T O Y O B O
R E P O R T
2 0 2 1
Year Ended March 31, 2021

P

Principle

rincipleV

Our Vision

ision

V

Our Values

alues

Collaboration

P

Challenge

Reliability

rinciple

Principle“Jun-Ri-Soku-Yu” (Adhering to reason leads to prosperity)“Jun-Ri”

positive standpoint• Do what must be done

• Don’t do what must not be done

“Soku-Yu”

defensive standpoint• Adhering to “Jun-Ri” leads to a prosperous society
while also realizing self-growthThis is the founding spirit of our company and is our belief.

V

Our Vision

ision

V

We will continue to create the solutions needed bypeople and the earth with materials and science.

Our Values

alues

We welcome change, enjoy change, and create change.
TOYOBO Spirit
Challenge

Think
Ahead

1

TOYOBO REPORT 2021

Our 9 Commitments

Reliability

CreateAccomplish

SafetyFirst

Customer
Satisfaction

Collaboration

FactualBasis

MutualDiversity
Communication

ProvidingOpportunities

President & CEO

Editorial policy
Since 2019, Toyobo has issued an“Integrated Report” instead of the “CSR
Report” and “Annual Report” we issued
previously. This single publication
contains an overview of financial andnon-financial information, including
Environmental, Social, and Governance(ESG) related data. Through thisIntegrated Report, we aim to deepen
understanding of the Company among
our wide range of stakeholders, including
our shareholders and investors. We
introduce our philosophy and businessactivities, our growth strategy andoutlook for the future, along withmessages from senior management. Our
intention is that this report will be actively
employed as a tool for dialogue with our
stakeholders, and will enhance theGroup’s corporate value.
Reference Guidelines, etc. :• GRI “Sustainability Reporting Standards”• Ministry of the Environment“Environmental Reporting Guidelines”(2018 versions)• Ministry of Economy Trade andIndustry “Guidance for Collaborative
Value Creation”• International Integrated Reporting
CouncilA fire that broke out at Toyobo’s Inuyama Plant in September 2020 resulted in the loss of
two employees and injury to another employee. Besides offering my prayers for theemployees who lost their lives, I would also like to express my sincere condolences to theirfamily members. I offer my heartfelt apologies to the injured employee, to local residents,
and to all other affected parties.
Also in fiscal 2021, the company experienced some quality fraud incidents in relation
to engineering plastics products, which were a significant source of inconvenience andworry for our customers and other stakeholders. I am deeply sorry for this. Going forward,
we will learn from this experience, which our company’s management is united in taking
very seriously, and the company as a whole will be working together to implement
measures for preventing re-occurrence. We will be working to thoroughly strengthenawareness of Toyobo’s corporate spirit, based on the Jun-Ri part of the company’s
founding principle, Jun-Ri-Soku-Yu, which requires that we “Do what must be done,” and“Don’t do what must not be done.”

Contents Please see page 15 for details of “Fire prevention measures” and page 17 “Response to quality fraud incidents.”
Introduction
Our Origins ..................................... 03
Who We Are .................................... 05
Where We Are Heading ......................... 07
CEO Message .................................. 09
Fire prevention measures ....................... 15
Response to quality fraud incidents ............ 17
Value Creation Process
Value Creation Process ......................... 19
Materiality ....................................... 21
CSV Examples by Solution ..................... 25
Value Creation Strategy
Director Dialogue
Controlling Supervisors of Corporate Planningand Administration Divisions ................... 27
KAERU Project: Beginning of Change .......... 31
Feature Strengthening Human Capital ......... 33

Feature Films ................................... 43
Feature Life Science ........................... 45
Overview by Solution ........................... 47

The Basis of Value Creation
The Basis of Value Creation .................... 55
Message from the Sustainability Officer ........ 56
ESG Management .............................. 57
Environmental Policy & Activities ............... 58
Social Contribution Policy & Activities .......... 66
Governance Policy & Activities .................. 75
Management Team .......................... 75
Corporate Governance ...................... 79
Overview of Fiscal 2021
Key Events in Fiscal 2021 ....................... 89
Financial and Non-Financial Highlights ......... 91
Investor Information and Corporate Data ......103

Feature Toyobo’s promotion of

women’s participation and advancement ....... 35

Financial Information

Non-financial Information

TOYOBO REPORT (Integrated Report)
This report outlines our company’s value creation-oriented growthstrategy, and presents an overview of our business operations. We
actively utilize this report as a tool for dialog with shareholders,investors and other stakeholders.
https://ir.toyobo.co.jp/en/ir/library/integrated.html

Reporting entity:
Unless otherwise stated, the report refers to
TOYOBO CO., LTD. (non-consolidated
basis), and references to “Toyobo” or the“Company” mean TOYOBO CO., LTD.
Numerical data in financial information isreported on a consolidated basis.
Reporting period:
April 2020–March 2021 (Partially includes
information dated after April 2021)
Published:
October 2021 (next scheduled publication:
September 2022)

Feature The Future our R&D is Creating ....... 37

WebsiteWebsiteInvestor Relations

Sustainability

https://ir.toyobo.co.jp/en/ir.html

https://www.toyobo-global.com/sustainability/

Annual Financial Reporthttps://ir.toyobo.co.jp/en/ir/library/
securities.html

TOYOBO NOW shareholder newsletter(in Japanese)
https://ir.toyobo.co.jp/ja/ir/library/
toyobonow.html

Sustainability Reports
https://www.toyobo-global.com/
sustainability/report/
PDF versions, compiled in November eachyear, of sustainability related information
posted on the company website

FACT BOOK

Corporate Governance Reporthttps://ir.toyobo.co.jp/en/ir/library/fact.html

https://ir.toyobo.co.jp/en/ir/library/
governance.html

TOYOBO REPORT 2021

2

Molding and processing

FilmPolymerization

Osaka Boseki

modification

Japan’s first large-scale spinning company

Eiichi Shibusawa

Jun-Ri-Soku-Yu

Merger with Kureha Boseki

Mie Boseki

MURATAKA trademark* Names followed by the ® symbol or by “TM” are registered trademarks or
pending trademarks respectively in Japan of TOYOBO CO., LTD.

3

TOYOBO REPORT 2021

IZANAS®

Knitted fabric exhibition
Plastics
ResinsSigning an agreement with DSM

A HOLLOSEP® module pilot projectin the Middle East
Seawater desalination

New types of synthetic fiber

Reducing environmental impact
Biotechnology

Reagents

Comfort evaluation technology
TOM® IIIFor 140 years, we have continued to embody
the spirit that we inherited from our founderThe spirit of Jun-Ri-Soku-Yu (adhering to reason leads toprosperity), which was one of our founder’s mottos andsubsequently became our corporate philosophy, has been
the foundation for our growth.
Osaka Boseki, one of the companies that later evolved
into Toyobo, came into being in 1882 with Eiichi Shibusawa,
renowned as the “father of Japan’s modernization,” as its
founder. The company went on to expand the scope of its
business from natural fiber to synthetic fiber, and brought theworld a wide range of textile products that have brightenedup the era they were created in and helped people to enjoy
comfortable lives.
In the 1960s, Toyobo launched its film business, andthe company later expanded into other business areas,
including plastics, bio-business and functional membranes.
With polymerization, modification, molding and processing,and biotechnology, as its core technologies, Toyobo
steadily expanded into new business areas.
From the late 1990s onwards, Toyobo has focused on
actively expanding its business into the areas of films,
functional polymers, industrial materials, automotive andhealthcare, and the company has generated a steadystream of high-value-added products that have contributed
towards solving social issues.
The attitude that Jun-Ri-Soku-Yu represents—in terms ofhelping to solve various issues that have affected society at
different times, contributing to the prosperity of society, andthe way that the company itself has achieved growth—canbe thought of as a forerunner of today’s concept of Creating
Shared Value (CSV).

TOYOBO REPORT 2021

4

Films,functional
materials(VYLON®,HARDLEN® /plastics
processed
products
Engineering
plastics,
airbag fabrics,etc.

Films andfunctional
materialsLifescience-related
products

p.47

p.53

Mobility-related
products

Lifestyle andenvironmental
products

p.49

p.51

COCOMI®

Health consciousness

Reducing greenhouse gas emissions
Life Science

QOL enhancement

Dialysis5

TOYOBO REPORT 2021

Lifestyle and Environment

Bioproducts,
medicalmembranes,
medicalequipment,
etc.
Desalination
membranes,
equipment for
VOCemissions
treatment, etc.

We are working in four areas to help solve
the issues affecting our customers
and society as a whole
We are putting into practice principle of Jun-Ri-Soku-Yu(adhering to reason leads to prosperity), by CSV in four
solution fields.
Playing a key role in this process are the four Solutions
Divisions—Films and Functional Materials, Mobility, Lifestyleand Environmental, and Life Science—that were
established in Toyobo’s organizational restructuring in fiscal
2021. The aim of this reorganization was for Toyobo to beable to do what needs to be done, from a customer andsocietal perspective rather than a manufacturer
perspective, in order to continue contributing to theresolution of social issues over the long term in the future.
In line with this approach, when providing, forexample, a solution for optimal PET bottle packaging,Toyobo has worked to provide a total solution by
integrating the activities of units handling film products andthose handing adhesives, etc., which in the past would
have been operating separately.
With this system as the foundation, Toyobo has
generated a series of products that contribute towards
solving social issues, including films that keep food fresh forlong periods and help to reduce food loss and waste, yarn
and fabric for manufacturing the airbags that help to keep
vehicle users safe, film used in seawater desalinization
plants in areas of the Middle East that are affected by water
shortages, and reagents that make COVID-19 testing
significantly more efficient.

Filims and Functional Materials
Human resource management

Reducing environmental impact

Food loss and waste reduction

Mobility

TOYOBO REPORT 2021

6

Digital society

Carbon neutral

Circular economy

Creating the solutions needed by people and the earth

Bioplastics
Chemical recycling

Clean technology

Material recycling

7

TOYOBO REPORT 2021

Eco-conscious film

Diagnostic technology
Well-being

Smart cities

Future mobility

Alliances
Open innovation
Synergy with other companies

Providing value for the world bycontinuing to create the solutions needed bypeople and the earth
Over the past few years, the expectations that the market, andsociety as a whole, have of companies have grown increasingly
diverse and more demanding, for example in relation to theUnited Nations Sustainable Development Goals (SDGs).
In order to clearly demonstrate, both within thecompany and externally, our determination to respondproperly to these expectations, in fiscal 2020 Toyobo
signed up to the United Nations Global Compact (UNGC),and also announced its support for the proposals made by
the Task Force on Climate-related Financial Disclosures(TCFD). Furthermore, starting from fiscal 2021, Toyobo has
been identifying materiality (i.e., key issues) that thecompany needs to address from a long-term perspective.
Toyobo has established related targets and KPIs, and has
put in place a company-wide, horizontal organizationalframework to accelerate Toyobo’s development into a
carbon-neutral company. By implementing a project toconsider the value that Toyobo Group will need to provide
in the future, and by promoting alliances and open
innovation with a wide range of other companies, Toyobo is
speeding up its generation of innovative ideas that
contribute towards solving social issues.
In fiscal 2022, Toyobo will be making an all-out effort
to regain trust, which is the company’s key priority atpresent. Besides formulating the Sustainable Vision 2030,
which embodies the company’s long-term vision, Toyobo isalso drawing up the next medium-term management plan,
which will begin in fiscal 2023, and working towards ourgoal of making Toyobo Group a group that continues tocreate the solutions needed by people and the earth.

TOYOBO REPORT 2021

8

CEO Message

From surviving
to sustainable—Now is the time
for change

Ikuo Takeuchi
President & CEO

9

TOYOBO REPORT 2021

Introduction

Management approach

A company where people work withpride and purpose
The true leaders of our Company are the people at ourworksites—By worksites, I mean the people behind thescenes at our production sites and R&D facilities, in ourback offices, and in our sales and marketing departments.
A company can only grow sustainably if every employee
at every worksite is actively engaged and fulfilling theirpotential. I have come to believe this even more strongly inthe last few years since joining the management ranks.
I remember one time in particular three years ago
when a talk with employees at the Iwakuni Membrane Plant
left a very strong impression on me. Several employees told
me that they are proud that our products are at theforefront of medical care and are supporting the lives ofmany dialysis patients. It is the motivation and efforts of ouremployees at our work sites that drive our business. I
realized that business managers only play a supporting
role; our biggest responsibility is to create an environment
where our people can work with pride and purpose andhave a sense of their personal growth.
Creating a company that employees can be proud
about and feel a sense of purpose is precisely the spirit of
the Group philosophy. A company’s sustainability increases
when it provides a workplace that enriches the lives of its
employees by enabling each employee to perform to theirfull potential at their workplace and feel that they are
growing through their work.
This cannot be achieved without the fundamental
elements of a safe and secure work environment and atrustworthy company. Unfortunately, the regrettable fire
accident and quality fraud incidents in fiscal 2021 havegreatly shaken the foundations of our business.
Restoring trust in the Company is my highest priority
as the new CEO leader of the Group. I feel a profoundsense of crisis and will do everything in my power toimplement change.

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Inheritor of Eiichi Shibusawa’s aspirations
Our founder, Eiichi Shibusawa, has been receiving a lot of
attention recently in Japan. I do not think that is just a passing
fad, in many ways I think this is a reflection of the times.
Even though he lived 150 years ago, many of his ideas
and actions were ahead of his time. As can be seen incorporate efforts related to the SDGs and ESG, balancing a“contributing to social issues” and the “pursuit of profits” isa very important theme in modern corporate management.
Yet, 150 years ago Shibusawa said, “A company’s reason
for existing is to enrich society,” and even went so far as tosay that the profit a company makes from its business is“nothing more than the residue.” He was ahead of his time,
but the times now seem to have caught up to his insights.
As one of the companies that he founded, over ourlong history we have contributed to solving social issues invarious areas. The TOYOBO PVVs corporate philosophy
framework we redefined two years ago (fiscal 2020) centerson the Shibusawa’s personal maxim the principle of
Jun-Ri-Soku-Yu (adhering to reason leads to prosperity)and sets our vision to “continue to create the solutions
needed by people and the earth with materials andscience.” My mission as CEO is to steadily raise corporate
value by following the TOYOBO PVVs corporate philosophy
and building our performance results by contributing tosolving social issues. I believe this embodies the aspirations
and thoughts that we have inherited from our founder,
Eiichi Shibusawa.

Fiscal 2021 overview / Outlook for fiscal 2022

Forecasting higher sales and profits
in fiscal 2022
Our overall business performance was solid in fiscal 2021
and the results exceeded our initial forecast. The global
COVID-19 pandemic severely impacted economic activity
worldwide. The Group also had businesses that weresignificantly affected, such as automobile-related products
and textile, but in addition to the steady performance of thefilms business, the life science field saw an increase in

TOYOBO REPORT 2021

10

CEO Message

production of reagents and raw materials for PCR testing as
we actively responded to the needs of society.
In fiscal 2021, the Toyobo Group recorded
consolidated net sales of ¥337.4 billion (down 0.6% year onyear) and operating profit of ¥26.7 billion (up 16.9%). Profit
attributable to owners of the parent amounted to ¥4.2
billion, representing a 69.5% decline, which owed mainly to
impairment losses in the acrylic fiber business.
The outlook for fiscal 2022 includes concerns about an
ongoing impact from the COVID-19 pandemic and higher
raw material prices. At the same time, we expect a positiveeffect from increasing our film production volume. For fiscal
2022, we forecast net sales of ¥365 billion (+8.2% year onyear), operating profit of ¥29 billion (+8.8%), and profit
attributable to owners of parent of ¥13 billion (+209.4%).
Note: Outlook for fiscal 2022 is as of August 5, 2021.

Restoring trust is the top priority
Our management strategy in fiscal 2022 will hinge on four
core initiatives designed to remodel our management basefor sustaining business growth.
The first core initiative is restoring trust in the Company,

11

TOYOBO REPORT 2021

which is our top priority. We will focus particularly on making acomprehensive and concerted Group effort in safety, disasterprevention, and quality assurance and on fortifying our risk
management system. In the area of disaster prevention, we
aim to fully establish an organizational culture that prioritizes
safety over all else. During the year, we will actively execute a
master plan for disaster prevention that includes speeding up
investment in disaster prevention equipment and providing
training in safety and disaster prevention. Quality assurance
will be bolstered by restructuring the quality management
system, strengthening and expanding compliance training,and various other measures to raise awareness and recreate
our corporate culture.
Risk management will be strengthened throughout theGroup. The newly established Risk Management Committee
will be dedicated to identifying and preventing risk alongwith executing measures for early detection and response.
The second core initiative is accelerating the portfolio
reform process. Each business will be classified as
expansion, stability and sustainability, and improvement andmanaged based on their profit and growth potential.
Aggressive investment will be focused on the film, life
science, environmental, and other businesses where wehave a competitive advantage and where we expect themarkets to grow.
The third core initiative is exploring avenues for futurebusiness. We will be launching the Company-wide Mirai
Value Proposition Project to pursue development themes ofdigital society, healthcare, and environment with the aim ofestablishing businesses in each area beginning in fiscal
2031. We will also form and execute digital transformation
strategies for our businesses.
Environmental initiatives are a key part of preparation
for the future. We will step up our efforts to establish
Company-wide systems and processes aimed at achievingcarbon neutrality. We will also develop films composed of
biomass and recycled raw materials to reduce the amountof plastic in our products and work with other companies toachieve zero waste.
The fourth core initiative is rebuilding the foundation of
our Company. We will lay a firm foundation for sustaining
growth by elevating the onsite capabilities of ourmanufacturing operations, creating an open work
environment, and developing our human resources while

Introduction

promoting the active participation of women and along withdiversity and inclusion in our workforce. We will also
strengthen our internal auditing functions and implement
measures to ensure thorough compliance.
These initiatives will lead us to become the Company
we envision for ourselves—a company using its business toaddress social issues, providing an atmosphere where
employees work with pride and a sense of purpose, andgenerating sustaining growth.

Long-term vision and strategy

From survival to sustainable
A prerequisite for a company to grow sustainably is to havea solid foundation from which we can build a growthtrajectory for the future. The fire accident and quality fraud
incidents in fiscal 2021 give us the opportunity to thoroughly
reexamine every aspect of our foundation.
Over the past six months, our corporate officers havegathered many times not only to discuss the direct causesof accidents and incidents but also to consider and verify
how our corporate culture and management approachcontributed to the incidents.
The distant cause of the fire accident and quality
incidents may be an effect of structural reforms that lasted forabout 15 years until 2010. Throughout those years,
management was cutting costs and reducing staff so theGroup could survive a fiercely competitive environment andsevere financial situation. It was a crisis situation, andmanagement at the time may have had little choice but to get
rid of anything that would not have an immediate negative
impact or could help improve results. Consequently,
improvements in important areas like quality and safety wereinsufficient. Their all-out efforts to eliminate losses and reformthe business structure were ultimately successful as theybrought us through the financial crisis. Although times havechanged, all of us at the management level have come to see
how the experience from that success has been influencing
our decision-making and business operations. That
understanding has led our management team to redouble its
efforts to establish sustainable management focused on 10
and 20 years in the future.

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021Companywide strengthening of safety,
disaster prevention, and quality
management
The first step in the transformation is reforming theorganizational structure for safety, disaster prevention, andquality assurance. In December 2020, we established the
dedicated Safety and Disaster Management Division withsubdivisions of the Disaster Management Department and the
Occupational Safety Department. We followed this in April
2021 by establishing the Quality Assurance Division. The
safety, disaster prevention, and quality management operations
that were previously part of the Production Technology
Innovation Division all were set up under a separate,
independent structure. We intend to continue strengthening
management in these areas by linking these bodies with theInternal Audit Department and all of the business divisions.
Also in April 2021, we created the Risk Management
Committee, of which as President & CEO I serve as chair, toprovide centralized management of the Group’s safety,
disaster prevention, and quality risks. This committee
formulates top-down risk management policies for the Groupand supervises overall risk management activities, including
forming organizational structures related to risk. Under thecommittee’s supervision, departmental managers implement
the risk management system and take steps to reduce risk.
One specific measure to strengthen our safety anddisaster prevention systems will be clarifying the risks andresponsibilities at the factory level, business unit level, andgroup management level and by formulating a system tosmoothly apply Check-Act-Plan-Do (CAPD, a modified
version of PDCA that starts with Check and Act) focused
specifically on safety and disaster prevention.
In addition, we will give priority to high-risk areas
identified by a comprehensive disaster prevention
inspection. We will also diligently proceed with themaintenance of equipment and facilities and renovation of
aging buildings. The system for safety and disasterprevention management will incorporate advice fromthird-party experts into its measure to reinforce weak
points. We also plan to provide regular disaster safety anddisaster prevention training as part of an education programfor all officers and employees.

TOYOBO REPORT 2021

12

CEO Message

We will address the quality issue by thoroughly
investigating the quality incidents to identify those cause
and why we were unable to detect the situation.

Creating our vision for the Company in 2030
During fiscal 2022, we plan to announce our next
medium-term management plan with our targets for fiscal
2026 and our Sustainable Vision 2030. Some ideas we areconsidering for the vision are to be “a company providing
solutions for people and the earth,” “a company capable ofsustaining growth,” and “a company people want tocontinue working for because they can work with pride anda sense of purpose.” In other words, we aim to use ourbusiness to help achieve global sustainability and enable
our sustainable growth.
We will not change the fundamental concept ofpracticing Jun-Ri-Soku-Yu (adhering to reason leads toprosperity) to pursue both economic and social value as away to raise corporate value. But we intend to change thewhole Group by creating a vision for 10 and 20 years in the
future, which to date has not been a significant part or ourapproach.
Although we have been aware of the importance ofrevising the business portfolio, we understand that thereason we have not realized significant change is that we
did not have a sufficient long-term perspective. From now
on, we will backcast from the Sustainable Vision 2030 andevaluate and classify each business based on profitability
and growth potential, then concentrate our resources
primarily in the core focus areas of films and life sciences
and in businesses, such as Mobility and Lifestyle andEnvironment, that can contribute to solving society’s
environmental issues. Determining which areas to focus on
will be extremely important, but I would like to set anearning rate of 8% as a baseline target for selecting whichbusinesses to retain and renew. ROCE is a yardstick theCompany uses to measure the capital costs.

Concept of the Next Medium-Term Management Plan (MTP)

Contribute to thenext-generation digitalsociety and reducing
food loss

Preparations forthe future

Reorganization of the businessportfolio
1. Concentration of resources toward
priority expansion projects
2. Improvement of asset efficiency
Backcasting

Sustainable
Vision 2030
(Sustainable growth)*Scheduled to bereleased in fiscal
2022

Laying the foundation forsustainable growth

Focus Areas

Films

Contribute todeveloping healthcare
and improving publichealth and quality of life

Life Sciences

Environment

Thorough safety, disasterprevention, and quality assurance

FY 3/21FY 3/262025 MTP“4 years to remake and prepare”

13

TOYOBO REPORT 2021

FY 3/31

MTP for the term
after next term “Achieve growth”

Green technology forcreating comfortable spacesthat support well-being andcontributing to realizing
carbon neutrality andcircular economies

Introduction

People and connections are the key
The people in our Group are important stakeholders. Our
worksites drive our business, and all of our employees mustfeel pride and a sense of purpose in what they do. That is
the key to providing the products and services that ourcustomers expect and for us to carry out the TOYOBO
PVVs corporate philosophy.
People are the key to the sustainable growth of theGroup, and we believe that creating a work environment thatmaximizes that power is the most important management
issue. We have had an ongoing group-wide projectexamining the personnel system for two years, and we plan
to launch a completely new personnel system in fiscal 2023
(see page 33).
We will also work to reform the “corporate culture” that
fosters our human resources and reinforces ourorganizational capabilities. Our culture has suffered as thenumber of experienced employees decreased, our staff
became more homogeneous, and our workstations became
more like silos, leading to fewer cross-organizational
connections and making it difficult for employees toconverse. I want to create a workplace that encourages
open communication across organizations and ranks so
employees can speak casually and openly with superiors
and colleagues.

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021sales in the textile business, a subsidiary in China, and in
the functional membrane and environmental businesses. I
am very familiar with Toyobo’s corporate culture before thestructural reforms and have seen the Company go throughtrial and error for more than 30 years. From thatperspective, I take pride in the fact that the reforms will notjust address issues in each business, but will be embracedby the entire Company.
That is why, when I took the position as the new CEO,I declared our slogan for fiscal 2022 to be “Now is the time
for change.”
Our top priority is restoring the trust in the Company,
but I also see this growing sense of crisis as an opportunity
the entire Group to change. We will change the Group andpresent clear long-term scenarios to everyone inside andoutside the Company. We already know what we must do,
and I am confident that making those changes willtransform Toyobo.
We would like to ask all our stakeholders for theircontinued understanding and support.

President & CEO

Message for stakeholders

Now is the time for change
Providing return to shareholders is a management priority.
At this stage we are not able to significantly increase
payout via dividends because of the need to strengthen our
infrastructure, including spending for disaster prevention
and to refurbish aging equipment and facilities, and theneed to invest to prepare the Company for the future. We
believe that steadily implementing the next medium-term
management plan is the most judicious route toreestablishing our ability to provide more dynamic dividend
payment and shareholder return.
My career started in business planning and took me to

TOYOBO REPORT 2021

14

Fire prevention measures

Overview of the fire at the Inuyama Plant
Situation regarding the outbreak of the firePlace of outbreak
Packaging film production line
TOYOBO CO., LTD. Inuyama Plant
344, Aza Maehata, Oaza Kizu, Inuyama City, Aichi PrefectureTime of outbreakApproximately 21:00 on Sunday, September 27, 2020

DamageCasualties
Two deaths and one injury (all Toyobo employees)

Revisions to the safety framework
Following the fire accident in September 2020, the Toyobo
Group completely revised the framework, education, and allelements related to disaster prevention and created an
Occupational Safety and Disaster Prevention Roadmap.
In December 2020, the Group established the Disaster
Management Department and the Occupational Safety
Department in the Safety and Disaster Management Division,
which is directly overseen by the president. The two new
departments are leading the Group’s efforts to apply the
PDCA cycle for improving the Group’s safety, security anddisaster prevention framework. In addition, the Business
Division, Management and Administrative Division, Audit
Division adopted a “three lines of defense” structure with eachdivision holding respective responsibilities for implementing
risk reduction measures related to safety and security risks.
The Business Division carries out comprehensive
disaster prevention and site inspections using a safety
management system (SMS) and emergency management
system (EMS). The Management and Administrative Division
identifies risk at factories and in audit projects, from which it
creates a risk map. The Risk Management Committee and the
Safety and Disaster Management Division use the risk map toimplement risk reduction measures throughout the Group.
The Risk Management Committee also recommends risk
reduction measures to the Board of Directors (see page 87).

Developments following the outbreak
Sunday, September 27, 2020
Approximately 21:00 Fire breaks out on a film production line at
the Inuyama Plant
Monday, September 28, 2020
01:10 Public fire department announces that it has the fireunder control
07:45 Public fire department announces that it has extinguishedthe fire
Property damage
Damage to the packaging film production building and someproduction equipment

program for management level employees with the aim ofpromoting awareness among all employees about theimportance of placing the highest priority on safety andsecurity and the prevention of accidents.
In fiscal 2021, we plan to introduce a new safety
education program created by external institutions anddesigned for specific position levels in the Company. The newprogram will first be provided to corporate officers and then toother position levels in stages.

On-site disaster prevention activities
We will initiate on-site disaster prevention activities related toequipment, personnel, systems, and the organization with theaim of ensuring safe and secure production at our factories.

Equipment

Update aging equipment and strengthen
maintenance

Personnel

Disaster prevention training, focus on education,
promoting “not being passive about accidents,”
setting up training centers, company-wide safety
education, hire coaches, meetings between
departments and the divisions

Systems

Visualization (reporting) of on-site risk,
standardized risk assessment, creating guidelines,
funds, number of days of Securing disasterprevention budgets such as visualization(visualization) of on-site risks, standardization ofrisk judgments, creation of guidelines, set up adisaster prevention budget with funds to coverwork stoppage days and personnel

Organization

Appoint disaster prevention specialists, increase
personnel, appoint on-site disaster prevention
personnel, reviews of manufacturing personnel

Revisions to the safety education system
The Company has expanded its safety education programs
provided at worksites and has also created an education
15

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021Three lines of defense structureManagement

First Line

Second Line

Solutions Divisions, Production Technology Innovation Division

Safety and Disaster Management Division

Area of Authority

Occupational Safety Department,
Disaster Management Department• Risk map*
• Risk reduction assessment

SMS(ISO45001) ／ EMS(ISO14001)* The risk map of risks identified at factories and inaudit projects reduces risks throughout the Company

0 Preface…

Company total

Production Center, factories

4 Organizational statu
5 Leadership
5.1 Leadership and Commitment
5.2 Policy
Risk assessment
6 PlanInternal Audit Department
Disaster prevention audit project

6.1 Risk and Opportunity Initiatives(Identification of risk sources, risk assessment)
7 Support
7.1 Resources
7.2 Competence
8 Operation
9 Performance evaluation
10 Improvement

Third LineInternal Audit Department• Risk identification and standardization

Comprehensive disasterprevention check

Safety audit projectOn-site inspection (safety)

Risk Management Committee• Risk identification and standardization• Promote risk reduction throughout the Company • Propose risk reduction measures to the Board of Directors

Occupational safety and disaster prevention roadmap
Fiscal 2022

Priority issues forthe year

Fiscal 2023

Top management commitment
statement● Start on-site dialogues● Start safety and disaster prevention
workshops● Organize the mission of the Safety
and Disaster Management Division● Organize the SMS and EMS policies
of all companies●

Establish on-site dialogue as standard
Establish safety and disasterprevention workshops as standard● Construct a Group SMS and EMS
system● Create overview of on-site
inspection activities● Start of human resource
development exchange meetings

Fiscal 2024

Fiscal 2025 and forward

Expand to all Group companies
Establish the Group SMS and EMS
system● Establish human resource
development exchange meetings asstandard●

Increasing independentstage1

Emerging interdependentstage1●●●●Develop for overseas sites

Fostering a cultureof safety

Mostly dependent stage1(employee behavior
and awareness)

Top management commitment statement
An expression of management commitment and action, and a demonstration of tangible leadership (Declaration of Action, on-site dialogues)

Reestablish sharedvalues andcommunications

Safety infrastructure(systems,
human resource
development)

Workshops for specific position levels (all levels → broaden to Group companies and overseas bases)
3S2 activities (production innovation, small group)
Continuously improve ability to identify on-site risks, develop human resources capable of noticing and rectifying abnormalities
Establish safety and disaster prevention training centers at all bases, construct a disasterprevention education program
Appoint disaster prevention personnel, strengthen organization (secure personnel and specialists)

Steadily implement
emergency response andincorporate into daily
management

Reconstruct the safety and security disaster prevention risk management system
Continuous risk management at all companies

Synchronize withall-company risk
management activities

Conduct on-site
inspections

Establish RA activities, review of case studies (strengthen horizontal development)

Review the comprehensive
disaster prevention checks

Disaster prevention budget, set work stoppage schedule

Mechanism to establish
a tradition of learning

Audit Project

Inspect ducts

Duct fire countermeasures

Medium-term safety and disaster prevention plan (update aging equipment, remove wooden buildings, replace firefighting equipment, etc.)
1. These stages are derived from the DSS Bradley Curve of the progressive maturity of a safety culture.
2. 3S activities: Seiri (sort), Seiton (set in order), and Seiso (shine)

TOYOBO REPORT 2021

16

Response to the quality misconduct incident

Incident of inappropriate third-party certification
In September 2020, during certification verification tests of products certified by Underwriters Laboratories (UL), a
third-party U.S. organization engaged in product safety science certification, Toyobo discovered discrepancies in the
product numbers of some of the engineering plastic products that had received UL certification and found samples of
products with different chemical compositions from those being sold to our clients. A subsequent investigation in
January 2021 found that some items were being manufactured at factory locations that had not been authorized to
produce the UL certified materials. After Toyobo informed UL about the misconduct, UL rescinded its certification of
one product on October 28, 2020 and additionally rescinded its certification of an additional three products on
February 3, 2021. Upon request by Toyobo, UL further rescinded its certification of specific product numbers among
the three products on March 26, 2021. To date, Toyobo has received no reports of accidents related to final products
using the non-compliant products.
Lloyd’s Register Quality Assurance (LRQA) Ltd., a certification/registration agent for the International
Organization for Standardization (ISO), after special investigation cancelled the ISO 9001 certification granted tocertain Toyobo departments related to the non-compliant products and temporarily suspended sections of themulti-site certification granted to Toyobo on January 28, 2021. The temporary suspension was subsequently lifted onJune 9, 2021.

Steps to prevent incidents of quality
misconduct
Following the incidents discovered in fiscal 2021, Toyobo isaiming to prevent and eliminate any potential for
quality-related misconduct by changing its culture, systems,
and awareness related to quality with the aim of conducting
manufacturing that fulfills its promise to provide safety andsecurity from the customer’s perspective.
Toyobo is planning to implement several changes tofulfill our promise to customers. We are forming the new threelines of defense structure, which includes the Quality
Assurance Division directly headed by the Company
president, and strengthening the check system whentransferring business. In addition, we will fortify the internal
auditing function and compliance training systems, promote
the use of the internal reporting and employee rotation
systems, and strengthen the quality management system byengaging outside experts to participate in special projects
centering on quality topics.

