Integrated Report 2023

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

CONTENTSSound Management Structure

Data Section

Period covered and frequency of reporting
Strategies for Achieving Sustainable Growth
Introduction
Corporate Philosophy

02

Message from the CEO

03

Financial and Non-financial Highlights

06

Foster’s History

07

Foster’s Business

10

Foster’s Sustainability

21

Natural Capital Initiatives: (1) Information
Disclosure Based on the TCFD Recommendations

26

Natural Capital Initiatives: (2) Environment

28

Social and Relationship Capital Initiatives

32

Human Capital Initiatives

36

Sound Management Structure
GovernanceFoster’s Value Creation Story
Foster’s Strengths

11

Value Creation Process

12

Progress in the Medium-Term Business Plan
and Fiscal Year Ended March 31, 2023

13

Sources of Strengths: Intellectual Capital

17

Sources of Strengths: Manufactured Capital

18

Special Feature: FOSTER STORIES

20

From April 1, 2022, to March 31, 2023 (fiscal 2022)

43

Directors, Audit and Supervisory Committee
Members, and Officers

49

Data Section
External Recognition

51

Financial Summary (10 years)

52

Non-financial Data

53

Corporate Overview / Stock Information

61

The phrase, “Sound to Life

” on the upper part of thecover is the slogan we strive to achieve created through ouractivities to instill our corporate philosophy. It has various

The illustration on the cover of this report represents our employees
embracing new challenges every day, which is this year’s internal slogan forour management policies. Our employees are cooperating to put together
a puzzle. The upper part represents our vision, “To make contributions
for future society through acoustics,” in areas including music andentertainment, with acoustics surrounding flying cars and drones.

We publish this report annually.

Reporting scope
Unless specifically indicated, the reporting scope includes theactivities of the Foster Group, which consists of Foster ElectricCompany, Limited, and its consolidated subsidiaries in Japan andoverseas.

Referenced standards and guidelines
Reference standards
and guidelines• IFRS Foundation, International Integrated Reporting Framework (2021)• Ministry of Economy, Trade and Industry, Guidance for Collaborative
Value Creation• Task Force on Climate-related Financial Disclosures (TCFD)
Recommendations• Ministry of the Environment, the Environmental Reporting Guidelines
2018• Global Reporting Initiative (GRI), Sustainability Reporting Standards (2021)
GRI content index

Disclaimer regarding forward-looking statements

Sound to Life
Integrated Report 2023

The report also includes statements concerning activities outside thereporting period, including those in fiscal 2023.

meanings, including “To deliver sounds to life,” “To enrich life
through Foster acoustics,” and “Sounds to reach lives andsustain healthy lifestyle.”

The forward-looking statements contained in this report, including ourplans, strategies, and earnings projections, are based on the currently
available information. Please note that actual results may differ from thecontent of this report due to various uncertain factors.

Editorial policy
This fiscal year, we began to publish the Integrated Report compilingboth financial and non-financial information as a tool to enable readers tounderstand our medium- to long-term targets and strategies.
This report was created with the goals of improving the transparency of
the Foster Group and enhancing initiatives to increase the Foster Group’s
corporate value and achieving sustainable growth through dialogue with its
stakeholders.
We hope that this report will be useful for increasing your understanding of
the Foster Group.
Please refer to the Investor Relations pages of our website for detailed
financial information and the Sustainability pages for our sustainability
activities.

1Introduction

Integrated Report 2023

Corporate Philosophy
The corporate philosophy of the Foster Group consists of the corporate
creed, vision, and mission.
Each one of us will practice this corporate philosophy with the goal of
making contributions to future society through acoustics.

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Foster Rhythm (Our Principles and Values)
Our corporate philosophy, principles, and values have been
verbalized as Foster Rhythm to ensure our corporate philosophy
becomes entrenched among our employees.

Sound Management Structure

Data Section

We aim to enable our employees all over the world to understand our corporate philosophy,
principles, and values and put them into practice toward being the Foster that we want to be.
Foster Rhythm was created by employees thinking on their own and proposing ideas which canbe shared with employees from different cultures and backgrounds. It is shared by employees
from all of the bases of the Foster Group, having been translated into their languages.
We believe that our principles and values expressed in Foster Rhythm will help build a soundorganizational culture and climate and improve the well-being of all of the employees working for
Foster.

Our Principles and Values

Corporate Creed

Sincerity

VisionTo make contributions for futuresociety through acoustics

THE LEADING

Sound to Life

Inspiring

Earn the trust of users and partners

Take pride in our expertise in acoustic
technology

SOLUTION COMPANY
Strive to be number one in the global
acoustic fields.
Innovate to support ever wider market
needs.

ALWAYS IMPROVING
Create a more efficient, effective,
profitable and better place to work.
Always seek new market categories andopportunities.

MissionThrough acoustic products or its solutions, a
total commitment to help create a comfortable
life and pleasure of communication aroundthe world. A truly global enterprise our futuresociety counts on.

Trust

EVER MORE GLOBAL
AND INCLUSIVE
Embrace diversity and pursue moreglobal synergy at all managementlevels.

ExpertAdd unique value, motivate partners and excite customers

Fast and Flexible

Reliable Quality

Be fast moving and flexible

Deliver totally reliable quality via
ever more efficient systems

Proactive

Steadfast

Embrace learning and proactive

Show steadfast dedication in goingleadershipbeyond our promised goals

Open MindTeam

Be open–minded and inclusive

Respect others as part of a team withshared goals

Responsible
Fulfill our duty to protect people
and the environment2

Introduction

Integrated Report 2023

Message from the CEO

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Review of the Fiscal Year Ended March 31, 2023 and Replacement of CEO

Atsushi Narikawa
Director and Chairperson/former CEO

Review of the Fiscal Year Ended March
31, 2023 and Evaluation of the Progressof the Medium-Term Business Plan

Strategies to Focus on in Fiscal 2023
to Achieve the Medium-Term Business
Plan

The COVID-19 pandemic declared in 2020 forced us to face thegreatest crisis since our founding, including surging component,
raw materials and ocean container transportation costs andconcerns regarding the global COVID-19 lockdown. In the fiscal
year ended March 31, 2023, however, we were coming out of thecrisis thanks to many customers understanding the cost passthrough.
Net sales have already reached the medium-term target for the
fiscal year ending March 31, 2025, and profits are returning to
the pre-COVID-19 levels. In addition, I believe that our corporate
resilience and management stability have increased dramaticallythanks to many customers’ approval of our introduction of asystem which links product prices to costs.
Regarding the financial targets of the medium-term businessplan, the car speaker business has gotten onto a growth track
and we have received 90% of the targeted orders for the final
year of the medium-term business plan. However, increasing ourearning capacity remains a challenge. We will surely overcome thechallenges revealed in the overhaul of the car speaker business,
including those related to logistics, and focus our efforts on building
a firm earnings structure. In logistics, it will be important that global
logistics management be more detailed and higher-level, throughefforts such as the optimization of inventory quantities, warehouse
locations, and transportation routes. Regarding this, we havealready established an organizational structure and begun tosteadily take actions to improve.
At the same time, we also aim to strengthen ties with our strategic
partners in the medium term, increase sales of automotive
equipment other than car speakers, including infotainment
equipment, and improve the profit level and margin of theseproducts. We feel that our customers’ criteria regarding theenvironment and human rights are becoming more strict everyday. We understand that we won’t even be given opportunities topropose solutions to customers if we do not continue to improve
our global environmental initiatives and supply chain management.
Looking back the COVID-19 pandemic, I believe that we havebeen able to increase the resilience of the structure of our businessdue to our experiencing and overcoming the pandemic. The pricenegotiations with customers we engaged in during the three-year
period of the COVID-19 pandemic strengthened our relationships
with customers and provided a foothold enabling us to advancepartner strategies. Further, in the process of overcoming the
pandemic, we were able to establish a correct understanding of
our weaknesses (global logistics and local production for local
consumption). This will enable us to take measures to overcome
challenges and build a solid foundation for launching the next
medium-term business plan.

