppliers ofmaterials, staffing and logistics to assess the current situation throughout the value chain. We are using the results ofthese surveys to consider corrective actions and reduce human rights risks.

45

Appropriate use of water and waste water management to prevent
pollution

Management Systems
Labor

Approach to Human Rights

Commitment

Environment■

Deployment of trained emergency response personnel
Designation of emergency response teams, and provision of
personal protection equipment and training
Establishment of risk assessment procedures and programs,
assuming emergency situations
Implementation of evacuation drills for all workers, assuming fires
and other emergencies

We recognize the importance of having highly effective grievance mechanisms related to human rights and areworking to establish and operate those mechanisms. In fiscal year 2021, we further strengthened our internal andexternal reporting systems in Japan and overseas for employees and suppliers.
By continuing to conduct human rights due diligence going forward, we will assess and correct any human rights
issues we identify in our business activities and further improve the grievance mechanisms we provide.

Health and Safety
Health and Productivity Management
Having every employee find fulfillment in both work and life and achieve their maximum performance is also
important for the future advancement of Tokyo Electron. To create healthy and comfortable workplaces for
employees, we are working to develop our systems further. Besides conducting various medical checkups inaccordance with the law, we offer face-to-face consultations by designated occupational health physicians for
employees who work long hours. We also offer counseling opportunities supported by external industrial counselors
for those who request them. Furthermore, we are working on strengthening health-related support, organizing
regular line-care1 seminars aimed at management, and, where necessary, holding liaison meetings with the healthofficers and health professionals at each Group company in Japan. Based on the collaborative health2 concept, incooperation with the Tokyo Electron Health Insurance Society, we are actively expanding data health3 initiatives,
providing employees health guidance and effective prevention and health promotion according to their individual
circumstances by utilizing examination data from medical checkups. As a result, the health literacy of employees infiscal year 2021 rose, demonstrated, for instance, by an increase in the percentage of employees receiving specifichealth guidance4. Furthermore, again in fiscal year 2021, as in fiscal year 2020, the entire Group in Japan collectively
received recognition as top 500 companies under the 2021 Certified Health & Productivity Management
Outstanding Organizations Recognition Program5. We will continue to promote various initiatives at the global levelto maintain and improve our employees' health.

1Line-care: A workplacemeasure for mental
health, in which
managers andsupervisors take a leadrole in responding torequests by workers foradvice, with the aim of
improving the workplaceenvironment
2Collaborative health:Situation where acompany actively
cooperates with aninsurer, such as a healthinsurance society, toeffectively and efficiently
promote the health of its
employees and theirfamilies
3
Data health: Refers to amore effective andefficient health careprogram that is
implemented in line withthe health status of
insured persons, byutilizing and analyzing
the health and medical
information heldelectronically by the
medical insurer
4
Specific health guidance:
Health guidance
provided for reducing
the number of people
with metabolic
syndrome (visceral fat
syndrome) or at risk ofmetabolic syndrome,and for the early
detection and early
treatment of lifestylediseases and cancer, etc.
5
Certified Health &Productivity
Management
Outstanding
Organizations
Recognition Program:
The program publicly
recognizes particularly
outstandingorganizations that arepracticing healthoriented business
management, based on
initiatives attuned to
local health-related
challenges and on
health-promotion
initiatives led by the
Nippon Kenko Kaigi

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

46

Management Foundation

Environment
Safety Management Framework

Environmental Management System

Based on a culture of “Safety First,” we carry out ongoing activities for safety promotion. In an effort to raise theoverall level of safety and occupational health, we use a management system based on OHSMS1 to manage safety andoccupational health and also follow the PDCA cycle to reduce the potential risk of work-related incidents. Moreover,by sharing information of any issues at internal meetings, such as those of the EHS Council and the Manufacturing
Company Presidents’ Council, we promote safety management as a company-wide initiative.

1
Occupational Healthand Safety Management
System (OHSMS): A
management system toimprove the overall levelof safety andoccupational health

Incident Reporting System
If an incident occurs, the information is shared with related parties and persons in charge through the TEL Incident
Report System (TIRS), newly developed in fiscal year 2019, creating a system that resolves issues and leads to the
proposal of measures to prevent reoccurrence. Through the operation of TIRS, we strive to improve the accuracy ofreport content further.