Investigation and response to the incident
Toyobo established a case committee to review the“PLANAC” and other engineering plastics involved in thequality incident, which was composed of outside directors
and auditors to ensure the investigation’s fairness andindependence from the Company’s executive bodies. In
17

TOYOBO REPORT 2021

addition, the Company engaged lawyers without any
affiliation with the Company to conduct an investigation.
The results of the investigation into the causes of theincidents and recommendations for measures to prevent
recurrence produced are shown in the following chart.
The Company is diligently implementing measures
following the recommendations.

Quality incident investigation findings(causes and prevention measures)
Cause

Prevention Measures

Inadequate check systemfor business transfer

Revise and apply rules for due
diligence at the time of business
transfer

Insufficient auditing
function

Expand the audit scope, conduct
on-site sampling and unannounced
inspections

Low complianceawareness

Provide compliance training to
improve officer and employee
awareness

Malfunctioning internalreporting system

Provide compliance training to
improve officer and employee
awareness

Internal conditions of
the division in charge

Investigate and respond to the senseof reluctance to use the system

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Specific measures to prevent incidents of quality misconduct
Objective: Manufacturing that promises safety and security to customers from the customer’s perspective
Respond to the four elements behind misconduct: Opportunity x Motivation x Justification x Ignorance(■ under way, □ priority measure)Opportunity

Change the system

Motivation

Change the culture■ QA system compliance (strengthening gate check)□ Revise the PL/QA assessments• Add sampling and unannounced inspections■ Create a system for handling quality data
□ Strengthen the quality-related organizational structure• Three lines of defense□ Construct a visual system for risk monitoring■ Corporate Philosophy: Return to the roots of Jun-Ri-Soku-Yu■ Top management policy: Deeply instill “safety first”* Safety = Occupational, environmental, products, equipment□ Human resource rotation and performance evaluation□ Revise the compliance training• Create an environment encouraging dialogue andconsultation■ Produce a Quality Assurance Manual Case Report■ Provide PL accident response training, present PL/QA
seminars□ Strengthen the QA education program• Train new employees• Educate on-site leaders• Educate upper and lower management■ Raise awareness of rules, professional expertise, laws

Justification

Change awareness

Ignorance

Increase understanding

Roadmap for Building the Quality System
FY2022
Priority Issues

Emergency
Measures

FY2023

FY2024FY2025 and forward

Regain trust

Unwavering trust

Inspections to guarantee
quality, build quality in theprocesses

Instill the concept of quality
assurance across the productlifecycle

Respond to external
certifications
Revise assessment
processes
Respond to
customers

Corrective
Measures

Create guidelines for
Quality DX

Horizontally expand to affiliates and overseas offices
Horizontally develop quality DX examples

Standardization

Accelerate conversion to smart factories

Management structure (verification of effectiveness): Three lines of defense system, Risk Management Committee
Diligent quality assurance management (actively apply ISO to operations)
Create a map of quality-related human resources, train and actively use specialists inthe professional system

Changing
Awareness

Corporate Philosophy: Return to the roots of Jun-Ri-Soku-Yu, deeply instill “safety first”
Change the organizational
culture and awarenessInstill QA as an activity for everyone!

Train QA personnel and foster quality awareness* Quality control and quality assurance using DX (Digital Transformation)

TOYOBO REPORT 2021

18

Value Creation Process
Our value creation process arises from the TOYOBO PVVs corporate philosophy
framework and demonstrates how we use various types of capital to create value
and increase value for all stakeholders. Through this process, the Toyobo Groupaims to accumulate and convert capital to continue creating “the solutions

INPUT

needed by people and the earth.”

Capital for value creation
Financial capital• Stable financial structure(Rating and Investment Information,
Inc. (R&I) Evaluation A-)

Focal Points in Value Creation
Manufacturing capitalCore Technology

Values & Philosophy

Technology“Manufacturing” for demand
Providing optimal value throughout the value
chain, in terms of quality, cost, and lead time

• 7 production bases in Japan,
production bases in 15 countries /regions• Capital investment of ¥23.3 billion(FY2021)

Intellectual capital• Sales-R&D expenses ratio 3.8%
(FY2021)• 3 primary R&D bases• Core technologies (polymerization,
modification, molding, processing,biotechnology)• Number of patents acquired 228(2020)

Human capital

Corporate Philosophy
Framework

Market Demand for“Products & Experience”
Creating customer value by providing
products, services and solutions

Social Demands(SDGs, etc.)

Our diverse value creation
activities are permeated by
the spirit of Jun-Ri-Soku-Yu(adhering to reason leads toprosperity). This can be
described as the forerunner ofthe modern concept of CSV.
See page 01

External Environment① Carbon neutral② Circular economy③ Technological innovation④ Demographic changes⑤ Progress of globalization⑥ Respect for human rights,
Diversity & Inclusion⑦ Food loss

19

TOYOBO REPORT 2021

• 10,149 employees (as of end-March
2021)• Ratio of female managers 3.1% (asof end-March 2021)• Number of employees engaged in
R&D Approximately 500 (as of June
2020)

Social / relationship capital• Strong relationships with customers
and suppliers• Open innovation with other companies
and universities• Participation in various initiatives

Natural capital• Energy consumption 13,166 TJ(FY2021)

Introduction

Value Creation
Process

Value Creation
Strategy

Business activities

OUTCOME

Sustainable Vision 2030 (to be announced in FY2022)

Value provided
directly to
stakeholders

Medium-term management plan

Accumulation of various types
capital through businesses
Solutions businesses creatingsocial and economic value

Films andFunctional Materials

Contributing to food security andsafety, protecting global
environment(Customer)
Provide solutions(Global environment)
Circular economy
Reduce environmental
impact and GHG
emissions(Employees)
Secures and safe
workplace,meaningful andrewarding work

Lifestyle and Environment

Contributing to solving
environmental issues, such as
climate change and water shortage(Business partners andcooperating firms)
Co-existence,
mutual prosperity

The Basis of
Value Creation

Overview of
FY2021Our Vision

A Group withsustainable growththrough
Jun-Ri-Soku-Yu

A Group that
continually creates“the solutions
needed by people
and the Earth”(Local communities)
Coexist withlocal communities

MobilityLife Science

Contributing to improving thesafety and comfort of all types ofmobile spaces(Shareholders andInvestors)
Enhance corporate
value, stable dividends

Contributing to growing needs
related to longevity and healthConversion to capital by internalizing the external economy and other methods

Materiality

See page 21

Management Base (Basic preconditions on materiality)

TOYOBO REPORT 2021

20

Value Creation Process

Materiality
Strengthening progress management by assigning company officers and setting targets (KPIs) for each materiality item

In recent years, the expectations placed on companies, interms of becoming carbon-neutral and contributing towards
the realization of a circular economy, have grown. Enterprises
need to address a wide range of issues, such as humanrights, working conditions, and the impact of climate change.
In fiscal 2021, responding to the demands andexpectations of our stakeholders, Toyobo Group identified
CSV- and ESG-related material issues in eight items, torealize our vision of being a “Group that continually createsthe solutions needed by people and the earth.” We havealso positioned three items for which society’s
expectations are particularly high as Management Base
(Basic preconditions to materiality). These items represent
the foundations of the Toyobo Group’s business activity.
We will also regularly review the material issues throughcommunication and engagement with our stakeholders.

Identification Process

Ascertaining and listing social
issues on a global scale
Measures toachievetargets

UNGC, GRI Standards, SASB Standards, etc.

Internal survey and impact assessment
Officers, employees

Analyzing competitors, hearing viewsof external consultants, etc.
Determination of the Board of
Directors following discussion at
management meetings

21

Setting targets(KPIs) for eachmateriality item

Reflecting
materiality inmedium- andlong-term
management plans

Verifyingachievement
statusMakingadjustments
as needed

Canvassing the viewsof third parties

Disseminating information about this series of processes
in our Integrated Report and on the company website.

Identifying materiality based on social
impactAppointing responsible company officers
and setting targets (KPIs)

When identifying materiality, we selected candidate social
issues with reference to external initiatives and 12
international guidelines, including the GRI Standards.
We then clarified the positive and negative impact ofthese social issues through internal surveys andinterviews. The Board of Directors made the final
determination on materiality, taking into account theviews of external parties such as institutional investors.
Our materiality is organized along the two axes of“materiality for stakeholders” and “materiality for the Group.”

In November 2020, we appointed company officers to be
responsible for each materiality item, and we also drewup the relevant targets (KPIs), so as to further enhance
progress management in this area (see p.23).
Regarding the targets (KPIs) for Ability to provide
solutions and for Product life cycle management, we will
be discussing and deciding on these in concert withstrategy formulation for the company’s next
medium-term management plan, implementation ofwhich is scheduled to begin in fiscal 2023.

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Identified Material Issues

Continuing to be a Group that “creates the solutions needed by people and the earth”
Innovation based on responsibility for the future: Realizing clean technology,
high QOL, and future mobility

Management Base (Basic preconditions to materiality)
Safety, disaster prevention,

E S G quality

G Corporate governance

S Respect for human rights

Extremely
important

Ability to provide solutions

Importance tostakeholders

E S (contribution through our business)
E Reducing greenhouse gas emissions
E Reducing environmental impact

E S Supply chain management
E S Product life cycle management

S G Data security, privacy
S G Compliance

S Human resource management

Important
Importance to Toyobo Group

Extremely important

S G Communication with stakeholders
E Environment S Social G Governance
Related ESG

E

S

G

Management Base (Basic preconditions to materiality)

Related SDGs

Safety, disaster prevention, quality

8

G

Corporate governance

16

S

Respect for human rights

10
Related SDGs

Materiality

Related ESG

E

S

Ability to provide solutions (contribution through our business)

6

E

S

Supply chain management

12

E

S

Product life cycle management

3

12

E

Reducing greenhouse gas emissions

7

13

E

Reducing environmental impact

6

12 14 15

S

Human resource management

5

8

S

G

Data security, privacy

17

S

G

Compliance

16

S

G

Communication with stakeholders

17

12 13 14TOYOBO REPORT 2021

22

Value Creation Process

Materiality

In line with the identification of the company’s materiality, in November 2020 new KPIs were established to support the implementation ofrelated initiatives. These KPIs are adjusted as necessary to correspond to the target achievement status. The results are reported once

Management base (basic preconditions to materiality)

Category

annually to the Board of Directors.
KPIs: timeframe for achievement set for each theme
Main topic

Safety anddisasterprevention

Officer in charge

Chikao Morishige
Senior Managing
Executive Officer
Head, Safety and Disaster
Management Division

Themes1) No. of major incidents*
2) Frequency rate of workplace
accidents resulting in lost workdays3) No. of fires or explosions
4) No. of environmental incidents* Major incidents: Defined according to internal
standards based on the definition stipulated by
the Ministry of Health, Labour and Welfare

Targets
1) 0 incidents per year2) 0.25 or less
3) 0 incidents per year4) 0 incidents per year

FY2021 results
1) 1 incident
2) 0.703) 1 incident
4) 0 incidents

All targets apply every year
(calendar year)

We are continuing to consider target setting for “accident prevention initiatives”

Quality

Yoshio Araki
Director, Executive Officer
Head, Quality Assurance
DivisionControlling Supervisor of
Production Technology
Innovation Division

1) No. of incidents related to products*
2) Implementation status of productsafety and quality assurance training* Incidents related to products: Defined according
to internal standards based on the definition
stipulated by the Ministry of Economy, Trade andIndustry

1) 0 incidents per year2) 100%

1) 0 incidents
2) 80%All targets apply every year

We are continuing to consider target setting for “Quality-related” themes

Corporate
governance

Respect forhuman rights

Masakatsu Shirai
Director, Executive Officer
Controlling Supervisor of
HR and Corporate
Communication Division

1) No. of meetings of the Board of
Directors / committees2) Attendance rate of officers at
meetings included in 1.
3) Disclosure of details of evaluation of
the Board of Directors’ effectiveness1) Disclosure of results2) Disclosure of results3) Disclosure of details of effectivenessevaluation

1) See page 802) See page 77
3) See page 82

Masakatsu Shirai
Director, Executive Officer
Controlling Supervisor of
HR and Corporate
Communication Division

1) Implementation status of human rights
education and training

1) Once a year for 20% of
nonconsolidated* employees

1) 24.1 %* “Nonconsolidated” here refers to TOYOBO CO.,LTD., TOYOBO STC CO., LTD., and TOYOBOINFORMATION SYSTEM CREATE CO., LTD.

Target for FY2026
Ability toprovide solutions

Materiality

Supply chain
management

Product life cycle
management

Reducing
greenhouse gas
emissions23

TOYOBO REPORT 2021

We plan to discuss and consider this when formulating the next Medium-term Management Plan from April 2021
Nobuya Fujiwara
Executive Officer
Controlling Supervisor of
Procurement and Logistics
Department

1) Ratio of CSR procurement surveys
returned
2) Ratio of reduction in CO2 emissions
related to logistics

1) 90% or above (In years when asurvey is not implemented, we carryout dialogue with business partners
that past survey had issues)2) Year on year reduction of 0.5%

1) Establishing asystem for
conducting
questionnaires
2) Year on year
reduction of 0.6%

We plan to discuss and consider this when formulating the next Medium-term Management Plan from April 2021
Yoshio Araki
Director, Executive Officer
Head, Quality Assurance
DivisionControlling Supervisor of
Production Technology
Innovation Division

1) Greenhouse gas emissions2) R&D investment targeting climatechange3) TCFD / scenario analysis disclosure1) 30% reduction* from FY2014
2) We will start to discuss and respondto this issue from now on3) We will start to discuss and respondto this issue from 2H FY2022*Target for FY2031
Set target in anticipation of increase ingreenhouse gas emissions accompanying net
sales growth (FY2031: ¥500.0 billion)1) 902 thousand
tonnes2) —3) —Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021Category

As of April 2021
KPIs: timeframe for achievement set for each theme
Main topic

Officer in charge

Reducing
environmental
impactYoshio Araki
Director, Executive Officer
Head, Quality Assurance
DivisionControlling Supervisor of
Production Technology
Innovation Division

ThemesTargets

FY2021 results1) Atmospheric emissions of VOC
substances
2) Discharge of hazardous substances
into water
3) Amount of waste emission4) Final disposal (landfill disposal) rate5) Expanding products and services
that contribute to the environment(ECO-PARTNER SYSTEM®)

1) 60% reduction* from FY2015
2) 80% reduction* from FY2015
3) 15% reduction from FY2016
4) Less than 1% every year5) Sales ratio of products and services
that contribute to the environment
40% (TOYOBO CO., LTD. only)

1) 50% reduction
compared to
FY20152) 53% reduction
compared to
FY20153) 4% increase
compared to
FY20164) 0.2%5) 29.9%

1) Formulation and disclosure of a
Human Resources Development Plan
2) Training core overseas personnel inJapan3) Training investment per employee4) Achievement of female manager ratio
target5) Ratio of annual paid leave taken
6) Reduction in overtime work exceeding
annual statutory permitted overtime
hours(no. of employees working more than360 hours of overtime / total no. of
employees)7) Ratio of male employees taking
childcare leave8) Employment ratio of people withdisabilities

1) Completion and sharing on the
Company website
2) 15 employees per year*3) ¥50,000 per year*4) 5.0% or above5) 75%*
6) Reduction of 20% (2.0%)*
7) Total number of days of absence leave
taken increased by at least 20% for atleast 80% of those eligible for absence
leave*
8) 2.3 %Masakatsu Shirai
Director, Executive Officer
Controlling Supervisor of
HR and Corporate
Communication Division

1) Increase in awareness of compliance2) Awareness and use of complianceconsultation desks
3) No. of serious legal violations

1) Improvement in compliancequestionnaire responses• Whether company emphasizes
compliance• Awareness of “Compliance Mini Study”
Compliance study sessions (Managers)
Various other trainings held2) Improvement in compliancequestionnaire responses• Awareness of complianceconsultation desks• Ease of use of complianceconsultation desks
Consultation desks support
3) 0 violations per year1) • I feel that way, orI somewhat feelthat way 88%(down 5%)• (down 8%)
11 times (1,209
participants) + video
delivered to all
employees
13 times2) • 92%• Want to use it 62%
373) 2 violations

Naoki Fujii
Executive Officer
Controlling Supervisor of
Corporate Planning
Division

1) No. of instances of information
security education provision12) No. of incidents1 (information leaks,
service outages, etc.)
3) Implementation of information
security measures2

1) 15 times per year2) 0 incidents per year
3) Disclosure of promotion contents

1) 19 times2) 0
3) Under discussion
at the Cyber
Security
Committee

Masakatsu Shirai
Director, Executive Officer
Controlling Supervisor of
HR and Corporate
Communication Division

Materiality

Human resource
management

Compliance

All inclusive

Data security,
privacyCommunication
with stakeholders*Targets for FY2031

1) Completed
Website posting2) Canceled becauseof COVID-193) ¥24,000
4) 3.1%5) 64%
6) (3.0%)
7) 80%
12 days absence
leave taken8) 2.2%*Targets for FY2026

All targets for FY2021

1 Scope is TOYOBO CO., LTD., TOYOBO STC
CO., LTD., and Toyobo Information System
Create Co., Ltd.
2 Scope is consolidated subsidiaries (determinedwhile monitoring the situation) Specific measures
aimed at consolidated subsidiaries• Application of Information Security Policy• Roll out of measures to strengthen officeautomation and factory automation

Masakatsu Shirai
Director, Executive Officer
Controlling Supervisor of
HR and Corporate
Communication Division

1) No. of press releases
2) No. of interviews with investors
3) Frequency of meetings with
employees and labor unions
4) Frequency of engagement withstakeholders

1) 75 per year2) 150 per year
3) At least 30 times per year
4) Twice a year

1) 90
2) 1443) 14 times4) 2 times

All targets for FY2021

TOYOBO REPORT 2021

24

Value Creation Process

CSV Examples by Solution
From fiscal 2021, Toyobo Group has organized the fields where the Group can create value that is shared withsociety into four categories, and established individual Solutions Divisions. Each division provides products andservices that contribute to solving social issues.

Solutions

Sales Ratio

Films andFunctional
Materials

Key Products

Net Sales• Films• Functional materials¥152.8 billion

45.3%

Mobility

Net Sales¥36.6 billion• Engineering plastics• Airbag fabrics

10.8%

Net Sales

Lifestyle andEnvironment¥109.1billion

32.4%Life Science

Net Sales¥27.1billion

8.0%

25

TOYOBO REPORT 2021

• Desalination membranes• Wastewater treatment systems• Equipment for VOC emissions
treatment• High-performance nonwoven
fabrics• Air purification filters• Chemical synthetic fiber• Super fibers• Textiles• Bio-related reagents• Pharmaceutical products (contract
manufacturing of injections, etc.)• Medical membranes• Medical equipment

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

ExamplesImproved LCD screen
performance

Food loss reduction

Recycling and resource
conservation

LCD film with more natural color
reproduction

Transparent vapor-deposited film
ECOSYAR®

Film of recycled PET resin
CYCLE CLEAN®

Boasts a high market share in response to trend
toward larger and bezel-less LCD TVs

Superior gas barrier properties for the long-term
storage of foodAchieves 80% use of recycled resin while
maintaining product properties

Protects lives in accidents

Improving automobile fuelefficiency

Creating future mobility

Airbag yarn and fabrics

Engineering plastics

Manipularer® concept car

Produces yarn and fabrics for over 20% of theworld’s airbags

Contributes to weight reduction as metal
substitutes, such as products that far exceed global
standards with 70% reinforced fibers

Incorporates more than 50 of our materials andtechnologies based on the concept of manipulating
air

Eliminating water shortages

Balancing air pollution
prevention and resource
recovery

Providing comfort and security

RO membranes for seawater desalination

Equipment for VOC emissions treatment

Global-leading functional nonwoven fabrics

Contributes to resolving water shortages in the
Middle East through adoption in local large-scale
desalination plants

Delivered more than 1,500 equipment for VOC
emissions treatment using active carbon fiber inJapan and overseas

Responded to changes in social needs during the
COVID-19 pandemic, contributing to the additionof comfort and security functions to end products

Shortening operation times
and reducing patient burden

Supporting lives of dialysis
patients

Accelerating diagnostics

SARS-CoV-2 Detection Kit

Nerve regeneration conduit Nerbridge®

Provides fast results using general-purpose
equipment

Promotes the regeneration of peripheral nerves
severed or damaged as a result of an injury or
related causes

Artificial kidney hollow fiber membranesof stable and reliable quality
Boasts outstanding filtering performance andstable waste removal performance with little
degradation over time
TOYOBO REPORT 2021

26

Value Creation Strategy
Director Dialogue

Naoki Fujii
Executive Officer, Controlling Supervisor of Corporate Planning

ProfileMr. Fujii joined Toyobo in 1987. He became Head of the
Procurement Department in 2007, Head of the Iwakuni
Production Center in 2015, and Head of the Corporate
Planning Department in 2018. He was appointed as
Executive Officer in April 2021.

Director Dialogue
Controlling Supervisors of Corporate Planningand Administration Divisions
In this section, two executive officers involved in formulating business strategies that included
the CSV concept and supervising the management of financial and ESG aspects, discuss theCompany’s portfolio strategy, approach to investments, and the objectives they are pursuingas the Company formulates the new long-term vision and medium-term management plan.

Hiroshi Otsuki
Director, Managing Executive Officer,
Controlling Supervisor of Administration

ProfileAfter joining Toyobo in 1987, Mr. Otsuki worked in various
finance and accounting positions, including General
Manager of Finance and Senior Coordinator of Corporate
Planning in 2010, and also served as Manager of Film
Business Management Office and other duties. He wasappointed Executive Officer in 2017, and Director andManaging Executive Officer in June 2020.

27

TOYOBO REPORT 2021

Introduction

Living through survival mode
Otsuki Mr. Takeuchi, who became the CEO in April

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021prepared to deal with all the different ways that
employees were engaged with the Company.
I, myself, feel very deeply that our employees and2021, and I have for many years been aware of the need

our company as whole should think again about theto find a way to improve the business portfolio. He has aimportance of Mr. Takeuchi’s words that “our worksites

corporate planning background and I’m from financedrive our business.”

and accounting, and we struggled to find a cohesive
way to deal with what should be done with low-profit
businesses and how to control costs and the size of ourasset portfolio.

Planning (offense) andmanagement (defense) for sustainability

Fujii I first worked with Mr. Takeuchi around 2001 when

Fujii I think my main role is to think of ways to create

he was in corporate planning, and I was the Head of

CSV, to understand the social issues and ask, “whatProcurement at the Iwakuni Production Center. The

solution can we offer?” along with “how can we growGroup was in an extremely precarious financial position

our business?” and to create plans and management

at the time, and we were embarking on a plan tostrategies focused on those questions.

drastically reorganize our partner supply companies,

When plans are being activated, there are times

which had never been done before. We worked together

when you really need to step on the accelerator. Thereon many occasions to carry out the plan.

are also times when it’s best for the Company if you

As Head of Corporate Planning, I have been working

apply the brakes at the right time or with the rightwith him on the management strategy since last year whenamount of pressure. You are in charge of the brakes.

he was Controlling Supervisor of Corporate Planning.

We need to have the right balance of both, so we gather

Otsuki Looking back, I can see how you, I, andspeed rather than just hurtle forward. Controlling thateveryone were really struggling during that period anddifference is extremely important.

the pressure that existed to take “survival action” toOtsuki I certainly will apply the brakes when we need it.

come through crisis. Our Directors and Executives had

At the same time, though, the business environment ismore meetings and spent more time than ever inchanging, so the brakes need to be used differently than

discussions in fiscal 2021 because of Inuyama Plant firein the past. When we were reforming our businessand quality fraud incidents. The discussions led us backstructure, we faced major financial challenges and wereto the Company’s very foundations and reinforced thereluctant to invest sufficiently in a project that carriedobvious that our highest priority must be on safety andeven just a little risk, even if we thought that if we keptthat without compliance our business cannot grow.

pushing it would have a good chance to become a solid

I also think that the long period that we spentbusiness. With where we are now, rather than avoiding

fighting for our survival weakened our corporate culturerisk completely, I think it’s very important that we seek

because it caused many employees to seriously wonder

to effectively manage risk.

why they were working for the Company and ask

Like a ship with a waterline on its hull, when you

themselves what they were getting out of their jobs andinvest in a project there should be no danger that a holeif they felt proud of their work. I also think thatwill open below the waterline. However, you sometimes

organizationally the Company wasn’t adequately

have to take a chance with a ship that has a hole above

TOYOBO REPORT 2021

28

Value Creation Strategy
Director Dialogue

the waterline.

technologies. This is a clear business opportunity, andFujii In other words, when risk exists, if you decide that the

we should certainly actively conduct upfront investments

risk is tolerable, then you should take it.

for future business.

Otsuki Precisely. Basically, I think that if an opportunity

Fujii Becoming carbon neutral will require various

is in line with the Jun-Ri-Soku-Yu (adhering to reason

measures along with technological innovation to reduce

leads to prosperity), management philosophy, then I

the greenhouse gas emission from our manufacturing

believe we should pursue it. One of our financial

operations. We also view it as a business opportunity,

waterlines is ROE near 8%.

and in April 2021 we created the Carbon Neutral

The finance department also needs to find a way toStrategies Cross-Functional Team to lead our efforts inquantify investments in terms of time to show how longthat direction.

an investment should be continued or increased, andOtsuki We also need to clarify what we must to do andwhen an investment should be reduced. Clear answers

how much we will have to spend to achieve carbon

would provide a solid foundation for medium- toneutrality. In other words, we will need to turn thelong-term management. For example, the debt-to-equity

non-financial information into financial information for theratio is a key indicator. When we were struggling

future. That’s another point where I want to takefinancially, we were doing all we could to bring the ratio

decisive action.

under 1.0. We’ve stabilized it now, and it was at 1.01 in

Fujii The circular economy presents very different

fiscal 2021, but new investment projects could very wellprospects, and I am very concerned that it could cause alift it temporarily to 1.2 or 1.3. Investors expecting

major shift in our sources of profit. The Toyobo Group has

short-term results will want to know if upfront

generated its profits through manufacturing, but a society

investments are viable. My job is to show them that they

with a circular economy could place more value on theare and when we expect to see the investment return.

collection system than the manufacturing operation. If so,then being a platformer for the circular economy would

Taking the initiative on social issues
Fujii Upfront investment will also be in businesses that

be ideal; however, deviating from that platform could
then cause you to lose all of your business.
It is very difficult to say whether the Group would

address social issues. I believe we need to focus

be able to create a platform like that on our own. We will

particularly on the two environmental issues of carbon

need to carefully consider business models thatneutrality and contributing to a circular economy.

encompass associations and alliances with various

Manufacturing operations that support these issues aretypes of companies and organizations.

extremely important for us and fundamental to asustainable company.
They are essential for us because they present
significant business opportunity.

29

Forming medium- to long-term growthstrategies

Otsuki Financial institutions and other service industries

Fujii One of the main initiatives of the medium-termcannot really contribute directly in these areas without

management plan is to eliminate conglomerate discounts. In

some sort of technology. The Toyobo Group, however,many of our businesses, we had a strategy of an “all-at-oncecan directly contribute with its products andadvance.” That strategy was effective during recession, but it

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

caused us to spread our resources too thin, which was one

earth with materials and science” and grow fromof the reasons we were unable to grow our overall profits.

focusing on the materials market to the greater market

The next medium-term management plan, which we plan toof providing solutions for society. We cannot do that on

announce in fiscal 2022, will sharpen our management

our own. We need to have the courage to take steps we

focus by concentrating resources on the films and life

have never used before to develop business, such as

science businesses.

developing products using not only the Group’s own

Otsuki From the perspective of investment, decisions canmaterials but with various types of content, pursuing

use the scale and cash flow return of past investments as ainnovation, and creating alliances with other companies.

guide. The life science business is different from films,

In that sense, the Vision is a message fromhowever, and doesn’t have such a clear cut time axis for

management telling how we are going to survive andinvestment and return. There are many avenues forgrow into the future. I really hope all of our employees

developing the life science business, including basic

will be excited about implementing our vision.

research and product development, M&A for sales

Otsuki Cultivating the human resources with the rightchannels, and alliances with other companies. Pursuingskills to support a sustainable Group business will be key.

those should eventually lead to business growth, but the

When the Company was struggling, we cut fixed

time scale will certainly be longer than the film business.

costs left and right and we had little room to consider

Fujii Although slightly outside the management focus

how much fixed costs we needed to bear to sustainablythat I mentioned earlier, the Group also has numerous

continue our business. For a time, we even thought

cutting-edge technologies in areas other than films andrationalizing employees might be necessary.

life science. Those technologies may not promise major

As an investment in the future, there is nothing morebusiness growth as they are now, but there is potential

important to our long-term growth than creating a

for a breakthrough that does lead to growth.

psychologically safe workplace for all employees and securing

You are absolutely right when you say that it will

and fostering human resources to lead us into the future.

take more time to grow the life science business, andthat’s why finding the “third pillar” business is one of mymain missions. We may even need to ally with otherIn conclusioncompanies that can boost our capabilities in areas we

Fujii Our PVVs corporate philosophy framework will be

are insufficient, such as intelligence, certain functions,our polestar as our Company makes a concerted effort

and assets.

to make us known as the “Sustainable Toyobo Group.”

Otsuki Once you decide on a focus area and resolve toOtsuki I would like us to enhance our corporate value

realize a breakthrough, you are faced with the question

by raising both economic and social value withof how much resources to allocate to it. I am looking for

management rooted in sustainability. I look forward tovarious ways to bring in additional resources. A

fulfilling the expectations of all of our stakeholders.

short-term perspective like we’ve had in the past will not
play, we will need to take a long term view.
Fujii That long-term perspective is built into our
Sustainable Vision 2030. Our vision is to be a group that“creates the solutions needed by people and the

TOYOBO REPORT 2021

30

Value Creation Strategy

KAERU Project: Beginning of Change

Overview of the project
The Group’s growing moves toward change took shape in
April 2018 with the launch of the KAERU Project (kaeru
means “to change”) throughout the Group with theparticipation of all officers and employees. The meaning
behind the KAERU Product is that the Group will work to“change work,” “change systems,” and “change awareness”
without being constrained by conventional methods, while
also clarifying “what must remain unchanged” and “whatmust be treasured and passed on.”This was because many employees agreed with theidea of volunteer executives, who felt it was necessary tocreate workplaces where everyone can continue to workwith comfort and energy, and a company that can plot acourse for growth while continuing to change.
We first redefined our corporate philosophy andestablished the TOYOBO PVVs corporate philosophy
framework (hereinafter, “the PVVs”) in March 2019. We havemade reform our slogan, with becoming a Group that willcontinue to create the solutions needed by people and theearth as our vision, and this has become the foundation of ourbusiness strategy. In addition, we have placed welcoming,enjoying and creating change as our values (see page 01).

KAERU project structure
Instillation of PVVs (activities axis)

Jun-Ri-Soku-Yu
Our vision

In the past three years, we have focused on
manifesting the vision of what we want Toyobo to be,
centered on the PVVs.
These efforts are broadly divided into “strategy, system andstructural reform” and “work and culture reform,” with PVVs
sharing activities to support them.
For “strategy, system and structural reform,” we plan toformulate a medium-term management plan based on the
PVVs and our long-term growth story in fiscal 2022 (see page09). Furthermore, a reformed system, including personnel
system (see page 33), will be enforced in fiscal 2022 to enable
us to implement strategies and contribute to realizing PVVs.
For “work and culture reform,” we have worked on
manifesting ideal work styles based on the PVVs, visualizing
business process reengineering, improving efficiency, and soforth, while utilizing the realizations and opinions of employees.
For “PVVs Sharing,” we produced and distributed
comics explaining the PVVs to promote their awareness andunderstanding among employees. Moreover, in order for
employees to get more personally involved, we have held
series of online dialogue workshop, including “dialogue with
the CEO,” incorporated the PVVs into performance
evaluations, multifaceted evaluations, education andtraining, and improvement proposal activities.
In an employee survey, the percentage who felt
positive changes in their workplace increased from 37%(March 2020, 2,540 respondents, 57% response rate) to51% (March 2021, 3,394 respondents, 83% response rate).
Amid these changes, a fire (see page 15) and quality fraud
incidents (see page 17) occurred, and we further recognized
the need for change when reviewing the situation.
We will continue our company-wide initiatives so thatthese reforms take root in each workplace, the realizationsof each employee are utilized, and a culture of positivechange continues into the future.

Our values
Our 9 commitments

Strategy, systemand structual reform(officers andcorporate staff)

Strategy /SystemWork and culture
reform(with fullparticipation)

Behavior /Creation
Online social events (FY2021)

31

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Major achievements and issues
Initiatives

Management
and strategy

Results

Established the PVVs
corporate philosophy
framework andreflected it in the
management policy
and strategy

Demonstrated our desire to more actively work to achieve abundance and linked it
to Toyobo Group sustainability by redefining the corporate philosophy,
Jun-Ri-Soku-Yu (adhering to reason leads to prosperity), and systematizing it as the
TOYOBO PVVs.