In fiscal 2023, we will focus on strategies aimed at achieving the
medium-term business plan. We are making steady progress inreceiving orders and reducing costs in the car speaker business.
We will accelerate the implementation of each strategy to steadily
achieve the operating profit target of 5.0 billion yen at the end of
the medium-term business plan. We are also making progress inour efforts to increase the sophistication of our foreign exchangesensitivity analysis of our sales and profits, which will support theimplementation of the strategies. Positioning the remaining twoyear period of the current medium-term business plan as theperiod for preparing to build a solid foundation for launching thenext medium-term business plan, we will focus our efforts on thefollowing three strategies in particular.
・Addressing challenges revealed through the overhaul of the
Speaker Segment
・
Accomplishing partner strategies by enhancing automotive
products outside the Speaker Segment
・Determining the direction of the Beyond2025 strategy* andpromoting it* For details, please see Beyond2025.
We have confirmed that the impact of the decline of demand for
products bundled with earphones in the Mobile Audio Segment
has hit bottom, and we have already found a direction in new fields
in which we will move forward to achieve growth.
We will shortly set our direction regarding the specific focus areasin the Beyond2025 strategy. Therefore, we will allocate resources
by narrowing down our targets to three pillars plus something
extra, to build a structure that will enable us to respond agilely tomarket changes in the era of VUCA.
We have positioned audio accessories & speaker drivers, aheadset for social infrastructure, and vibration devices (actuators)
as the three pillars. In addition, we have positioned car headsets,
robotics USB speakers, and next-generation digital auscultation
devices for remote medical care as the long-term revenue bases,
which are something extra to the three pillars. In these areas, wewill proactively implement proposal activities unique to us in newmarkets such as the metaverse, autonomous vehicles, and EVs.
To accelerate these strategies, we replaced the CEO in June 2023.
The new CEO has been leading Foster on the front lines of sales fora long time. I am sure that he will powerfully open up the path tothe future of Foster that will be appropriate for the new era.
I highly appreciate your continued support.

3Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Future Strategies and Aspirations
I am Kazuhiro Kishi, the new CEO. We have been earning thetrust of customers all over the world by providing high-quality,
innovative products. We will continue to forge ahead with activities
to enhance our corporate value by providing customers withvaluable products and services.
We promise to contribute to society by conducting business withsincerity and transparency. We will continue to develop innovative
products through the application of new technologies to help
build a better future society through acoustics and vibration. We
appreciate your support.

Philosophy and Vision
Our corporate creed is “Sincerity." Our vision is “To makecontributions for future society through acoustics." And our mission
is “Through acoustic products or its solutions, a total commitment
to help create a comfortable life and pleasure of communication
around the world. A truly global enterprise our future society countson." Throughout our history since our founding, we have aimed to
be a sustainable company that is always needed by society, and acompany that continues to develop.
Our long-term goal is to be the world’s No.1 acoustic
solution partner by fiscal 2030 by focusing our efforts on
new market domains. To achieve this goal, we have steadily
been building short-term, medium-term, and long-term
revenue bases. We will also implement quality managementand ESG management which are the base for the above.
In our view, being the world’s No.1 means having customers say"We will ask Foster about acoustics and vibration" as a specialistin acoustics solutions. We would like to engage with customers
as an entity which can support and push forward a wider rangeof market needs by working on solutions related to the tactile andauditory senses in promising industrial fields that will contribute to
the future society, such as games, virtual reality, healthcare andmedicine, and social infrastructure, in addition to the automotive
business.
As the manager of Foster, I believe that components of being theworld’s No.1 are the following:・Solid management base and profitability
・Wide-ranging, deep knowledge and technological capabilities
related to acoustics
・Sincerity and respect for stakeholders

Further, I believe that action guidelines for achieving the target are
as follows.
・Take actions with pride so that anyone can rely on us, andrespond to this trust with our technological capabilities andsincerity.
・Individual employees shall work fully displaying their capabilities
and motivation.
・Employees shall act with respect and consideration for eachother and all stakeholders.

Our Universal Strengths for the Longterm Enhancement of Corporate ValueI believe that our universal strengths for the long-term enhancementof corporate value lie in our corporate climate which enables us
to retain many sincere human resources who have strong senses
of responsibility. The spirit with which we work on all operations
sincerely and take on any difficulty seriously and truthfully to
overcome it is the source of our strength. In addition, we havewide-ranging, deep knowledge and development skills related toacoustics and we are capable of applying them to mass production
with high quality. This is a result of accumulating manufacturing
technologies over many years and passing them down to new
generations of employees.
Further, we have built strong relationships with importantcustomers. Good relationships with customers are essential forthe long-term development of business. This is also one of ourstrengths.
We have verbalized our corporate philosophy, principles, andvalues as Foster Rhythm, a more specific corporate climate
initiative for recruiting, developing, and utilizing sincere humanresources based on “Sincerity,” the corporate creed that we haveheld since our founding. This is our guide to ensure we all movein the same direction to achieve our goals and dreams so wealways move closer to our inspiring “Vision.” In addition, there has
been progress in the activities on FOSTER STORIES* which weresuggested by employees voluntarily to enable Foster Rhythm toresonate both internally and externally. Taking advantage of thesestrengths, we will aim to achieve the long-term enhancement ofcorporate value and sustainable growth.
* For details, please see the special feature.