Activities for Safety
On-site Safety Patrols
At each plant and office, monthly safety and health committee meetings are held to discuss measures for any
workplace safety or employee health issues and to conduct safety patrols. We have also set up a system forautonomous problem-solving at manufacturing sites, with safety patrols by representatives from appropriate
departments at least once per month.

ISO 14001 Certified Plants and Offices
Company nameRisk Assessment and Stop Work Authority
Before starting work at our manufacturing facilities, the work details and the risks are shared with all workers involved,
and they each increase their awareness in an effort to prevent incidents. In addition, effort is also being directed toproviding guidance to safety managers as well as making workers stop work and take corrective action in the event ofan unforeseen incident while on the job.
Safety Education
In addition, we are implementing two education programs globally for theestablishment of safe work environments.
■ Basic Safety Education
TCIR
Our program on basic safety targeting all employees. This is provided as
introductory training for new hires as well as refresher training every thirdyear of employment.
■ Advanced Safety Education
Our program on advanced safety targets employees working on production lines and in cleanrooms. Participants are
required to complete the course every year. For overseas transferees, the laws and regulations in their previous andfuture places of employment are compared, and additional safety education is added as necessary.

0.27

To eliminate incidents, we also provide online training and risk assessment training for employees in Japan andoverseas. Also, to expand the concept of safe equipment design2 to our design, manufacture, and service operations,
we hold a semiannual safe equipment design seminar at our manufacturing sites in Japan, inviting an external guest to
speak. Finally, we also promote our initiatives to prevent accidents, such as providing our suppliers and customers withsafety information as circumstances demand.
As a result of having maintained a high priority on creating safe work environments, TCIR3 has been maintained atless than the company’s target of 0.5, with 0.27 in fiscal year 2021.

47

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Environmental issues such as climate change are growing ever more crucial. To promote activities in the medium to longterm that meet the environmental/ESG needs of its customers and other stakeholders, the Manufacturing Company
Presidents’ Council, which includes the corporate director in charge of EHS, monitors and supervises progress related toenvironmental issues. A headquarters has been established, headed by the corporate director in charge of EHS, andpromotes environmental activities across the entire Group. The Environment Council, made up of members appointed by
the executives of the Group companies, sets targets related to environmental issues, monitors progress and also works toachieve its goals. Furthermore, to continuously promote our environmental activities, we have operated anenvironmental management system based on ISO 14001 since fiscal year 1998, primarily at our manufacturingsubsidiaries. In March 2017, we acquired multi-site ISO 14001 certification for our plants and offices in Japan that had
previously acquired certification separately. Coinciding with this multi-site certification, we have developed astandardized group format for environmental impact assessments, the identification of useful environmental aspects,
environmental management programs and internal audit checklists. During fiscal year 2021, we established approximately
100 environmental goals for different levels across the entire Group and carried out these improvement activities. Any
issues identified through these activities are reviewed by the Environment Council, reported to the Manufacturing
Company Presidents’ Council and used for promoting environmental activities across the entire Group. Under such anenvironment management system, fiscal year 2021 was again free from environmental incidents, accidents, violations,and associated legal proceedings.
Plant/Office name

Certification dateTokyo Electron

EHS Promotion Center (Fuchu Technology Center)

Tokyo Electron Technology Solutions

Fujii Office/Hosaka Office/Tohoku Office

Tokyo Electron Kyushu

Koshi Office/Ozu Office

Tokyo Electron Miyagi

Taiwa Office

Tokyo Electron (Kunshan)—

March 2013

Chaska Office

March 2013

May 1998

TEL Manufacturing and Engineering of America
2Safe equipment design:
Refer to p. 25
3
TCIR: Total Case
Incident Rate. The
number of workplace
incidents per 200,000
work hours.