Reorganization

Reorganized to promote and expand the business of providing solutions tocustomers and social issues in line with the vision of the PVVs

Issues and future initiatives• Reflect in medium-term management plan using backcastingfrom long-term growth scenarios• Instill the PVVs in all employees, including those in domestic
and overseas Group companies
Note: Refer to “Instillation of PVVs Corporate Philosophy
framework” section
Substantiate into mission, vision, action plans, and KPIs for eachorganization• Reorganized into Solutions Divisions for each market area
• Reorganized corporate staff• Newly established sustainability, DX, and marketing departments

Strategy,system andstructuralreformPerformance
management system
reformDefined the performance management indicators to focus on as a company inrelation to the PVVs

Design and implement a performance management system basedon the new indicators shown to the left

Personnel system
reformRealized a system where each of our employees can feel their own growth, andwork with pride and purpose to achieve the PVVs

(See page 33)• Enforced multifaceted evaluation system• Hold consultations between labor and management, and briefing
sessions for the implementation of the reform plans described to
the left by the end of fiscal 2023

• Formulated reform plans for the job level, compensation, and evaluation systems• Enhance the ability of managers to operate the system
Note: Refer to “Work and culture reform” section

Dialogue andinteraction planning• Held 16 online talks with CEO that were joined by 83 employees• Held 10 workplace workshops that were joined by 89 employees

Measure instillation through dialogue between CEO and otherexecutives with employees, and between employees at different
workplaces, in order for executives and employees to naturally
practice and pass them on in their everyday actions (including
domestic and overseas Group companies)• Dialogue between Heads of Solutions Division and employees,
and workshops throughout the company

Instillationof PVVs

Incorporation into
personnel andincentive systems

Incorporated the values of the PVVs corporate philosophy framework and the
TOYOBO Spirit to provide motivation

Conduct evaluator training to ensure proper performance
evaluations• Behavioral evaluation items for performance evaluations

Note: Refer to “Work and culture reform” section• Multifaceted evaluation items• Evaluation of small group activities and improvement proposal activities• Episodes submitted by applicants during the recruitment process
Enhancingawareness• Provided explanation and message by CEO• Provide explanations and messages by Heads of Solutions Division• Produced and distributed instillation tools• Online serialization of PVVs system comic, and translation into
English and other languages• Increase awareness among domestic and overseas Group
companies

Work andculturereformWork reforms(business efficiency
improvements,
standardization, coresystem renewal)• Visualized and improved efficiency of work through work faultfinding and workflow
creation, and created a system enabling its continuation(Progress) Work faultfinding: 82%; Workflow creation: 64%
Note: As of the end of FY2021

Work style reform• Presented the “Work Style Reform Map,” a reform policy leading to theachievement of the PVVs

Continue work faultfinding and workflow creation
Team building for business standardization and core system renewal• Prepared for business standardization through the creation of standard workflows[Place]Develop infrastructure to support the diversification of work
styles and workplaces[Time]

I ncrease productivity and reduce working hours by streamlining
and standardizing work, and developing systems[People] Revise awareness and behavior toward work styles and health
Trust managers, team members and colleagues, and build good
relationships• Promote teamwork(hold workplace workshops, and courses for promoters)• Improve workplace environments(office, information sharing, flextime, etc. systems)• Activities to instill work styles (see left)• New management training system to enhance and support
management skills (improve personnel system operational
capabilities through evaluator training, improved dialogue skills,
etc.)• Support for the autonomy of employees careers• Obtained certification under the Certified Health & Productivity Management
Outstanding Organizations Recognition Program• Proposed work styles(meetings, 3S (sort, sweep, and standardize), thorough awareness, guidance andtraining, business manners, utilization of IT tools)• Improved work environments (office improvements, paperless, telecommuting,etc.)• Developed information sharing infrastructure (digital signage, etc.)• Held events to encourage communication (family office tours, etc.)

TOYOBO REPORT 2021

32

Value Creation Strategy| Feature | Strengthening Human Capital—Creating a human resource reform system to achieve the growth strategy—

Kenji Fujihashi
General Manager, Human Resources Department

Aiming for an environment where
everyone can individually work andgrow with pride in what they do
Everyone working together for the group are important
stakeholders. We cannot realize the TOYOBO PVVs corporate
philosophy framework unless each of our employees is able to play
an active part with pride in what they do.
In that sense, we believe that the key to the Group's
sustainable growth is its people, or human capital. Based on thisidea, we are currently reviewing our human resource system andwill introduce the new one in fiscal 2023. This is the first revision in
22 years since 2000. For the company to continue growing, wemust also change the human resource system that supports our

employees, which is why we decided to revise it.
The human resource management policy that forms the basisof the system has the following of the system has the following
principles:
1. Treat and evaluate field leaders, organization heads, etc.
according to their current responsibilities
2. Clarify the expected competencies for each rank and to improvethese competencies over the medium to long term
3. Assign and rotate human resources for the early selection anddevelopment of human resources responsible for management
4. Evaluate, treat and encourage the activities of diverse
specialized human resources in areas including research anddevelopment.
We will create a system to treat and train specialized humanresources so that various personnel can play active roles for future
development, and also foster management personnel early on toraise the whole of management.
On the other hand, we will continue to promote organizational
development and activities that increase connection between
people within the company, along with individual human resource
development. We will create workplaces where real conversations
can be had throughout the organization and hierarchies. Our aim is
to create workplaces that guarantee psychological safety, where
employees can comfortably speak honestly with their superiors
and colleagues.
We conducted an engagement survey in March 2021. We will
use the results of the survey on organizational climate andemployee job satisfaction in future policies.

Overview of New Human Resources System
Toyobo’s ideal form and importance of human capital
Contribution to resolving social issues

Realization of sustainable growth

Leadership by sites,and sense of pride and satisfaction

33

TOYOBO REPORT 2021

Growth centered on solutions
in each market field

Strengthen management base throughinvestments in facilities and human resources

Solid foundation, growth strategy,
and people to achieve it are important

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Goal of New Human Resources System
Each of our employees can individuallywork with a sense of growth, pride, and satisfaction

Revised Measures
Human Resource
Management Policy

Promotion andsupportof capacity building

Treatment andevaluations inaccordance withjob responsibilities

Revision Points
Rank

Evaluation

SalaryClarify expected competencies
for each job role competence
rank to improve themNurture through dialogue using
personnel evaluations

Eliminate duplicate systems
while maintaining support fordaily life

Competence rank definition

Enhanced feedback

Review of household
and housing allowances

Present wide range of promotion speeds and find way out ofseniority-based system

Career Development

Reward based on positions(responsibilities) as well as jobrole competence rank

Promotion requirement review, special promotions, demotions

Review performance-based
pay and base pay

Understand human resources information company-wide, and train
management personnel at an early stage

Newly creation of position pay
and managerial allowance

Expect continued employment
after the age of 60
Expansion of system
reemploying retired employees

Evaluation, promotion decision meeting

Enhancement ofmanagement skills

Clarify what are ideal managers
and demand a higher level ofmanagement

Assign human resources fromthe perspective of medium- tolong-term development

Competence rank definition

Human Resource Meeting

Encourage the active
participation ofdiverse professional
human resources

Treat and cultivate highly specialized human resources
Professional roles

Enhancement of management skills
Started the Human Resource Meeting to discuss training measures forthe early education of management personnel
For Toyobo Group’s initiative to train the next generation ofmanagement, the Group plans to provide chosen personnel withinternal and external management executive development training. In
order to further broaden their experience, we will also give them theopportunity to undertake business operation and management
duties to hone their management skills, which will help us achieve
our succession plan.
Moreover, in order to expand the perspective of developing
human resources of not just business divisions or departments but theentire company, we will visualize positions and human resources, anddetermine exactly who should have what experience.
The Group will begin holding the Human Resource Meeting todiscuss measures to cultivate the next generation of managementfrom fiscal 2022. The meeting will be divided into theCompany-Wide Human Resource Meeting, which mainly discusses
the succession of management positions, and the Department
Human Resource Meeting, which mainly discusses the successionof positions with high levels of operational expertise, and topics will
include the selection and rotation of human resources and support
for the training of successor candidates. We will be able to find anddevelop human resources and increase their effectiveness throughcoordination between these two meetings.

Company-Wide Human
Resource Meeting

Department Human
Resource Meeting

Attended byAttended byPresident, controllingsupervisors1, etc.

Controlling supervisors,operating department
heads2, etc.

For

For

All management
personnel

Alignment

Department and staff
personnel3

AgendaAgendaSelection, training androtation of humanresources

Selection, training androtation of humanresources

1 Oversees each division and Management and Administration Division
2 Oversees specific fields across multiple business divisions
3 “Corporate divisions” including corporate planning, management andadministration, and human resources

TOYOBO REPORT 2021

34

Value Creation Strategy

Female mentor program
Encouragement for employees
to take childcare leave

Female leader training
seminars

Seminars for women| Feature | Toyobo’s promotion of women’s
participation and advancement

Progress so far, and the key issues
Promoting women’s participation and advancement fromthe three perspectives of recruitment, cultivation, andsupport for employment continuation
Toyobo’s initiative to promote women’s participation and advancementin the workplace got underway in earnest in fiscal 2016 with theestablishment of a dedicated organization: the Women Empowerment
Promotion Group.
When this initiative was first launched, there were relatively few
women on the managerial career track1 at Toyobo, and the company was
not providing adequate opportunities for women’s participation andadvancement. To improve this situation, we formulated an action plan tobe implemented by fiscal 2021, with the aim of putting in place theenvironment and organizational culture needed for women’s advancement.
We set ourselves the goal of doubling the number of female managers2(compared to fiscal 2016), and of making sure that women accounted forat least 15% of all employees on the managerial career track. We alsobegan to implement various measures from the three perspectives ofrecruitment, cultivation, and support for employment continuation. The
targets set in this initial action plan were met, with the number of female
managers rising three-fold to 13, and the female share of employees on
the managerial career track increasing to 17.1%.

One factor that contributed greatly towards the achievement of thesegoals was the adoption of a new recruitment policy that emphasized
having women account for at least 40% of recent graduates recruited
onto the global career track3. In parallel with this, we have also been
expanding the range of work roles open to women, substantially
increasing the number of female employees on the managerial career
track assigned to the sales and manufacturing divisions, which in the

Number and Raito of Female Managers
Number of section chiefs or higher position
Number of manager job
Raito of section chiefs or higher position
Raito of manager job(Persons)

20

19

3.1
2.8 3.0
13

14 2.7

15

12

12
2.0

10

1.1
5

12
2.0

1.9
8

1.2

5

2.1

2.4

(%)

4.0

12

2.0

1.0

5

0.0

0
2017

2018

2019

2020

2021 (FY)

Main measures implemented
Seminars
Female leader development seminars
Held 7 times(introductory and intermediate)
Career planning seminars

Held 19 times

Seminars for managers on
managing female employees

Held 38 times

Babysitter support system
Childcare costs incurred while
away on business trips

Entirely covered by
the company

Male employees taking
childcare leave(fiscal 2021)
Percentage: 80%

Interviews:

Held with a cumulative
total of 907 employees(approximately 150 per year, including male employees)

FemaleActivities implemented continuously over a
Empowerment
Promotion Project: four-year period, with changing participants

Mentoring system:

A total of 226 mentoring pairs(achieved over a period of two years,
with pairs being changed every six months)

Establishment of a nursery within the company(at the Research Center)
Enrollment capacity:

Cumulative total no. of users:

10 children

25 children
over three years

Notes; 1. Defined as all employees on the managerial career track, including those who have only just joined the company.
2. Including all female employees with the rank of section chief or higher. 3. Career track for employees who are expected to be active throughout the entire company.
4. Career track for employees whose career is expected to be confined to one specific business site.

35

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Realizing diversity andMessage from
inclusion (D&I) by promoting Manager
women’s advancement

Noriko Tsuchiya

Establishment of an internal
nursery (at the Research Center)

Babysitter support system

It is vitally important to make effective use of theskills and knowledge of a diverse range of human
Women Empowerment
talent in order to innovate and achieve sustainable
Promotion Group Manager
corporate growth. Promoting women’s
Human Resources Strategy
advancement has been positioned as the first
Department,
step in this process, and everyone is focused on
Human Resources Department
identifying one’s own capabilities and on creating
opportunities to utilize these capabilities to maximum effect. Since it was first established, the Women Empowerment
Promotion Group has benefited from being composed of both male and female employees with a diverse range ofviewpoints and experience, and I feel that the Group has been able to utilize this diversity effectively in its activities. In
implementing our activities, we have attached particular importance to listening carefully to employees’ views, and thenreporting these properly to senior management. Fortunately, management has implemented speedy decision-making thattakes employees’ views into account. For example, when the new nursery was opened at the Research Center in Otsu Cityin fiscal 2019, this had taken just 10 months to achieve since the concept was first put forward. Looking ahead to the
future, both managerial and non-managerial staff will be making a serious effort to put in place the environment needed toaccelerate the fostering of diversity and inclusion, through both bottom-up and top-down approaches.

past had very few managerial career track female personnel. As a result,the issue of women’s advancement has been made more directly relevant
for many managers, and we have been able to promote a change inattitudes and a transformation of the organizational culture.
Nevertheless, the percentage of female managers is still not
sufficiently high, and the relatively limited number of female candidates
for managerial positions is also an issue that needs to be addressed. In
response to this situation, in fiscal 2021 we set the ratio of female
managers as a KPI for Toyobo Group. The Group is now working toachieve this target.

Formulating new targets and action plans
In April 2021, Toyobo launched a new women empowerment promotion
action plan. Besides setting various numerical targets, including raising theratio of female managers to 5.0% by fiscal 2026, the new action plan also
continues to maintain the target of having women account for at least 40%
of recent graduates recruited onto the managerial career track, in order toincrease the pool of candidates for cultivation as future female managers.
In addition, we introduced a new Career Development Support
Program for female employees who are currently on the regional career

track4. Participants meet with their supervisor over a period of three
years to discuss a career development cultivation plan thatincorporates a formal schedule for the acquisition of specialist technicalknow-how and other knowledge, for example through on-the-job
training, as well as self-development, etc., with an implementation cyclethat includes an annual progress report and refresher training.
Whereas in the past there was no clear career development path forfemale employees the regional career track, such a path has now beencreated, and the company is continuing to provide support to help
female employees to fully develop their capabilities. In addition, by having
individual units compile and implement female employee cultivation actionplans, we are fostering self-directed activities at the workplace level.
Toyobo also has a policy of participating actively in external
initiatives. The company has already expressed its support for 30% by
2030 Challenge5 goal announced by the Japan Business Federation(Keidanren) to raise the ratio of female executives to 30% by 2030, andfor the Women’s Empowerment Principles6, which outline a code of
conduct for actively promoting female empowerment; Toyobo has signed
a statement committing itself to act in accordance with the WEPs.
Through these activities, Toyobo is aiming to secure 2-star Eruboshi
certification7 for promoting women’s advancement by fiscal 2022.

Targets and Initiative Content
TargetNo. 1

Raise the share of managers who are women to at least 5.0% by the end of fiscal 2026 (compared to 3.1% in March 2021)

April 2021 onwards:
April 2021 onwards:
April 2021 onwards:
September 2021
onwards:
TargetNo. 2

Raise the share of women on the career track to at least 22% by the end of fiscal 2026 (compared to 17.1% in March 2021)

April 2021 onwards:
April 2021 onwards:
April 2021 onwards:
April 2021 onwards:
TargetNo. 3

Implement female leader cultivation training for female managers and female candidates for managerial positions(continued implementation since August 2017)
Implement female leader cultivation training for female section chiefs and female candidates for section chief positions(continued implementation since September 2019)
Implement mid-career hiring of female managers
Establish and implement women empowerment promotion action plans at the unit level

Maintain women’s share of new graduate recruitment at a level of at least 40%
Actively promote mid-career hiring of female employees
Implement follow-up interviews for female employees (continued implementation since April 2015)
Establishment and operation of a three-year career development support program

Raise the percentage of eligible male employees taking childcare leave to at least 80%, and increase the number of days ofchildcare leave taken by at least 20% by the end of fiscal 2026 (compared to 80% and 12 days respectively in fiscal 2021)

April 2021 onwards:
April 2021 onwards:

Make eligible employees aware of the childcare leave system (continued implementation since April 2019)
Send eligible employees’ supervisors details of the encouragement that should be provided to subordinates to encourage themto take childcare leave (continued implementation since September 2019)

5. This is one of the targets for promoting D&I to realize sustainable growth in linewith “. The NEW Growth Strategy” announced by the Keidanren in November
2020.
6. The Women’s Empowerment Principles were formulated jointly by UNGC andUN Women in 2010.

7. Eruboshi (2-star) criteria: Must meet 3–4 of the specified criteria, and must
demonstrate continued improvement for a period of at least two consecutive
years.

TOYOBO REPORT 2021

36

The Toyobo Group is advancing innovation to prepare for the future to fulfil our
corporate vision.
We are pursuing innovation various directions ranging from researchingclean technology for carbon neutrality and a circular economy to developing newlife science products which are become increasingly important amid concern
about the potential spread of infectious diseases. With the advances indigitalization, we are also exploring the promise of new technologies, such as
Materials Informatics, that are opening the door to new possibilities.

Toyobo Research Center innovation in“leading-edge technology”
Research Center began operations in 1931 with the R&D of fibers and textiles
and for 90 years has been expanding its research to meet changing needs for a
full range of films, biotechnology, and high-performance products. The center has
grown into an expansive research complex with its own production department
and currently serves as the R&D base for the whole Toyobo Group.
Toyobo’s Research Center has approximately 500 employees concentrating
on strengthening and integrating basic technologies that will lead to new
products and technologies and pursuing innovative technologies, products, andsolutions that can contribute to solving social issues. Within the center, theCorporate Research Center directs our basic research by establishing the clear
relationships from the proposal stage between our research themes and the 17
SDGs for the year 2030 and beyond.

Research Center

37

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

focus on seed ideas in the earliest stages at universities.
The Toyobo Group has a successful history of building
seed ideas from the R&D stage, and our investments are
not focused on introducing technologies that are alreadydeveloped but on technologies that we can build together.
In addition, we are rebuilding the Research Center tocreate an atmosphere of active and open innovation where
it is easy for people to gather and generate various ideas.
The institute also has systems and facilities designed toaccommodate career professionals and foreign and female
researchers to support the diversity that is key to innovation.

Yasuo OtaManaging Executive Officer,
Controlling Supervisor of Innovation Division

We are creating the Toyobo that willcontribute to the society of 2030
Innovation is the source of the Group’s competitiveness.
Our focus in recent years has become geared more to thelong term and to addressing social issues. The Mirai Value
Proposition Project is bringing together members fromvarious departments to envision Toyobo in the year 2030—
what kind of business will we engaging in, what value do
we want to be providing, and who will we be providing it to.
We are not waiting for someone to take the lead; every
person is making their own future.

Spurring innovation through active
collaboration
We are also engaging open innovation and othercollaborative activities with other companies. Toyobo is at
the middle of a value chain enabling smooth and quick
communication both upstream and downstream. Our
positioning facilitates open innovation and makes it one of
our strengths. This strength gives us greater latitude topursue our objectives. For example, we are approachingachieving carbon neutrality by using our technologies while
also considering if sharing our technology with othercompanies could help us attain our goal.
We are also spurring open innovation with startup
companies that can apply our technologies by actively
providing venture capital investment in venture companies,
universities, and research institutes designing advanced
manufacturing technologies. One of our investment
initiatives is to provide venture capital to support R&D andtechnological development of venture concepts with aA spirit of creating new businesses withtenacity and without fear of failure
To realize the Group vision and grow sustainably, we willcontinue expanding our R&D in markets we expect to growand in which the Group has competitive leads, such as
high-performance films and other functional materials, life
sciences, and the environmental field. In functional
materials, we will accelerate research on next-generation
products that can provide solutions not just from the
aspect of materials but from the perspective of customer
needs. In the life science field, in addition to advancing ourcore business in diagnostics, we are also targeting fields
where we can support well-being for a vast number ofpeople. For example, we have developed our “kansei”
engineering technology which is quantifying and evaluating
comfort levels from 1970s. We are seeking to expand thistechnology to encompass psychological and physiologicalevaluations while also broadening our product range fromclothing to living spaces. In the environmental field, we willdevelop technologies that will help realize a carbon neutral
society and circular economy, beginning with our own
various clean technologies and biopolymers. We also plan
to give more emphasis to R&D related to carbon capture,
use and storage (CCUS), such as in carbon dioxide
immobilization and storage methods.
I tell our researchers that I want them to always havethe spirit of creating a new business. I also encourage themto take on challenges without fear of failure and to broaden
their radar and connections inside and outside ourcompany and overseas as well.
The slogan we follow to encourage innovation is “Trymany, fail quickly.”

TOYOBO REPORT 2021

38

The Future our R&D is Creating

Quick and accurate SARS-CoV-2 detection
The development of ImmunoArrow™ SARS-CoV-2
Antigen test kits are increasingly being used in Japan and overseas as a reliable method for quick and accurate detection of
SARS-CoV-2 (which causes COVID-19) and as an aid to preventing the spread of the disease. In June 2021, the Toyobo Group
introduced the immunochromatographic ImmunoArrow™ SARS-CoV-2 antigen test kit for medical institutions and testing laboratories.
The “arrow” in the name reflects the test’s ability to detect the SARS-CoV-2 antigen as quickly and accurately as an arrow.
We responded to the urgency of the situation and strong social need by vastly accelerating our developmental processes.
Below is a dialogue between two of the researchers involved in the project.
thought that creating an antigen test kit could lessen theburden on medical professionals and help prevent the virus
from spreading.
Nishimura Polymerase chain reaction (PCR) testing
requires equipment that is generally only available at larger
medical institutions. We thought that there was a strong
need for an antigen test kit that does not require special
equipment so it could be used at smaller medical clinics
and be available wider testing.
Okamoto We were already conducting R&D in
immunochromatographic testing as one of our basetechnologies, and when the pandemic broke out we started
talking about whether we could develop it for COVID-19.
One of our biggest challenges was the fact that this was
the first time we were trying to create a product that used
the immunochromatographic technique.
Nishimura Honestly, we felt like we were in a huge hurry
because we knew that it had to be developed quickly andalso because the situation was rapidly changing and othermakers had already released immunochromatographic
products. But it was a fantastic experience to strongly
believer that we could create a better product than what
was available and then to bring it to full fruition.

We stepped up R&D to meet the urgencyof the social situation and successfully
created a productOkamoto The Group has previously developed anddelivered the GENECUBE® fully automated gene analysis
system and SARS-CoV-2 genetic test reagents. We also

Jun Okamoto

Kengo Nishimura

Bio-Science & Medical Research Unit,
Corporate Research Center
New Development Group,
Biotechnology Research Laboratory

Bio-Science & Medical Research Unit,
Corporate Research Center(Previously IVD Development Group,
Biotechnology Research Laboratory)

Immunochromatography
What isimmunochromatography?
Immunochromatography is aquick diagnostic method thatusing capillary action tomeasure antigen-antibody
reaction, and is used aroundthe world to diagnose
influenza and test for
pregnancy. The advantagesof immunochromatography
for SARS-CoV-2 testing anddetection are that it isquicker than PCR tests and it
does not require special
equipment.

39

TOYOBO REPORT 2021

Sample drop
placed in the test
kit

Kit contents

Results appear in minutes(or longer for certain
substances)

Positive

Negative

Specimen to be tested (target antigen)
Antibodies
Results appear in minutes(or longer for certain substances)
Particles that indicate
antibodies (markers)

1) Samples with the target substance ( ) areabsorbed and flow into the kit ( )Line positions
indicate apositivediagnosis!

3) Lining up the markers ( )creates what looks like astraight line

2) The target substance ( ) is caught and lined
up by the antibodies ( ) in the kit

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Technological teamwork with the
University of Toyama and others werecriticalNishimura The kit’s accuracy requires highly sensitive andspecific antibodies and particles to act as markers forvisualizing the reaction. The antibodies were developed using
the Company’s base technologies and through technicalcooperation with the University of Toyama. Working
together, we conducted multifaceted evaluation testing andin a very short time were able to very efficiently identify
promising antibodies from a huge number of candidates.*Okamoto We selected the particles to use as markers by
testing which ones had the highest sensitivity, which led tochoosing particles different from those used in conventional
immunochromatography methods. A major feature of thisproduct is superior antibodies and particles that it uses.
Nishimura We also enhanced kit performance by adding
features like technology to suppress non-specific reactions
and to enhance reactivity.
Okamoto That was our first experience with manufacturing,so we did many trial tests and made many improvements
to the technology before we released the product.
Nishimura We had to work through many different opinions
about how many trials to conduct and how to balance
quality with the delivery period, but everyone wanted to put
out a product that we all agreed on. We always returned tothat as our starting point, and that enabled us to keep
working with mutual understanding and respect.
Okamoto We were also hurrying to get it out because wewere starting later than other companies and did not yet
have a kit on the market. At the same time, everyone on
our team felt it was essential to ensure the kit’s reliability.
Nishimura I think it was a major point that, through all of
the many discussions, everyone on the team had the same
mindset. Because of that, a sense of teamwork naturally

Development team members

Bio-Science & Medical Research Unit,
Corporate Research Center

Diagnostic System
Department

Biotechnology Research Laboratory

ImmunoArrow™ SARS-CoV-2

developed. In the end, I think it worked really well because
each person understood their role, and was able to work as
a team while thinking independently about who should dowhat and when. I think the collaboration inside and outside
the company is what ultimately made the projectsuccessful.
* The antibody used in this product was produced in participation with the
Research Program on Emerging and Re-emerging Infectious Diseases (second
open recruitment) and Research on the development of immediate clinical testing
systems for SARS-CoV-2 of the Japan Agency for Medical Research andDevelopment (AMED) in fiscal 2020.

Immunochromatography will continue tobe used for quick action on infectious
diseases and mutant viruses
Okamoto When we were creating theimmunochromatography method for the kit, we developed
our own antibodies, antigens, and other biomaterials
in-house. But as we worked, I had the impression that theCompany’s base materials are fertile ground for creating
many more materials. I think there is potential to fuse our
non-woven fabrics, membranes, and other base materials
with biomaterials to produce new all-Toyobo products with
distinctive features.
Nishimura In addition to the PCR test reagents, I would
like to build out and serialize the ImmunoArrow™ brand toprovide a wide range of solutions for infectious diseases,
which is one of our objectives in the life science field. I
wonder if, in the future, testing can be easier and be donein more situations, such as before entering a stadium or
train station.
We created this kit for COVID-19, but would like tocontinue improving our antibody acquisition and production
technology and our development and production
technology related to immunochromatography so we canmake test kits more quickly when a highly infectious
influenza virus or other type of new virus mutation appears.
I would like us to continue working in this area tobecome one of the leading companies in the solution
business for diagnosing infectious diseases.
Whatever direction we go in, I would like us tocontinue placing the emphasis on teamwork.

TOYOBO REPORT 2021

40

The Future our R&D is Creating

Transforming R&D with DX—Integrating materials informatics
Amid the rapid changes in our society, the Toyobo Group is aiming to use IT and DX to bring out the full potential of its
technologies in various areas. Materials informatics (MI) is one of the key technologies we are integrating to our R&D
operations. MI applies information science (informatics) methods with AI, machine learning, and statistical analysis to efficiently
identify and develop materials.
We are harnessing the power of digital technology to accelerate the creation of new solutions and businesses.

Building a structure to utilize materials
informatics throughout the Company
In fiscal 2021, the Group established the IT and DX
Planning Department at the head office and the DX
Promotion Office at the Research Center. These two
departments are spearheading construction of the optimal
MI system, which will enable a significant advance in the
R&D processes for the Group’s core products andbusinesses. The first objective is for all of our researchers
using basic MI as an experimentation tool by the end of
fiscal 2023.
Key will be storing and analyzing the experiment data.
As we build a database capable of continuously collecting
and storing experiment records from all of the Group’s
research centers, we will train analysts and standardize thetechnology needed for the data analysis.
Following is an interview with a Toyobo researcher
who is using and developing MI at the Research Center.

Constructing MI optimized for Toyobo
Massive transformation of the R&D processes
for core products and businesses

MI enhances R&D sophisticationand efficiency
Develop moreadvanced data
analysistechnology

Harness big data

All researchers using basic MI
as an experimentation toolStandardize data
analysis technology,
develop humanresources

Develop datacollection
workflow

Analysis

Making the technology aseasy to use as possible

Developing analysis technology

I work in two departments, the DX Promotion Office and the Computational
Research Center. The DX Promotion Office is working with the people who will
actually be using the MI with the aim of creating worksites where MI can easily be
used. To that end, the office is creating a learning structure for MI-based analysis
and the software needed for the analysis. I have worked on experiments as a
researcher and understand that people who have not used MI before could feel
reluctant to use it. That is why I’m always trying to make the software as easy to
use as possible for people who are unfamiliar with the programs or digital tools.
At the Computational Research Center, we are working with the people whowill actually be using the MI for experiments to broaden the range of areas where
the MI will be used. In the future, we want to combine the MI and simulation to
help further advance our material development.

41

TOYOBO REPORT 2021

Collection

Natsuki Ito
Computational Research Center, Corporate
Research Center and DX Promotion Office,Research Center

Introduction

Value Creation
Process

Value Creation
Strategy

I want to examine and use
data from both inside andoutside the Company

Masafumi Shibuya
Advanced Processing Technology Unit
Corporate Research Center

MI provides new perspectives
on R&DMI and research on seawater
desalination membranes

MI and research on
conductive adhesives

Collecting the dataneeded to find solutions

Vylon Technology Center
Hardlen and Vylon Development Department

Overview of
FY2021My research group is developing next-generation seawater desalination
membranes. Membrane production must satisfy certain conditions, but eachcondition has numerous parameters and there is never enough time to test every
parameter. We use MI to instantly organize the parameters and create theoptimum production conditions. My group has just begun using MI, and we areboth arranging the parameters and gathering data at the same time. I’m looking
forward to sharing information with the DX Promotion Office so we can quickly
develop the MI system to its full potential.
Collecting in-house data is undoubtedly important, but so is data fromoutside the Company, such as research papers and patents, so in the future I
would like to also actively incorporate public data into our analysis. However,public data is not necessarily correct, so we will need to apply our own analysis
to verify its veracity.

I use MI to accelerate the R&D on conductive adhesives. I struggled with using
MI at first because it was a different approach from the usual R&D processes.
However it was extremely quick to find materials which in my experiencewouldn’t normally be considered. As we continue using MI, I think it will enable
even employees with minimal experience to engineer materials like experienced
professionals. I also think that improving our R&D efficiency will lead to workstylereform. Since I’m the team leader, I would like my team members to all be using
MI as a normal part of their jobs.
I also think we need to rethink where we have our researchers expend theirenergies. Using MI will open up time for us to focus our attention in other areas. I
would like to use that time to look at outcomes that are different from conventional
knowledge, and analyze and consider what mechanisms are at work.

Masami Hamano

The Basis of
Value Creation

Michihiko Irie
Chemical Research Unit
Corporate Research Center

MI and the development ofcopolymerized polyester

At the Vylon Technology Center, we are using MI for both the analysis andcollection of data. The ultimate goal is to be able to input the resin composition to
the MI and instantly be able to determine the physical properties. We are
improving our analysis methods and accumulating the data we will need to makethat possible. Since ensuring accuracy will need a considerable amount of data
and time, this is a multiyear project.
For the business divisions, it is important how quickly we can respond to
customer requests for products. In the past, researchers would rely on theirexperience and repeated trial and error until they found the right solution.
Sometimes we lost customers to competitors because they were quicker toproduce a solution. Increasing the use of MI will make us faster and boost thecompetitiveness of our business divisions.

TOYOBO REPORT 2021

42

Value Creation Strategy| Feature | Films—Establishing a Foundation to Create Synergies in Expanding Markets—for each process, including sales, technology, research andlogistics, and both companies took various opportunities tohold discussions. Furthermore, we held monthly debriefing
sessions to share information closely, experienced no major
obstacles to the integration process by clearing all issues
one by one, and are proceeding with operations smoothly
even after the completion of the integration.
I think one of the main reasons for this was the sharedvalues of helping the larger society and growing as companies
in the corporate philosophies of the Teijin and Toyobo Groups,
which are “In Harmony with Society” and Jun-Ri-Soku-Yu(adhering to reason leads to prosperity), respectively.

Chikao Morishige
Representative Director & Senior Managing Executive Officer
Head of Safety and Disaster Management
Head of Films and Functional Materials Solutions

Demonstrating synergies
With the demand for IoT-related products rapidly growing,
we anticipate that demand for mold releasing films forComplementing the technologies andhuman resources of two companies

MLCC will continue to steadily increase into the future.
Toyobo was always dominant in products for small
ceramic capacitors, while Teijin Film Solutions Limited was

In fiscal 2020, Toyobo Group entered into a stock purchasestrong in premium market segment products for larger

agreement with Teijin Limited for its subsidiary Teijin Films

sizes. We directly expect there to be synergies throughSolutions Limited to become a member of our Group. We

integration in this field. There are also many other products

changed the name of the company to Toyobo Filmand fields with demonstrable synergies. In fiscal 2021, we

Solutions Limited and completely integrated it within ourestablished an independent department within theexisting businesses in fiscal 2022.