Kazuhiro Kishi
new CEO

4

Integrated Report 2023

Introduction

Approach to Sustainability
At the base of our approach to sustainability is our positioning of ouremployees as the leading players in our corporate activities. The missionof the management team is to build an environment which enables each
employee to hone and fully demonstrate their capabilities. Believing that wecannot establish an environment like this if our employees are not happy,
we have set the goal, “Be Happy 80%.”
We respect the diversity of all of the employees working with us and value
an environment which enables them to choose their workstyles and careers.
We aim to enable employees to maintain and improve their physical andmental health while ensuring their work enables them to develop personally,
be satisfied in their jobs and take pride in their contributions to society. To
achieve this we have set the goal, “Be Happy 80%.” Our goal is to enable allof Foster’s employees to be happy, reflecting not only satisfaction with ourcompany and ourselves but also consideration for others. The 80% happy
goal expresses a state of happiness with room left for the consideration ofothers, which is an ideal we aim to achieve at Foster. In “others,” we include
our stakeholders, the environment, all living things, and all matters otherthan human beings.
The wellbeing we aim to achieve is based on the assumption that
we can continue to achieve “Be Happy 80%” for our employees byimproving employee engagement, enabling employees to be motivatedand giving them opportunities for personal development. We are also
focusing our efforts on initiatives related to overall sustainability throughESG management. They include diverse initiatives, such as initiatives toimprove employee wellbeing and reduce environmental impact and social
contribution activities. We are also advancing sustainability initiatives in our
supply chains.

Specific Human Resource Development
Initiatives at Foster, Where Human Resources
are Regarded as the Foundation ofManagement
We regard our human resources as valuable assets. The slogan for our
FY2023 management policies is, “Embracing new challenges every day,”and we seek human resources who work on everything in good faith andtake on challenges without fear of failure. Because we focus on overseas
manufacturing and have many overseas customers, we have a wealth ofhuman resources who flexibly accept overseas cultures and diversity.
In addition, we define globally competitive human resources as “humanresources capable of carrying out missions in various environmentswith diverse values outside the framework of nation states.” Whileforeign language skills are necessary to a certain extent, we attach more
importance to the understanding of different cultures, readiness to accept
diverse values, communication capabilities, and expertise which are theweapons wielded by human resources. Understanding and supporting
Foster Rhythm and being able to embody it together with us is also
important.
Our human resource development policies are based on our mediumterm business strategy which we implement continuously as we work to

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growthorganically link our medium- to long-term business strategy with a rangeof personnel systems. This is why we have established human resources
development programs for various phases, from training programs foracquiring specialized knowledge, foreign language skills, and otherknowledge and skills to career development training programs based on
job experience, with the key phrases, “strong will,” “ability to take action,”“autonomous growth capability,” “expertise” and “ability to create value
continuously.”
Diversity is also important to us and we aim to enable diverse humanresources of diverse genders, nationalities, and other attributes to work
vibrantly to enable every employee to realize a fulfilling personal life andcreate new value. At present, we have approx. 15,000 non-Japanesehuman resources and approx. 600 Japanese human resources. In 2018,
we were ranked No. 1 in terms of percentage of human resources that are
non-Japanese.
We also continually review our systems and programs to support
employees’ workstyles, such as the diversification of pension schemes tocater to the diverse needs of employees, including our human resources
whose nationality is other-than-Japanese, as well as introducing systems toenable employees to flexibly implement measures regarding remote working
and long-distance commuting.

Sound Management Structure

Data Section

In the growth strategy in the next medium-term business plan, we will
differentiate ourselves from our competitors through economies of scale,aiming to acquire a dominant market share in the area of automotive
business by including expansion through acquisition among our potential
options. Also in the area of acoustics, we will powerfully push forward with
the Beyond2025 strategy, including strategic M&A activities, aiming tofurther enhance our product development capabilities and ability to achievecommercial production, which are backed by our proprietary technologies.
Further, we will focus our efforts on improving our ability to developinterfaces, which is our strength, aiming to connect customers’ products toour acoustic devices and vibration devices.
I became CEO in June this year, and my first duty is to work hard to
steadily achieve our first goal, the current medium-term business plan,and to build a foundation for the next medium-term business plan. I ask
our stakeholders for their continued understanding and support of Foster
Electric’s transformation to achieve sustainable growth.

Global Governance, Risk Management, andCompliance Structures
To maximize our corporate and shareholder values, we recognize theimportance of establishing a fair and sound corporate management system
and a managerial structure that enables quick and accurate decision making
to accommodate an ever-changing business environment and the executionof legitimate and appropriate business operations. To that end, we are
currently working to improve and enhance our approach to corporate
governance and build an appropriate group governance structure.
Our risk management activities are focused on predicting risks and taking
measures to prevent risks from materializing. They also focus on minimizing
damage should a risk develop and materialize. It is also important toincrease the sophistication of the risk control matrix (RCM) framework andto reinforce our structure for managing and sharing information under thebasic operating policy of “being prepared for forward-looking risk and crisis
management.”
The Foster Group emphasizes compliance (with laws, regulations andcorporate ethics) as a core element of its sustainability philosophy andpromotes a compliance program—setting internal rules and building a
structure for management—to all Group companies.

To Our Shareholders and Investors
Our basic approach to capital strategy is based on the equal division ofcapital between employees, the company, and shareholders. During thecurrent medium-term business plan, our primary purpose is to ensure stabledividends. During the next medium-term business plan, we believe it will be
important to allocate the company’s profits to investments in future growthstrategies, in addition to stable dividends.

5Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Introduction

Integrated Report 2023

Sound Management Structure

Financial and Non-financial Highlights
Net sales* For details of the data, please refer toFinancial Summary (10 years) andNon-financial Data.
Greenhousegas emissions

Net sales (Million yen)

Scope 1

Scope 2People10 thousand tons CO2

1650

160,000

100

14
40

120,000

10
8

80,00020

02019

Operating profit /Operating profit ratio

2020

2021

Operating profit (Million yen)

2
0

0

2022

2018

2019

2020

Waste volume andrecycling rate

Operating profit ratio (%)

2021

Hazardous waste

2022

Recycling rate (%)%

1,000 tons

%

4,000

5

6

70

2,000

3,937

0

4

1.9
2,064

2

0.7

2,445

0

-2,000-4-7,757-6-6,000

2019

2020

2021

2022

2.9

3

1.7

63

-3.5
-6.4

0

2018

2019

2020

2018

2019

2020

2021

2022

62.5

60
40

30

20

5

6

3

6

5

2018

2019

2020

2021

2022

Ratio of employees taking
regular health checks (%)

0

Ratio of specific health guidance taken (%)(including people who received a post-healthcheckup interview*)* Those who received a post-health checkup interview are included in the rate of specific health guidance taken for2021 and thereafter. The rate of specific health guidance taken is calculated based on results of healthexaminations in the previous year, for which the interviews were conducted in the following year.

100

100

55.4

2021

2022

FemaleRatio of female
employees (%)

Male

Ratio of female
managers (%)

0

0

%

Million yen

3,000

133

133

465

457

0

22
9.7

2018

2019

100

100

100

82.4

83

2021

2022

63.3

127
407

22

23

24

12.3

12.6

13.2

2019

2020

2021

40

23

20

14.2

2022

R&D expenses and theirratio of net sales (%)

%

3
2.91

2.87

2.55

2,000
1,500

326

2020

R&D expense

2,500

135
127

465

2018

R&D expense

60

100
-14.4

80

1

60

63

700

200

-12

57.1

100

％

100

People

300

-9

100
10

20

400

-6

100
9

61

500

-3

100

%

40

2

600

0

-15

4

Number of employees and ratiosof female employees andfemale managers (headquarters)

ROE
%

-10

100

80

-8

-8.5

2018

66

-2

-4,000-8,000

65

2
0

100

54.5

Health initiatives(headquarters)

Non-hazardous
waste

Million yen

2.8

100

4

10

2018

* The blank in 2018 indicates that no women returned to work in that year.