Tokyo Electron Korea

North Chelmsford Office

May 2018

TEL Technology Center Korea, Balan Plant

July 2014

Environmental Risks and Opportunities
The various issues related to the environmental impact on our daily lives and the business activities of companies.
Physical risks, such as rising average global temperatures, strong winds, disasters, and water shortages caused byclimate change and abnormal weather, heighten the risks in business, such as damage to assets, increased operating
costs, and impacts on the supply chain. In terms of legal risks, we recognize that stronger environmental laws andregulations, more stringent regulations on greenhouse gas emissions, the introduction of carbon taxes, and so on willlead to higher costs for associated measures. At the same time, promoting environmental initiatives leads to more
opportunities to sell outstanding, environmentally friendly products, reduce operating costs, and further improve
corporate value. As a participant in the semiconductor and flat panel display (FPD) industry, by leveraging Tokyo
Electron’s advanced technological prowess to create added value, we can contribute to the creation of semiconductor
and FPD products with low power consumption and the building of an energy-saving society that makes the most of
information technology.
Based on the requirements of ISO 14001, we identified and analyzed internal and external issues in relation to theenvironment, namely, our relationship with the climate, air quality, and water quality. We also clarified theenvironmental needs and expectations of customers, suppliers, governments, and employees and identified thecompliance obligations of our group. From this information, we defined the following as its risks and opportunities toaddress: (1) environmental management by reducing the environmental impact of its business activities, (2)compliance with applicable laws, and (3) enhancing product competitiveness with the environmental contribution of
products.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

48

Management Foundation

TCFD

CO2 Emissions Across the Value Chain

Initiatives Related to Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
We are pursuing ongoing disclosures and initiatives based on the TCFD framework and relating to risks andopportunities that climate change presents to our business.

We will work to grasp the environmental impact throughout the value chain and develop business activities that are consciousof reducing this impact. Based on our environmental slogan “Technology for Eco Life,” we aim to resolve environmental
problems through leading technology and reliable services.

Status of Initiatives Related to Recommendations of the TCFD
■ Governance
Each of our corporate directors for EHS and CSR is working under the supervision of the CEO to monitor progress ofgoals related to our response to climate change.
With the establishment of the EHS Promotion Department and CSR Operations Department at headquarters, these
activities are being driven by the entire Group. At the Environmental Council, comprised of members appointed byexecutives of the Group companies, company-wide goals are set, progress is monitored and the achievement of thesegoals is promoted.
■ Strategy
Utilizing the framework of the TCFD recommendations, we identified the risks and opportunities of climate changethat will impact business over the medium to long term. We have evaluated the quantitative impact on businessfrom some of those risks and opportunities, and we aim to continue quantifying others going forward as we
investigate relevant measures.
■ Risk Management
Through the Manufacturing Company Presidents’ Council, we approve company-wide risk management initiatives,
from short term to long term, that related divisions and councils recommend, and then apply those initiatives to thefacilities and divisions of the Group companies.
For Scope 11 and 22 CO2 emissions, we are adopting renewable energy from a global perspective, including theimplementation of measures at our key manufacturing sites in Japan with high emissions.
For Scope 33 emissions, we recognize the importance of providing products that generate fewer CO2 emissions
because about 88% of the emissions in our entire value chain are generated during use of products after sale, so weare focusing on the development of a range of environmental technologies.
We also formulate business continuity plans in anticipation of natural disasters caused by abnormal weather andother factors, and take measures with our suppliers to ensure that business operations can be maintained.
■ Metrics and Targets
To further reinforce our initiatives toward improving environmental performance of products and conserving theenvironment at our plants and offices, we revised our medium-term environmental goals in December 20204. While
supporting the advancement of information and communications technology through the provision of oursemiconductor and FPD production equipment, we are also committed to achieving new environmental goals in
keeping with our Corporate Philosophy: “We strive to contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support”.
Examples of Climate Change (Risks and Opportunities) Impacting Business over the Medium to Long Term
ScenarioType

Details■

2°C
Temperature
Increase

Transition risks■■

4°C
Temperature
Increase

Physical risks■■

CommonOpportunities■■■

Increased energy costs in line with taxes on fuel and energy
Assuming our greenhouse gas (GHG) emissions and use of renewable energy remain at fiscal year 2021 levels, if a carbon tax
were applied, we estimate our costs would increase by 1.1 billion yen/year by fiscal year 2026 (assuming a tax of 6,000 yen per
ton CO2) and 2.6 billion yen/year by fiscal year 2041 (14,000 yen per ton CO2)
Decreased net sales if we are unable to meet customers’ requirements and demands for environmental initiatives
Reduced reputation among investors, NGOs and local communities if a response to climate change and other environmental
issues is delayed
Impacts on us, our suppliers and customers from abnormal weather (net sales decrease as a result of supply chain disruptions,operation stoppages, production/shipping delays and other factors)
Accelerated efforts to create new value, including innovation toward development of low-GHG products and services, andequipment and technologies that contribute toward the manufacture of low-power consumption devices
Gaining superiority and business opportunities through proactive initiatives for climate change and adding value to the market
Higher productivity by streamlining operations and reducing related environmental impacts
Securing a competitive advantage by building resilience (responsiveness to climate change) into global operations, including
working to adopt renewable energy, and improving corporate value through these initiatives