Marketing Strategy Department to consider ideas that will

Since signing the purchase agreement, we have43

bring about future development so we could further

worked while being mindful of the post-merger integration

develop new products to grow sustainably. We plan to use(PMI) process. We specifically created a meeting structure

this to plant the seeds that will become the pillars for our

Product

Synergies

Mold releasing films
for MLCCTEIJINPEN films

TEIJIN
Developed heat-resistant PEN films new to Toyobo
TOYOBO Many film customers with optical applications and general industrial uses, and high market share
Demand of PEN films is increasing due to insulation of wind power generation motors, etc. Plans to develop
new products through combination of PEN films and Toyobo’s strong markets, and by improving raw materials

Laminating films for cans

TEIJIN
Lineup of laminating films for food cans
TOYOBO Lineup of laminating films exclusively for beverage cans
Demand for canned goods expected to increase, especially in U.S.

TOYOBO REPORT 2021

Has long sold large in-line release films, that form a coating layer during film formation, in the premium
market segment
TOYOBO Developed release films for the production of extremely small ceramics
Combination allows sharing of various information and technologies

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Expanded production line
at Inuyama Plant

Utsunomiya Plant (established in April 2021 throughthe business integration of Toyobo Film Solutions Limited)revenue in five and ten years in the future.
In addition, we will put our focus on providing

COSMOSHINE SRF®

expanded the food packaging film business andcommercialized products as being eco-conscious, and they

products that are unique to the Group and cannot be

have received more attention in recent years, with sales

emulated by others, and explore the possibility ofgrowing steadily. We believe that this technology eventuallymultilaterally creating synergies.

can be adopted in industrial films.
The Group will continue to develop films with lessenvironmental impact, in addition to various technologies

Investing in COSMOSHINE SRF®
We will also continue to concentrate on COSMOSHINE
SRF®, a polarizer protective film for LCDs used in TVs andcontributing to creating a circular economy.
1 Reusing resins without changing their chemical composition
2 Reusing raw materials by changing their composition through chemical
reactionsother devices. Demand is strong, and with the Inuyama
Plant production line that was expanded in July 2020 to be
fully operational in fiscal 2022, we will be able to provide a

Message from the Executive
Assistant to Headmore stable supply to the world.

Yoshihiro Nomi

However, we will need to carefully ascertain how long
this demand will continue in the medium- to long-term future.
We have also seen the arrival of OLEDs, micro-LEDs andothers as competing products to replace LCDs, and they may
develop their advantages and expand in market share. In
addition, LCD display manufacturers from South Korea aremoving production to China, and Chinese manufacturers may
have a large presence in the future. We will carefully watch
these trends while considering capital and R&D investments.

Becoming the No. 1 global
manufacturer of eco-conscious films
Our long-term goal is to become the No. 1 global
manufacturer of eco-conscious films in the films andfunctional materials field. Currently, by adopting bio-based
raw materials, reducing the amount of raw materials
through the development of thin and high-strength films,
promoting the development of material recycling1 andchemical recycling2 for films and other such initiatives, we
aim to contribute to the realization of a circular economy
and measures to combat climate change. We have

Executive Assistant to Head of Films andFunctional Materials Solutions Division
General Manager, Films and Functional
Materials Marketing Strategy Operating
Department
Served as President and Representative
Director of Teijin Film Solutions Limited, andstriving for synergies as the Executive Assistantto the Head since merger with Toyobo

Creating chemistry
I personally have known about Toyobo for a long time, so I
welcomed the opportunity when it came. However, because anumber of employees still have some reservations, we have
prepared communication plans for all levels while always
remembering that we need to address these feelings respectfully.
As a result, we successfully integrated two companies with histories
of outstanding world-class human resources and technologies.
Before the integration, the main focus was inevitably onsustaining the business while finding a balance during the
restructuring. After it was complete, there were changes such asproactive investment for sustainable business growth, and theimplementation of bold strategies while assessing risks from along-term perspective. These major differences in the stance ofmanagement toward the business were very refreshing.
We have fought as rivals and tried to find our own particularadvantages, which is why I would like to create chemistry by
combining both of our cultivated strengths.

TOYOBO REPORT 2021

44

Value Creation Strategy| Feature | Life Science—Strengths and Growth Strategy for the Diagnosing Infectious Diseases—
development in the genetic testing field and refined ourtechnologies for more than 20 years, constituting ourtechnological foundation. Because of this, we were able toquickly move forward with this development.
Furthermore, we launched an in vitro diagnostic
SARS-CoV-2 detection kit using immunochromatography inJune 2021 (see page 39 for more details).

Promoting joint research for theestablishment of more efficient testing
methods
Yutaka Ouchi

In fiscal 2021, we also undertook research aimed at improving

Director & Managing Executive Officer
Head of Life Science Solutions

the reliability and safety of tests, and shortening the time ittakes from collecting specimens to assessing the results.
Reducing the duration of the test will allow us to test alarger volume of specimens, leading to more efficient testing.

Developing in vitro diagnostic reagentsfor SARS-CoV-2 utilizing expertise
cultivated through research reagents

For this, we started a collaborative research project with theKitasato Institute and Tsubakimoto Chain Co. to establish anext-generation automated testing system. This research started
when the Kitasato Institute approached us after recognizing

Amid the rapid spread of COVID-19 in 2020, we launched

our achievements in the research reagents field. We strongly

SARS-CoV-2 genetic test reagents to be used whenendorsed the meaningful project and decided to participate in

conducting research on the virus in April. It has been used

the joint research. The research was adopted and started by thein research ever since. In addition, we released in vitro

Japan Agency for Medical Research and Development (AMED)

diagnostic products in July and have supplied them toas part of the FY2021 Program to Develop Countermeasure

medical institutions and testing centers.

Technologies against Viral and Other Infectious Diseases (3rd)We have manufactured and sold research reagents for(Development and Demonstration Research Support for

genetic testing since the 1980s, including reagents to test

Establishing New Testing Methods and Systems, etc. tofor norovirus, a common cause of gastroenteritis.

Achieve Early and Mass Infectious Disease Testing).

Due to the technical similarities with testing for

The joint research uses a pooling test method. We

SARS-CoV-2, we started development from the desire topreviously had to collect saliva samples from one person,

contribute to society by utilizing these commonalities. We

test it once, and then see if it was positive or negative.

have continuously invested resources in research andHowever, with the pooling test method, specimens from up

History of Research Reagents
1982
1989
1995
2014

45

Started business with three restriction enzymes
Launched our first PCR enzyme, rTth DNA polymerase
Launched the PCR enzyme KOD® DNA Polymerase, our current
core brand, and have continued improvements
Launched the Norovirus Detection Kit, a norovirus testing reagent,and have continued improvements

TOYOBO REPORT 2021

2020

Gained approval for our SARS-CoV-2 genetic testing reagent
to be covered by public medical insurance as a method in
conformance with the Manual for Pathogen Detection
2019-nCoV (issued by the National Institute of Infectious
Diseases)

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021(From left) SARS-CoV-2 Detection Kit -N setSARS-CoV-2 Detection Kit -N2 set-

Fully automated gene analysis system GENECUBE®

to five people can be collected and tested together at once.

COVID-19, there are other infectious diseases, including

While we would normally have to perform 100 tests if we

avian influenza, that risk causing pandemics in the future,collected 100 different specimens, if they are all negative, it

and finding measures against them have become an

only takes 20 tests, or just one-fifth the number. When aimportant social issue.

group tests positive, we only need to test those fiveIn the future, we will actively invest in the infectious

specimens again. This greatly reduces the number of tests

disease diagnostics area and set broader targets. We aim toand leads to increased efficiency and cost savings.

become the top provider of solutions for diagnoses of

We are conducting this research not only in theinfectious diseases not only domestically but also globally, withmedical field, but also with a view to utilizing it in entry

an eye on genetic testing and the entire diagnosis business at

screen at airports, which require rapid and mass testinglarge. In this way, we want to contribute even more to solving

systems, and the construction of testing infrastructure at

the global issue of the spread of infectious diseases.

venues such as large-scale international sporting events.
Message from the General
ManagerAiming to become the No. 1 provider ofsolutions for the diagnosis of infectious
diseasesIn the genetic testing field, we manufacture the reagents for
PCR tests in addition to the raw materials for them. For
example, according to our own estimates, we boast theworld’s second largest share of the raw materials forbiochemical reagents used in the measurement of neutral
fat and cholesterol during medical examinations and othersettings. In addition, we possess an outstanding level ofbiotechnology, particularly with highly functional proteinssuch as enzymes and antibodies. For instance, the antigen
testing kit using antibodies for SARS-CoV-2, which wasdeveloped in collaboration with the University of Toyama, isan example of the utilization of our unique technology forhighly functional proteins. The antibodies it uses weredeveloped through participation in AMED’s FY2020
Research Program on Emerging and Re-emerging
Infectious Diseases (2nd) (Research on the Development ofImmediate Clinical Testing Methods for SARS-CoV-2).
Although the world had paid insufficient attention to
the threat of infectious diseases, a global response is now
required to combat the spread of COVID-19. In addition to

Atsushi Sogabe
General Manager, Biotechnology Operating
Department and Manager, Bioproducts Sales
Department, and Bioproducts Development
Department

Creating edgy technologies
Our Group has been in the PCR business for more than 30 years. In
1995, we started selling PCR enzymes under the KOD® brand, andhave continuously reviewed and changed models since then.
To improve the performance of PCR reagents, it is important toalso remember the substances that assist the function of the main
enzymes. Because both are made of proteins, we cannot produce
good reagents without excellent technology to make proteins.
We have refined the technology to enhance the function ofproteins and to produce them efficiently through many years of
research. In addition, we have also enhanced the performance ofreagents themselves by combining them with these highly functional
proteins, as well as creating reagents with many distinct properties.
Thanks to these achievements, we enjoy a high degree ofrecognition in the reagent industry. The Group has many
opportunities to participate in joint development and other activities
as a result of being introduced to cutting-edge technologies byprofessors in academia.

TOYOBO REPORT 2021

46

Value Creation Strategy

Overview by Solution

Financial results
Net Sales (¥ bn)

Operating Profit (¥ bn)

152.8
127.1

Films andFunctional Materials
Overview of fiscal 2021
Sales and profit increasing from businessintegration, stay-at-home consumption, etc.
For fiscal 2021, net sales and operating profit increased to¥152.8 billion and ¥20.0 billion (operating profit margin:
13.1%), respectively. The effect of the business integration with
the Teijin Group’s film department contributed approximately¥20.0 billion yen to the increase in sales (see page 43 for detailsof the integration).
In the packaging film field, shipments of olefin-based films
decreased because of the fire that broke out at the Inuyama
Plant in September 2020. Although we benefited from lower
raw material costs, we still saw a decrease in sales. In addition,
due to the spread of COVID-19, foodservice-use productdemand was sluggish; however, sales of sealed retort pouchesof ready-to-eat food, 2-liter bottle labels, and other applications
for food to eat at home remained strong due to stay-at-homeconsumption demand.
Sales of CYCLE CLEAN®, a packaging film with arecycled resin ratio over 80%, also grew as customer demandfor eco-conscious products increased with growing
environmental awareness in the wider society.
In the industrial film field, sales of COSMOSHINE SRF®, apolarizer protective film for LCDs, and COSMOPEEL®, a moldreleasing film for MLCC, the two growth drivers of the field,
expanded and drove the growth in profit. Sales of
COSMOSHINE SRF® in particular increased by around 30%.
This was due to increased production and improved
productivity thanks to the installation of a new production line
at the Inuyama Plant.
For COSMOPEEL®, automobile demand fell in the firsthalf of the fiscal year, but the significant recovery in the second
half resulted in an approximately 20% increase in sales for thewhole year.

47

TOYOBO REPORT 2021

2020

2021

(FY)

14.6

20.0

2020

2021

(FY)

In the functional materials business, sales of VYLON®, acopolymerized polyester and HARDLEN®, an adhesion
promoter for polyolefin, recovered in the second half of the
fiscal year, though this did not offset the decline in sales
caused by the spread of COVID-19. On the other hand, in thephoto functional materials business, which deals withphotosenstive water-wash flexo printing plates, sales to China,
Europe and the United States remained strong.

Forecast for fiscal 2022
Two growth drivers are leading revenue sources
New machines for COSMOSHINE SRF® at the Inuyama Plant
will be fully operational in fiscal 2022, and we expect them tosignificantly contribute to our business performance. In
addition, we have been continuing enhancements of the
production system for COSMOPEEL®, at the Tsuruga
Research and Production Center since fiscal 2021, and we
expect the new line to contribute in the future. In addition, welook forward to synergies from the business integration with
the Teijin Group’s film department.
Through these factors, we anticipate net sales of ¥170
billion and operating profit of ¥20.3 billion (operating profit
margin: 11.9%)* for fiscal 2022.
* Forecast for fiscal 2022 as of August 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Value Creation Flow

Manufacturing

Procurement

Process

Enhancement of positiveeffects (increasing opportunities)

ESG aspects

Mitigation of negative
effects (reducing risk)

Resource circulation• Procuring recycled raw materials from PET bottles (Films)

Preventing climate change• Installation of gas cogeneration facilities, conversion of fuel fromcoal to gas

Resource circulation• Re-use of recycled raw materials
Crisper®, KAMISHINE®, SPACECLEAN®, CYCLE CLEAN®,RESHINE® (Films)• Re-use of non-conforming products
COSMOSHINE SRF® (Films)• Re-use of HAGIPRO resin*
full-scale start of production scheduled for October 2021 (Films)

Related material issues
Product life cycle
management

Reducing greenhouse gas
emissions

Product life cycle
management

Disposal / Re-use

Sales / Use* Impurity-free PET made by removing the surface treatment of films that would
otherwise reduce recyclability

Solutions for customer challenges and social issues• Saving resources and reducing GHG emissions by using
recycled raw materials and developing thinner products
Shrink film SPACECLEAN®
Film of recycled PET resin CYCLE CLEAN®
Film of plant-derived raw materials BIOPRANA®
• Enables long-term food storage, reducing food loss
Transparent vapor-deposited film ECOSYAR®
• Enhances the performance of communications equipment
Polarizer protective films for LCDs COSMOSHINE SRF®
Mold releasing films for MLCC COSMOPEEL®
• Replaces metals, reducing weight
Copolymerized polyester VYLON®
• Does not use solvents, reducing environmental impact
Environmentally conscious printing plates Printight®,
Cosmolight®

Resource circulation• Collecting and recycling silicon-coated films (Films)

Ability to provide solutions(contribution through our business)

Reducing greenhouse gas
emissions
Reducing environmental
impactProduct life cycle
management

TOYOBO REPORT 2021

48

Value Creation Strategy

Overview by Solution

Financial results
Net Sales (¥ bn)
43.9

Mobility
Overview of fiscal 2021
Decrease in sales and profit due to lower global
automobile production
In fiscal 2021, Toyobo’s Mobility Solutions Division had net
sales of ¥36.6 billion and an operating loss of ¥1.6 billion.
Although sales recovered in the latter half of the fiscal yearwith the global recovery in automobile production, it could
not sufficiently compensate for the impact of reduced
automobile production due to the spread of COVID-19 tothe second quarter, resulting in decreased sales and profit.
For the airbag business, we did not see an
improvement in profit even though delivery volumes
recovered during the fiscal year. This was mainly due tothe continuing need to procure yarn at higher prices
because of the fire at the Tsuruga Research andProduction Center in September 2018, and also unstablesupplies and price hikes in some raw materials from the
middle of the fiscal year.
In the engineering plastics business, our sales volume
recovered in the latter half of the fiscal year, particularly led
by China; however, this did not fully make up for the sales
decline in the first part of the year due to reduced
automobile production.
Since October 2020, inappropriate conduct regarding
certification by Underwriters Laboratories (UL), a third-party
safety science organization in the U.S., has been
discovered for several products in this field. We havealready completed an investigation, and are reconfirming
delivery specifications and discussing compensation costswith our customers. Products related to improper UL
certification comprise about 10% of the approximately¥30.0 billion of the field’s sales.
Considering this an issue for the entire company, theGroup established the Quality Assurance Division in April
49

TOYOBO REPORT 2021

2020

Operating Profit (¥ bn)

36.6

2021

(FY)

– 0.7

–1.6

2020

2021

(FY)

2021 under the direct control of the President, and is
working to prevent similar events from occurring in the
future with the help of external experts.

Forecast for fiscal 2022
Recovery expected in second half after
uncertain results in first part of year
Due to the spread of COVID-19 and the impact fromshortages of various raw materials such as
semiconductors, the circumstances surrounding
automobile manufacturing in the first half of fiscal 2022
remain unclear. However, we believe that the economy willundoubtedly recover in the second half of the year. We arealso working to respond to quality issues in engineering
plastics, and aim to expand sales again in the latter half. In
the airbag business, while the impact of the fire at the
Tsuruga Research and Production Center and the global
shortages of the raw material nylon 66 have caused issues
in procuring yarn, the increasing capacity utilization rate at
all bases leads us to expect further improvement.
Moreover, we are constructing a yarn plant in Thailand, andplan to offer yarn for the evaluation of customers by the endof the fiscal year. (See page 89 for more details about yarnplant.)We are continuing initiatives in line with major trends
such as CASE,1 MaaS2 and sustainability, and will ultimately
promote the provision of total solutions in the mobility field.
Based on this, we anticipate net sales of ¥40 billion
and an operating loss of ¥1 billion (improvement of ¥0.6 billion
from previous year)3 for fiscal 2022.
1 Abbreviation of “Connected, Autonomous, Shared & Service, Electric.”
Refers to the latest technological advances in automobiles
2 Abbreviation of “Mobility as a Service.” Refers to the provision / use of various
forms of transportation as a one-stop service, and the systems for that
3 Forecast for fiscal 2022 as of August 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Value Creation Flow

Procurement

Process

Enhancement of positiveeffects (increasing opportunities)

ESG aspects

Mitigation of negative
effects (reducing risk)

Chemical substances management• Conducting reviews to ensure compliance with legal regulations
and switching to alternative components

Resource circulation

Manufacturing• Promoting use of recycled resin

Preventing climate change• Establishing efficient production methods, promoting energy
conservation

Developing human resources• Hiring local workers in overseas plants• Providing technology support to domestic and overseas Group
companies

Disposal / Re-use

Sales / Use

Worker health & safety

Management base
Related material issues
Reducing environmental
impactProduct life cycle
management

Reducing greenhouse gas
emissions

Human resource
management• Raising awareness of preventive maintenance to prevent accidents

Safety, disaster prevention,
quality

Solutions for customer challenges and social issues

Ability to provide solutions• Reducing GHG emissions, enhancing energy efficiency andimproving safety in next-generation mobility• Helping to realize a pleasant vehicle interior space (safety andcomfort)Engineering plastics:
Polyester resin specially targeted for injection molding
VYLOPET®
Thermoplastic polyester elastomer PELPRENE®
High-performance polyamide resin GLAMIDE®
Biomass polyamide resin VYLOAMIDE®
Thermoplastic stampable sheet QuickForm®
Non-coated and coated fabrics for airbags

Resource circulation• Collecting and recycling airbag fabric offcuts, and recycled asengineering plastics resins• Collecting and recycling packaging film offcuts, and recycle asengineering plastics resins(contribution through our business)

Reducing greenhouse gas
emissions

Product life cycle
management

TOYOBO REPORT 2021

50

Value Creation Strategy

Overview by Solution

Financial results
Net Sales (¥ bn)
128.4

Lifestyle andEnvironment
Overview of fiscal 2021
Uphill battle in super fibers and textiles
In fiscal 2021, demand decreased due to the spread of
COVID-19, and the nonwoven fabrics, super fibers, andtextiles businesses remained sluggish. As a result, net sales
and operating profit fell to ¥109.1 billion and ¥4.4 billion(operating profit margin: 4.0%), respectively.
The textiles business saw a nearly 30% decline insales largely due to poor over-the-counter sales caused by
the spread of COVID-19.
In the nonwoven fabrics business, sales of the
nonwoven filament fiber spunbond did not grow as muchas expected for construction and civil engineering
applications. Meanwhile, sales of functional filters for air
purifiers and masks were strong, while sales for officeequipment including copy machines and projectors werelackluster as more companies implemented telecommuting.
Sales of Tsunooga®, a high strength polyethylene fiberused in factory gloves, decreased due to the drop in factory
utilization rates through the world.
Forced to operate in a severe business environment
from the decline in demand in the Chinese market andanti-dumping policies, the market environment for acrylic
fibers deteriorated due to the warm winter and the spreadof COVID-19.
On the other hand, in the environmental solutions
business, although we struggled to obtain new deals forequipment for VOC emissions treatment, which recoversolvents and contribute to the prevention of air pollution, due
to the spread of COVID-19, we achieved solid results in theend thanks to a backlog of orders from the previous fiscal
year. In addition, sales increased for seawater desalination
RO membranes, which are used in large seawater
desalination plants and contribute to resolving water
51

TOYOBO REPORT 2021

2020

Operating Profit (¥ bn)

109.1

2021

(FY)

5.9

4.4

2020

2021

(FY)

shortages.
The functional textiles business also produced strong
results, with polyester staple fibers for sanitary materials
and the three-dimensional cushion material BREATHAIR®
used in bedding.

Forecast for fiscal 2022
Strengthening the solutions business in theenvironmental field
In the environmental business, there is demand forequipment for VOC emissions treatment from the increasein lithium-ion batteries and semiconductor factories, andin the nonwoven fabric and super fiber businesses, orders
are recovering with return of overseas production activities.
In the future, the need is expected to increase for our
separation materials and filtration products with a variety ofcharacteristics, such as greenhouse gas reduction and ZLD.1
We will strengthen our solutions business thatcombines materials and equipment to solve the issues ofour customers. In addition, we are constructing theMulti-functional Nonwoven Production Center (provisionalname) in the Iwakuni Production Center, and aim to start
production in July 2022 (see page 89 for details).
We will also accelerate research, development andprocurement for the conversion of raw materials to
eco-materials, and aim to become a manufacturer ofcomprehensive functional nonwoven fabrics that provides raw
materials, staple fibers, filament fibers and applied products.
Through these actions, we anticipate net sales of¥113 billion and operating profit of ¥5.2 billion (operating
profit margin: 4.6%)2 for fiscal 2022.
1 Zero liquid discharge: Wastewate treatment that eliminates liquid wastefrom the perspective of wastewater reclamation and reuse
2 Forecast for fiscal 2022 as of August 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Value Creation Flow

Manufacturing

Procurement

Process

Enhancement of positiveeffects (increasing opportunities)

ESG aspects

Mitigation of negative
effects (reducing risk)

Resource circulation• Use of renewable plant-derived materials (Environment, Functional Textiles)• Use of materials recycled from PET bottles (Nonwoven Fabrics, Functional Textiles)

Preventing climate change• Energy conservation through systems improvement and greater
production efficiency (Nonwoven Fabrics)• Reduction of transport-related GHG emissions through local production• Regular Quality Assurance meetings with customers to strengthen
quality control (Nonwoven Fabrics, Functional Textiles)

Developing human resources• Active employment of local workers by Saudi Arabian affiliatedcompany (Environment)• Chinese affiliated company has assigned local workers tomanagerial and sales positions (Nonwoven Fabrics, Functional Textiles)

Sales / Use

Product life cycle
management

Reducing greenhouse gas
emissions(Nonwoven Fabrics, Environment, Functional Textiles)

Quality and customer health & safety

Disposal / Re-use

Management base
Related material issues

Solutions for customer challenges and social issues• Supplying the world with safe water
Seawater desalination and wastewater treatment systems(RO, BC, FO membranes)• Harmful substances are adsorbed, reducing the impact on theenvironment
Activated carbon fiber K-Filter®, Equipment for VOC emissions treatment
Functional nonwoven fabrics (electret air filter ELITOLON®, heavy
metal ion adsorbent spunbond COSMOFRESH NANO™)
PPS fibers for bag filters PROCON®
• High functionality, recyclable, enhanced comfort
Three-dimensional cushion material BREATHAIR®
• Reduces weight and conserves resourcesSuper fibers IZANAS®, Tsunooga®, ZYLON®

Resource circulation• Hollow fiber membrane materials are biodegradable after disposal

Safety, disaster prevention,
quality

Human resource
management

Ability to provide solutions(contribution through our business)

Reducing greenhouse gas
emissions

Reducing environmental
impact(Environment)

Product life cycle
management

Health & safety of local residents• Prevention of soil contamination, control of poisonous gases during
combustion (Environment)

Reducing environmental
impactTOYOBO REPORT 2021

52

Value Creation Strategy

Overview by Solution

Financial results
Net Sales (¥ bn)
25.5

Life Science

2021

(FY)

3.8

4.5

2020

2021

(FY)

Overview of fiscal 2021

Forecast for fiscal 2022

Sales and profit increased from rapid growth indemand for PCR test reagents

Anticipating demand for PCR and antigen testing

While this segment is small in size, it is highly profitable. The contract
manufacturing business of pharmaceuticals struggled in fiscal 2021;
however, the biotechnology business saw a rapid increase indemand for PCR test reagents, resulting in net sales of ¥27.1 billion
and operating profit of ¥4.5 billion (operating profit margin: 16.7%).
In the biotechnology business, although the demand forbiochemical diagnostic reagent raw materials declined, PCR test
reagents saw a significant increase in sales volume due to the
spread of COVID-19. By doubling our test reagent production
capacity from February 2021, our customers improved theirsystems to enable the testing of 1,000,000 specimens from
500,000 per month. As a result, our sales volume increased
significantly from March 2021.
In the contract manufacturing business of pharmaceuticals,
flaws were found in the manufacturing process environmental
monitoring at the Otsu Pharmaceuticals Plant that is to ensure thatthe required level of cleanliness is maintained. As a result, we
temporarily suspended operation, and revenue deteriorated due torelevant costs for GMP* compliance. We recognize this as a major
issue and have developed master plan for business normalization.
We are enforcing reforms in both intangible and tangible elements,
including fostering a quality culture, and remodeling facilities.
In the medical products business, shipments of various
hollow fiber membranes used in the medical field remained
strong. Due to the spread of COVID-19 in particular, demandfor virus-removing membranes used when manufacturing
antibody drugs and vaccines increased worldwide, and sales
have also doubled. Meanwhile, sales of the medical equipment
nerve regeneration conduit Nerbridge® and catheters
decreased from the previous year due to postponements ofnonessential surgeries caused by the spread of COVID-19.
* Good Manufacturing Practice: manufacturing and quality control standards
for pharmaceuticals and medicated products

53

2020

Operating Profit (¥ bn)

27.1

TOYOBO REPORT 2021

For SARS-CoV-2 PCR testing reagents, we expect shipments tocontinue at a pace similar to the previous fiscal year, but will
gradually decrease as vaccinations progress more broadly. On theother hand, demand for private sector testing is expected toremain, such as testing to prove lack of infection with SARS-CoV-2
when traveling overseas. In addition, we anticipate that the antigen
testing kit for COVID-19, first launched in June 2021, will contributeto our business performance in the future as we expect it to be
used in rapid tests during hospitalization and before outpatient
surgery, in addition to regular testing. We will also consider
developing this technology to utilize in research reagents for
simple screening at schools, companies and sporting events.

Anticipating demand for components used in
the medical field
We are planning to increase our production capacity in order toexpand our business in hollow fiber membranes used in medical
applications, including those for artificial kidneys. There is aparticularly high demand for virus-removing membranes used
when manufacturing antibody drugs, and we plan to double our
production capacity. In addition, in response to customers’
expectation for starting sales early, we are working on theoverseas development of Nerbridge® and the creation of sales
and production systems for the domestic release of new boneregeneration materials, which are expected to contribute to ourbusiness performance in the future.
Through these actions, we anticipate net sales of ¥30
billion and operating profit of ¥6 billion (operating profit margin:
20.0%)* for fiscal 2022.
* Forecast for fiscal 2022 as of August 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Value Creation Flow

Manufacturing

Procurement

Process

Enhancement of positiveeffects (increasing opportunities)

ESG aspects

Mitigation of negative
effects (reducing risk)

Quality and customer health & safety• Acceptance testing based on GMP (Pharmaceuticals)• Ensuring complete traceability of raw materials in products
intended for implant

Worker health & safety• Conducting prior reviews concerning the safety of chemical
substances

Quality and customer health & safety• Strict controls based on GMP (Pharmaceuticals)

Preventing climate change• Promoting energy conservation by upgrading to highly efficientequipment (Medical Membranes)

Resource circulation• Collecting offcuts, etc. and providing these to manufacturers thatregenerate raw materials (Pharmaceutical Membranes)• Reducing packaging material volumes by simplifying packaging

Management base
Related material issues
Safety, disaster prevention,
quality

Safety, disaster prevention,
quality

Safety, disaster prevention,
quality

Reducing greenhouse gas
emissions

Product life cycle
management

Sales / Use(Medical Equipment)

Solutions for customer and social issues• Enhancing QOL through our contributions to medical settings
Nerve regeneration conduit Nerbridge®
Artificial kidney hollow fiber membranes
Fully automated gene analysis system GENECUBE®
Sterile injections, etc.

Quality and customer health & safety

Disposal / Re-use• Formation of scientific support group to prevent incorrect use of
products (Medical Equipment)

Chemical substances management• Selection of specified collection contractors for organic solvents,
etc. (Medical Equipment)

Worker health & safety• Installation of exhaust ducts at sites where organic solvents arehandled (Medical Equipment)

Health & safety of local residents• Outsourcing of waste material processing to specialist operators(Medical Equipment)

Ability to provide solutions(contribution through our business)

Safety, disaster prevention,
quality

Reducing environmental
impactSafety, disaster prevention,
quality

Safety, disaster prevention, quality
Reducing environmental impact

TOYOBO REPORT 2021

54

The Basis of
Value Creation
Message from the Sustainability Officer .................... 56
ESG Management ................................................... 57
E

Environmental Policy & Activities
Climate Change ................................................ 58
Resource Circulation ......................................... 61
Eco-Conscious Products .................................. 64
Chemical Substances Management ................... 65

S

Social Contribution Policy & Activities
Safety, Disaster Prevention, Quality .................... 66
Human Resources Management ....................... 69
Supply Chain Management ............................... 73
Human Rights .................................................. 74

G

Governance Policy & Activities
Management Team ........................................... 75
Corporate Governance ...................................... 79
Message from an Outside Director ..................... 84
Compliance ...................................................... 85
Risk Management ............................................. 87
Data Security and Privacy .................................. 88

55

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021The Basis of Value Creation

Message from the Sustainability Officer

Nobuya Fujiwara
Executive Officer
Supervisor of Corporate
Sustainability Department

The Toyobo Group has been growing and expanding its
business by responding to the demands of society andcontributing solutions to of social issues since its founding in
1882, long before the concept of CSV was formed. In recent
years, we have been broadening the concept of CSR toencompass initiatives for environmental conservation andcontribution to local communities.
Sustainability is a natural extension of this for acompany with such a history, and in fiscal 2021 we began
full-fledged sustainability management activities.
To be sustainable, the Toyobo Group must have both
economic value and social value. The Corporate
Sustainability Department was created in April 2020 with theobjective of building those two values by incorporating ESG
elements into the Group’s management and strategies andby improving the communication of information to
stakeholders. Some of the main activities under way in 2021
include steps to achieve carbon neutrality and a circular
economy as well as measures to apply risk managementfrom an overall company perspective.
I believe there are two main avenues to achieving
sustainability. The first is to apply an ESG perspective to
identifying opportunity and risk and strengthening themanagement base. The second is to apply a CSV
perspective to using our business to address social issues
and making that a driver for business growth that gives us acompetitive advantage. Utilizing the Group’s various
technologies and services in solutions for social issues andto achieve the SDGs, such as by helping reduce
environmental burden, will be directly connected to thecompany’s purpose for its existence.
In addition, in the future society made up of people
with different values, it will be essential that each employee
feels pride and purpose in their work. We are instilling theconcept of sustainability along with our corporate
philosophy into our business approach and integrating
sustainability into our management and business strategies
as we seek to fulfill our long-term vision.

Conceptual Framework—Sustainability, CSV and ESG

CSVSustainability

Creating social
value throughour business

Promoting positive
impacts
Having a plus (+)
impact on society(Addressing social issues)
Solutions Divisions

Responding to society’s needs
ESG

Reducing emissions of greenhouse gases / Respect for human rights /Social and environmental considerations in the supply chain etc.

Corporate Sustainability Department, Solutions Divisions, Corporate departments

Controlling negative
impacts
Not having a minus (–)
impact on society

TOYOBO REPORT 2021

56

ESG Management
Toyobo has also established a Sustainability
Committee, chaired by the President, to undertake thecross-departmental promotion of sustainability across theentire company. The Sustainability Committee meets on aquarterly basis to confirm the progress made in implementing
sustainability activities throughout the company, anddiscusses new issues that need to be addressed, andcompany-wide risks. The content of the Committee’s
discussions is reported to the Board of Directors on a regularbasis. The management of progress made in relation tomateriality has also been conducted within this framework.