100

5

6

Ratio of employees who
returned to work (male) (%)
Ratio of parental leave
taken by male employees (%)

950

Ratio of employees who
returned to work (female) (%)

100

12

30

40,000

Number of employees
who took parental leave (female)
Number of employees
who took parental leave (male)

Number of employees who
took parental leave and ratioof employees who returned
to work (headquarters)

Scope 3* Actual scope 3 emissions for FY2018 and thereafter were corrected reflecting the revision of the calculation method.

Million yen

Data Section

2.29
2

1.70

1,000
500

0

0

2018

2019

2020

2021

2022

1

6

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Introduction

Integrated Report 2023

Sound Management Structure

Data Section

Foster’s History
For a new form of entertainment

A relay race — From thepursuit of high-quality soundto a quest for high functionality

2020 to 2021 Vibration actuators

For details, please refer to Intellectual Capital.

A vibration actuator is capable of generating a wide
range of vibrations accurately. For example, it cangenerate haptic feedback for a video game player via agame controller, based on the things the player is seeing
and hearing while playing the game. By combining tactile
sensations with visual and auditory sensations in this way, this device creates an immersive world of virtual
reality.

A fine item embodying 70
years of history
2019 FE103A
70th anniversarymodel
A revived model featuring alnico
magnets sold to commemorate
Foster Electric's 70th anniversaryof foundation

Unending quest for materials
that enable high-quality soundExploiting a new market through a collaboration thatstarted in the R&D phase

1992-1993
Development of a speaker featuring
a new diaphragm material

2022 PSZ (Personalized SoundZone)

For details, please refer toIntellectual Capital.

In response to market demand for high-quality
sound, we developed a diaphragm using
bio-cellulose fibers, enabling the detailed, beautiful
reproduction of mid- to high-range sounds with highresolution. We also developed a diaphragm made fromkenaf. This speaker not only features excellent full-range reproduction but it
is also environmentally friendly.

Provision ofcompact,
excellent andhigh-grade
products

We have commercialized the world's firstearphone that is equipped with the PSZ
technology (which traps high-quality sound near
the listener’s ears and prevents sound from leaking
out in any direction) owned by NTT sonority, Inc. , asa result of our collaboration with them that began in
the research and development phase.

An evolved earphone for the era of
the New Normal
2020 Hearable device

For details, please refer toIntellectual Capital.

1949 Pearl brandA 5-inch speaker, our first
product, was completed at the
Shinano Onkyo Institute. Sales of
the Pearl brand speakers began.

This product is similar to other wearable
devices, such as watches and glasses,
and includes functions for acquiring
biological information in addition to being
an earphone.

A metallic material with high functionality which
ensures high-quality sound regardless of theenvironment
2004 First in the world
Pure magnesium diaphragm2020`s

We were the first in the world to succeed indeveloping a pure magnesium speaker
diaphragm. This diaphragm uses a pure magnesium foil made into arolled coil material using the continuous warm rolling method.
(Jointly developed with Mitsubishi Steel Mfg. Co., Ltd.)

Responding to the arrival ofthe digital era
1985 Honeycomb (square flat)
speaker

2010`s2000`sIn response to the arrival of the digitalera, we developed a flat speaker using adiaphragm made of a honeycomb
material also used for aircraft.

1990`s1980`s1970`s1960`s1949

Founded1950`s1959
Renamed as Foster ElectricCo., Ltd.

1972-73
Established affiliates in the
United States, Singapore
and Germany
1973
Established Fostex Company

1986
Merged with TonegenCo., Ltd.
1988
Began production in
China

1999
Our stock listing is
moved from the Second
Section to the First
Section of the Tokyo
Stock Exchange.

2006
Began production in
Vietnam2009
Converted
Korea-based ESTecCORPORATION into
a consolidated
subsidiary

2012
Headquartersfunctions relocated tothe current location,
Tsutsujigaoka,
Akishima City

2022
Our stock was
moved to the Prime
Market of Tokyo
Stock Exchange.
2022
Established asubsidiary in
Hungary

2014
Took over the micro
acoustic components
business from STAR
MICRONICS CO., LTD.
2017
Acquired shares in FSK(Thailand) Co., Ltd.

7

Integrated Report 2023

Introduction

10 Stories

about Foster♪

Column Mi

Starting overseas production andthen local production for local
consumption
In response to an increase in trade with overseas
manufacturers, we began speaker production in Singapore
and the United States in 1964. We later built production
infrastructure in Asia, including in China and Vietnam.
Regarding the operation of local subsidiaries, the headquarters
believes it is important to support local staff rather than control
them, which furthers the localization of management. In
October 2024, we will start commercial production in Hungary
in anticipation of theincrease of demandin Europe, promoting
local production for
local consumption.

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth♪

Column Do

Shinano Onkyo Institute

The founders of Foster Electric, Shigehiro Nishimura andHiroaki Shinohara, were co-workers involved in the
manufacturing of radios at an electric equipment company
in the postwar period. However, the company they were
working for went bankrupt in the chaos after the war.
Determined to complete the development of the speaker,
which was only half done, Nishimura and Shinohara
established the
Shinano Onkyo
Institute in 1949.
This was the
beginning of
Foster's enthusiastic
quest for acoustic
experience.

♪

Column Fa

The Foster quality that we boast of
to the world
In 1982, we took the delivery of products to a U.S.
automaker as an opportunity to enter the automotive
equipment market. Unlike audio-visual equipment forhouseholds, safety and durability are the top-priority
qualities required of car speakers. Ready to mass-produce
high-quality products able to endure the tough in-car
environment, Foster
has the largest shareof the global car
speaker market.

Sound Management Structure

Data Section♪

Column Re

From the Shinano Onkyo Instituteto FosterIn 1953, they changed from Pearl, the trademark that they
had been attached to since they founded the company, toFoster. The name is inspired by Stephen Foster, an
American composer loved by the public for his impressive
melodies, and the verb, to foster. At present, the name
Foster is also familiarly known because of Foster Hall in
Akishima City, where our headquarters is located.

♪

Column So

Mobile music culture that we
spread around the world
In the 2000s, we achieved rapid growth due to orders
received for earphones to be supplied with mobile phones.
We played a role in the spreading of the culture of listening
to your favorite music on the go, as well as via speakers inrooms. Even if you don't know the Foster name, you may
have listened to sounds via the products that Foster has
developed with its
customers.