1
Scope 1: Direct
greenhouse gas (GHG)
emissions from use offuel and gas we owned
or controlled
2
Scope 2: Indirect GHG
emissions from use ofelectricity, steam andheat we purchased
3
Scope 3: Emissions
from corporate value
chains (excluding scope
1 and 2 emissions), suchas producttransportation,
employee businesstravel and major
outsourced production
processes*
Scope 3 is divided into
upstream activities,
which include emissions
associated withpurchased or procured
products and services,and downstream
activities, which include
emissions associatedwith sold products andservices.
4
Revision of mediumterm environmental
targets: Refer to p. 50

409 kilotons

186 kilotons

5,813 kilotons

Not from our GroupOwn emissions

Not from our Group

Scope 3 upstream

Fuel- and energy-related
activities

Employee commuting

11 kilotons

14 kilotons

1 kiloton

162 kilotons

Waste generated in operations

1 kiloton

Purchased goods and services

211 kilotons

Direct emissions from fueland gas use
Scope 1

29 kilotons

Business travel

Capital goods

Scope 3 downstream

Scope 1, 2

Indirect emissions from electricity
use and heat purchase
Scope 2157 kilotons

Upstream transportationand distribution

End-of-life treatment ofsold products

2 kilotons

Use of sold products

5,668 kilotons
Downstream transportationand distribution

143 kilotons

9 kilotons

Downstream

Upstream

Our total CO2 emissions of Scope 1 and Scope 2 is 186 kilotons, while Scope 3 accounts for a total of 6,222 kilotons,
approximately 97% of the total. Of this, CO2 emissions when using products is 5,668 kilotons, about 88% of the total.
This is why we consider the development of products with low CO2 emissions during operation to be important.

Medium- and Long-term Environmental Goals
In order to further strengthen our initiatives toward the environment in our products, plants and offices, the contents of themedium-term environmental goals for fiscal year 2031 were revised in December 2020. In the goals for products, thereference year for per-wafer CO2 emissions was changed from fiscal year 2014 to fiscal year 2019. In addition, in the goals forplants and offices, the total CO2 emissions reduction goal was changed from 20% reduction to 70% reduction while reaching a
rate of 100% renewable energy usage. At present, we are working on new initiatives toward achieving these revised goals.
Specifically, we are planning to introduce renewable energy at our plants and offices in Japan, the United States and China
starting from fiscal year 2022. This will bring our use of renewable energy company-wide to over 50% while dropping our CO2
emissions by 40%. In terms of products, we are moving ahead with understanding the amount of CO2 emissions during theuse of standard equipment and creating a roadmap. We are rolling out activities toward achieving our goals based on this.
We have set the following as a long-term goal to achieve by 2050. As a leading corporation in environmental management,
Tokyo Electron works actively to conserve the global environment. We strive to contribute to the development of a dreaminspiring society by proactively promoting the reduction of environmental burden of both our products, facilities, and at thesame time, providing evolutionary manufacturing technologies that effectively reduce the power consumption of electronic
products. We1 are working on initiatives for this at a company-wide level.

Medium-term environmental goals for 2030 (Revised in December 2020)
CO2 emissions reduction goals
Products

30%

reduction

Per wafer (compared with 2018)70%

reduction

Total emissions (compared with 2018)
Reduce energy consumption by 1% YoY at each plant andRatio of renewable energy 100%
Asaaleading
leadingcorporation
corporationininenvironmental
environmentalmanagement,
management,Tokyo
TokyoElectron
Electronworks
worksactively
activelyto
toconserve
conservethe
theglobal
globalAs

Long-termgoal
goal(2050)(2050) environment.
Long-term
environment.We
Westrivestrivetotocontributecontributetotothe
thedevelopment
developmentofofaadream-inspiring
dream-inspiringsocietysocietyby
byproactively
proactivelypromoting
promotingthe
reductionof environmental
burdenof both
our products,
facilities,
and atthetime,time,
providingevolutionary
the reductionof environmental
burdenof both
our products,
facilities,andatsamethe same
providingmanufacturing
technologies that
effectively
reducethe power
consumption
electronic products.
evolutionary manufacturing
technologies
thateffectively
reducethe power ofconsumptionof electronic products.