Management system
Toyobo Group regards sustainability as a key aspect ofcorporate management, which should be promoted
throughout the Group. In April 2020, we established the
Corporate Sustainability Department, which since April 2021
has reported directly to the President. The Corporate
Sustainability Department puts forward proposals forincorporating a sustainability perspective into the company’s
growth strategy, and also enhances support for measures
aimed at realizing these proposals, as well as strengthening
the collation of sustainability and ESG-related internal
information and the dissemination of such information bothwithin and outside the company.

Board of Directors

Board of Corporate Auditors

President

Board of Managing Executive Officers
and Controlling Supervisors

Sustainability Committee
Chair:President
Members:Heads of Solutions Divisions
Officers responsible for staff
and corporate departments
Secretariat: Corporate Sustainability
Department

Safety and Disaster Management
Committee
Global Environmental Committee

Risk Management Committee
Chair:President
Members:Heads of Solutions Divisions
Officers responsible for staff andcorporate departments
General Managers of Risk Management
and Compliance Functions
Secretariat:Corporate Sustainability Department

Corporate Planning
Committee

Financial Control
Committee

Internal Control Committee
Information Committee

PL/QA Committee*

Research & Development
Committee

Compliance CommitteeIntellectual Property Committee

Corporate departments

Solutions Divisions

Export Reviewing Committee* Product Liability/Quality Assurance Committee

The Ten Principles of UNGC

UN Global Compact (UNGC)
In January 2020, Toyobo became a signatory to UNGC, andalso joined Global Compact Network Japan, which
comprises Japanese companies and organizations that are
UNGC signatories. As a responsible corporate citizen, thisreflects our endorsement of the goal to resolve global issues
and realize sustainable growth. We also gather information
through our participation in the subcommittees of Global
Compact Network Japan, utilizing this in our day-to-day
activities. From fiscal 2021, we are participating insubcommittees such as ESG, Supply Chain, Environmental
Management, Kansai-based regional subcommittee,
Reporting Research. Toyobo is strengthening measures torealize a sustainable society by following the ten principles of
UNGC.

Human
RightsPrinciple 1:
Businesses should support and respect
the protection of internationallyproclaimed human rights; andPrinciple 2:
make sure that they are not complicit inhuman rights abuses.
Principle 3:
Businesses should uphold the freedom of
association and the effective recognition of
the right to collective bargaining;

LabourPrinciple 4:
the elimination of all forms of forced andcompulsory labour;
Principle 5:
the effective abolition of child labour; andPrinciple 7:
Businesses should support a precautionary
approach to environmental challenges;
Principle 8:
undertake initiatives to promote greater
environmental responsibility; andPrinciple 9:
encourage the development and diffusionof environmentally friendly technologies.

AntiCorruption

TOYOBO REPORT 2021

p.21-24,
p.70-71,
p.73,P.74

Principle 6:
the elimination of discrimination in respectof employment and occupation.

Environment

57

p.21-24,
p.73,74

Principle 10:
Businesses should work against corruption
in all its forms, including extortionand bribery.

p.21-24,
p.47-54,
p.57,
p.58-65

p.21-24,
p.85-86

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021E Climate Change
Environmental Policy & Activities

Long-term vision and KPIThe Paris Agreement, an international framework on climatechange, aims to limit global temperature rise to less than
2 degrees Celsius from pre-industrial levels, or less than
1.5 degrees if possible. In recent years, countries worldwide
have been accelerating their initiatives to reduce greenhousegas(GHG) emissions to virtually zero by 2050 in order toachieve the goal of the agreement.
Toyobo Group seriously considers this social
environment, and recognizes the risks and opportunities
posed by global warming and climate change on ourbusiness, which is why we have set the goal of achievingcarbon neutrality or net-zero GHG emissions by fiscal 2051.
We will promote the reduction of GHG emissions from ourbusiness activities by improving production efficiency,
converting fuels in our production activities, and promoting

the introduction of renewable energy such as solar power toachieve net-zero emissions by fiscal 2051.
In addition, we will make efforts to reduce GHG
emissions in the entire value chain through actions such as
reducing product weight, reviewing raw materials andpromoting green logistics. Also, we will expand contributed
GHG reductions using solutions based on the Group’s
unique products and technologies. Specifically, we aredeveloping a RO hollow fiber membrane that contributes toenergy saving in seawater desalination plants, and reducing
the weight of engineering plastics to contribute to improved
fuel efficiency in automobiles, we also are providing films andFO membranes used in wind power generation and osmotic
power generation, and developing organic film solar cells
boasting the world’s highest power generation efficiency
under indoor lighting. Furthermore, we are developing
carbon recycling technology that separates and captures

Targets for Scope 1 and Scope 2*

Emissions reductions from business activities(fuel conversion promotion / production efficiency improvements / renewable energy introduction, etc.)
FY2014FY203130% reduction

FY2051Net-Zero* Scope 1: Direct emissions from owned or controlled sources
Scope 2: Indirect emissions from the use of purchased electricity, heat and steam

Targets for entire value chain

Contribution through products and solutions(raw material conversion / carbon recycling technology / renewable energy-related materials, etc.)

FY2051

Emissions<Contributed reductions

EmissionsContributed reductions

TOYOBO REPORT 2021

58

members from throughout the company and will study andimplement substantive measures, such as encouraging
innovation, promoting alliances, accelerating research anddevelopment, and creating solution businesses from along-term perspective.

CO2, in addition to other activities. We will calculate thecontributed reductions as the amount of GHG emissions
reduced through these efforts, and we aim to achievecarbon neutrality by making it higher than that of the entire
value chain by fiscal 2051.

Three objectives to achieve by formulating
carbon neutral strategies

Structure to achieve carbon neutrality
In April 2021, Toyobo established the Carbon Neutral
Strategies Council and the Carbon Neutral Strategies
Cross-Functional Team to formulate and promote strategies
to achieve carbon neutrality.
The Council consists of Corporate Executive Officers
and Controlling Supervisors, and will formulate strategies topursue and milestones to reach based on three objectives inorder to diligently make efforts to achieve carbon neutrality
company wide. The Cross-Functional Team consists of

1. Minimize greenhouse gas emissions generated from
Toyobo Group’s production activities
2. Contribute to reducing greenhouse gas emissions
and ultimately achieving carbon neutrality throughsolutions provided by Toyobo Group
3. Place emphasis on developing technologies for
capturing and separating greenhouse gases

Promotion system
Subcommittee
Carbon Neutral Strategies Council
Comprising members of theBoard of Managing Executive
Officers and Controlling
Supervisors

Board of Directors
President

Sustainability
Committee

VariousCommittees

Comprehensive issues about
corporate sustainability

Examples of GHG emissions reduction
contributions FO membrane for osmotic
power generation
Osmotic power generation using high-salinity
geothermal water, a source of renewable energy, hasbeen receiving public attention. Toyobo has developed
a forward osmosis (FO) membrane for the power plantcore used in this method, and are runningdemonstration tests at a power plant in Europe.
Geothermal water osmosis power generation uses
the high osmotic pressure of geothermal water with highsalt concentrations pumped from underground.
Compared with solar and wind power, the weather andtime of day does not affect geothermal power
generation, and a 1 MW geothermal osmotic power

59

TOYOBO REPORT 2021

Carbon Neutral Strategies
Cross-Functional Team
Leader: Executive officer of Corporate Sustainability
Department
Secretariat: Corporate Sustainability Department
Participant: Business departments relevant to carbon
neutrality R&D, Innovation Strategy, Technology
Innovation

plant can reduce annual CO2 emissions by 7,200 tonnes
compared with coal power generation. In addition, it
does not emit harmful substances such as nitrogenoxides and sulfur oxides normally emitted during
combustion.
We are currently performing demonstration tests
on the FO membrane using highly concentrated salt
water at a salt manufacturing plant in Europe, in thehope of putting it to practical use as soon as possible.

Osmotic power plant employing FO membraneIntroduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Reducing GHG emissions

Introduction of renewable energy

In fiscal 2021, Toyobo is accelerating our reduction activities
by raising our interim targets (fiscal 2031) from a 17%
reduction (compared with fiscal 2014) to a 30% reduction(Scope 1 and Scope 2 combined, compared to fiscal 2014)
and our short-term targets from an annual 1% reduction(compared with fiscal 2014) to an annual 1.8% reduction.
We plan to revise the targets depending on ourachievement.
In fiscal 2020 we constructed the Group’s fourth gas
cogeneration facility* at the Tsuruga Research andProduction Center, our largest R&D and production base.
We will also consider the introduction of renewable energy
and switching to CO2-free fuels in the future.

Malaysia is currently promoting the introduction of clean
energy, and TOYOBO TEXTILE (MALAYSIA) SDN. BHD. hasdecided to install solar power generation facilities in its new
factory.
After completion, solar power is expected to provide
approximately 7% of all energy used by the whole factory.
This will result in a yearly CO2 reduction of 915 tonnes, whichis equivalent to a Group-wide 0.1% reduction in total energy
consumption.

*An energy recycling system, harnessing waste heat (from clean natural
gas-fired electric generation) to produce steam and hot water used in
manufacturing processes, supplying hot water, air conditioning, etc.

GHG emissions
In fiscal 2021, the CO2 emissions for Scope 1 and Scope 2
totaled approximately 902 thousand tonnes, 25.7% lower
than the reference fiscal year (fiscal 2014). The increase fromthe previous fiscal year is due to additional emissions fromthe Utsunomiya Plant, which joined the Toyobo Group. We
have set greenhouse gas emissions as a KPI, and we willcontinue to work towards achieving this target throughenergy conservation, production efficiency improvements,
the introduction of renewable energy, and fuel conversion.

KPI
30% reduction compared to
FY2014 (FY2031 target)

Greenhouse gas emissions

Support for the TCFD and participationin the TCFD Consortium
In January 2020, Toyobo Group announced its support for
the Task Force on Climate-related Financial Disclosures(TCFD) proposals, and joined the TCFD Consortium, a groupof companies and financial institutions that agree with therecommendations.
The TCFD was established by the Financial Stability
Board (FSB), whose members include representatives ofcentral banks, financial supervisory authorities, and othersfrom 25 major countries and regions, and its
recommendations urge companies, organizations, andothers to disclose information about climate-related risks
and opportunities. In Japan as well, preparations areunderway to respond to TCFD proposals, including the
publication of the “Guidance on Disclosure of Climate-related
Financial Information (TCFD Guidance)” by the Ministry of
Economy, Trade and Industry.
With the announcement of our endorsement of the
TCFD proposals and our participation in the consortium, we
will continue to meet requirements for accountability to ourstakeholders by further analyzing and responding to the risks
and opportunities to our business posed by climate change,
and by expanding our disclosure of relevant information.

Scope 1, 2 greenhouse gas emissions (Japan, overseas)
Japan total1 (thousand t-CO2)964
63

Overseas total2 (thousand t-CO2)

904
60

901

2018

844

2019

902

873

2020

54

58

820

844

2021

(FY)

1 Japan total: Total for TOYOBO CO., LTD. and domestic consolidated subsidiaries
2 Overseas total: Total for overseas consolidated subsidiaries

TOYOBO REPORT 2021

60

Resource Circulation
Initiatives centered on plastic resource
circulation

develop and promote the use of alternative materials.
Toyobo Group is also a member of the Japan
BioPlastics Association*1 and Petcore Europe.*2

Basic approach*1 The association was established in 1989 with the aim of promoting the use of
bioplastics, and establishing a testing and evaluation system.
*2 A consortium of more than 80 companies and organizations spanning theentire value chain of European PET-related companies.

In recent years, there have been growing expectations insociety for the creation of a circular economy; an economic
system that recycles and reuses previously discarded
products as new resources.
In Toyobo Group, we have been active in developing
products and technologies aimed at reducing environmental
impact. For our mainstay plastic products, we are working toincrease the ratio of recycled resins and biomass(plant-derived) materials, and to commercialize biomass
plastics that retain their high functionality.
To add to this, we have long been taking a broad viewin searching for new technologies. One such example is atechnology that creates polyester raw materials from wood.
Anellotech Inc., a U.S. biochemical venture company iscurrently developing this technology.

Structure
To further accelerate these initiatives and contribute tocreating a sustainable society, in April 2020 we launched theRenewable Resources Business Development Department.
By 2030, we hope to shift to using biomass forpolyester resin, and establish technologies for material andchemical recycling.* These technologies will contribute to
reductions in greenhouse gases emitted from thermal
recycling process of plastic waste, as well as reductions in
the environmental impact from emissions of pollutant
release.
Based on our slogan of “Catalyzing Circular Economy,”
we will continue to fulfill our responsibility toward the future
and thus aim for sustainable growth.
*Material recycling: conversion to flakes and pellets, and reuse as resinmaterials.
Chemical recycling: using chemical reactions to change the composition ofmaterials, and reuse these as raw materials.

Participation in various initiatives
Toyobo Group is working closely with a variety of companies
and organizations, and is active in a number of initiatives
aimed at contributing to the construction of a plastics value
chain that is appropriate to the era of the circular economy.
In August 2019, Toyobo Group joined the European
consortium Circular Economy for Flexible Packaging(CEFLEX)—this focuses on the development and supply oftechnologies and products while staying on top of informationand trends concerning recovery systems and regulations.
We have also participated from the beginning in theJapan Clean Ocean Material Alliance (CLOMA), an
organization established in 2019 in Japan to reduce marine
plastic waste. Through collaboration with other CLOMA
members, which includes manufacturers, processors andusers of packaging and other materials, we will work to

61

TOYOBO REPORT 2021

Strategy
A move to biomass as well as recycling are complementarywhen it comes to promoting plastic resource circulation.
Transitioning to biomass helps us reduce our dependenceon limited petrochemical materials, and recycling allows
more efficient use of available resources. We are promoting
a strategy to make all our film products renewable (recycling
and biomass) by 2050.

Strategy 1: Using biomass for polyester
100% biomass plastic for food packaging film
Our focus is on furandicarboxylic acid (FDCA) as a biomass
raw material. FDCA is polymerized using our proprietary
technology to produce polyethylene furanoate (PEF), a
high-performance polyester. PEF is a 100% biomass plastic
with excellent gas barrier properties, and when formed into afilm can help extend the shelf life of food contents, and thus
reduce food losses. The world’s first FDCA production plantis scheduled to be opened by Avantium in 2023. We plan to
use this FDCA to produce PEF film.
We are also exploring other initiatives besides PEF inorder that we can make all of our film products renewable(recycling and biomass) by 2050.

Strategy 2: Material recycling
Developing catalysts to increase PET recyclability
TOYOBO GS Catalyst®, a polymerization catalyst developedby Toyobo, is the world’s first aluminum catalyst that does
not contain any heavy metals. PET degrades during
repeated melting processes in recycling, but the PET
obtained using this catalyst does not deteriorate whenmelted, making it well suited to recycling.
Toyobo has already licensed the technology toThailand’s Indorama Ventures Public Company Ltd., theworld’s largest PET resin manufacturer. With the excellent
recyclability of the produced PET resin, we will develop thisbusiness worldwide in cooperation with Indorama.

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Overview of Toyobo Group circular economy strategy

Improvements in recycling technology

Expansion of biomass materials■ Chemical recycling■ Biomass plastics

Developing technologies to turn plastic waste into raw materials, and to produce
recycled plastics.
Products that are in no way inferior to new products, with increasing applications.

Biomass is made from plants which absorb
CO2 from the atmosphere, so it can be offset
even when CO2 is emitted during incineration.

• R Plus Japan, Ltd.*■ Material recycling• BIOPRANA®*• VYLOAMIDE®*• Polyethylene Furanoate (PEF)*

Strategy 3

Improving recyclability by preventing the deterioration of raw materials, even after
repeated, bottle-to-bottle recycling.
• TOYOBO GS Catalyst®*aluminum catalyst Strategy 2
Reuse of materials including:• Collection and recycling of airbag fabric offcuts*• Packaging and industrial films* using recycled materials

Strategy 1

Reference initiatives
Reference initiatives• Japan BioPlastics Association• Japan Plastics Industry Federation(Bioplastic usage promotion working group)• Japan Chemical Industry Association(Waste plastic and chemical recycling working group)Rawmaterials

Rawmaterials(biomass,
petrochemicals)(recycling)

Chemicals
Materials

Development&
production
Chemical recycling, material recycling,
biomass plastics—
these all play complementary roles

Recycling

Reference initiatives• CEFLEX• Petcore Europe

Use &consumption(end-users)

Handling marine plastic waste
Reference initiatives• CLOMA• Marine-Biodegradable Biomass Plastics
Development platform

Final
production(customers)

Environmentally conscious design■ Reduce
Reduce use of plastics by developing thinner and lightermaterials■ Monomaterial solutions
Increased recyclability through single-plastic composition* Toyobo initiatives and products

TOYOBO REPORT 2021

62

Strategy 3: Chemical Recycling
R Plus Japan Initiatives
Anellotech’s technological development has enabled a newtechnology to efficiently recycle a wide variety of usedplastics. Following this, in June 2020 the joint venturecompany R Plus Japan, Ltd. was established by a group of
12 companies operating in Japan’s plastics value chain,
which includes Toyobo. As of July 2021, this number has
grown to 29 companies, and together with Anellotech it iscontinuing with the development of new technologies.
So that we can contribute to solving the common
worldwide problem of plastics, we aim to have thistechnology in practical use by 2027. To do this, we arecollaborating with companies in a range of industries,
including those in sorting and processing of collected
plastics, distribution, and production of monomers,
polymers, packaging and containers, and beverages.

Waste reduction
At Group manufacturing sites, we are working to minimize
the amount of waste sent to landfill by reducing to the extent
possible waste products produced by our production
activities.
Given this, we are working to reduce, reuse, andrecycle waste, aiming for an annual final disposal rate (landfillrate)* of under 1%.
We achieved this target in fiscal 2021, with a final
disposal rate of 0.2% continuing our success in achieving
targets since fiscal 2015. We will continue making efforts tofurther reduce the final disposal rate by reducing wastequantities through reviews of our sorting and disposal
methods as well as moving to resource recovery.
Toyobo takes a systematic approach to appropriate
disposal of polychlorinated biphenyl (PCB) waste. The
disposal rate up to end of fiscal 2021 was 94% (unit volume
basis). With regard to electric facilities containing
low-concentration PCBs, which we currently use, we are
implementing updated plans so as to meet the statutory
disposal deadlines.
Toyobo Group has long taken a proactive approach toleveraging recycling to reduce waste, such as using recycledresin made from PET bottles as the raw material forchemical synthetic fiber and film products. Reuse of recycled
raw materials in films is at 800 tonnes per annum, withrecycling of non-conforming products also proceeding. For
example, we collect the fabric offcuts that are produced
during airbag manufacturing and recycle them into highly
heat-resistant resin. We also reuse certain packaging film
offcuts as the raw material for engineering plastics.
(See page 48, 50 for details of solution overview)* Amount of landfill waste as percentage of total waste

63

TOYOBO REPORT 2021

KPI: Waste Volume and Final Disposal Rate
(FY)

2018

2019

2020

2021

Waste volume(thousand tonnes)

94.9

99.1

92.3

106.2

Landfill rate forindustrial waste (%)

0.7

0.7

0.6

0.2

Aggregation scope: Japan total

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Eco-Conscious Products
Mechanism for certification of
eco-conscious products
As clearly stated in TOYOBO Group Charter of Corporate
Behavior, Toyobo Group strives to save energy as well as
reduce and re-use resources. We also develop products andtechnologies that help reduce impact on the environment.
These products and technologies are defined andevaluated under our Eco-Review system. This systemevaluates the following aspects at every stage in the productlife cycle: climate change prevention, reduction of chemical
substances, resource conservation, waste reduction, andother environmental contributions. Products that meet thesestandards are certified as ECO-PARTNER SYSTEM®
products. Since the Eco-Review is carried out at every
product life cycle—from R&D to commercialization—issues
that require improvement from an environmental protection
perspective are identified and improved at an early R&D
stage prior to the subsequent review. Consequently, we arecontributing to the environment as we develop our products
and technologies.
Eco-Review evaluation items

We aimed to increase our sales ratio of ECO-PARTNER
SYSTEM® products to 30% of total sales by fiscal 2031
(25% by fiscal 2016), and achieved this target with 30.4%(sales: ¥60.6 billion) in fiscal 2020. Accordingly, we have set
new targets of 40% by fiscal 2031 and 60% by fiscal 2051.
We will continue to create eco-conscious products.
In addition, we are considering
expanding the applicable range of thecertification system to Group companies,
and have begun to identify issues in order tocalculate the sales ratio of ECO-PARTNER
SYSTEM® products for the entire Group.

Review and certification process

Design anddevelopment• Designing eco-conscious products

Raw materials• Using recycled materials and alternative
petroleum raw materials• Considering biodiversity

Production• Using energy-saving and clean energy• Reducing water use and effectively using
raw materials• Reducing waste through distribution
and packaging

Distribution andpackaging

Ratio of ECO-PARTNER SYSTEM®
product sales for fiscal 2021
increases to 29.9%

Person in charge ofdevelopment• Global Environmental
Promotion Committee Chair• Global Environmental
Promotion Committee
members• Business Unit General Manager• Production Center Environmental
Safety Management Supervisor• Implementation Officer

Apply

Secretariat

Review• Reducing transportation energy• Reducing packaging waste

Approve

Use and consumption• Saving energy• Increasing lifespan

Recycling, disposal
and incineration• Reducing hazardous chemical emissions• Biodegradability and recyclability• Global Environmental
Promotion Committee Chair

Certification

Concentrated
srawaterSales by evaluation standard of
ECO-PARTNER SYSTEM® products*

TurbineFO membrance

Preventing
ClimateChange¥24.1¥26.6 billion

Forward osmosis (FO) membranes(osmotic power generation)

billionresource
conservation

Five evaluation
standards

Low-concenteration
treated water

Reduction ofchemical
substances¥30.5
billionEquipment for VOC
emissions treatment

Transparent vapor-deposited film
ECOSYAR® (food loss reductions)¥29.4

billionwaste
reduction

Other
environmental
contributions

Film of recycled PET resin
CYCLE CLEAN® (recycled plastic usage)* Net sales in the figure include duplicates because they are set with multiple criteria.

¥27.0
billionReverse osmosis membrane for seawater
desalination HOLLOSEP®
TOYOBO REPORT 2021

64

Chemical Substances Management
TOYOBO Chemical SubstanceManagement Classification

Basic approach
Toyobo Group endeavors to manage chemical substances
appropriately throughout the product lifecycle (research,development, design, manufacturing, sales, use, anddisposal), in order to help conserve the global environment,
prevent accidents, ensure workers’ health and safety, andguarantee product safety.

Chemical substance management
structure
In order to promote appropriate management of chemical
substances, Toyobo Group has established a management
system at each Production Center. Each Solutions Division
supervises the activities of the production sites and groupcompanies under their jurisdiction.
In addition, we have created a TOYOBO Chemical
Substance Management Classification in compliance withlaws and regulations—both international and domestic—aswell as client requests. This classifies the chemical
substances we handle into five levels, and the management
procedures are specified for each level or “rank.” Use of
substances in rank A and B is permitted only when the risks
are thoroughly assessed, mitigation measures are taken,
and the risk is deemed tolerable. We are continuously
making efforts to reduce the overall usage volume of rank A
and B substances by optimizing and replacing thesesubstances.

Chemical Substance Management Structure
Chemical SubstanceManagement Subcommittee
Secretariat

Solution Divisions
Operating Departments

Groupcompanies

Manufacturing
DivisionsManagement at
Group companies

Development
DivisionsTechnologicalInnovation
Department

Occupational
SafetyDepartment /DisasterManagement
Department

Engineering
Divisions

Environment &Safety Office

Management at
Production Center

Rank

Management Category

Notes (laws and regulations, etc.)

A

Substances requiring
particularly strict
management

Chemical Substances Control Act1, Industrial
Safety and Health Act, Poisonous and Deleterious
Substances Control Act, Act on the Protection of
the Ozone Layer, Act on the Prohibition ofChemical Weapons, POPs2, PIC3, etc.

B

Substances requiring
strict management

Chemical Substances Control Act, PRTR4,
Industrial Safety and Health Act, Poisonous andDeleterious Substances Control Act, etc.

C

Substances requiring
strict exposure
prevention measures

Chemical Substances Control Act, PRTR, Industrial
Safety and Health Act, Poisonous and Deleterious
Substances Control Act, Fire Service Act, etc.

D

Substances requiringexposure prevention
measures

PRTR, Industrial Safety and Health Act, etc.

E

OthersOther than A–D

1 Chemical Substances Control Act: Act on the Evaluation of Chemical Substances
and Regulation of Their Manufacture, etc.
2 POPs (treaty): Prevention and Reduction of Persistent Organic Pollutants
3 PIC (treaty): The Prior Informed Consent Regulation (trade)
4 PRTR: Pollutant Release and Transfer Register

Chemical substance management
activities
Recent years have seen requirements to manage chemical
substances within the supply chain. These requirements also
apply to Japan following the Act on the Evaluation ofChemical Substances and Regulation of Their Manufacture,etc. (Chemical Substances Control Act), as well as otherregulations relating to the chemical substancesmanagement. Additionally, the Globally Harmonized Systemof Classification and Labeling of Chemicals (GHS) has been
adopted by the United Nations.
In view of this situation, Toyobo has introduced achemical substance management system covering
procurement to manufacturing and sales. This is to realize
green procurement while providing accurate and prompt
support to our customers. We employ this system toinvestigate the use of regulated substances and carry out
surveys regarding content in products. The system also
supports in creating safety data sheets (SDS) for chemical
substances.
Given the global expansion of Toyobo Group’s
operations, we are creating a database of chemical
substance-related laws and regulations in Asia, Europe,
North and South America. Furthermore, in order to identify
and mitigate chemical substance handling risk, we haveestablished rules concerning matters including the
replacement / reduction of hazardous chemical substances,proper maintenance of the workplace and environments,
and the chemical substances management in products. In
this way, we are striving to ensure proper management.

Reduction of PRTR listed substanceemissions
Please refer to our website.
65

TOYOBO REPORT 2021

https://www.toyobo-global.com/sustainability/environment/chemical/

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

S Safety, Disaster Prevention, Quality
Social Contribution Policy & Activities

Safety and Disaster Prevention
Basic approach and policy
We recognize that ensuring health and safety is a major
premise for corporate activities, and are striving to ensure
employee safety and to improve the health environment
under the TOYOBO Group Basic Policy on Health & Safety.
In order to prevent the memory and lessons learned
from the fire and fatalities that occurred at our Inuyama Plant
on September 27, 2020 from being forgotten, we willcontinue to observe TOYOBO Group Disaster Preparedness
Day on September 6. Also, we are newly designating
September as Disaster Preparedness Month to promote theawareness of disaster prevention, including fires.
We will review our safety and disaster prevention
activities, and continuously promote “the creation of
workplaces and personnel that are strongly equipped to deal
with fires” at all Group sites to create resilient production
bases. We will work together as a Group to make concerted
efforts to regain the trust of society.

Structure
To further enhance safety and disaster management as themost important management issues, we established the
Safety and Disaster Management Division on December 1,
2020 as a specialized organization with strong authority thatreports directly to the President. The progress of initiatives
related to safety and disaster management is regularly
reported to the Board of Directors. We also reorganized the
Global Environment and Safety Committee into the Safety
and Disaster Management Committee and the Global

Environment Committee. The chair of the Safety andDisaster Management Committee is the Senior Managing
Executive Officer, and its members consist of the Senior
Managing Executive Officers, Managing Executive Officers
and Executive Officers in charge of each Solutions Division.
In addition, Corporate Auditors and those designated byCommittee members can attend meetings as observers andexpress their opinions. Ordinary committee meetings areheld once a year in principle, and extraordinary committee
meetings are held when necessary to deliberate anddetermine policies regarding safety and disastermanagement activities. The committee met once in fiscal
2021.
Furthermore, the subordinate Safety and Disaster
Management Promotion Committee meets six times a year
to manage the progress of activities. Promotion Committee
members visit our production centers, plants, and Group
companies to perform safety and environmental
assessments and check the progress of local activities.
Each month, management and employees at the
Health and Safety Committee, consisting of employee
representatives, managers, and experts, jointly investigate
and consider matters relating to safety, disaster prevention,and health at each production center and plant. The
employee representatives then give feedback to employees
regarding the decisions taken.
Labor union representatives also participate indiscussions at the Safety and Disaster Management
Promotion Committee and the Health and Safety
Committee. Additionally, we hold regular management
meetings with the labor union to discuss issues and the

Toyobo Group Structure for Safety, Disaster Prevention, and Environment
TOYOBOTOYOBO Group
Policy Formulation and Auditing

President

Divisions

Production
Center /PlantsHealth and
SafetyCommittee

Safety and Disaster Management Committee(Chair: Controlling Supervisors of the Production Technology
Innovation Division)(Members: Heads and Controlling Supervisors2)

Global Environment Committee
3

Safety and Disaster
Management
Promotion Committee

3

Global Environment
Promotion Committee

TOYOBO Group Environment
and Safety Committee

Activity Planning /Implementation /Management

Sustainability Committee(Chair: Head of the Safety and Disaster Management Division)(Members: Heads and Controlling Supervisors1)(Secretariat4)

Environment &Safety Office

Disaster Management Department /Occupational Safety Department

Each Company

1 Deliberates and decides policy on safety and disaster prevention 2 Deliberates and decides policy on the global environment
3 Deliberates and decides specific matters, and manages progress 4 Supports activities, provides information, and conducts interdepartmental coordination

TOYOBO REPORT 2021

66

progress of matters related to safety, disaster prevention,and health, and to share information.
All production centers use risk assessment methods toevaluate employee health and safety risks in workplaces,
and carry out activities to mitigate elevated risks.

Promotion of disaster prevention
In response to the large fire at Tsuruga Research andProduction Center that occurred in 2018, we haveconducted an overall inspection of Toyobo Group’s main
production sites using the Inspection Guidelines for Fire
Risk. And we are promoting measures to reduce duct firerisks in addition to improving the functionality of fire-fighting
equipment at our sites of production. Moreover, to respondto the fire and fatalities at the Inuyama Plant in 2020, we
have launched the Disaster Prevention Audit Project tofurther reduce fire risks by adding the perspective of a third
party. We are also revising the content of our training drills
so that they are more practical and planning for all workers
to participate in them in order for everyone to be able toprotect their own workplaces in the event of fires.
As an important management issue, we will promotereliable measures to enhance disaster prevention at all sites
with the aim of creating sites that do not allow fires to occur,and that prevent casualties and minimize other damage ifthey do occur.
For natural disasters, we will continue to implement
disaster mitigation measures by reinforcing buildings against
earthquakes, improving office and plant infrastructure, andconducting emergency response drills.

safety prevention training for each job level. We will create
training spaces in all offices to experience the fear of
disasters using simulation equipment, and for safety anddisaster prevention knowledge training to reflect on past
incidents and prevent them from being forgotten.

Target and KPITarget• We will strive to prevent disasters and accidents by clarifying
and thoroughly complying with basic safety throughout theentire Toyobo Group.
KPI and Results
Initiatives
1. Build a culture ofsafety2. Prevent workplace
accidents(make human-operated
equipment safer,promote security anddisaster prevention)

KPI
No. of major incidents*

Targets

Results(FY2020)0 incidents
1 incident
per year

Frequency rate of workplace
0.25 oraccidents resulting in lostlessworkdays

0.70

No. of fires or
explosions

0 incidents 1 incident
per yearNo. of environmental
incidents

0 incidents 0 incidents
per year* Major incidents: Defined according to internal standards based on thedefinition stipulated by the Ministry of Health, Labour and Welfare

Quality
Basic approach and policy

Making people, equipment, and processes safer
We identify major sources of potential danger and take steps
to prevent major incidents from occurring. We carry out risk
assessments and research procedures to understand theonsite risk and then make improvements to equipment andprocedures. We then include this information in procedure
manuals and carry out education to prevent incidents fromoccurring in advance. In cases when an incident does occur,
we investigate it to prevent similar incidents from occurring in
the future. Additionally, when incidents occur at othercompanies and workplaces, we check whether there is asimilar risk at our own workplaces and take steps if
necessary.

Based on the awareness that ensuring the quality and safetyof products and services is the foundation of our businessactivities, Toyobo Group has established the TOYOBOGroup Basic Quality Assurance Policy. We have strived toconstruct an appropriate management system, conduct
quality inspections following appropriate procedures, andhandle data appropriately in order to ensure the quality andsafety of the products and services we provide.
However, there were quality fraud incidents in ourengineering plastics business. We will take these issues
seriously, completely review our daily processes andmanagement standards, and rebuild our manufacturingsystem to regain the trust of our customers and otherstakeholders.