8Integrated Report 2023

Introduction

10 Stories

about Foster

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth♪

Column La

Elements of acoustics found in theheadquarters
Various elements related to acoustics are found in ourheadquarters building which was completed in 2012. The
pedestrian crossings on the premises were designed with apiano keyboard motif. In the lobby on the first floor, visitors
are welcomed by the music of Beethoven's Ninth Symphonyon the wall. The guest reception rooms are named after
musical instruments. The cafeteria has an open atmosphereand its ceiling has a large curved section designed to evoke
the image of a treble clef.

♪

Column Do

FOSTEX 50th anniversary
In 1973, Foster's consumer products segment was spun off
into FOSTEX. Established as a brand of products for general
consumers, as well as an OEM, FOSTEX has been highly
acclaimed for its reliable product quality and soundreproduction technologies. For example, A FOSTEX productwas selected by NHK as its standard monitor speaker in
2004.

♪

Column #Foster's corporate climate
Operating globally, Foster has employees of many different
nationalities. We are proceeding with the Foster Rhythm
project, in which we share the direction of the company's
values in a company-wide manner leveraging the diversity of
individuals. In these activities, which are aimed at instilling
our corporate philosophy, employees interact with eachother through workshops, fostering the unique corporate
climate of Foster. Further, we have posted the Be Happy
80% slogan for improving engagement, under which a
climate that valuing people
is being fostered, including
an environment thatenables people to be happy
and considerate to others.

Sound Management Structure

Data Section♪

Column Ti

From “sounds you listen to” to“sounds you can touch (vibration)”Sounds are vibrations that create waves in the air that carry
to our ears. Applying this mechanism, a series of vibration
products (actuators) have been developed and adopted in
new areas. We are developing vibration products for a wide
range of applications by thinking outside the box, so thatthey will be used not only for entertainment but also foralerts when vehicles are driving autonomously, for medical
equipment and for other uses.

♪

Column ♭Becoming the world's No.1 acoustic solution partner

To date, we have been focusing our efforts on soundreproduction technologies, manufacturing, and the qualityof products as an OEM/ODM supplier. Moving forward, we
will contribute to society in the future by creating acomprehensive range of highly strategic products related tosound and vibration, so that people will think, "When it
comes to soundand vibration,
Foster is the first
choice."9

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Foster’s Business
Foster Electric was founded as a loudspeaker manufacturer in 1949. Since
that time, we have established ourselves as a specialist in audio technologies,
and have provided the audio industry with many products and technologies.
Among them, acoustic transducers have become our mainstay products.
We have created a wide array of unique technologies and accumulated
broad expertise, including in car speakers and other automotive audio
products, audio equipment (AV speakers) for home entertainment, high-end
Hi-Fi speaker systems, headphones and headsets, compact speakers for

information equipment, buzzers, and vibration actuators that apply audio
technologies. With these technologies and accumulated expertise as our
backbone, we pursue optimal quality and acoustic experiences that fulfill the
expectations of our customers. Foster Electric’s audio and vibration solutions
have been used in many products around the world. Through these products
sold under our client’s brands, Foster Electric’s audio and vibration solutions
are delivered to customers.

In recent years, we have also focused on automotive products as a strategicarea that has matters in common with all business segments — speakers,
mobile audio and other businesses. Taking advantage of the opportunitiesof new technological trends, we continue to develop our acoustic signal
and human interface technologies using our accumulated knowledge andexpertise and continue to take on challenges in the development of newtechnologies and new businesses.

Sales by Segment

Mobile Audio Segment
Manufacturing and sales of headphones and headsets, earphone
drivers, vibration actuators, and others

Speaker Segment
Manufacturing and sales of car speakers and speaker systems,
speakers and speaker systems for audio equipment and TVs, andothers12%
82%

FY2022
Net sales

Headphones and Headsets

Actuators

6%
Other Segment

Car speakers

Car speaker systems

TV speakers

Manufacturing, sales, and logistics services for warning buzzers andother buzzer products, FOSTEX brand products and others

Micro acoustic equipment

FOSTEX products

10Introduction

Integrated Report 2023

Foster’s Strengths
We have reaffirmed the strengths of Foster, namely “Responsiveness,” “Creativity”
and “Connections,” which we have cultivated over our 74-year history since ourfounding in 1949. We will use these strengths as the sources for the sustainable
creation of value in the future.
We will leverage these strengths to be the world’s no. 1 acoustic solution partnerthat is able to support a wider range of needs related to the tactile and auditory
senses, not only in the automotive business that is the center of our businessportfolio but also in promising industrial fields that will contribute to the futuresociety, such as automotive products, games, virtual reality, healthcare andmedicine and social infrastructure.

We respond appropriately to customers’ quality needs leveraging the expertise
we have accumulated over the many years since we began to deliver car
speakers in 1982.

1.
Responsiveness■ Customer handling capabilities
Social andrelationship capital

Since our founding, we have continued to build aglobal customer network (in Europe, the Americas,
and Asia). This has enabled us to receive major
orders for high-quality products from very trustworthy customers able to be ourstrategic partners. We have also built a global support system that improves thequality of our responses to customers, the quality of our proposals to customers
and the quality of products. As a result of these initiatives, we have also been
involved in a number of innovative era-leading products.

■ Manufacturing capability (1)Manufacturing
capitalAs the changes of the times accelerate, the diversity of customer requirements
related to the products of the Foster Group is increasing. We have built amanufacturing system that is capable of commercial production of customized
high-quality products that respond appropriately to these requirements, in Asia,
the Americas and Europe, transcending the borders between nations. We
are also working to expand the global manufacturing system and improve its
efficiency to cater to customers’ needs for the local production of products for
local consumption.

■ Manufacturing capability (2)Intellectual
capital■ Technical capabilities

We possess core technologies related to acoustics and vibration which are
unique to us as a business operator specialized in acoustics. We can say thatthese technologies form the foundation for not only our car speakers but all of our
products including audio accessories, actuators, compact audio products andacoustic vehicle alert systems.

(2) Responsiveness to change■ Employees(1) Responsiveness to customer
requirements

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Human capital■ Employees

Data Section

Human capitalThrough a program supporting
employees taking on challenges(the Foster Incubation Program),*
we have continued efforts todiscover and improve employees’
potential value as human capital,
aiming to enable employees tocreate an exciting society of the
future on their own and develop
an internal climate for taking onchallenges.
* Please refer to Human Capital Initiatives.

In our long history, we have faced a number of difficulties. Even after the revisionof the business portfolio in 2018, we faced unprecedented crises due to various
factors, such as the personnel expenses generated in relation to the transformationof the product portfolio, the response to the COVID-19 pandemic (the surging
cost of ocean container transportation, raw materials and components) andthe political upheaval in Myanmar. The crisis control capabilities and on-site
capabilities of Foster Group employees, who face these crises and implement
measures patiently to resolve them while sincerely addressing customer issues,
have become a great force for responding to change.

■ Environmental burden reduction

Natural capital

While the major trend towards protecting the global environment is acceleratingaround the world, customers’ environmental needs are growing every day inmany domains, mainly reflecting the tightening of government regulations in many
countries and regions. In response to this major trend, we are proceeding steadily
with medium- to long-term environmental action programs based on our ability
to reduce environmental impact (conserving the resources used to manufacture
products, improving manufacturing processes, managing chemicals, conserving
biodiversity and partnering with customers and suppliers).