49

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1
T. Kawai, CEO / Top Management Conference / 2021.5.25

150

Management Foundation

Product Initiatives
Products that Contribute to a Sustainable Society
Of the CO2 emissions from our value chain, emissions during product use account for about 88%. For this reason, we have madeit a key corporate objective to promote environmentally friendly product design and lower the energy consumption of our
products. In fiscal year 2021, we moved ahead with setting out a roadmap for key models to reach our medium-term
environmental goal to reduce per-wafer CO2 emissions by 30% by fiscal year 2031 (compared with fiscal year 2019) for the keymodels of each business unit, and have established guidelines for calculating CO2 emissions that include the amounts of processgases and chemical substances to use, as well as the area, volume and mass occupied by equipment, in addition to our existingones for energy and water. Based on these guidelines, we have begun estimating CO2 emission levels for equipment using ourbase year (fiscal year 2019), and have also started studying environmental technology strategies. As we work to further raise
environmental awareness, we will continue to incorporate environmental technologies as an important added value in our
technological strategies through various activities.
■ Example initiative
In our Cellcia™ series of test systems, we have improved the cooling circuits in the cooling chiller, increasing
efficiency and boosting cooling capacity by 30%. This has enabled us to make the cooling chiller smaller, reducing
our equipment footprint1. In addition, we have brought in new functions to automatically switch off heaters andchillers inside our Precio™ series of wafer probers when idling.
Initiatives for Product Environmental Laws and Regulations
In order to comply with each country’s environmental laws and regulations pertaining to products, we proactively collectinformation and take appropriate action as required. An example of our efforts for EU REACH2 is that we properly
investigate and disclose information on the presence of any chemical substances in articles. We introduced the
chemSHERPA3 format in fiscal year 2021 and collected information on chemical substances for concentrations in the parts
per billion (ppb4). As an effort toward GHS5 requirements, we provide safety data sheets (SDS6) when selling chemical
products. We also promote the local procurement of chemical products and effectively address laws and regulations. In
explaining and addressing the frequently revised environmental laws and regulations, we continue to offer “web-based
training for Product Environment Compliance” to all employees, and we provide suppliers with information on therelevant environmental laws and regulations. We will continue to monitor each country’s environmental laws andregulations rapidly and strive to take appropriate action.

Plant and Office Initiatives
Renewable Energy Initiatives
We have set as a medium-term environmental goal the use of 100% renewable energy sources at our plants andoffices by fiscal year 2031. To reach this goal, we are planning to introduce renewable energy at our sites in Japan, theUnited States and China, starting from fiscal year 2022. This will bring our use of renewable energy company-wide toover 50%, while dropping our CO2 emissions by 40%.
As an initiative toward in-house generation of renewable energy, at Tokyo Electron Miyagi (Taiwa Office) and Tokyo
Electron Technology Solutions (Fujii Office, Hosaka Office), renewable energy generated from solar panels is used to
power the plants, and monitors displaying their energy profile have been set up at the entrances to the plants. At
Tokyo Electron Kyushu (Koshi Office), generated energy is sold, helping to prevent global warming. In fiscal year 2021,
we generated a total of 4,068 MWh of renewable energy in Japan. In addition, Tokyo Electron U.S. Holdings has
continued to purchase green power from external sources, amounting to 4,980 MWh in fiscal year 2021.
Initiatives to Prevent Global Warming and Save Energy
As our medium-term environmental goal, we want to reduce total CO2 emissions by 70% by fiscal year 2031
(compared with fiscal year 2019) at our plants and offices, and have set the goal of reducing energy consumption by atleast 1% year-over-year at each of our plants and offices. To achieve this goal, we have brought in a number of
initiatives, including our energy-saving clean room operation, setting office air conditioning at appropriate
temperatures, introducing devices that offer superior energy-saving performance, and bringing in renewable energy.
As a result of these activities, we managed to reduce by 10% year-over-year the amount of energy used at our plants
and offices per net sales in fiscal year 2021. In addition, the increase in the amount of energy used to develop andevaluate products and increase production meant that our power consumption was 355 GWh (12% increase YoY), andthe CO27 emitted by our energy sources was 169 kilotons (9% increase YoY). In addition, in fiscal year 2019, we revised
the per-unit basis for plants and offices in Japan to more appropriate levels based on the correlation between business

51

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

operations and energy, sharing these and putting them into practice. Specifically, the per-unit basis is calculated bycompound weighting using data on the number of development and evaluation machines, production volume, floor
space, and man-hours in each region. As a result, the goal has been achieved at 1 of the 11 total plants and offices inJapan and overseas.
■ Example initiative 1

We are bringing in a system at our manufacturing sites in Japan to make it clear how much energy is saved at ourplants and offices. Previously, we used to graph changes by extracting data by hand, but now, through integrated
management on the cloud, we can check changes at any time, as well as check the deployment and effects of BKM1
at each plant and study or implement measures. This system is scheduled to be fully in place by fiscal year 2022.