3S activities and training
We will focus on 3S (sort, sweep, and standardize) activities
from the perspective of safety and disaster management,
and have adopted “Everything we do starts with heartfelt 3S
activities” as our slogan for fiscal 2022. We are undertaking
and promoting tangible 3S activities with all employees.
In addition, we have established a safety training
system common to all companies, and conduct necessary

67

TOYOBO REPORT 2021

Quality assurance system
Toyobo Group has established the PL / QA Committee as apermanent committee that oversees product liability (PL) andquality assurance (QA). The chair of the committee is theControlling Supervisor Director of the Production Technology
Innovation and Quality Assurance Division, which comprises
persons in charge from each business and persons in charge

Introduction

Value Creation
Process(executives) from the corporate staff. Ordinary committee
meetings are held twice a year in principle, and thepromotion committee comprising general managers is held
six times a year. The committee met eight times in fiscal
2021.
We have established the new Quality Assurance
Division on April 1, 2021 as one of the measures to prevent
recurrences of this inappropriate conduct. We will ensure theindependence of the Quality Assurance Division, which waspreviously in each business division (Solutions Division), andstrengthen its control over the business divisions. In addition,
the Quality Assurance Department will be given the authority
to guide and suspend the businesses, development andproduction of the Company and affiliated companies
regarding product safety and quality assurance of the
Toyobo Group, and will continue to redouble its efforts torestore trust, such as by working to reconstruct anappropriate quality management system and strengthen
governance.

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Target and KPITarget• We will increase customer satisfaction by practicing quality
management throughout our entire supply chain, including
upstream areas, and ensuring quality that can be trusted.
KPI and Results
Initiatives
1. Realize stablesupply, contributeto solutions forcustomer issues,fulfill customer
needs
2. Ensure productsafety and quality

KPI

Targets

Results(FY2021)

No. of incidents related
to products*

0 incidents 0 incidents
per year

Implementation status ofproduct safety and quality
assurance training

100％

80％

* Incidents related to products: Defined according to internal standards
based on the definition stipulated by the Ministry of Economy, Trade and Industry

Quality assurance activities
Employees have shared access to the Quality Assurance
Manual, which describes the basic approach and code of
conduct for all employees when implementing Toyobo
Group’s development, production and sales activities, anduse it as the basic philosophy for TOYOBO Group
manufacturing. In addition, the Quality Assurance Guidelines
provide the basis for developing a system that guarantees
quality. In January 2021, we reviewed our Quality Assurance
Guidelines to enhance the effectiveness of our assurance
and management systems.
Moreover, a QA system is established for each productand service so that quality and product safety can always be
guaranteed at each stage. Additionally, checks arerepeatedly carried out by business supervisors, related
internal and external parties, and experts, to ensure that no
incidents occur in the market.

Product safety promotion activities
For each department and group company, we conduct
PL / QA assessments carried out by third parties or quality
assurance personnel from different departments to verify
and improve Product Safety (PS) activities. Moreover, wehave established criteria for assessing PS and PL risk, andbased on these criteria, we carry out inspections at eachstage, from product development to sales. By addressing
risk in advance, we work to mitigate risks pertaining tocustomers and employees.
All possible measures are taken to ensure productsafety, and training drills are also conducted every year at all
business divisions based on PL incident scenarios. Productsafety remains a crucial theme throughout the whole of theGroup, and we will continue to mitigate risk as much as
possible to fulfill our social responsibility.

TOYOBO REPORT 2021

68

Human Resources Management
Policy and approach

Developing Human Resources

In line with our own corporate growth strategy, the Toyobo
Group aims to realize the TOYOBO PVVs corporate
philosophy framework, which is centered around humanresource management in which “each individual can workwith a sense of growth, pride, and satisfaction.” To achievethis, we respect employee individuality and support work
practices that allow employees, to demonstrate theirindividual skills, and build environments where a diverse workforce can thrive.
As an example, we have formulated and shared a
Human Resources Development Plan and we are increasing
the amount we invest in employee education. We prohibit
inappropriate behavior, such as various forms of harassment,in our workplaces and ensure there is no discrimination in theway we employ, evaluate, and treat employees.

Basic approach

Structure
The individual responsible for the Group’s human resourcesmanagement is Masakatsu Shirai, Director, Executive
Officer, Controlling Supervisor of HR and Corporate
Communication Division. Human Resources Department
creates regular opportunities for discussion and information
sharing with the departments responsible for humanresources at each business site and group company, whichleads to the formulation and execution of human resourcesmanagement plans. Regarding key issues in the annual
management plan, reports are made to the relevant
executive officer each quarter and the issues are alsodeliberated on by the Sustainability Committee. Importantmeasures are also discussed by the Board of Managing
Executive Officers and Controlling Supervisors and Board of
Directors.

Target and KPI

Toyobo Group considers human resources to be our mostimportant asset. We support the growth of each and every
one of our employees, while respecting their diversity. We
believe that the continuation and development of the Group
as a whole can be achieved by building an environment inwhich our employees can flourish both inside and outside
the company and realize their own potential.
Toyobo carries out human resource development
based on a training program categorized by job level, typeand objective, from the newly employed to top
management. Over our long history, we have fostered an
approach of valuing “people”—our most important
asset—and this is shared throughout the Group. In recent
years we have been training human resources who can put
CSV into practice, and are focusing on developing
employees who can make our TOYOBO PVVs corporate
philosophy framework and growth strategies a reality.
Specifically, in order to develop the next generation ofmanagement personnel, we are taking a company-wide
perspective in actively rotating selected personnel, including
to overseas, as well as sending them to business schools(for details of the Succession Plan, please refer to page 34).
Additionally, Human Resource Meeting which comprises
controlling supervisors regularly discusses and confirms thisportfolio of human resources in order that it can be
maintained in a time-responsive, appropriate manner.
At the same time, we are promoting diversity andinclusion in order to increase our medium- to long-term
capabilities. Besides promoting the participation andadvancement of women, we are actively taking on
mid-career hires and staff from overseas so that we canbring in more knowledge and experience (refer to page 35
for promotion of women’s participation and advancement).

Developing global human resources

TargetToyobo Group will build an organizational structure for theentire Group that enables employees to work easily and feelsatisfaction with their work, that ensures fairness and integrity,and that is considerate of diversity and human rights.

Toyobo Group implements “Short-term Overseas BusinessTraining” in which around 10 employees in two separate
groups from Japan are sent overseas for training each year

KPI and Results
Initiatives

KPI

Results (FY2021)

Complete and share on
the Company website

Completed Website posting• Promote work-life balanceTraining core overseas personnel in Japan• Ensure equality in recruitment
and treatment of employees

15 employees per year*

Canceled because of COVID-19

Training investment per employee¥50,000 per year*¥24,000 per year

Achievement of female ratio in manager ratio target

5.0% or above

3.1%

Ratio of annual paid leave taken

75%*

64%

Reduction in overtime work exceeding annual statutory permitted
overtime hours (no. of employees working more than 360 hours ofovertime / total no. of employees)

Reduction of 20% (2.0%)*

3.0%

Ratio of male employees taking childcare leave

Total number of days of absence leave taken
increased by at least 20% for at least 80% of
those eligible for absence leave*

80% of those eligible forabsence leave12 days
absence leave taken• Develop human resources(build careers, develop capabilities)• Realize diversity and inclusion• Maintain people-friendly work
environments (promote health)* Targets for FY2026

69

Targets

Formulation and disclosure of a Human Resources
Development PlanTOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Education & training system
Job Level

Standard Training

Manager

Job Category-Specific Training

Training for Executive
Management Candidates

GlobalTraining

Specialist

Career Design
SeminarTraining
by Level

Selectable
Seminars
OJT forWork Issues

Role-based
Training

Sales
Training

Distance
Learning /E-Learning
Technical
Seminars(first and second half of the year). This motivates younger
and mid-career employees to participate in Toyobo’s global
business, and also represents a major opportunity for themto further their careers.
In addition, local candidates for management fromoverseas offices are selected to undergo training in Japan
twice each year. This aims to enhance their understandingof Toyobo and deepen interaction with employees who workin Japan.

Employee engagement
We need to align the vectors of organizational goals andpersonal growth, given that we position companies andemployees as being equal. To this end, we started surveys
on organizational climate and job satisfaction targeting all
employees in 2021.
These surveys will keep us periodically appraised of
employee engagement, and create an environment in which
they can proactively work with a sense of pride andfulfillment.

Diversity and inclusion
Basic approach
Toyobo Group believes that personal and organizational
growth is achieved through a process of mutual respectamong our employees, with their differing work styles,
careers, gender, nationality, race, and beliefs, and throughcooperation to achieve our shared objectives. We respectdifferent opinions and a wide range of values, and cooperate
to achieve ambitious goals together.

The spread of COVID-19 in fiscal 2021 means that most training was
conducted online. This photo shows training in fiscal 2020.

TOYOBO REPORT 2021

70

Main initiatives
In addition to activities to promote the participation andadvancement of women, we are also working to ensure thatthe assessment and treatment of employees focuses on
ability and is not influenced by differences such as genderand nationality and we are cultivating a corporate culture inwhich diverse employees can participate actively and findjob satisfaction. We also engage senior employees who havebeen rehired after the set retirement age of 60 to train
younger employees and pass on skills.(See pages 33–36.)

Increasing employment of people
with disabilities
In regard to raising the ratio of employees with disabilities, itis crucial that initiatives are carried out at a companywide
level, at meetings of the managers of General Administration
Departments at each business site held four times a year,
we share information and actively encourage the recruitmentof people with disabilities.

Maintenance and promotion of health

KPI and Result
KPI
Employment ratio of people
with disabilities

Target (FY2026)

Result (FY2021)

2.3％

2.2％

Work-life balance
Basic approach
We are engaged in work style reform so that our employees
can work with renewed efficiency and achieve a goodbalance between work and personal life and we also provide
support such as the Childcare Shortened Work Hour
Program, Nursing Care and Flextime system, andTeleworking scheme. Building an environment that enables
more flexible work styles tailored to each employee’s life
stage provides an opportunity to enhance creativity. Letting
each individual do their best with confidence, pride, peace ofmind, and a forward-looking mindset helps to build astronger foundation for the company.
The TOYOBO Group Charter of Corporate Behavior
declares, “We will respect employee diversity and support
work practices that allow employees to demonstrate theirindividual skills. Also, we will provide workplaces that are
conducive to productive work while taking health and safety
into consideration.”

Main initiatives
Toyobo has introduced schemes that go above and beyond
the legal requirements, including the Childcare ShortenedWork Hour Program and Nursing Care Leave, and we also

71

TOYOBO REPORT 2021

provide a Flextime system. Since fiscal 2020, Childcare
Leave has offered five days of paid leave. In conjunction withthis change in the system, we are encouraging men to takeChildcare Leave. Male employees who have a child arenotified of the system individually and are recommended totake this leave by their immediate supervisor. We willcontinue these promotion efforts until it becomes normal for
male employees to take childcare leave. Furthermore, we
introduced a 15-Minute Shortened Work Hour Program athead and branch offices in fiscal 2018, and at the ResearchCenter in fiscal 2019.
We are also increasing the number of days of leave atother offices and we are creating opportunities for
employees to spend quality personal time together withfamily and friends, such as holding a Family Day (NoOvertime Day) at least once a month. In fiscal 2020, we
introduced a Teleworking scheme at head and branch
offices, and have expanded to also include other offices infiscal 2021.

Basic approaches
Toyobo Group is engaged in initiatives for maintaining andimproving employees’ physical and mental wellbeing in orderto create comfortable workplaces that are conscious of
employee health.
In fiscal 2020, we embarked on the strategic
implementation of health and productivity management,
considering health care from a management perspective,
and formulated the TOYOBO Health & Productivity
Management Declaration.

Key measures under the TOYOBO
Health & Productivity Management Declaration
1. Initiatives for raising employees’ health awareness:
education and training
2. Initiatives for improving employees’ lifestyle habits:
exercise, diet, support for quitting smoking, etc.
3. Initiatives for strengthening mental health,including improvement measures for high-stressemployees and workplaces

Structure
In March 2020, Toyobo Group formulated a Health &Productivity Management Declaration in order to proactively
and systematically address health and productivity
management, and we also established a structure topromote this.
Under the Chief Health Officer (CHO), Masakatsu
Shirai, Director, Executive Officer, Controlling Supervisor of
HR and Corporate Communication Division, the Labor

Introduction

Affairs Department, the occupational physician and nursing
professionals and the health insurance association work inclose coordination to enhance healthcare consciousness of
employees, improve their lifestyle habits, and strengthenmental health-care measures as part of priority programs.
These initiatives were evaluated, and in fiscal 2021 thecompany received recognition in the large enterprise
category of the Certified Health & Productivity Management
Outstanding Organization Recognition Program, a project
conducted jointly by the Ministry of Economy, Trade andIndustry and the Nippon Kenko Kaigi (Japan Health Council).
We will further strengthen and promote health management
through measures such as continuing to actively work tomaintain and improve employee health, and through thisincrease our corporate value. In fiscal2022, we plan to work
towards being awarded White 500 — certification awarded
to companies that have outstanding records in healthmanagement.

Management Meeting
Report
Health andproductivity
management
promotion
structure

Chief Health Officer (CHO)
Health insurance union

Cooperation
Labor Affairs
Department

occupation physicians,
medical care nurses

Health checkups
Toyobo aims to have a 100% rate of health checkups byindustrial health staff at each business site. Our
examinations for lifestyle-related diseases and cancer are
more comprehensive than as required by law.
In cooperation with the health insurance society wehave in place cancer screenings for any staff (employees
and their dependents) who want these, and we are working
to ensure early detection and treatment of diseases
including in family members.
Our occupation physicians check the results of healthcheckups for all employees, and in the event of any
abnormal findings, meet with and provide health guidance inValue Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021cooperation with nursing staff. If necessary, they also
provide examinations and treatment at clinics, and referrals
to specialized medical institutions. Furthermore, the healthinsurance association actively provides specific healthguidance on approaches to reduce risks faced by high-riskpatients.
We continue to improve structures and environments
for health examinations and consultations, to support themaintenance and improvement of employee health.

Restricting long working hours
At Toyobo, if long working hours exceed a certain standard*
within a three-month period, including for management staff,
then measures to prevent recurrence will be discussed inmanagement meetings. Management and employees at
each business site have set a specific cutoff point, and keeptabs on work that leads to excessive hours. We have also
set the number of employees eligible for work exceeding
annual statutory permitted overtime hours as a KPI, andhave set a reduction of 20% as a target.
Management and employees at each business site have
put in place Family Day (No Overtime Day), and we haveestablished a campaign that encourages employees to gohome on time so they can enjoy personal and family time.
Furthermore, in order to prevent mental health issues
caused by long working hours, we have put in place stricter
standards than as legally mandated, and we hold interviews
with industrial physicians.
* Over 80 hours overtime in two consecutive months + 45 hours in the thirdmonth

Mental healthcare initiatives
Toyobo invites mental health specialists as guest lecturers toprovide annual training for managers, to increase theirawareness and understanding of mental healthcare.
Individual consultations are also given by industrial healthstaff (one to five) in place at each business site. We also
provide personalized support to employees suffering fromhigh levels of stress, based on the results of a stresscheckup. We are planning to identify and resolve issues inhigh-stress workplaces based on the results of group
analysis shortly.
With regard to mental healthcare in the rapid increase
in working-from-home situations, adopted also as ameasure to tackle the spread of COVID-19, we haveaddressed the importance of self-care and so-called “linecare,” care provided by managers for the wellbeing of theemployees and measures to improve the workplace, issuinginformation so as to maintain and support our employees’
physical and mental wellbeing.

TOYOBO REPORT 2021

72

Supply Chain Management
Policy and approach
Toyobo Group is contributing to achieve the SDGs, which
support the development of a sustainable society,throughout our entire supply chain by establishing anappropriate trading policy and conducting procurement andlogistics responsibly. To realize this, we have formulated
CSR Procurement Guidelines1 that deal with matters suchas legal compliance, fair trade, consideration for theenvironment, and respect for human rights (including theprohibition of child labor or forced labor and discrimination
based on gender identity including LGBT), and Green
Procurement Guidelines2 that are considerate of theenvironment. In October 2020, we revised our CSR
Procurement Guidelines based on various recent global
issues.
Additionally, based on the principle of “2. Fair businesspractices” in the TOYOBO Group Charter of Corporate
Behavior, we practice fair competition and dealings andresponsible procurements, with a focus on healthy
relationships.
1 CSR Procurement Guidelines
https://www.toyobo-global.com/sustainability/guideline/
2 Green Procurement Guidelines
https://www.toyobo-global.com/sustainability/guideline/green/

Procurement structure
We have in place a collaboration system with divisions thatdeal with manufacturing, sales, and development, as well as
the Procurement and Logistics Department with its
company-wide functionality, and this is paired withoutstanding suppliers. Through continuous development ofthese systems, we are working to ensure mutual prosperity
with our suppliers.

Targets and KPITargets• Throughout its supply chain, Toyobo Group aims to realize
procurement and logistics that involve fair and sincere
transactions, respect human rights, and consider impact
on both society and the environment.
KPI and Results
Initiatives
1. Realize sustainable,
responsible procurement
and logistics

KPI

Targets

Ratio of CSR
procurement
surveys returned(every two years)

90% or above

Ratio of reduction
in CO2 emissions
related to sales
and logistics

Year on year
reduction of 0.5%

2. Carry out transactions
that are fair andrespect human rights(In years whena survey is not
implemented,
we carry out dialogue
with business
partners that past
surveys had issues)

Results(FY2021)
Putting in placeof questionnaire
surveyimplementation
system

3. Build a low-carbon
society73

Year on year
reduction of 0.6%

• We reduce CO2 emissions by promoting green logistics,
such as implementing a modal shift to rail and sea
transportation and improving loading efficiency.

CSR procurement
We have formulated our CSR Procurement Guidelines andGreen Procurement Guidelines with the aim of fulfilling oursocial responsibilities, such as ensuring legal compliance,
product quality and safety and respect for human rights, andenhancing value throughout our entire supply chain throughinitiatives such as contributing to regional communities andenvironmental conservation.
In addition to sharing these guidelines through our
website, we carry out CSR procurement survey for business
partners requesting their understanding and cooperation in
actively advancing initiatives.

CSR Procurement Survey
We conduct a survey among our key business partners,
based on the CSR Procurement Guidelines. This allows us
to verify the status of their CSR activities, while facilitatingthem to deepen their understanding of CSR activities. We
ask that new business partners cooperate in these surveys
when we start working with them, and existing business
partners do so on a periodic basis.
We plan to conduct this survey in fiscal 2022, and seek
improvements for any issues that it uncovers.

Resolving social issues in logistics
To resolve social issues in logistics, Toyobo Group ispushing forward with initiatives to reduce environmental
impact and reform the work style in logistics.
In reducing environmental impact, we are shortening
the transportation distance by using the ports closest to our
production sites, implementing a modal shift such as using
sea and rail transport, and improving loading efficiency. We
are also sharing logistics and storage with other companies(including joint shipment, making use of returning trucks,
securing joint storage space), and are encouraging the
introduction of systems that enable visualization of thelogistics situation.
Additionally, we formulated a voluntary action
declaration in support of the White Logistics Movement*
advocated by Japan’s Ministry of Land, Infrastructure,
Transport and Tourism, Ministry of Economy, Trade andIndustry and Ministry of Agriculture, Forestry and Fisheries.
Corresponding to the declaration, we disclose our various
initiatives, including logistics improvement proposals andcooperation, utilization of pallets, etc., modal shift to sea
and rail transport, consideration of compliance withapplicable legislation when selecting logistics operators, andsafety measures for freight handling.
* A movement in which all the parties involved in logistics cooperate to propose
and implement mutually beneficial improvements.

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Human Rights
Policy and approach
Respecting human rights is essential for Toyobo Group to
fulfill its responsibilities as a member of society and continue
as a trusted company. Within this, respecting the rights of
employees and trading partners, who are important
stakeholders for the Group, is crucial to enabling them todemonstrate their abilities, and to work with vigor andenergy. In recognition of this, we have included “4. Respectfor Human Rights” and “6. Active Employee Participation”
within our Charter of Corporate Behavior. We have also
positioned relevant items as Management Base (Basicpreconditions to materiality) and are advancing initiatives
accordingly.
As a way to openly express our position on this both
inside and outside the company, the Group became asignatory to UNGC in January 2020. In light of these 10
principles and of internationally required norms, in October
2020 we revised our TOYOBO Group Charter of Corporate
Behavior and formulated the TOYOBO Group Human Rights
Policy*.
The Group complies with the laws and regulations that
stipulate minimum wages in the countries and regions inwhich it operates and pays salaries.
With regard to respect for human rights in the supply
chain, our CSR Procurement Guidelines clearly stipulate items
to respect for human rights (including the prohibition of childlabor and forced labor and discrimination based on gender
identity including LGBT), when selecting trading partners.
* TOYOBO Group Human Rights Policy
https://www.toyobo-global.com/sustainability/society/human_rights/

Targets and KPITargets• Toyobo Group will carry out initiatives to ensure respectfor
basic human rights and diversity throughout the entire
Group, including providing training to foster such respectamong employees.
• Through these initiatives, we will aim to be a fair company
that is trusted by society.

Complaint handling and internalreporting systems
The Complaint Handling Committee and the complianceconsultation centers within the internal reporting systemprovide consultations and handle reports regarding humanrights. In order to ensure that employees can use thesesystems without any concern, the name and other details of
employees making reports or receiving consultations are
kept private and we guarantee that these individuals will not
be negatively affected by their action.
We also strive to detect and solve human rights issues
at an early stage through compliance surveys.

Internal education initiatives
Toyobo Group has created English and Chinese versions of
the TOYOBO Group Charter of Corporate Behavior in orderto implement internal education that enables employees
around the world to share the same vision. We inform
employees of rules and examples regarding respect forhuman rights, the prohibition of discrimination, theprohibition of child and forced labor, and the protection of
personal information through the TOYOBO Group
Compliance Manual.
Furthermore, we hold training and seminars on respectfor human rights alongside other initiatives aimed at
improving awareness of human rights among employees. In
fiscal 2020, we provided training for Group company
employees concerning the human rights of overseas
workers, and confirmed to promote our trading partners to
implement the effort as well. In fiscal 2021, we provided
training for new hires, 145 of whom participated, along withholding a training session of Human Rights Promotion
Committee, attended by 26 participants. In addition, we
provide education and clarity on human rights in a variety ofother settings, such as at compliance study meetings.

KPI and Result
Initiatives• Avoid human rights violations• Eliminate forced and child labor• Respond to human rights laws andregulations (Modern Slavery Act, etc.)

KPI

Target(FY2026)

Result(FY2021)

Implementation
status of humanrights educationand training

Once a year for
20% ofnon-consolidated*
employees

24.1％• Ensure equality in recruitment andtreatment of employees* TOYOBO CO., LTD., TOYOBO STC CO., LTD., and TOYOBO INFORMATION SYSTEM CREATE CO., LTD.

TOYOBO REPORT 2021

74

G Management Team
Governance Policy & Activities

Directors

Seiji Narahara
Chairman & Director

Ikuo Takeuchi
President & CEO,
Representative Director
Controlling Supervisor ofInternal Audit Department,
KAERU Project and Corporate
Sustainability Department

Jan.
Apr.
June
Apr.

1988
2010
2011
2014

Apr.

2021

Apr.
Oct.
Apr.
Apr.
June
Apr.

1985
2015
2018
2020
2020
2021

Joined the Company
Executive Officer
Director and Executive Officer
President & CEO,
Representative Director
Chairman & Director(current position)

Joined the Company
General Manager of Corporate Planning
Executive Officer
Managing Executive Officer
Director and Managing Executive Officer
President & CEO, Representative Director(current position)

Yutaka Ouchi

May

Director and Managing
Executive Officer

June 2009
Mar. 2012

Head of Life Science
Solutions

Hiroshi Otsuki
Director and Managing
Executive Officer
Controlling Supervisor ofManagement andAdministration
Supervisor of KAERU Project

Chikao Morishige
Representative Director &Senior Managing Executive
Officer

Apr.
Apr.

1983
2006

Oct.

2009

Apr.

2014

Executive Assistant toChairman & Director

June 2014

Head of Safety and Disaster
Management

Apr.
Apr.
Apr.
June

Head of Films and Functional
Materials Solutions

2017
2019
2020
2021

Joined the Company
General Manager of Packaging
Development
General Manager of Films
Development
General Manager of Films
Development
Senior General Manager of
Plastics Production Technology
Executive Officer
Managing Executive Officer
Senior Managing Executive Officer
Representative Director and Senior Managing
Executive Officers (current position)

Yoshio Araki
Director and Executive Officer
Head of Quality Assurance
Controlling Supervisor of
Production Technology
Innovation

Masakatsu Shirai

TOYOBO REPORT 2021

Apr. 2019
Apr. 2020
June 2021

Nov. 1987
June 2010
Apr.

2014

Oct.

2014

Apr. 2017
June 2020
Apr. 2021

Apr.
Jan.

1984
2008

Oct.

2013

Apr. 2018
June 2020

Apr.
Apr.

1985
2012

Controlling Supervisor of
HR and Corporate
Communication

Oct.

2016

May

2017

Supervisor of Internal Audit

Apr. 2018
June 2020

Director and Executive Officer

75

1980

Joined Kyowa Hakko Kogyo Co., Ltd.
(currently Kyowa Kirin Co., Ltd.)
Director of Kyowa Hakko Bio Co., Ltd.
Managing Executive Officer of
Kyowa Hakko Kirin Co., Ltd.
(currently Kyowa Kirin Co., Ltd.)
Joined the Company
Managing Executive Officer
Director and Managing
Executive Officer (current position)

Joined the Company
General Manager of Finance Department andSenior Coordinator of Corporate Planning
General Manager of Plastics Planning, andManager of Film Business Management
Deputy Director, General Manager of
Plastics Planning, and Manager of Film
Business
Executive Officer
Director
Director and Managing Executive Officer(current position)

Joined the Company
General Manager of Polymer Production
Technology and Manager of Corporate
Research Project
Deputy Director, General Manager of
Plastics Production Technology
Executive Officer
Director and Executive Officer(current position)

Joined the Company
General Manager of HR Labor
Administration
Deputy Director, General Manager of
Human Resources
Deputy Director, seconded to TOYOBOINFORMATION SYSTEM CREATE CO., LTD.
Executive Officer
Director and Executive Officer(current position)

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Corporate Auditors

Masaru Nakamura
Outside Director

Apr. 1977
Apr. 2006
Apr. 2008
Apr. 2010
Apr. 2012
Apr. 2016
June. 2017

Joined Sumitomo Corporation
Corporate Officer of Sumitomo Corporation
Executive Officer of Sumitomo Corporation
Managing Executive Officer of Sumitomo Corporation
Senior Managing Executive Officer of Sumitomo Corporation
Adviser of Sumitomo Corporation
Director of the Company(current position)

Yasuhiro Iizuka

Takayuki Tabo

Takafumi Isogai
Outside Director

Jan.
Apr.

1987
1996

Apr.

2002

Oct.
Apr.

2003
2013

Apr.

2018

June 2018

Assistant Professor of Faculty of Liberal Arts, Osaka University
Assistant Professor of Graduate School of Engineering
Science, Osaka University
Professor of Faculty of Mercantile Marine,
Kobe University of Mercantile Marine
Professor of Faculty of Maritime Sciences, Kobe University
Professor of School of Commerce, University ofMarketing and Distribution Sciences
Part Time Lecturer at University of Marketingand Distribution Sciences
Director of the Company (current position)

Hiroyuki Sugimoto (Outside)

Akihiko Irie (Outside)CEO
Kimie Sakuragi
Outside Director

Mar.
Apr.

1981
1995

Nov. 1998
Jan. 2003
June 2003
Apr. 2007
June 2019

Joined Fukutake Publishing Co., Ltd. (current Benesse Holdings, Inc.)
Supervisor of Book Businesses in Publishing Division ofBenesse Holdings, Inc.
Chief of Business Ethics and Compliance Office of Benesse Holdings, Inc.
Manager of Business Ethics and Compliance Office ofBenesse Holdings, Inc.
Audit and Supervisory Board Member of Benesse Holdings, Inc.
(retired in June 2019)
Adjunct Professor of the University of Aizu Graduate School (current position)
Director of the Company (current position)

Ikuo Takeuchi
Senior Managing Executive Officers
Chikao Morishige

Shigeo Nishiyama

Managing Executive Officers
Shigeo Takenaka Yasuo Ota
Yutaka Ouchi
Hiroshi Otsuki
Ichiro Takai
Executive Officers

Masaaki Harima
Outside Director

Apr. 1977
May 1981
Sep. 1987
Apr. 2010
June 2011
June 2014
June 2020
Apr. 2021

Assistant Judge at Osaka District Court
Registered as an attorney at law (Osaka Bar Association)
Founded Harima Law Office(current Fushimimachi Lawyer’s Office) (current position)
Chairman of Osaka City Fair Work Committee
Outside Corporate Auditor of Ishihara
Sangyo Kaisha, Ltd. (current position)
Independence Committee of the Company
Director of the Company (current position)
Chairperson of Osaka Prefecture Pollution
Examination Committee (current position)

Takeo Kashima
Masakatsu Shirai
Kazuhiko Katayama
Atsuhiko Otsuka
Taichi Sakai
Eiichi Shimizu

Yoshio Araki
Nobuya Fujiwara
Seiji Yamazoe
Yoshihiro Nomi
Naoki Fujii
Takahito Sagara

TOYOBO REPORT 2021

76

Attendance record at Board of Directors and Corporate Auditors, skills (as of June 2021)
Attendance record (attendance percentage) FY2021

Corporate Auditor

Director

Outside Independent Age〇

Chair of Each
Committee

Board ofDirectors

Board ofDirectors

Board ofCorporate
Auditors

Nomination
Committee

Advisory Board
on Compensation

18/18 (100%)―

5/5(100％)

5/5(100％)

14/14(100％)

―

―

―

Seiji Narahara

64

Male

Ikuo Takeuchi

58

Male

Chikao Morishige(Newly appointed)

61

Male

―

―

―

―

Yutaka Ouchi(Newly appointed)

64

Male

―

―

―

―

Hiroshi Otsuki

60

Male

14/14 (100%)

―

―

―

Yoshio Araki

61

Male

14/14(100％)

―

―

―

Masakatsu Shirai

58

Male

14/14(100％)

―

―

―

18/18(100％)―

5/5(100％)

3/3(100％)

18/18(100％)―

5/5(100％)

3/3(100％)

18/18(100％)―

5/5(100％)

3/3(100％)

Board of Managing
Executive Officers
and Controlling
Supervisors〇(Chair)Masaru Nakamura

〇

〇

67

Male

Takafumi Isogai

〇

〇

72

Male

Kimie Sakuragi

〇

〇

62

FemaleMasaaki Harima

〇

〇

70

Male

14/14(100％)―

4/4(100％)

2/2(100％)

Yasuhiro Iizuka

62

Male

18/18(100％)

15/15(100％)――

Takayuki Tabo
(Newly appointed)

60

Male

―

―

―

―

18/18(100％)

15/15(100％)

5/5(100％)

―

―

―

―

―

Hiroyuki Sugimoto

〇

〇

68

Male

Akihiko Irie
(Newly appointed)

〇

〇

64

Male

* Change to integrated management from April 2021

77

Nomination andCompensation
Gender Advisory
Committee

TOYOBO REPORT 2021〇

ObserverIntroduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Within the experience and background required by the Company, skills that are particularly beneficial (two for inside officers and one for outside officers)

Corporate
Management /Strategy

Production
Technology /Quality / Safety

R&D /Intellectual
Property

Sales /
Marketing

Legal Affairs /EthicsTalentDevelopment /Labor affair
management〇

Accounting /Finance

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

TOYOBO REPORT 2021

78

Corporate Governance
Basic approach and system overview

Board of Directors

To respond to the changing times and continuously enhance
corporate value, Toyobo Group has established the following
three policies: (1) ensuring timeliness and accuracy indecision-making, (2) ensuring transparency in management,and (3) emphasizing fairness. Based on these principles, we
are working to strengthen group governance structure, as
well as bolster risk management and compliance structures.
Toyobo is a company with Board of Corporate Auditors
and, under this governance system, has adopted theexecutive officer system. In the executive officer system,
which is defined in our management regulations, the Boardof Directors oversees the business execution of executive
officers. Under Toyobo’s governance framework, a clear
separation is made between the role of the Board of
Directors—which oversees decision-making and performs
management oversight—and the executive officers who arein charge of business execution. This system enables rapid
decision-making and efficient business execution.

At the Annual General Meeting of Shareholders held in June
2021, one director was added to the Board of Directors tomake a total of 11, including four outside directors. A
director’s term of office is set at one year to ensure a swift
response to changes in the business environment and toclarify the responsibilities, and this is led by the Chairman &Director.
In order to separate decision-making and supervisionfrom business execution, we have built a system in which
the Board is elected from outside directors and executive
officers who oversee departments that are engaged inoperations with a company-wide scope. This system makes
it easier for executive officers, who are responsible for
specific businesses, to concentrate on their respective
businesses and fields, however so that directors cansupervise the execution of business appropriately andsmoothly, we increased the number of executive officers incharge of specific offices by one to a total of two.