■ Financial conditions

Sound Management Structure

Financial capital

3.

Partnerships with customers
based on cooperation and trust■ Customers

We have already dispatched our engineers tosome customers, building strategic partnerships
through collaboration in advanced development
initiatives, among other efforts. We will continue
efforts to improve our value as a strategic partner globally based on trust andcooperation with customers.
Connections■ Employees

Human capital

The Sales Division and Engineering Division at the headquarters and our overseas
sales subsidiaries have sales and engineering human resources who are very
experienced and propose many solutions to world-leading customers who leadthe industry in their own domains.

■ Procurement capabilities

We have been steadily responding to the various changes in the businessenvironment that have occurred recently based on our high equity ratio which
contributes to the stability of management. We will continue to strengthen our
foundation for medium- to long-term revenue and efficiently use capital in ourefforts to develop and enhance our foundation for sustainable growth.

Social andrelationship capital

Manufacturing
capital

We have a supply chain that enables us to procure the optimal components forour sites around the world. Thus, we have established a system that enables thetimely procurement of components.

Manufacturing
capital

We are shifting steadily to the inhouse production of key parts (such as
papermaking, voice coil production, andresin molding) to enhance the added valueof Foster Group products and reduce
manufacturing costs.

■ Quality control capability
Manufacturing
capitalIn the automotive business, we must beable to control product quality to conformfaithfully to the quality standards of theInternational Automotive Task Force (IATF).

2.
Creativity

Ability to make changes on
our own and create things thatexceed customers’ expectations■ Technical capabilities

Intellectual
capitalAs professionals in acoustics, we have technologicalcapabilities in acoustical evaluation and reliability
testing, the ability to design environmentally friendly
speaker products, and a technological capacity tomake changes ourselves and manufacture products
which exceed customers’ expectations.

11Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Value Creation Process
Vision/Purpose: To make contributions for future society through acoustics
Goal: Being the world's no. 1 acoustic solution partner

Input(management resources)

OutputBusiness Model(products and solutions)
Focused market

Financial capital● Automotive ● Audio ● Games ● Virtual reality ● Healthcare and medicine

High equity ratio that contributes tomanagement stability● Social infrastructure

Cultivated strengths

Manufacturing capital●Manufacturing technologies that enable both
high quality and stable commercial production●A global manufacturing system that enables
us to optimally cater to customer needs

Responsiveness
Creativity
Connections

Core technologies, elemental technologies,
and applied technologies related to acoustics(vibrations)Global on-site capabilities and crisis
response capabilities

Social and relationship capital
Global customer network→ Clear sounds indicating safety and danger, effective alarm sounds, sound insulation, andMain strategy: Partner strategy→ Elevate position from OEM/ODM
supplier to strategic partner

Value chain oriented
toward building
partnerships withcustomers who
operate globally
Business proposals,
technology development,
high-quality manufacturing
and global sales

Human capital→ Rich sounds, emotionally engaging sounds, and a wide variety of sensations● Information-related products: Compact audio products and acoustic vehicle alert systems
healthcare

Medium-termbusiness planIntellectual capital

Audio (vibration) products of focus● Entertainment-related products: Speakers, audio accessories, and actuators

OutcomeSocialCustomer Satisfaction● Prosperous lives, fun, pleasure and comfortable spaces

Employee Satisfaction● Stable life, personal develop-

created through the provision of analog value andemotional value (auditory and tactile senses) integrated
into a digital society● Customer satisfaction with high-quality products● Reduction of environmental impact with environmentally

ment and job satisfaction

friendly products● Reliability, safety and health

EconomyNatural capital
Ability to reduce environmental impact● Development of clients' businesses● Enhancement of shareholder equity, dividends and tax payment

Governance, ESG management and quality management that support global business activities
12

Introduction

Integrated Report 2023

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Sound Management Structure

Data Section

Progress in the Medium-Term Business Plan and Fiscal Year Ended March 31, 2023
Medium-term business plan
We announced the medium-term business plan for FY2020 to FY2024 in
November 2020. In this medium-term business plan, we positioned theautomotive field and new fields related to 5G as strategic fields. In these
domains, where changes in the market are expected to greatly impact
society in the future, we will provide new emotional value using our acoustic
technologies related to our founding business and vibration technologies
which apply those acoustic technologies. In particular, we aim to be an
essential entity for our clients in the field of automotive business, thusbuilding a solid foundation for the management of Foster and achieving our
medium-term financial targets.
During the period of this medium-term business plan, we will enhanceinvestments while at the same time building a lean profit structure
implementing labor-saving, automation, standardization and other initiatives
while striving to maintain our sound financial standing. We aim to achieve ourfinancial targets for FY2024, net sales of ¥120.0 billion, operating profit of¥5.0 billion and an operating profit ratio of 4.2%.
In addition to the above financial targets, we aim to achieve our goalof elevating our position from being an OEM/ODM supplier to being astrategic partner by FY2024. For this purpose, in addition to playing therole of conventional OEM/ODM supplier which responds to customers

only after receiving an order, we are reinforcing our structure for quickly
understanding customers’ issues and needs and proactively proposing
solutions incorporating new functions related to acoustics. We will propose
solutions related to development and design from a position that is close tocustomers, such as jointly conducting sound field tuning to increase comfort
with automotive manufacturers, something that was previously done bythem alone. Thus, we will create products related to sound and vibrationthat are comprehensive and more strategic as a partner to our customers.
■ Priority strategies for the period up to FY2024
During the current medium-term business plan, we will continue to enhance
our existing activities, including the activities for shifting to the in-houseproduction of key parts, standardization and quality improvement. In addition,
we will mainly implement the following three measures as priority strategies
to be a strategic partner for our important customers who operate globally(focusing mainly on finished vehicle manufacturers and tier-1 manufacturers)
by FY2024.
1. This is a one-stop sales strategy for automotive products and services infields related to sound and vibration. We aim to increase the number ofour products used per vehicle by establishing a system enabling the onestop provision of all automotive products, including actuators compatible
with advanced driver-assistance systems (ADAS), speakers for acoustic
vehicle alerting systems (AVAS)/eCall and automotive headsets, inaddition to devices for audio equipment that we have developed. To makethis a reality, we will strengthen cooperation with partners within the Groupand external partners, particularly to enhance the provision of emotionallyengaging added value, such as the design of in-car sound fields and the
proposal of tactile sensations using various vibration patterns.
2. We will strengthen regional strategies. In response to the automotive laws
and regulations and environmental regulations of each country, we willswitch from a business-by-business approach to a regional approachcovering all products in Japan, the Americas and Europe which are ourmainstay markets, in our efforts to improve our sales capabilities andstreamline our sales activities. We will focus our efforts on the Chinese
market more than ever before because it is becoming a promising market
for us in the aspects of price and quality, reflecting the expansion anddevelopment of the market. Further, we will enhance our presence in the
Chinese market by improving our sales capabilities in the country with ourbrand power and high-quality local production system.
3. The third measure is our M&A strategy. We will also consider strategic
M&A activities as needed, aiming for the in-house production of core parts
with high rarity and the acquisition of technologies in different fields which
are necessary for us to be a strategic partner.