1
BKM: Best Known
Method■ Example initiative 2

The new manufacturing wing that started operation at the Tokyo Electron Technology Solutions (Fujii Office) in August2020 uses energy-saving air-conditioning equipment, allowing it to save an expected 30% of energy or more in terms offloor area.
1
Footprint: The overall
area a piece ofequipment takes up ona flat surface when
seen from directlyabove

2
EU REACH: An EU
regulation pertaining to
the Registration,
Evaluation,
Authorization, andrestriction of CHemicals
3
chemSHERPA: A data
entry support tool for
appropriately managing
information on
chemical substances in
products across anentire supply chain
4
ppb: parts per billion(1 × 10-9)
5
GHS: Globally
Harmonized System ofClassification andLabelling of Chemicals
6
SDS: Safety Data Sheet(Safety Data Sheetrefers to the document
containing hazard
information aboutchemical substancesthat is issued when acompany transfers orprovides chemical
substances, products
containing chemical
substances, to anothercompany)7
The emission
coefficient for power
consumption in Japan in
fiscal year 2021 uses thepost-adjustment
emission coefficient on
a per-electricity
supplier basis, while theemission coefficientsfor power consumption
overseas uses theemission coefficients inEmissions Factors 2019
Edition issued by theInternational Energy
Agency (IEA).

■ Example initiative 3

At Tokyo Electron Kyushu (Koshi Office), heat source chillers that used to be controlled, managed and run
independently have been switched to integrated operation. This is expected to save about 470 MWh and 170 t-CO2
annually going forward.

Initiatives to Reduce Water Consumption
With the growing importance of water resource preservation in global
environmental initiatives, we have established a goal of keeping water
consumption at the same level or below that of the baseline year (fiscal
year 2012 for plants and offices in Japan and a fiscal year of theirchoosing for each overseas operation). Our ongoing efforts to achievethese goals include reusing pure water from our manufacturing
operations, installing water-saving devices, watering lawns withrainwater, and implementing the intermittent operation of cafeteria
faucets. During fiscal year 2021, as a consequence of new buildings
coming online and an increase in water consumption associated withproduct development and evaluation, water consumption amounted to1,397,000 m3, up 7% year-over-year. Moreover, in terms of our goal of
maintaining water consumption at the baseline level (per-unit basis) ateach plant and office, we achieved 10 of the 13 goals. Additionally, anestimated 1,195,000 m3 of wastewater was discharged in fiscal year 2021.

Percentage of plants and offices achieving water
intensity target
(%)

100

86

77

69

75
50
25
0

2019

2020

2021

(FY)

Initiatives to Reduce Waste
To curb the amount of waste generated and to recycle it wherever possible,
we promote initiatives to reduce waste. In addition to participating in the
Recycling rateelectronic manifest system2 to ensure proper waste management, we areengaged in maintaining an appropriate amount of parts inventory and inreusing cushioning material. We are also achieving lower waste processing
costs by promoting waste sorting activities and by modifying space used forstoring waste to increase storage capacity and reduce the frequency ofcollection. In fiscal year 2021, we surveyed waste disposal operators in Japan using a unified on-site checklist, and weshared the results. As a result of these initiatives, in fiscal year 2021, we generated 183 tons of incinerated and landfill
waste, and the recycling rate3 was 98.8%, achieving our single-year goal of maintaining a recycling rate of 97% orhigher for the 15th consecutive year since fiscal year 2007. We have also maintained a high level of recycling of 95% at
our overseas plants and offices.
■ Example initiative
At the Chaska Office of TEL Manufacturing and Engineering of America, wood recycling is encouraged, and in
addition, packaging materials that would normally be sent to landfills are converted to heat or power generationmaterials. The recycling rate was 85% in fiscal year 2020 but climbed 14 points in fiscal year 2021 to reach 99%.