Corporate Governance Structure (as of June 2021)
General Meeting of Shareholders

Electionand dismissal

Nomination andCompensation
Advisory Committee* Chairman & Director,
2 outside directors

Electionand dismissal

Accounting auditing

Board of Directors

Consultation

Accounting Auditor

11 directors,

Reporting·including four outside directors (36%)·including one female director (9%)

ReportingElectionand dismissal

Board of Corporate Auditors
Audit

Decision-making,supervision,
election, and dismissal

President
Board of Managing
Executive Officers
and Controlling Supervisors

Assessing
the appropriateness

Reporting

ReportingCorporate Planning
Committee
Financial Management
Committee

Sustainability Committee

Cooperation

Business
execution

Reporting

Cooperation

Board of Executive Officers

Four auditors,
including two outside corporate
auditors (50%)
including zero female directors (0%)

Risk Management Committees
Various Committee

Functionalorganization

Internal auditing

Internal Audit Department

Internal auditing
Audit

Group Companies
Audit

79

TOYOBO REPORT 2021

Each Group Company’s
Corporate Auditors

Introduction

Board of Directors meetings are in principle held
monthly, and otherwise as needed. In fiscal 2021, they
made decisions on matters stipulated in laws and the
Articles of Incorporation, and on important investment deals
including acquisitions. In addition, the Board received
reports on each business and conducted appropriate
supervision.
Main issues (FY2021)(1) Important investment deals(2) Fire accidents, quality deficiency-related incidents(3) Risk management-related(4) Revision of the Charter of Corporate Behavior,formulation of Human Rights Policy, etc.
(5) Sustainability related (identifying materiality,
handling carbon neutrality, etc.)(6) Reports on the Nomination Committee and Advisory
Board on Compensation(7) Evaluation of Board of Directors’ effectiveness(8) Cross-shareholdings (policies, verification)(9) Reports on the Emergency Safety Meeting, etc.

Board of Corporate Auditors
The Board of Corporate Auditors has four members, two ofwhom are outside corporate auditors. Their responsibilities
include attending meetings of the Board of Directors andother important meetings, stating their opinions whennecessary, and auditing each department’s operation inorder to audit directors’ execution performance.
KPMG AZSA LLC has been appointed to conduct
Toyobo Group’s Accounting audits required under Japan’sCompanies Act. The Board of Corporate Auditors receives
auditing plans and reports from the accounting auditor andmeets with the accounting auditor periodically to exchange
information. This also exchanges information with theInternal Audit Department, which monitors the effectivenessof internal control.

Board of Managing Executive Officers
and Controlling Supervisors
There are 20 executive officers, including some who serve
concurrently as directors. The Board of Managing Executive
Officers and Controlling Supervisors deliberates in advanceon matters to be resolved by the Board of Directors, anddetermines matters related to business execution, which has
been entrusted by the Board of Directors.
The Corporate Planning Committee and the Financial
Control Committee are established under the Board ofManaging Executive Officers and Controlling Supervisors.
They deliberate on important investments and new projects,
important borrowing, etc. from their respective realms ofexpertise, thereby managing business risk.
A working group comprised of executive officers was
also established to discuss issues including the future visionof Toyobo Group.

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Nomination and Compensation
Advisory Committee
Up until now, the Nomination Committee and Advisory
Board on Compensation have been formed for deliberating
and reporting to the Board of Directors from the perspectiveof ensuring transparency and fairness in the determination of
nomination and compensation of directors and otherofficers. However, in order that bodies consulting on
nominations and compensation could operate in an
integrated manner as well as further increase functionality
and transparency, on April 1, 2021, these two committees
were reorganized into the Nomination and Compensation
Advisory Committee.
This committee comprises the two outside directors
and the Chairman & Director, and an outside corporate
auditor as an observer, and is led by an outside director.
Meetings Convened in FY2021
Number of meetings held
Board of Directors

18

Board of Corporate Auditors

15

Nomination Committee

5

Advisory Board on Compensation

3

Board of Managing Executive Officers and Controlling Supervisors

31

Sustainability Committee

4

Corporate Planning Committee

8

Financial Control Committee

19

Policies and procedures for theappointment of officers
For the appointment of top management and nomination ofcandidates for directors, the Nomination and Compensation
Advisory Committee, comprising a majority of outside directors
as members and chaired by an outside director, has been
established as an advisory body to the Board of Directors, anddecisions are made by the Board of Directors based on the
deliberations and reports of the Committee. In the nomination ofcandidates for inside directors, we recommend individuals who
have knowledge, experience, and a track record in their areas of
responsibility, and who possess a company-wide perspective
and qualifications suitable for the post. In the nomination ofcandidates for outside directors, we recommend individuals who
can objectively provide supervision of management, and who
have the abundant experience and well-developed insight toincrease corporate value. In the nomination of corporate auditors,
candidates are outstanding individuals in terms of their insightand capabilities, and these are determined by the Board of
Directors with the agreement of the Board of Corporate Auditors.
Furthermore, for the dismissal of a senior management
member, in the event of an act of misconduct, impropriety, or
actions suggesting a breach of trust, or of other reasons thatmake the member unsuitable to serve as an officer, then basedon the report from the Nomination and Compensation Advisory
Committee, the Board of Directors deliberates and decides on
the dismissal of a senior management member.
TOYOBO REPORT 2021

80

executive officers
1) Comprises set amount by position and the short-term
incentive reflecting the previous fiscal year company-wide
evaluation and performance evaluation of the overseen
department.
2) The performance indicator (KPI) for the company-wide
performance evaluation is the consolidated operating
income, given that this is a major management indicator.
The specific amount shall be determined in accordancewith this by the Board of Directors based upon advice fromthe Advisory Board on Compensation*.
3) Performance evaluations of overseen departments will be
determined by a comprehensive overview of its
performance taking into account improvements in operating
profit and ROA.
4) Compensation is calculated individually using formulas
determined by the Advisory Board on Compensation*, andbased upon company-wide performance evaluations andthe performance evaluation of the overseen department,
and decided upon by the Board of Directors.
5) Compensation for the Chairman & Director is the sameas the President, taking into account their duties.

Training programs for officers
As well as giving explanations to newly appointed directors
and corporate auditors concerning their roles andresponsibilities, the Company bears the cost to send
executive officers and directors to an external training
program upon their appointment, in order to acquire thenecessary knowledge. In addition, newly appointed outside
directors and outside corporate auditors are given
explanations concerning the Company’s operations,finances, and organization, etc. and provided visits to eachbusiness site. They are continuously provided with
opportunities after assuming office to acquire the necessary
knowledge in order to sufficiently fulfill their roles andresponsibilities.

Officer compensation system
1 Basic Policy
Toyobo’s system of officer compensation is designed asfollows, in line with basic policy, within the monetary amountresolved at the Annual General Meeting of Shareholders.
1) Provide incentives that lead to Toyobo Group’s sustained
growth and enhance corporate value over the longer term2) Secure highly talented management personnel
3) Set determination procedures that are objective and highly
transparent
Compensation structure and levels are reviewed based
upon the company’s business environment, levels of employee
salaries, and other companies’ levels based upon surveys
conducted by specialized external organizations.

2 Monetary compensation(including performance-based amounts)(1) Composition of monetary compensation
Monetary compensation for directors (excluding outside
directors) is a fixed monthly compensation, comprising thefollowing two components:
1) Compensation by position for directors (representative
director, director)
2) Compensation by position for directors also serving as
executive officers(2) Compensation by position for directors who also serve as

3 Stock compensation
In order to increase incentives to sustainably enhance corporate
value and to promote more value sharing with shareholders, acertain percentage of compensation is granted annually as
non-monetary compensation for granting restricted shares(non-performance-based, provided in advance).

4 Ratios of compensation
Compensation for directors also serving as executive officers isdesigned to appropriately increase incentives to increase
corporate value, and the ratio of the fixed portion, short-term
incentive portion, and the non-monetary compensation is 7:2:1(when 100% of KPI acheived).

5 Other(1) Compensation for outside directors is to be fixed monetarycompensation in view of their role and independence.
(2) Compensation for corporate auditors is to be fixedmonetary compensation in accordance with their duties
and responsibilities, and is to be decided by discussions

Details of Officer Compensation (FY2021)
Position

Directors(including outside directors)
Corporate Auditors(including outside corporate auditors)
Total(including outside officers)

81

TOYOBO REPORT 2021

Total
compensation,etc.

*Including mid-period appointments and resignations
Total compensation by type

Basic
Performance-based Non-monetary compensation(Compensation for granting restricted shares)
compensationcompensation

Number of
officers*(¥ mn)(¥ mn)(¥ mn)(¥ mn)

Name

325
(41)
66
(15)
391
(57)

251
(41)
66
(15)
318
(57)

50

23

(−)
−
(−)
50

(−)
−
(−)
23

(−)

(−)

15
(5)
4
(2)
19
(7)

Introduction

with the corporate auditors in view of their duties
and responsibilities.
(3) The Advisory Board on Compensation, comprising amajority of outside directors as members, has been
established as an advisory body to the Board of Directors
to ensure the transparency and objectivity of decisions
regarding compensation. The Advisory Board on
Compensation receives advice from the Board of Directors
and deliberates on the system, level, and calculation
method of officer compensation, in addition to the targets
set for the company-wide performance evaluations forming
part of the compensation by position. The Board of
Directors makes the final decision on the amount of
individual compensation based upon the report fromthe Advisory Board on Compensation*.
*On April 1, 2021, the Advisory Board on Compensation merged with theNomination Committee to form the new Nomination and Compensation
Advisory Committee.

Evaluating the effectivenessof the Board of Directors
From January to April 2021, in order to further enhance thefunctions of the Board of Directors, the Company carried out
an overall analysis and evaluation of the effectiveness of theBoard of Directors in fiscal 2021 with the support of an
external organization. An outline of this evaluation is as follows.

Method of analysis and evaluation of effectivenessWe have conducted a survey with 40 questions for our
directors and corporate auditors, and the responses to thissurvey are continuously provided directly to the externalorganization.
Analyses and evaluations after the survey was conducted
were carried out by the Board of Directors based on theaggregated survey reported by the external organization.

Summary of evaluation results
1 Analysis and Evaluation(1) Member numbers for the Board of Directors, the ratio ofinternal and external members, and the Chair's
management of meetings procedures were evaluated as
generally appropriate.
(2) Efforts are underway to further separate
decision-making / supervision from execution, but there isinsufficient discussion on solutions to medium- to long-term
management issues such as digital transformation (DX),human resources strategies, and business portfolios.
(3) Fire accidents and quality deficiency-related incidents need
to be taken seriously, and further efforts should be made to
improve the effectiveness of the risk management system
by strengthening this and confirming how it is progressing.

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY20212 Issues and Future Initiatives
In order to improve the effectiveness of the Board of Directors,
we have identified the following issues and initiatives for future
attention.
(1) Strengthened risk management including of safety anddisaster prevention, and quality assurance→ Establish the Risk Management Committee, and monitor
its activities to further enhance the Group-wide risk
management system.
(2) Strengthen the Group-wide internal audit functionality→ In order to strengthen the internal audit functionality,
have a mechanism by which to periodically report directly to
the Board of Directors the status of internal audits.
(3) Initiatives including ESG, DX, and business portfolios forcontinuously increasing corporate value→ We will set up a venue separate from the Board of
Directors as necessary to discuss medium- to long-term
themes such as ESG, DX, and business portfolios that
require ongoing discussions.
(4) Further initiatives towards succession planning andappointment procedures for Chief Executive Officers→In order to achieve transparency, fairness, andeffectiveness of the decision-making procedures regarding
the nomination of officers and their compensation, review
the operations of the advisory body to the Board of
Directors.
(5) Further streamlining of Board of Directors’ management ofmeetings procedures→We will review the operation of the Board of Directors as
follows in order to further improve the efficiency ofmanagement of meetings procedures, and to ensuresufficient time for deliberation on important management
issues.
1) Narrow down the number of individual cases byreviewing the criteria for selecting items on the agenda
2) Earlier advance distribution of materials3) More thoroughly organize issues, and shorten
explanations4) Establish an annual agenda plan (incorporating
important themes)
Through these initiatives, the Board of Directors is
working to increase its own effectiveness.

Tax policy
Toyobo Group conducts business in a number of countries
and regions. In order that we can comply with tax laws andinternational regulations applicable in each country, we createda tax policy in July 2021. This tax policy can be viewed on our
website.
https://www.toyobo-global.com/sustainability/governance/tax_affairs/

TOYOBO REPORT 2021

82

Progress in system enhancement
Initiatives to Strengthen Corporate Governance(Year)

1998

Initiative & Objective
Established the Ethics Committee (the current Sustainability
Committee)
To promote companywide compliance activities as a key elementof management
Appointed one outside director, shortened the term of office fordirectors to one year

2004

To clarify management accountability by strengthening thesupervisory function and shortening the term of office
Established an Advisory Board on Officer Provisions, etc. (thecurrent Nomination and Compensation Advisory Committee)
To ensure transparency and fairness in procedures fordetermining officer compensation

2005

Introduced an executive officer system, reduced the number of
directors
To split the decision-making / supervisory and executivefunctions
Increased number of outside directors to two
To strengthen the supervisory function by multiple
appointments
Established an outside officer liaison meeting2015

To hold regular information exchange meetings to optimize thefunctions of outside officers
Established the Nomination Committee (the current
Nomination and Compensation Advisory Committee)
To ensure transparency and fairness in procedures fornominating / dismissing directors

2016

Made an analysis / evaluation of the overall effectiveness of
the Board of Directors
Will annually identify issues and make improvements

2018

Increased number of outside directors to three, raising theirratio to one third of all directors
To ensure diversity among members of the Board of Directors,
as well as strengthen governance
Increased number of outside directors to four (adding a female
director)

2019

To further promote diversity among members of the Board of
Directors
Revised the officer compensation system (introduced
compensation in the form of restricted stock units)
To offer longer term incentives and realize greater sharing ofvalue with shareholders

2020

2021

83

Implemented further separation between
decision-making / supervision and business execution in regard
to election of directors
Established the Nomination and Compensation Advisory
Committee
Integrated advisory and compensation advisory bodies,and improved their functionality

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Message from an Outside Director
manufacturer. I believe that to regain that trust we must
once again identify, fully comprehend, and take steps
against all risk.
The perspective I will take when providing counsel for
the Company’s execution of business will be to follow thephilosophy and strictly ensure that the profit it generates
does not include any inappropriate activities.

Masaaki Harima
Outside Director

Return to the origins of
manufacturing
My approach as an outside director
I have been involved investigations related to whistleblowing
incidents and providing recommendations for the public
interest as a member of corporate and academic third-party
investigation committees examining the causes of
misconduct, proposing measures to prevent recurrence, andserving on community compliance committees. I have also
participated in corporate auditing of the business executionof directors as an outside corporate auditor, and inaccounting and public sector auditing as a local government
auditor.
As a member of an independent committee related toanti-takeover measures, over the past six years I havelearned a great deal about the Company’s business from theperspective of protecting the common interests ofshareholders. Now that I have been appointed as an outside
director, I look forward to deepening my understanding of
the Company.
As an outside director representing the common
interests of all shareholders, I will endeavor to provide
corporate governance oversight from a standpoint that is
independent from the executive officers.

Board of Directors effectivenessThe purpose of evaluating the effectiveness of the Board of
Directors is to improve the Board’s ability to promote thesustainable growth of the Company and enhance corporate
value over the medium to long term.
Measures under way to ensure the Board’s
effectiveness include improving management procedures,
determining policy for medium- and long-term issues, andimplementing more extensive risk management, and I will be
encouraging greater effort in these areas. I will also advise
management to ensure full compliance with revised
Corporate Governance Code of the Tokyo Stock Exchange,
to be fully dedicated to addressing Company issues, and tocontinue to improve its effectiveness.

Addressing issues
Toyobo has various issues that it must confront, and I havebeen impressed with the speed and flexibility of its
responses. I also think the Board of Directors has been fully
open to accepting the advice of its outside directors. I
believe the Company will soon begin seeing tangible resultsfrom the organic connections that are developing among thevarious projects and committees created at the advice of theoutside directors to address the Company’s issues.
I am committed to doing my very best to ensure theBoard of Directors acts in full conformity with thefundamental philosophy and to create organically-linked
actions and initiatives to reestablish the trust in Toyobo as amanufacturer as quickly as possible.

Reflections after a year as an outside
director
Toyobo’s efforts to engage in fair business and profit-making
activities following the corporate philosophy of
Jun-Ri-Soku-Yu (adhering to reason leads to prosperity) has
garnered praise for the Company as an earnest, high-quality
company. Nevertheless, the Company’s reputation has
suffered in the past year from incidents that went against thecore philosophy. The Company has already begun
implementing corrective measures, but it will take a full andconcerted effort to regain the trust that has been lost as a

TOYOBO REPORT 2021

84

Compliance
Basic approach
Based upon our corporate philosophy of Jun-Ri-Soku-Yu(adhering to reason leads to prosperity), at the core of
Toyobo Group's compliance activities is the idea of “Do
what must be done” and “Don’t do what must not be done.”

Structure
A Compliance Committee is comprised of members fromthe Board of Managing Executive Officers and Controlling
Supervisors. The goal is to promote Group-wide compliancefrom a management perspective. A Compliance Promotion
Committee has also been established as a sub-committee,
which considers specific initiatives, and the Legal andCompliance Department promotes compliance throughout
the Group as a whole.
In fiscal 2021, the Compliance Committee convened
twice, and the Compliance Promotion Committee convened
four times. Working with the theme of “considering
compliance together with the people and the workplace,”
this worked toward enhancing the effectiveness ofeducation, training, and preventive measures.

consultations, and that there will be no disadvantage for
employees who consult or report.
In fiscal 2021, 37 incidents were brought to theirattention. Of these, there were 21 requests for investigation
or approaches to the workplace, and 16 with consultationsor questions, with no specific action requested. Many ofthese matters were related to suspicions of abuse of
authority or to do with COVID-19. Depending on the detailsof these consultations, in the event problems are identified
we recommend corrective measures or disciplinary action,
and we also provide the complainant with advice andanswers to questions.
Number of consultations for compliance consultation
desks (including internal reporting service)
FY2017FY2018FY2019FY2020

FY2021

20

15

32

35

37

Details of consultations

Compliance consultation desks
Toyobo provides an internal reporting service andinternal / external compliance consultation desks for all Group
employees. This receives reports and gives consultations
regarding workplace violations of laws and regulations or
fraudulent acts, acts that violate anticompetition laws,
corruption including bribery and embezzlement, and bullying
or harassment, and works toward early detection of these
problems together with rectifying these and preventing theirrecurrence. So that employees can use the consultation
desks with peace of mind, we guarantee protection ofprivacy, including the names of people who seek

Details of consultations

Incidents

Abuse of authority (including perceived or actual）

10

Related to COVID-19

8

Violations of internal rules

6

Confirming internal rules, etc.

4

Personal relationships & communication

4

Sexual harassment

1

Others4

KPI and Results
Initiatives

Targets

1. Increase in awareness of compliance

Improvement in compliance questionnaire responses

2. Awareness and use of complianceconsultation desks

3. No. of serious legal violations

Results (FY2021)• Whether company emphasizes compliance• I feel that way, or I somewhat feel that way 88% (down 5%)• Awareness of “Compliance Mini Study”• down 8%

Compliance study sessions (Managers)

11 times (1,209 participants) + video delivered to all employees

Various other trainings held

13 times

Improvement in compliance questionnaire responses• Awareness of compliance consultation desks• 92%• Ease of use of compliance consultation desks• Want to use it 62%

Consultation desks support

37x

0 violations per year

2 violations*“Partial Deficiency in Environmental Monitoring in Contract Manufacturing Business of Pharmaceuticals” and “Misconduct Involving Toyobo's PBT Resin PLANAC85

TOYOBO REPORT 2021”

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021TOYOBO Group Compliance ManualCompliance education

Based upon the principles declared in the TOYOBO Group
Charter of Corporate Behavior, we have summarized in a
concrete and easy-to-understand manner the rules to which
employees are subject in the TOYOBO Group Compliance
Manual. We are working to promote its understanding
amongst all Group employees and to ensure that these rules
are fully publicized.
This manual has been translated into other languages
such as English and Chinese, so that we can distribute thisto countries and regions in which there are Toyobo andGroup company. During Compliance Enforcement Monthevery year in November, we revise the manual and distribute
this to Group employees, and have employees read throughthe texts together in each workplace.

We use a variety of measures such as study sessions andissuing reports in order to increase overall awareness ofcompliance, and carry out compliance education by job leveland occupations as a part of training for new employees,
sales staff and expats. In fiscal 2021, we started study
sessions by headquarters as a part of considering
compliance together with the workplace.

Holding compliance study sessions
In fiscal 2021, we held 11 study sessions targeting
management-level personnel from all Toyobo business sites
including headquarters, branches, production centers, andat 38 affiliated companies. We also held this remotely as a
COVID-19 measure.
With members of the Compliance Department and IT
Department acting as lecturers, 1,209 employees
participated, and covered topics such as management’s
role in preventing misconduct, preventing harassment, andcyber security. We have also created a video of the study
sessions edited for general employees, and distributed thisto Group companies.

Issuing case study reports

TOYOBO Group
Compliance Manual

Anti-corruption initiatives
Toyobo Group positions the prevention of corruption in all
forms such as bribery as a priority issue for compliance. In
particular with regard to bribery, in addition to Toyobo
policies and regulations, we have also decided uponguidelines that detail specific rules such as judgments andmonetary standards when giving gifts and entertainment.
We ensure that these are well understood by outlining
details in the compliance manual and providing explanations
in meetings and trainings. Additionally, in order to build fairand healthy relationships with business partners, we have
put in place rules for when accepting gifts andentertainment. These include declining to accept money orits equivalent, or gifts and entertainment that exceed sociallyaccepted norms, and the introduction of a reporting system
for when these are received.
In fiscal 2021, there were no violations regarding
corrupt activities, nor any administrative discipline carriedout.

A “Compliance Mini Study,” which educates employees
about cases of violation in a case study format, is issued
monthly, and heads-up reports are issued occasionallybased on cases that occurred within Toyobo Group.

Holding of questionnaire
During Compliance Enforcement Month held in November
every year, we hold an anonymous questionnaire. This
includes a survey on employee awareness of complianceincluding of ethics, safety, quality, confidential corporate
information, harassment, the organizational culture, and useof the consultation desks. Through this, we confirm thestatus of compliance risks in the workplace.
In fiscal 2021, we received 5,094 responses from
employees, and results of the questionnaire are disclosed toall employees. Details on individual problems and issues areshared with related departments in a form that does not
identify the respondent—this proves useful in improving thesituation and preventing problems.

*Toyobo Group Anti-Bribery policy
https://www.toyobo-global.com/company/compliance/anti-bribery/

TOYOBO REPORT 2021

86

Risk Management
sustainable thinking, and to aim to be a company capable ofsustainable growth. The second of these is because of thefire that broke out at our Inuyama Plant last year and theincidents concerning our response to engineering plastics
quality issues. As management, we have built acompany-wide system to identify risks throughout thecompany, prevent these and ensure early detection, and are
putting in place preventative measures.
This Risk Management Committee brings together risk
management activities (identification, analysis, evaluation,and response), as well as formulates risk management
policies for the Group as a whole. It is working to strengthen
our risk management structure by aiming to build effective
and sustainable organizations and approaches.
In fiscal 2021, we developed an infrastructure(processes, committees, regulations) upon which to pursue
our risk management activities. In fiscal 2022, we will
operate our designed system and promote activities aimed
at reducing risks. We also plan to achieve Group-level risk
management as well as develop reduction activities targeting
specific risks.

Basic approach
As well as establishing a “Risk Management Basic Policy” thatoutlines our fundamental stance on risk management activities,
Toyobo Group is identifying various types of risk that could
pose a threat across the entire range of our business activities,
and are managing risk appropriately according to thecharacteristics of each risk. In an emergency situation, we
immediately set up a task force under the instruction of therelevant executive officer, and bring the crisis under control
through a swift response. By putting these systems in placeand conducting the aforementioned initiatives, we work hard toearn the trust of our customers, the local community, and ourshareholders and other stakeholders.

Structure
On April 1, 2021, Toyobo Group established a Risk
Management Committee headed by the President for
centralized management of risks throughout the Group. The
committee comprises members of the Board of Managing
Executive Officers and Controlling Supervisors as well as
members nominated by the chairman, and in its first year
since establishment in fiscal 2022, is scheduled to convene
four times.
There are two main reasons for the establishment of
this committee. The first of these is to work towards amanagement policy that switches from survival thinking toManagement structures and processes
Sustainability Committee

Reporting

Risk Management Committee

Various Committees
Safety and Disaster
Management Committee

Global Environmental
Committee

Product Liability Prevention /Quality Assurance Committee

Compliance
Committee

Export Reviewing
Committee

Internal Control
Committee

Information
Committee

Research & Development
Committee

Intellectual Property
Committee

Monitoring

Participation /ReportingCorporate Sustainability
Department

Participation /Reporting

Follow-up

Summary ofactivities

Risk Management andCompliance Functions
Considering / Expanding / Monitoring measures

Risk owners
Execution of Measurement / Self Inspection

87

TOYOBO REPORT 2021

Board ofDirectors

Introduction

Business risks
The main risks recognized that could have a material impact
on Toyobo Group’s operating results and financial position are

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

as listed below. The list does not include all the risks related to
Toyobo Group.
Forward-looking statements were determined by theGroup as of fiscal 2021-end.

Recognized risks
Financial risks• Large forex movement• Large rise in interest rates• Sharp drop in share prices• Impairment loss of fixed assets

Incurred or highly probable risks• Occurrence of disasters,
accidents, and infections• Further worsening of politicaland economic situations• Inappropriate behavior or similar
in details of third-party
certification registration

Medium- to long-term risks• Purchase of raw materials (p.73)• Product defects (p.67)• Securing of human resources (p.69)• Climate change(p.58)• Environmental burden (p.63,65)• Information security (p.88)• Laws, regulations and compliance (p.85)• Overseas business activities• Litigation

Data Security and Privacy

As a part of our education and awareness-raising activities,
we conduct biannual targeted email attack drills with differinglevels of difficulty and subjects for all employees at TOYOBO
CO., LTD., TOYOBO STC CO., LTD., and Toyobo Information
System Create Co., Ltd.
As a new initiative, we also carried out security
comprehension testing in order that employees can self-check

Chief Information Security Officer (Responsible Executive Officer)
Formulating basic policy and plans

Cyber Security Committee(Chair: General Manager, IT and DX Planning Department)
Formation of / instruction on
management structure

Mutualcollaboration
Support for activities /reporting・Training・Drills
・Measures
・Audits

Information Security Officer(Responsible executive officer,
leader of each Group)
Policydissemination
Implementation
instructions

Asset
designation
Execution of
measuresDept. person in charge

Education and Awareness-raising Activities

TOYOBO Group Information
Security Management Structure

Dept. person in charge

Amid the accelerating digitalization of society and increasingly
important significance of the value of information, the key tocorporate survival will lie in continuing to create value that
contributes to society and the environment by leveraging thenecessary information to promote development of products
and technologies. On the other hand, inappropriate handlingof information causes significant damage and impact. This
includes loss of sales opportunities due to leakage ofconfidential information and information system outages, andlegal and social sanctions as well as loss of corporate brandprestige due to leakage of personal and customer information.
Toyobo Group drew up the “Information Security Policy”
to ensure the Group’s correct and safe handling of informationand sustainable growth as well as its continuation as a trusted
company and strives to appropriately manage and utilize all
information assets. In fiscal 2021, we created individual
regulations to make this policy a reality. We have also createdvideos explaining the policy together with guidelines andeducation materials for management and users, and areworking to promote awareness of these basic rules.

and reflect on their understanding of our education andawareness-raising activities.
So that customer information as well as internal
corporate information including confidential is kept secure, wetake all appropriate measures such as keeping appraised ofthe latest threats, strengthening monitoring of officeautomation and factory automation, fixing vulnerabilities, andpreventing unauthorized access.

Dept. person in charge

Basic approaches and policies

Initial incident report
Initial response, recovery

Departments responsible forLegal ComplianceInternal Rules
Personal Information Management
Education & Training
Information Systems Operation
Incident Response

Convening of related parties
Final report

Computer Security Incident Response TeamA virtual team convened according to the severity of the information security incident

TOYOBO REPORT 2021

88Overview of Fiscal 2021

Key Events in Fiscal 2021
Establishing a new operating location
Toyobo established a joint venture with Indorama
Ventures to build a new plant for automobile airbag yarns
In November 2020, Toyobo established a joint venture company, Toyobo Indorama
Advanced Fibers (TIAF), in Thailand together with Indorama Polyester Industries
PCL (IPI), a subsidiary of the world’s largest polyethylene terephthalate (PET)
producer, Indorama Ventures PCL.
TIAF is scheduled to start operation in spring 2022, producing yarns forautomobile airbags. Toyobo Group aims to enhance its competitiveness in theairbags market, which is expected to see demand grow by 3% to 4% per year. We
are also striving to meet the needs of customers globally going forward as the only
manufacturer capable of streamlined production and supply of airbag yarns andfabrics at five locations around the world.

Overview of the joint venture company
・Name: Toyobo Indorama Advanced Fibers Co., Ltd. (TIAF)
・Address: Bangkok, Thailand (same as IPI headquarters)
・Representatives: Ashok Mathur (IPI),
Hidekazu Takahashi (Toyobo)
・Investment ratio: Toyobo 50% and IPI 50%
Overview of the new production factory
・Address: Rayong Province, Thailand (inside IPI factory)
・Start of operation: Spring 2022 (scheduled)
・Production capacity: Maximum output of 11,000 tonnes
per year

Base for the development and manufacturing of high-performance nonwoven fabric
The importance of a stable supply of nonwoven fabric used for making masks andpersonal protective equipment has been noted since the spread of COVID-19. To
meet these needs, Toyobo has established a new development and production basefor high-performance polypropylene nonwoven fabric at the Iwakuni Production
Center, investing approximately ¥1.6 billion. Manufacturing is scheduled to begin in
July 2022.
Looking ahead to the post-COVID-19 world, we are also focused on thedevelopment of high-performance nonwoven fabrics that are durable and efficient atdust collection, as well as ones made from eco-friendly materials. With the Functional
Materials Plant of Iwakuni Production Center as the model plant, we aim tocollaborate with other plants and expand the nonwoven fabric market globally.

Developing the next generation
Next-generation cultivation program for the local community and junior highand high school students
Toyobo Group is promoting science and technology by providing research grants to cultivate future leaders. We also
implement the following programs targeting communities where we operate and local junior high and high school students.
We are a partner business in the Shiga Tech Planter program, which supports next generation technology, researchers,
technicians and entrepreneurs, as well as the business plan contest, Shiga Tech Plan Grand Prix, both hosted by the
Shiga-based Growth Business Identification and Cultivation Consortium, whose mission is to promote industries and revitalize
communities within Shiga Prefecture.
In fiscal 2021, we organized a lecture for approximately 30 students from Senzoku Gakuen Junior and Senior High Schoolas part of the Social Discovery! Science Lecture sponsored by science journal, Nikkei Science, on December 16th, 2020. In thelecture, we discussed our company’s initiatives, research technology, plant-derived plastic, and biodegradable plastic. On
December 18th, we participated in an online business interview with four students from Toshimagaoka Joshigakuen Junior HighSchool as part of the Nikkei STOCK League program, a contest that promotes learning about stocks, where we introduced ourenvironmental initiatives.

89

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Open Innovation
Partnership agreement with Plug and Play JapanOn November 1st, 2020, Toyobo signed a smart city* partnership agreement withmajor startup assistance firm, Plug and Play Japan. Plug and Play Japan is theJapanese subsidiary of world-leading venture capital / accelerator, Plug and Play,
which supports startup companies in Japan and abroad.
Through this partnership with Plug and Play Japan, we aim to create new
businesses that will contribute to achieving the concept of a smart city while working
together with startup companies that share synergies within our company’s businessdomains: films and functional materials, mobility, lifestyle and environment, and life science.
*A next-generation urban area that utilizes advanced digital technology to address local issues and achieves a
comfortable and safety living environment.

Patent application for realizing an environmentally conscious water treatment system

Concentrated
srawater

Water flow occurs

Utilize water flow as energy

High pressure
FO membrance
Low Pressure
Low-concenteration
treated water

Diagram of water treatment system using an FO membrane

In February 2021, Toyobo jointly developed an eco-friendly hollow fiber forward osmosis
membrane (FO membrane) water treatment system with Sustainable Water Power
Consultants FZ LLC, a seawater desalination consulting company, and Toyobo’s
consolidated subsidiary, Arabian Japanese Membrane Company, LLC, and submitted aprovisional patent application in the United States.
This system effectively utilizes concentrated seawater discharged from seawater
desalination through reverse osmosis membrane (RO membrane), and reduces discharge ofconcentrated seawater, generate usable energy within the plant, and reduce costs. As it canbe easily integrated into the existing seawater desalination process, there is no major
equipment investment, while making an eco-friendly water treatment system possible.
Toyobo is conducting a series of real life testing aimed at early commercialization to resolve
worldwide water shortage issues.