VisionMissionTo make contributions for
future society through acoustics

Through acoustic products or its solutions, a total commitment to help create a comfortable life andpleasure of communication around the world. A truly global enterprise our future society counts on.

Medium-term (FY2020 - FY2024)

Long-term (FY2020 - FY2030)

Goal

Goal

Elevate position from OEM/ODM supplier to strategic partner

The world's no. 1 acoustic solutions partner

Priority measures

Contributing as an acoustic solutions specialist inpromising industrial fields that contribute to society inthe future and fields related to the auditory and tactile
senses. Aiming to have customers say that they will
ask Foster about acoustics and vibrations.

1. One-stop sales strategy for automotive products and services in fields related tosound and vibration
2. Regional strategies
3. M&A strategy (acquisition of technologies in new fields which arenecessary for us to be a strategic partner)

Financial targets
Net sales: ¥120 billion Operating profit: ¥5 billion Operating profit ratio: 4.2%

Provision ofemotional value(auditory and tactile senses)

Priority areas
MaaS
Entertainment

Wearable Devices

Wellness

Noise reduction/noise cancellation

13

Introduction

Integrated Report 2023

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Sound Management Structure

Data Section

Overview of FY2022 Business Performance and Evaluation of the Progress of the Medium-Term Business Plan
In the fiscal year ended March 31, 2023, net sales were ¥121.3 billion and operating profit was ¥2.4 billion. We achieved the FY2024 net sales target of ¥120.0 billion stated in the medium-term business plan ahead of schedule, due in part toan increase in the quantity of car speakers shipped and the contributions of the weaker yen. At the same time, the operating profit ratio was no higher than 2.0%. This indicates that reinforcing the profit structure is a challenge that still remains.

(Million yen)

■ Summary of financial results
FY2021

FY2022

ChangeChange (%)

Net sales

91,106

121,338

30,232

33.2%

Operating profit(7,757)

2,445

10,202-(8.5%)

2.0%(7,473)2,327(8.2%)

1.9%(7,017)848(7.7%)

0.7%

Ratio of operating profit to net sales
Ordinary profit
Ratio of ordinary profit to net sales*1

Profit (loss)*1

Net profit margin or net loss margin

Speaker Segment

7,865

Dividend per share
Dividend payout ratio
ROE

38.23 yen353.76 yen

10.00 yen

20.00 yen

10 yen52.3%(14.4%)

1.7%*1 Profit/loss attributable to owners of parent, ratio of profit/loss attributable to owners of parent to net sales

121,338

33.2%

Operating profit(7,757)2,445-(8.5%)

2.0%

Net sales

69,676

76.5%

99,087

Operating profit(6,955)-2,004

Net sales(315.53) yen-

91,106

Operating profit
ratio

-

Operating profit
Operating profit
ratio

100.0%Net sales*2

Other businesses

FY2022Component
Change (%)
ratio

Net sales

Operating profit
ratio
9,800

Component
ratio

FY2021

Mobile Audio Segment
Profit per share(Million yen)

■ Results by segment

Operating profit
Operating profit
ratio(10.0%)

42.2%
-

2.0%

14,227

15.6%

14,691

(896)

-

1,203

(6.3%)

12.1%

3.3%
-

8.2%

7,202

7.9%

7,558

94

-

(762)

1.3%

81.7%

6.2%

4.9%
-

(10.0%)*2 Values for other businesses were calculated based on values after the elimination of inter-segment transactions.
Amount eliminated in FY2021: (Other businesses) ¥1,128 million, FY2022: (Other businesses) ¥2,845 million■ Results by segment
Speaker Segment

Mobile Audio Segment

Other Segment

While the environment surrounding the automotive market was tough, net
sales increased 42.2% year on year to ¥99,087 million, due to an increasein shipping quantity and the effect of the weaker yen. On the profit front,
a deficit of around ¥700 million was posted at a consolidated subsidiaryin Korea (whose fiscal year end is December) in the first quarter due to airtransportation expenses incurred at the beginning of FY2022. This wasmore than offset by the overall progress in cost reduction, the reductionof fixed costs, and price pass-through. As a result, this segment returned
to profitability, posting an operating profit of ¥2,004 million (compared toan operating loss of ¥6,955 million in the previous fiscal year).

Shipments of actuators for consumer use and automotive headsets weremade as planned although the forecast was pessimistic reflecting theshortage of semiconductor chips. Meanwhile, sales of headsets to besupplied with smartphones continued to decline. As a result, net sales
stood at ¥14,691 million (up 3.3% year on year). On the profit front, thissegment has remained profitable since the beginning of the fiscal year,with an operating profit at ¥1,203 million (as compared to an operating
loss of ¥896 million in the previous fiscal year), reflecting the introduction
and promotion of the R&D-oriented business in addition to efforts focusedon high-value added products.

Net sales of other businesses, including the micro acoustic components
business and FOSTEX brand products, increased to ¥7,558 million (up4.9% year on year). On the profit front, this segment posted an operating
loss of ¥762 million (compared to an operating profit of ¥94 million in theprevious fiscal year), due to sluggish sales of FOSTEX brand products,
inventory write-downs, and an increase in costs of products for thedomestic market attributed to the rapid depreciation of the yen.

14

Introduction

Integrated Report 2023

Foster’s Value Creation Story■ Progress on priority strategies
In the automotive business, we have already received approx. 90% of theorders targeted in the final fiscal year of the FY2024 medium-term businessplan, mainly reflecting strong orders and the contribution of the weaker yen.
In particular, sales of products for major Japanese brands are expected toincrease due to the expansion of sales to tier-1 manufacturers which havetheir bases in North America. In addition, orders received from luxury car
manufacturers in Europe have remained strong, and aggressive activities topromote the combined sale of speakers and micro acoustic components(including buzzers and speakers for acoustic vehicle alerting systems/eCall)or other products are beginning to bear fruit. Measures to increase resilience,such as the development of a production system for responding to thestrong demand for speakers, are progressing as planned.
Regarding products for the European market, which we have been
manufacturing in Asia, we must build a system for the stable supply of
products to important customers as soon as possible, reflecting the supply
chain disruptions that have continued since the COVID-19 pandemic.
In response, we have decided to establish our own manufacturing basein Hungary by borrowing a part of our affiliate’s factory in that country. In
December 2022, we established FOSTER ELECTRIC HUNGARY Kft., which
is our first subsidiary in Europe. Many automobile-related manufacturers
have entered Hungary. A good investment climate has been established inthis country because the corporate tax rate is low and the local authorities
are proactive and cooperative in attracting and supporting enterprises. While
important customers in Europe are strengthening their policies regarding
procurement from within the region, we will work to stabilize supply and also
reduce CO2 emissions from transportation.