98.8 %

2
Electronic manifest
system: A system forelectronically tracking
the flow of industrial
waste instead of using
paper-based manifests(i.e., paper forms for
tracking industrial
waste). The system uses
a communications
network of dataprocessing centers,
businesses that generate
waste, and waste
collection/disposal
companies.
3
Recycling rate: (Recycled
amount/Amount ofwaste generated) × 100

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

52

Management Foundation

Supply Chain Management
Principles and System of Supply Chain Management

Management of Chemical Substances
We constantly monitor and manage our use and release of any chemical substances used in product development andmanufacturing subject to the Japanese PRTR1 law. Whenever we introduce a new chemical substance or change theway an existing substance is used, we check for environmental, health, and safety risks beforehand and conduct
appropriate processing after use by contracting expert vendors and using in-house processing facilities. In response to
the Fluorocarbons Recovery and Destruction Law, we conduct simple checks, regular inspections and so on based onlaw in an effort to monitor the amounts of fluorocarbons filled and recovered. In fiscal year 2021, none of our plants oroffices had fluorocarbon leakages requiring notification.
URL

Biodiversity

1
PRTR (Pollutant Release
and Transfer Register):A framework for
tracking, tabulating anddisclosing quantitative
data on chemical
substances that may behazardous to humanhealth and theecosystem, including
the amounts used anddischarged into theenvironment and theamounts transferred (aspart of waste) off theplants and offices

www.tel.com/csr/environment/office/In carrying out our business activities, we have a not insignificant impact on biodiversity, and yet without the benefits
yielded from biodiversity, we could not sustain our activities. In recognition of this, we will develop a framework for
promoting initiatives to conserve biodiversity. We set a single fiscal year goal of conducting at least two ecosystem
tours or conservation activities at our plants and offices in Japan. Results in fiscal year 2021 show that a total of 18
events were held, attracting a total of 52 participants.

Green Procurement

URL

Initiatives in the Supply Chain
CSR Operations
To keep track of our suppliers’ engagement in CSR activities, we have conducted a CSR assessment in areas such aslabor, health and safety, the environment and ethics since fiscal year 2014. We analyze the results of the assessments,
provide feedback and work together with our suppliers to remediate any issues. In fiscal year 2019, we completely
revised the content of the survey based on audit standards stipulated by the RBA and have since conducted surveys
on materials1, staffing2 and logistics3 suppliers.
In fiscal year 2021, with the help and understanding of our suppliers, steps were taken to repay workers with respect
to cases of an employment-related expense burden for forced labor and bonded labor, which had been identified in
the previous fiscal year and which have been given particular emphasis in the RBA Code of Conduct. In addition, withrespect to cases of false reporting, changes were made in business processes and audits were introduced.
Regarding the human rights issue of “freely chosen employment,” we have expressly stipulated our zero-tolerance
policy for forced labor and bonded labor, and by communicating this to our major suppliers, we are promoting
initiatives to ensure that all people in our supply chain can work of their own free will.

www.tel.com/csr/environment/green-procurement/

We began implementing our Green Procurement Guidelines in January 2001 and have since promoted green
procurement, prioritizing the purchase of environmentally friendly parts and products. Through these guidelines, we
strive to gain the understanding and cooperation of our suppliers with respect to building environmental management
systems, monitoring, reducing and disclosing information on the environmental impacts of business activities, anddeveloping environmentally friendly products.

Logistics Initiatives

URL

www.tel.com/csr/environment/product/

We have been promoting activities designed to reduce the environmental impact of our logistics. We have been
implementing a modal shift2 from air to ocean transportation for the overseas shipping of our semiconductor and FPD
production equipment, and at the same time, we have been working hard to reduce production lead times. We have also
been endeavoring to reduce CO2 emissions and costs by adopting the shelved trolleys traditionally used in shipping FPD
production equipment to semiconductor production equipment, thereby improving the load factor of trucks.
In fiscal year 2021, we set a new environmental goal for logistics to reduce the amount of wooden packaging
materials used by 50% (packaging for semiconductor production equipment fiscal year 2024). We will continue topromote activities that contribute to the achievement of this goal.