Final selection for the Shiga Tech Plan Grand Prix held on July 4, 2020

Special lecture for Senzoku Gakuen Junior andSenior High School

TOYOBO REPORT 2021

90

Financial Highlights
Operating Profit and Operating Profit Margin

Net Sales

Operating profit (¥ bn)
Operating profit margin (%)(¥ bn)

349.5

339.0

351.6 351.3 347.8

7.9
7.1

329.5 331.1 336.7

339.6 337.4

7.2

6.6
6.0
5.2

5.9

5.0

23.9
23.1 23.3
21.0 20.6

18.3

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

(FY)

26.7
21.7 22.8

17.1

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

(FY)

During fiscal 2021, sales in the films and life science businesses were robust.
However, sales in the mobility and lifestyle and environment businesses
slumped due to the impact of the COVID-19 pandemic. As a result, net sales
fell by 0.6% year on year to ¥337.4 billion.

During fiscal 2021, the film business, including COSMOSHINE SRF®,
continued its strong performance. In addition, production volume of PCR test
reagents increased to meet strong social demand to combat the COVID-19
pandemic. As a result, operating profit rose by 16.9% year on year to ¥26.7
billion.

Profit (Loss) Attributable to Owners of Parent / EPS

Cash Flow
Cash flows from operating activities (¥ bn)
Cash flows from investing activities (¥ bn)
Free cash flow (¥ bn)

Profit (loss) attributable to owners of parent (¥ bn)
Earnings per share (EPS) (yen)

44.3

155.1

35.0

146.9 13.8
13.0
10.2
7.6

8.2

26.9

9.4

8.1

4.2
5.2

8.6

9.2

9.1

22.4
21.2
7.8

12.7

4.6

11.4

-14.1

-24.3
(FY)

In fiscal 2021, although operating profit increased, we recorded impairment
losses of ¥7.8 billion in the acrylic fiber business as a result of further
deterioration in the market environment due to the COVID-19 pandemic while
the business was already being forced to operate in challenging conditions
due to declining demand and anti-dumping measures in the Chinese market.
As a result, profit attributable to owners of parent was ¥4.2 billion, and EPS
was ¥47.3.
*The 2017 increase in EPS was caused by a 10-for-1 reverse stock split ofcommon stock on October 1, 2017.

TOYOBO REPORT 2021

3.3

-16.4

10.6

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

5.0

-1.2

47.3

– 0.6

91

6.7

6.5

2017

2018

2019

-39.2
2020

-31.7
2021

(FY)

In fiscal 2021, cash flows from operating activities recorded an inflow of ¥35.0
billion, including factors such as a ¥19.1 billion increase in depreciation andamortization and impairment losses in the acrylic fiber business of ¥8.9 billion.
Cash flows from investing activities recorded an outflow of ¥31.7 billion,
wowing to factors including the purchase of property, plant and equipment
and intangible assets. As a result, free cash flow recorded an inflow of ¥3.3
billion, a decrease of ¥1.6 billion from the previous fiscal year.

Introduction

Value Creation
Process

Interest-Bearing Debt / Shareholders’ Equity /Debt-To-Equity Ratio
Interest-bearing debt (¥ bn)

169.2 167.8
145.6

180.6
164.8

1.01
0.81

2017

Shareholders’ equity (¥ bn)

2018

2019

0.98

2020

D/E ratio(FYE)

Interest-bearing debt rose by ¥11.8 billion year on year to ¥187.0 billion at theclose of fiscal 2021, due to procurement of funds through borrowing toincrease liquidity on hand in light of the impact of COVID-19. Meanwhile,shareholders’ equity rose by ¥7.8 billion year on year to ¥185.7 billion, mainly
due to an increase in accumulated other comprehensive income, including
remeasurements of defined benefit plans. This resulted in a D/E ratio of 1.01.

36.4

25.5
18.4
14.9

15.7

2017

2018

15.8

2019

39.7

33.5

32.5

36.7

32.7

56.6

62.5

70.2

73.0
32.3

78.6
33.0

235.1

234.0

229.8

226.1

2017

2018

2019

2020

2021

17.0

2020

23.3
19.1

2021

2018

2019

36.4

35.7

34.7

63.5

66.5

148.7

156.2

138.6
2017

2018

27.1

128.4

109.1
36.6

43.9

2019

127.1

152.8
2021

2020

0.9

3.8
5.9

4.3

5.2
2.6

13.7

13.7

14.6

0.6
5.2

12.7

2017

2021

(FY)

4.5
4.4

20.0
-1.6

-0.7

4.7

2020

25.5

Operating Profit (¥ bn)

5.2
3.9

2018

2019

2020

14.9

2021

(FY)

Operating Profit Margin（%）

2.3
2017

64.6

59.9

7.8

4.7

68.3

(FY)

5.4
5.4

Healthcare

Lifestyle and Environment

77.6

1.1

5.8

Industrial Materials
Mobility

Net Sales (¥ bn)

7.5

5.2

(FY)

During fiscal 2021, the overseas sales ratio increased to 33.0% as sales ofindustrial film and other products increased in China and southeast asia.

ROE: Return on equity

ROE (%)

30.5

233.2

ROA / ROEROA (%)

29.0

Films and Functional Polymers
Textiles and Trading
Films and Functional Materials
Life Science

In fiscal 2021, capital expenditure was limited to ¥23.3 billion compared to theinitial plan of ¥26.5 billion as a result of careful examination of the details ofcapital expenditures and review of the timing of non-urgent projects in
response to the COVID-19 pandemic. Depreciation and amortization was¥19.1 billion.

ROA: Return on assets

Others (¥ bn)

The Company revised its business segments in fiscal 2021.
Figures for fiscal 2020 have been reclassified for the purpose of comparison.

Depreciation and amortization (¥ bn)

21.3

Overview of
FY2021Net Sales / Operating Profit /Operating Profit Margin by Segment

Capital Expenditure /Depreciation and Amortization
Capital expenditure (¥ bn)

Japan (¥ bn)
China and Southeast Asia (¥ bn)
Overseas sales ratio (%)

29.2

1.01

2021

The Basis of
Value Creation

Overview by Region(Net Sales / Breakdown of Net Sales)

175.1 177.9 187.0 185.7
176.6

0.93

Value Creation
Strategy(FY)

ROE was 2.3%, due to a decrease in profit attributable to owners of parent,
mainly owing to the impact of impairment loss recorded as a result of
declining profitability in the acrylic fiber business. ROA was 5.4% due to theincrease in operating profit.

14.4

14.5

14.9

9.2

9.2

8.8

6.5

6.7

3.9

1.4

0.9

1.4

2017

2018

2019

16.7
13.1

11.5
4.6

4.0

2020

2021

(FY)

TOYOBO REPORT 2021

92

Non-Financial Highlights
ECO-PARTNER SYSTEMⓇ Sales / Sales Ratio

PRTR Substances Emissions

Total sales of Toyobo (¥ bn)
ECO-PARTNER SYSTEM Ⓡ sales (¥ bn)
ECO-PARTNER SYSTEM Ⓡ sales ratio (%)

27.8

26.7

27.7

30.4

Emissions of hazardous substances into atmosphere (tonne)
Discharge of hazardous substances into water (tonne)

173

29.9
161

20

19

196.4

202.9

199.3

52.5

56.3

55.2

2017

2018

2019

199.1

115
12

197.3

60.6
2020

59.0
2021

(FY)

113
18

107
21

141

154

103

95

86

2017

2018

2019

2020

2021

(FY)

We have operated the ECO-PARTNER SYSTEM Ⓡ since fiscal 1999 as a
unified brand of products and technologies that contribute to reducing theGroup’s environmental impact. To achieve certification under the
ECO-PARTNER SYSTEMⓇ brand, assessments are made for every stage of a
product, from raw material through to disposal, and the product is evaluatedin terms of its contribution to reducing the Group’s environmental impact fromfive perspectives including prevention of climate change. Sales in fiscal 2021
totaled ¥59.0 billion, and the ratio to net sales was 29.9%. We are working tocreate eco-conscious products with targets of reaching a ratio to net sales of
40% by fiscal 2031 and 60% by fiscal 2051. (For Toyobo Co., Ltd.)

Toyobo Group is actively engaged in managing chemical substances
appropriately and reducing environmental emissions, as part of the material
issues. The Group has set targets to reduce hazardous substance emissions
into the atmosphere by 60% from 159 tonnes in fiscal 2015 and emissions ofhazardous substances into water by 80% from 49 tonnes in fiscal 2015, andis working to achieve the targets by fiscal 2031.
* Figures are rounded to the nearest whole number. Therefore, the total of the
figures listed in the breakdown may not match the actual total.

GHG Emissions / Reduction Rate vs. FY2014 (%)

Environmental Protection Costs

Global (thousand t-CO 2)

Reduction rate vs. FY2014 (%)

28.1

Investment (¥ bn)

Maintenance costs (¥ bn)

25.7

25.5

2.60

2.50

2.34

2.32

20.6
16.7

1.56

1.50
1.08

1,011

964

904

873

902

2017

2018

2019

2020

2021

0.62

(FY)

We have set a target of becoming carbon neutral, meaning net-zerogreenhouse gas (GHG) emissions, by fiscal 2051. We have set an interim
target of reducing GHG emissions from our own business activities by 30% by
fiscal 2031 compared with fiscal 2014. We have been implementing
reductions in GHG emissions in production and distribution, and we reduced
GHG emissions in fiscal 2021 by 25.7％ compared with fiscal 2014.

93

TOYOBO REPORT 2021

2017

0.70

2018

0.59

2019

2020

2021

(FY)

As a means of quantitatively evaluating our environmental protection activities,
Toyobo Group implements environmental accounting with reference to the
Ministry of the Environment’s “Environmental Accounting Guidelines 2005.” Infiscal 2021, capital expenditure with the objective of environmental protection
totaled ¥0.59 billion. In addition, maintenance costs totaled ¥2.6 billion. This
primarily includes the costs of statutory environmental impact measurements,
industrial waste disposal, various inspections, and associated personnel
expenses.

Introduction

Value Creation
Process

Frequency Rate of Lost Workday Injuries
Toyobo Group

1.20

1.20

Overview of
FY2021

R&D Expenses (¥ bn)
Ratio of R&D expenses to net sales (%)

3.8

1.21
3.4

1.02

0.71

The Basis of
Value Creation

R&D Expenses

Manufacturing industry average

1.15

Value Creation
Strategy

3.3

3.4

3.1

0.70

0.74

0.38

11.1

10.4

11.0

11.7

12.7

2017

2018

2019

2020

2021

0.31

2017

2018

2019

2020

2021

(Year)(FY)

Toyobo Group is striving to achieve zero accidents in accordance with the
Toyobo Group Basic Policy on Health & Safety. However, in 2020, twoemployees lost their lives in a fire that occurred at our Inuyama Plant. The
frequency rate of lost workday injuries was 0.70, inclusive of affiliatedbusinesses at the same business site.
* Frequency rate of lost workday injuries refers to the rate of accidents
resulting in lost workday injuries per one million hours worked.

We are strengthening our R&D activities in order to generate new value andachieve sustainable growth, and the medium-term management plan
incorporates strategic investment in R&D. R&D expenses amounted to¥12.7 billion in fiscal 2021, and the ratio of R&D expenses to net sales was 3.8%.

Childcare Leave Utilization

Ratio of Female Managers

No. of women

Number of female managers (manager-class and higher)

No. of men

Utilization for women (%)

Number of female managers (manager-class)
Ratio of female managers (manager-class and higher)
Ratio of female managers (manager-class)

Utilization for men (%)

100.0
100.0

100.0

100.0

100.0

69

50

80.0

3.1
2.7
2.1
2.0

2.8
2.4

1.9

2.0

46.3
2

1.1
1

1

34

2017

1.0
2018

27

24

19
1.7

1.2

30

1.1
2019

2020

2021

(FY)

In fiscal 2020, we adopted a new system, offering paid childcare leave for the
first five days. In addition, men who had previously taken little childcare leave
were encouraged to do so by their managers, and we also provided
information about childcare leave to increase uptake. As a result of these
efforts, the number of men who took childcare leave increased significantly
from fiscal 2020. In fiscal 2021, utilization of childcare leave among male
employees grew to 69 employees with uptake of 80%, achieving the childcare
leave uptake target of 80% by fiscal 2026.

12 5

12 5

12 8

14 12

19 13

2017

2018

2019

2020

2021

(FY)

Led by the Women Empowerment Promotion Group, which was establishedin fiscal 2016, we have been promoting various initiatives from the threeperspective of recruitment, cultivation, and support for employment
contination. As a result, there were 19 women in managerial positions in fiscal
2021, and the female manager job group consisted of 13 people, a three-foldincrease from fiscal 2016. We have set achieving a ratio of female managers
of at least 5.0% in fiscal 2026 as a KPI for the Group, and the entire company
is working together to reach this target.

TOYOBO REPORT 2021

94

Key Financial Data (FY2011–FY2021)
FY2011FY2012FY2013

FY2014FY2015¥ 340,573
20,89017,043427
12,479¥ 349,505
18,305
15,730364
5,231¥ 339,009
17,081
15,5222,673
5,420¥ 351,577
21,006
18,426595
5,151¥ 351,279
20,580
16,257
1,160
5,101

Profit (loss) attributable toowners of parent

4,155

4,587

7,639

8,154

8,117

Comprehensive income

5,416

9,065

11,097

12,98818,182¥ 184,739
262,707
164,831
127,093
155,522138,024
447,445
159,430¥ 184,630
271,625
160,582
150,558
145,115
142,310456,256
170,721¥ 196,607
269,202146,250
158,472
161,087
157,988465,809
177,085¥ 30,354(11,294)(2,636)
19,06026,467¥ 23,927(22,218)(10,839)
1,709
19,177¥ 20,107(20,089)797
17
20,389¥ 18,041
13,246
9,966¥ 20,074
14,038
10,474¥ 17,491
14,916
10,819Fiscal year (¥ mn)
Net sales
Operating profit
Ordinary profit
Extraordinary income
Extraordinary losses

Assets, liabilities and equity (¥ mn)1
Current assets¥ 177,735¥ 172,001
Non-current assets
260,105
271,515
Current liabilities
162,850
163,444
Non-current liabilities
127,267
130,299
Net assets
147,724
149,773
Shareholders’ equity
130,572
125,770
Total assets
437,841
443,516
Interest-bearing debt
154,888
151,804
Cash flow (¥ mn)
Cash flows from operating activities¥ 14,192¥ 33,714
Cash flows from investing activities(15,061)(11,579)
Cash flows from financing activities(11,531)( 9,915)
Free cash flow
(869)
22,136
Cash and cash equivalents at end of period
9,481
21,927
Capital expenditure, depreciation and amortization, R&D expenses (¥ mn)
Capital expenditure¥ 16,517¥ 13,931
Depreciation and amortization
19,473
19,113R&D expenses
10,820
10,634Per share information (¥)2
Net assets per share
Earnings per share (EPS)Dividends per share
Financial indicators
Operating profit margin (%)
Return on equity (%)
3
Return on assets (%)
Price earnings ratio (%)
Dividend on equity (%)
Equity ratio (%)
4
EBITDA (¥ mn)
D/E ratio
Results by business segment (¥ mn)5 6
Net sales
Films and Functional Polymers
Industrial Materials
Healthcare
Textiles and Trading
Real Estate and Other Business
Operating profit
Films and Functional Polymers
Industrial Materials
Healthcare
Textiles and Trading
Real Estate and Other Business
Adjustment

95

TOYOBO REPORT 2021

¥ 141.85
5.49
3.50¥ 147.26
5.17
3.50¥ 155.35
8.61
3.50¥ 160.28
9.18
3.50¥ 177.95
9.14
3.50

6.1
3.6
4.7
21.88
2.5
28.4
¥ 40,003
1.21

5.2
3.6
4.2
22.81
2.4
29.8
¥ 37,778
1.19

5.0
5.7
3.8
18.58
2.3
30.8
¥ 30,327
1.16

6.0
5.8
4.6
17.65
2.2
31.2
¥ 35,044
1.20

5.9
5.4
4.4
17.72
2.1
33.9
¥ 35,496
1.12¥ 126,960
71,462
31,38686,83223,933
12,528
4,911
3,724
624
2,322
(3,219)¥ 138,437
71,221
26,58087,99925,267
8,574
5,342
4,133
1,058
2,478
(3,280)¥ 137,394
71,891
24,83979,211
25,673
7,634
5,453
4,170
213
2,740
(3,128)¥ 148,000
71,70427,34479,08925,440
7,794
5,501
5,140
2,952
2,732
(3,113)¥ 146,029
71,52028,77785,093
19,860
6,988
6,601
5,042
2,334
2,630
(3,016)

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

1. The company applied Partial Amendments to Accounting Standard for Tax Effects Accounting in the fiscal year ended March 31, 2019.
2. By resolution of the 159th Annual General Meeting of Shareholders held on June 28, 2017, the company carried out a 10:1 consolidation of shares, effective October 1, 2017. On the samedate, the company changed the number of shares constituting a trading unit from 1,000 shares to 100 shares.
3. ROA: Operating profit ÷ Total assets
4. EBITDA: Operating profit + Depreciation and amortization (including goodwill)
5. From the fiscal year ended March 31, 2015, the AP (acrylate fiber) business was moved from Films and Functional Polymers to Industrial Materials. From the fiscal year ended March 31,
2017, the AC (activated carbon fiber) business was moved from Industrial Materials to Healthcare, and the AP business was moved from Industrial Materials to Textiles and Trading.
6. Starting from fiscal 2021, the company revised its business segments. The figures for fiscal 2020 have been reclassified for the purpose of comparison.

FY2016FY2017FY2018FY2019FY2020

FY2021¥ 347,763
23,123
20,393702
4,871¥ 329,487
23,332
20,650469
7,179¥ 331,148
23,923
20,415
11,492
13,683¥ 336,698
21,727
17,7881,519
19,204¥ 339,607
22,794
18,035
11,206
9,525¥ 337,406
26,657
20,706629
15,753

10,1509,444

13,044(603)

13,774

4,202

2,147

13,51915,611

(467)

4,437

9,471

¥ 186,633
257,954
130,690
153,795
160,101
156,915444,587
165,358¥ 196,293
254,497
136,865
143,016
170,910
167,773
450,790
169,230¥ 186,571
258,924
125,110
135,870
184,515
180,561445,495
145,594¥ 193,125
267,922
131,768
148,053
181,226
176,585
461,047
164,769¥ 206,416
282,458
122,321
183,916
182,636
177,890
488,874
175,139¥ 212,963
278,225
131,444
171,109
188,635
185,729
491,188
186,958¥ 32,337(10,636)(21,384)
21,701
20,101¥ 26,872(14,132)(324)
12,74032,179¥ 22,353(1,174)(27,831)
21,17825,857¥ 7,838(24,286)
12,608(16,448)
22,167¥ 44,255(39,216)(1,805)
5,040
25,084¥ 35,028(31,678)
5,340
3,350
34,526¥ 17,336
14,434
11,266¥ 18,360
14,93911,114¥ 21,259
15,666
10,402¥ 25,512
15,823
11,022¥ 36,445
17,005
11,690¥ 23,253
19,095
12,656¥ 176.75
11.43
3.50

¥ 188.98
10.64
3.50

¥ 2,034.04
146.9340.00¥ 1,989.29(6.80)
40.00¥ 2,003.01
155.1240.00¥ 2,090.47
47.30
40.00

6.6
6.4
5.2
14.78
2.0
35.3
¥ 37,557
1.05

7.1
5.8
5.2
18.14
1.9
37.2
¥ 38,271
1.01

7.2
7.5
5.4
14.29
2.0
40.5
¥ 39,589
0.81

6.5
(0.3)
4.7
—
2.0
38.3
¥ 37,550
0.93

6.7
7.8
4.7
7.37
2.0
36.4
¥ 39,799
0.98

7.9
2.3
5.4
30.11
2.0
37.8
¥ 45,752
1.01¥ 143,398
70,522
27,72385,486
20,634
9,920
6,288
4,726
2,500
2,841
(3,152)¥ 138,574
59,92536,42377,552
17,013
12,747
3,875
5,242
1,066
3,344
(2,941)¥ 148,667
63,45435,72368,317
14,987
13,713
4,262
5,179
645
2,820
(2,694)¥ 156,241
66,54034,67564,585
14,657
13,727
2,620
5,170
914
2,233
(2,936)¥ 127,127
43,905
128,40925,538
14,62914,582
(701)
5,936
3,798
2,623
(3,444)¥ 152,842
36,573
109,148
27,087
11,75720,028(1,572)
4,376
4,517
2,302
(2,993)セグメント別情報（百万円）※3
Films and Functional Materials
Mobility
Lifestyle and Environment
Life Science
Real Estate and Other Business
Films and Functional Materials
Mobility
Lifestyle and Environment
Life Science
Real Estate and Other Business
Adjustment

TOYOBO REPORT 202196Consolidated Balance Sheets(¥ mn)FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)

AssetsCurrent assets
Cash and deposits

25,247

34,695

Notes and accounts receivable - trade85,34585,182

Electronically recorded monetary claims - operating

8,208

8,709

Merchandise and finished goods

49,15045,785Work in process

12,750

11,480Raw materials and supplies

18,72819,045

Other

7,141

8,203

Allowance for doubtful accounts

(154)

(136)

206,416

212,963

Buildings and structures, net

52,74654,227

Machinery, equipment and vehicles, net

43,34356,053

Land

97,055

93,169Construction in progress

29,876

12,454

Total current assets

Non-current assets
Property, plant and equipment

8,459

8,738

231,478

224,640

Other

4,641

4,674

Total intangible assets

4,641

4,674

Investment securities

20,916

26,503

Deferred tax assets

17,977

15,066

Other

8,203

8,191

Allowance for doubtful accounts

(757)

(849)

Total investments and other assets

46,33948,911

282,458

278,225

488,874

491,188

Other, net
Total property, plant and equipment
Intangible assets

Investments and other assets

Total non-current assets

Total assets

97

TOYOBO REPORT 2021

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021(¥ mn)FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)

Liabilities

Current liabilities
Notes and accounts payable - trade41,65940,879

Electronically recorded obligations - operating

8,357

4,881

Short-term borrowings

32,02740,767—

10,000Current portion of long-term borrowings

8,510

10,107

Provision for bonuses

4,366

4,691

Other

27,403

20,118

Total current liabilities

122,321

131,444

Bonds payable

55,00045,000Long-term borrowings

75,851

77,046

Deferred tax liabilities for land revaluation

Current portion of bonds payableNon-current liabilities

21,277

20,156

Provision for retirement benefits for directors (and other officers)

247

241

Provision for environmental measures

331

31

Retirement benefit liability

21,613

18,288

Other

9,598

10,347

183,916

171,109306,238

302,553

Share capital

51,73051,730Capital surplus

32,20032,202Retained earnings

61,92964,351

Treasury shares

(350)

(294)

145,509

147,989

4,013

7,038

Total non-current liabilities

Total liabilities
Net assets

Shareholders’ equity

Total shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(8)

11

Revaluation reserve for land

44,45742,708Foreign currency translation adjustment(11,954)(11,052)

Remeasurements of defined benefit plans(4,128)(965)

Total accumulated other comprehensive income

32,38137,740

4,746

2,906

182,636

188,635

488,874

491,188

Non-controlling interests
Total net assets
Total liabilities and net assets

TOYOBO REPORT 202198Consolidated Statements of Income(¥ mn)FY2020April 1, 2019
( Fromto March 31, 2020 )(FY2021
From April 1, 2020
to March 31, 2021

Net sales

339,607337,406

Cost of sales

255,140

247,032

Gross profit

84,467

90,375

Selling, general and administrative expenses

61,67363,718Operating profit

22,79426,657

Dividend income

650

555

Share of profit of entities accounted for using equity method

469—

Insurance claim income

598

368

Subsidy income

38

1,041

Other

1,575

1,167

Total non-operating income

3,329

3,131

1,369

1,283

859

753

947

1,854

4,914

5,192

Non-operating income

Non-operating expenses
Interest expenses
Salaries paid to dispatched employees
Loss on suspension of production
Other

8,089

9,082

18,03520,706—387

Gain on sale of non-current assets

1685

Gain on sale of investment securities

448—

Gain on bargain purchase

65—

Gain on liquidation of subsidiaries and associates

30

157

Total non-operating expenses

Ordinary profit
Extraordinary income
Gain on extinguishment of tie-in shares

Insurance claim income

10,647—

Total extraordinary income

11,206629

Impairment losses

2,397

8,923

Loss due to fire

3,112

1,906

Loss on disposal of non-current assets

3,979

3,558

Extraordinary losses

Other

37

1,366

Total extraordinary losses

9,525

15,753

Profit before income taxes

19,716

5,582

Income taxes - current

5,587

3,541

Income taxes - deferred

819

(271)

Total income taxes

6,406

3,270

Profit13,310

2,313

(464)

(1,889)13,7744,202

Loss attributable to non controlling interests
Profit attributable to owners of parent

99

TOYOBO REPORT 2021)

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021

Consolidate Statements ofComprehensive Income(¥ mn)FY2020April 1, 2019
( Fromto March 31, 2020 )Profit(FY2021
From April 1, 2020
to March 31, 2021

13,3102,313(5,052)

3,015

25

19

Foreign currency translation adjustment(1,705)

1,069

Remeasurements of defined benefit plans, net of tax(2,089)3,162)

Other comprehensive income
Valuation difference on available for sale securities
Deferred gains or losses on hedges

Share of other comprehensive income of entities accounted for using equity method

(52)

(107)

(8,873)

7,158

4,437

9,471

Comprehensive income attributable to owners of parent

4,974

11,309Comprehensive income attributable to non controlling interests(538)(1,838)

Total other comprehensive income

Comprehensive income
Comprehensive income attributable to

TOYOBO REPORT 2021

100

Consolidated Statements of Cash Flows(¥ mn)FY2020April 1, 2019
( Fromto March 31, 2020 )(FY2021
From April 1, 2020
to March 31, 2021

Cash flows from operating activities
Profit before income taxes

19,716

5,582

Depreciation and amortization

17,00519,095

Increase (decrease) in allowance for doubtful accounts

48

68

Increase (decrease) in retirement benefit liability

230

1,189

Interest and dividend income

(791)

(619)

Interest expenses

1,369

1,283

Share of loss (profit) of entities accounted for using equity method

(469)

338

Impairment losses

2,397

8,923

Loss (gain) on sale and disposal of non-current assets, net

3,963

3,658

Loss (gain) on sale and valuation of investment securities

(448)

78

—

4

(10,647)—

Loss due to fire

3,112

1,906

Decrease (increase) in trade receivables(2,005)306

Decrease (increase) in inventories

1,678

5,067

Increase (decrease) in trade payables

3,367(4,664)

Decrease (increase) in retirement benefit asset

142

(420)

Other, net

552

467

Subtotal

39,21942,261

Payments for loss due to fire

(4,147)(952)

Income taxes refund (paid)(1,464)(6,281)

Proceeds from insurance income

10,647—

Net cash provided by (used in) operating activities

44,25535,028(30,858)(27,495)

Proceeds from sale of property, plant and equipment and intangible assets

1,344

473

Purchase of shares of subsidiaries resulting from change in scope of consolidation(8,797)—

Proceeds from collection of long-term loans receivable

903

29

Long-term loan advances

(117)

(73)

Interest and dividends received

810

619

Other, net(2,500)(5,230)Net cash provided by (used in) investing activities(39,216)(31,678)

Loss (gain) on sale of shares of subsidiaries
Insurance claim income

Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets

101 TOYOBO REPORT 2021)

Introduction

Value Creation
Process

Value Creation
Strategy

The Basis of
Value Creation

Overview of
FY2021(¥ mn)FY2021

FY2020April 1, 2019
( Fromto March 31, 2020 )(From April 1, 2020
to March 31, 2021)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings(13,498)

8,466

Proceeds from long-term borrowings

14,59512,004

Repayments of long-term borrowings(12,460)(9,471)

Proceeds from issuance of bonds payable

25,000—

Redemption of bonds payable(10,000)

—

(3)

(2)

Interest paid

(1,376)(1,249)Dividends paid

(3,551)(3,550)

Dividends paid to non-controlling interests

(25)

(2)

Other, net

(487)

(856)

(1,805)5,340

Effect of exchange rate change on cash and cash equivalents

(621)

461

Net increase (decrease) in cash and cash equivalents

2,613

9,151

Cash and cash equivalents at beginning of period

22,16725,084

Increase (decrease) in cash and cash equivalents resulting fromchange in scope of consolidation

303

20

Increase in cash and cash equivalents resulting from merger withunconsolidated subsidiaries—

270

25,08434,526

Purchase of treasury shares

Net cash provided by (used in) financing activities

Cash and cash equivalents at end of period

TOYOBO REPORT 2021

102Investor Information(As of March 31, 2021)

Stock ListingTokyo

Stock Code

3101

Transfer Agent

Sumitomo Mitsui Trust Bank, Ltd.
1-4-1, Marunouchi, Chiyoda-ku,
Tokyo 100-8233, Japan

Other domestic
companies

KPMG AZSA LLC
3-6-5, Kawara-machi, Chuo-ku,
Osaka 541-0048, Japan

Overseas companies
and others

Independent Auditors

Composition of Shareholders

Common Stock

Authorized: 200,000,000 shares
Issued: 89,048,792 shares

Paid-in Capital¥51,730 million

Number of
Shareholders

57,447

General Shareholders’Meeting

Held in June every year

Number of Shares
Constituting One Unit

100

Securities companies

3.18%

4.53%

19.41 %

Number of
Shareholders

Financial
institutions

57,44743.41%

Individuals and others

29.47%

Major Shareholders
Number of shares held (thousands)

Percentage of voting rights (%)

The Master Trust Bank of Japan, Ltd.

8,303

9.35

Custody Bank of Japan, Ltd.

5,431

6.11

National Mutual Insurance Federation of Agricultural Cooperatives

3,558

4.00

Custody Bank of Japan, Ltd, (Trust Account 9)

2,091

2.35

JAPAN POST INSURANCE Co., Ltd.

2,015

2.27

Toyobo Employees Stockholders’ Association

1,832

2.06

Toyukai (Contractor Share Holding)

1,801

2.03

Nippon Life Insurance Company

1,750

1.97

Meiji Yasuda Life Insurance Company

1,402

1.58

DFA INTL SMALL CAP VALUE PORTFOLIO

1,258

1.42

Stock Prices
Highest / lowest stock prices for the past five years
FY

2017

2018

2019

2020

2021

Highest (¥)

211

2,249(218)

2,164

1,684

1,687

Lowest (¥)

155

1,900(184)

1,386

903

1,033

1. Stock price quotations are from the Tokyo Stock Exchange (First Section).
2. The highest and lowest stock prices shown for fiscal 2018 are figures following the share consolidation. Figures in parentheses show pre-share consolidation amounts.

103 TOYOBO REPORT 2021

Corporate Data （As of March 31, 2021）

Head Office2-8, Dojima Hama 2-chome, Kita-ku, Osaka 530-8230, Japan
Telephone: +81-6-6348-3111

EstablishedMay 3, 1882

Number of Employees

3,365 (Nonconsolidated) / 10,149 (Consolidated)

Branches

Tokyo Branch

Toyama Production Center
Utsunomiya Plant

Nagoya Branch

Tsuruga Research andProduction Center

Tsuruga Research and Production Center

Takasago Plant

Iwakuni Production Center
Toyama Production Center

Iwakuni
Production Center

Research Center

Inuyama Plant

Tokyo Branch

Nagoya Branch
Research Center
Head Office

Utsunomiya Plant
Takasago Plant
Inuyama Plant
Overseas

TOYOBO (SHANGHAI) CO., LTD.
TOYOBO U.S.A., INC.
TOYOBO (THAILAND) CO., LTD.
TOYOBO CHEMICALS EUROPE GmbHTOYOBO DO BRASIL PARTICIPACOES LTDA.
Countries and Regions with Overseas Toyobo Group Bases

Germany
United States
China

Spain

South Korea

India
Saudi Arabia

Japan

Thailand

MexicoEl Salvador

Malaysia
Indonesia
BrazilExternal Recognition TOYOBO is listed on the following ESG indices, as of June 2021.

• FTSE Blossom Japan Index• MSCI Japan Empowering Women Index (WIN)THE INCLUSION OF TOYOBO CO., LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS,
TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF TOYOBO CO., LTD. BY MSCI OR ANY OF ITS AFFILIATES. THE
MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND
LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

TOYOBO REPORT 2021

104

TOYOBO CO., LTD.
2-8, Dojima Hama 2-chome, Kita-ku,
Osaka 530-8230, Japan
Telephone: +81-6-6348-3111
URL: https://www.toyobo-global.com/

Corporate Sustainability Department
Sustainability Planning Group
Telephone: +81-6-6348-3046
E-mail: sustainability@toyobo.jp

Disclaimer
This report contains statements related to the
future performance of the Toyobo Group. The
reader should bear in mind that these statements
are not guarantees of future performance, as
they assume various risks and uncertainties.
Furthermore, the purpose of this report is toprovide information, and while such information
could be referred to when making investment
decisions, the report is not intended to encourage
investment in the Company.

TOYOBO REPORT 2021
Full page PDF

AccessQR codeF1940K