Third-Party Opinion

TDK CSR REPORT 2017

Third-Party Opinion
Gearing up for Redoubled Progress
TDK made steady progress in promoting its CSR initiatives
over the past year. This stance included the issue of an annual
report targeting a vast range of stakeholders, edited to be easy
to read and understand and address expectations. The reportclarifies a number of themes and issues aimed at propelling
the Group to even more pronounced progress going forward.
Here, I would like to comment on four core issues, as well as
make brief mention of compliance.

1. Contribute to the World through Technology
The quest for “Kotozukuri through fusion” is a core theme underscored by TDK President Ishiguro. The report clearly conveys the positive social impact of the numerous technologies
possessed by TDK, hand in hand with the fusion that they generate. In the midst of the steady surfacing of technical potential throughout society that is certain from here on, endeavors
to more precisely communicate the image of the world thatTDK seeks to create would provide an even greater support
for moving in that direction. Steps to articulate the presence
and role of “Koto (solutions)” within the dynamics of our society,phrased in even more integrated images, will raise the power ofappeals to TDK stakeholders.

2. Develop Human Resources
From the setting of global-scale key performance indicators(KPI), an effort advanced as a major goal in fiscal 2016, thetarget for the current fiscal year is to deploy a database instilledwith an expanded range of tangible facts and conviction. In
the setting of global KPI for human resources, the high degreeof difficulty proportionally reflects the very importance of suchprogress. The dilemma involved in achieving the goals in a single fiscal year is understandable. In that sense, this current
year’s target of firmly grasping the situation at hand appears
appropriate. Having said that, I also believe that more efforts
are needed to disclose the status of specific efforts being advanced, to better illustrate the specific difficulties the company seeks to surmount. For development of human resources,
stakeholder dialogues have generated significant insights.
They deserve high marks for furnishing a birds-eye view of thedirection in which TDK is striving to advance. At the same time,
disclosure of such progress reports from the systems involved
comprises a step best promoted through the setting of KPI.
As noted by President Ishiguro, therefore, increased attention
should be directed to the vital query of “whether the trust ofshareholders will be forthcoming.”

From the perspective of disclosure, however, certain issues
remain. While partial mention is made of the number of companies to which supplier improvement guidance has been issued
as CSR procurement KPI, the report provides no data on theoverall ratio of its CSR-compliant suppliers. Consequently, it
is difficult to assess the contents of such progress from theoutside. There is a critical need to continue to move forwardwith KPI and human rights policies under the constant scrutinyof society, effectively raising their quality and impact. From thatperspective as well, I look forward to such disclosure in the report for next fiscal year. This is even more vital considering thehigh caliber of TDK efforts in the supply chain, initiatives thatserve as excellent models for so many companies to follow.

4. Develop and Prosper in Harmony with theGlobal Environment
TDK efforts on the environmental front have been outstanding—notably, achievement of the Group’s carbon neutral target ahead of schedule. I harbor high hopes for the commitment
by President Ishiguro to increased introduction of ICT into themanufacturing process, as well as the Akita Future Project—aworksite-generated environment countermeasure as an embodiment of that commitment. A core theme in this area ismoving to reduce the environmental load throughout life cycle
stages.
The targets at the current time are positioned as extensionsof the carbon neutral vision. From here on, I look forward todeployment of foundations for activities beyond the scope
covered to date, with setting of goals capable of strategicallyincorporating lifecycle perspectives as well.

5. Compliance
TDK deserves praise for reporting on its cooperation with anon-site investigation by authorities during the past fiscal year.
In efforts to bolster corporate compliance systems, the combination of high transparency and after-the-fact responses toproblems, comprises a critical key to progress.
On this occasion, it has been my pleasure to comment on thefive preceding categories. I award the report solid marks for
its high overall quality, while also issuing several requests. ForTDK, I would be honored if those suggestions play a role insupporting moves toward redoubled progress throughout thenext fiscal year.

3. Consider the Societal and Environmental
Impact of the Supply Chain
TDK initiatives in this field are consistently progressive andworthy of stellar commendation. The setting of global KPI andother targets from the past fiscal year have all been achieved.
Likewise impressive has been the strong leadership displayedin formulation of a solid TDK Group Policy on Human Rights
and revision of the Conflict Minerals Data Exchange Standard.

Toshihiko Fujii
Consulting Fellow,
Research Institute of Economy,
Trade and Industry

38