Environmental Communication

URL

2
Modal shift: Efforts totransform the means oftransportation

www.tel.com/csr/environment/office/TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Plan

Do

Check

Act

Formulationof supply
chain policies

Notification of requests to our
suppliers and appeal for CSR
activities

Implementation of supply
chain CSR assessment andanalysis of response

Provision of feedback based on
the results and requests for
improvements to suppliers

Procurement BCP
As part of our business continuity plans (BCPs), we collaborate with suppliers fordisaster preparation. We maintain a database of suppliers’ production sites so that if acrisis arises, we can promptly identify impacted suppliers and quickly collaborate inrecovery efforts. During fiscal year 2021, about 22,000 supplier sites were registered,and post-disaster impact surveys were conducted five times.
In addition, we conduct BCP assessments8 on our suppliers, analyze their responses
and provide them with feedback to promote further improvement. In the fiscal year
2021 assessment, improvements in the overall rating level were observed at 20% of
suppliers, and improvements in the overall raw score were seen at 43%.

E-COMPASS53

Supply Chain CSR Process

Responsible Procurement of Minerals (Conflict Minerals)
We regard taking action against conflict minerals (3TG4) obtained through illegal exploitation, including sources withhuman rights violations or poor working conditions, as an important part of corporate social responsibility. Our resolutegoal is to eliminate the use of raw materials made from these conflict minerals, as well as any parts or components
containing them. We conduct surveys on conflict materials using the CMRT5 and referring to the OECD6 Due Diligence
Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In fiscal year 2021, we
conducted our seventh annual survey on potential conflict minerals, and as a result, we were able to identify 236 RMAP7
conformant smelters, providing us confidence that 3TG sourced from these smelters were conflict-free. In addition, noneof the materials we procured were found to contain 3TG involved in conflict.

Our environmental policy requires that we promote cooperative partnerships with our stakeholders and respond
appropriately as a company to their expectations and wishes. In promoting initiatives for the environment, we
maintain close communication with all our stakeholders.
We are introducing online environmental education programs to better promote environmental communicationinternally. Our online programs consist of an environmental program for new employees and mid-career recruits, plus
a refresher program for existing employees. In fiscal year 2021, we carried out refresher programs for existing
employees, which about 8,000 people in Japan attended.

We established E-COMPASS (Environmental Co-Creation by Material,
Process and Subcomponent Solutions) as a new supply chain sustainability
initiative. E-COMPASS aims to align our products and the entire operations
more closely with our environmental mandates, strengthen our ties withbusiness partners, solidify our industry leadership, and pave the way for asustainable future. We will utilize every management resource at our
disposal to drive the major trends of digitalization and greening of society
and actively endeavor to preserve the global environment throughout the
supply chain.

To make its entire supply chain sound and sustainable, Tokyo Electron has formulated a procurement policy based on thelaws, regulations and social norms of each country, as well as the RBA Code of Conduct, and is promoting activities based on
this policy by disseminating it throughout the Company and its suppliers. We also promote improvement activities fromvarious perspectives while valuing continuous communication with diverse suppliers, including materials suppliers that
handle parts and raw materials, staffing suppliers that provide services and logistics suppliers that handle physicaldistribution operations.
We strive to create value in the supply chain by working to build relationships of trust with our suppliers, who support ourbusiness as partners, and by working together to conduct operations in compliance with global standards. Under theleadership of the Representative Director, President & CEO, issues identified during various activities are shared with relevant
divisions for consideration and action on specific improvements.

Pursue Digital × Green change throughout the supply chain

Environmental Co-Creation by Material, Process andSubcomponent Solutions

Provide Best Products・Best Technical Service
Environmental
Performance

Percentage of supplier sites bycountry (FY2021)
U.S. 2.0%
China 3.5%

Taiwan 1.1%

Other 4.8%

Japan 88.6%

1
Material suppliers:
Surveys have been
conducted since fiscal
year 2014 for suppliers
accounting for morethan 80% of our
procurement spend.
2
Staffing suppliers:
Surveys have been
conducted since fiscal
year 2019 on 100% of
employment agencies
and contracting
companies (internal
contractors).
3
Logistics suppliers:
Surveys have been
conducted since fiscal
year 2019 on 100% of
customs-related
operators.
43TG: Tantalum, tin,tungsten and gold
5
CMRT: Conflict Minerals
Reporting Template.
Survey format forreporting conflictmaterials, provided by
the Responsible
Minerals Initiative(RMI), which has
establishedinternational guidelines
on conflict minerals.
6
OECD: Organisation for
Economic Co-operation
and Development
7
RMAP: Responsible
Minerals Assurance
Process. A program
promoted and led by
the RMI for auditing
smelters/refiners that
do not use conflictminerals.
8
BCP assessment: A
survey that hascontinuously been
conducted to key
suppliers accounting for
more than 80% of our
procurement spend
since FY2013

2

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

54