Strategies for Achieving
Sustainable Growth

We are also working to rebuild our production system in view of the risk of
the intensification of the U.S.-China conflict. At our manufacturing bases in
China, we will gradually shift to production for the Chinese market. While
we manufacture products for markets other than China mainly in Vietnam,
we will strengthen our production systems in the Unites States and Europe
and work to build optimal production systems with an awareness of local
production for local consumption. In Vietnam, we will begin speakerproduction at the Ho Chi Minh factory within the second half of FY2023, in
addition to continuing production at the Bac Ninh factory. The Ho Chi Minhfactory was previously the main factory for headphones for key customers.

Long-term goal and direction of strategies
We will steadily implement the medium-term business plan, aiming to be
the world’s no. 1 acoustics solutions partner, not limited to the automotive
business, by FY2030. This is a position where we, a specialist highly
evaluated by customers who say that they will ask Foster about acoustics andvibration, can be active in promising industrial fields which will contribute tosociety in the future. To make this a reality, we are accumulating technologies
and services which will enable us to support a wide range of market needsin domains related to auditory and tactile senses and push forward in these
domains.
As a long-term priority strategy, we will strengthen our businesses in existing
fields and position the following market domains as targets for intensive
development. We aim to be the world’s no. 1 acoustic solutions partner inthese domains by FY2030.

Sound Management Structure

Data Section

MaaS: We will offer products with high safety and durability by applying thetechnologies we have cultivated through the manufacturing of car speakers,
by targeting the robotics and last mile markets.
Wearables:We see audio devices for smart glasses using AR/VR andbiometric authentication devices (such as earphones) as promising markets.
We will provide new products taking advantage of the ultracompact
dimensions, high sound quality, and low distortion of our products, which
are strengths we have cultivated, in view of the possibility that they will be
adopted as a part of social infrastructure in the future.
Wellness:We will shift to devices for bio-monitoring for health maintenanceand promotion as the aging of society progresses. We will leverage our
product track record used in blood pressure monitors and other products.
We will also work on devices to supplement hearing.
Entertainment: In this domain, which includes the game market, there isdemand for new emotional value as well as products with high sound quality.
We will provide devices that appeal to the user’s sensibility with acoustic
components and vibrating components that apply them.
Noise reduction/noise cancellation: No matter how the world progresses,
the importance of hearing, one of human’s senses, remains unchanged. We
will cater to diverse needs of society as a whole related to sound and soundquality control as a technological expert that has been dedicated solely toacoustics for more than 70 years.

Automotive business sales targets(Million yen)
100,000

CAGR

12.2％

TargetResultWeaker yen andprice pass-through80,000* The automotive business includes all of the Foster
Group products used for automotive applications, suchas car speakers, micro acoustic components (such as
buzzers) and automotive headphones.

60,000* The value varies greatly according to various
factors, such as future automobile sales and thestatus of the orders we receive.

40,00020,0000

FY2020

FY2021

FY2022

FY2023E

FY2024E

15

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Beyond2025

Sound Management Structure

Existing markets

Data Section

New markets

Car
headsets
Audio Accessories &Speaker Drivers

Robotics USB
speakers
Robin (RN002TW), a
headset with
9-degrees-of-freedom
sensor for social
infrastructure

r
lla
pi

T hi
rd

New technologies

piActuatorsSeconApplication
development in viewof BtoBtoC

lar
pil

Firs
t

Returning to thefinished productbusiness and building
a solid foundationd

Existing technologies

In the process of overcoming the crisis in the past three years, various
weaknesses and issues we needed to address further emerged that
had yet to surface when we formulated the medium-term business plan.
Addressing these issues is also essential for establishing a revenue base forthe automotive business, which is one of the targets in the medium-termbusiness plan. Our strong relationships with customers, which we developedin overcoming the crisis, are a great foothold for developing the partner
strategy in the Speaker Segment. Instead of restoring the pre-COVID-19
state, we will promote the partner strategy to build on the new relationships
established while tackling the pandemic, with existing relationships as our
foundation.
In addition, in fields including acoustic vehicle alerting systems (AVAS), we willreorganize our production system and improve our marketing capabilities,
thus increasing our market share steadily and establishing a solid revenue
base for Foster in the medium term. This is our task going forward.
Throughout the fiscal year ended March 31, 2023, Foster Electric consideredworking on longer-term projects to establish a long-term revenue base. We
call these Beyond2025 initiatives because the goal is to accomplish themin or after March 2025, the end of the current medium-term business plan.
Above all, from 2025 onward, when certain results will be achieved in theautomotive business under the current medium-term business plan, we
will aim to build businesses to enable us to be the world’s no. 1 acoustic
solutions partner with the foundation of our current Mobile Audio Segment.
The Mobile Audio Segment has remained profitable since the beginning of
the fiscal year ended March 31, 2023 and achieved a full-year net profit
because of the various measures that have been taken since before thefiscal year ended March 31, 2022. We will accumulate models for successlike these, to lead to successful Beyond2025 initiatives, and establish pillars
that will forge the future of Foster.
Specifically, we will develop three pillars plus something extra to respond tomarket changes in the era of VUCA.
The first pillar is audio accessories (finished products) & speaker drivers.
Because the market continues to grow, we will once again focus our effortson the finished product business, which may be called the point of origin of
the Mobile Audio Segment, aiming to achieve the regrowth of the businessas a solid foundation for net sales and marginal profit.
The second pillar is a headset with 9-degrees-of-freedom sensor for social
infrastructure (RN002 TW). We aim to achieve its commercialization as thefirst earphone-type device capable of acquiring biological information. It
has the potential to establish a unique position in a new market. We aredeveloping applications for it that meet users’ lifestyle needs in various
domains.

Strategies for Achieving
Sustainable Growthll a rMedical &wellness

Promoting the growthof business in stages
with internal strategies
for the development of
new business

Expansion from thegame market to thewellness market, etc.
enabled by increased
visibility

The third pillar is vibration devices (actuators). The haptics* market hascontinued to grow, and it will be a new challenge for us. Based on establishedvibration technologies, we will lead the video game market and expand
applications to the wellness and automotive equipment markets.
In addition to the above, we will work proactively on car headsets, robotic

USB speakers, and auscultators and next-generation digital auscultation
devices for remote medical care as a long-term revenue base. These are thesomething extra alongside the three pillars.
* Haptics: Tactile technology that transmits force, vibration, movements, and other tactile
sensations to the user as haptic feedback

16

Integrated Report 2023

Introduction

Sources of Strengths:
Intellectual Capital
Technology development and management
systems■ Passing down technologies
As an initiative to ensure that technologies
are passed down to new generationsof employees, which is an importanttask of a manufacturer, we hold theTechnology Convention and the QC Circle
Convention every year as company-wide
events. At the Technology Convention,technology-related departments report
selected contents of their developmentof technology from among the mattersconsidered that year, and the reported
content is compiled in the Technology
Yearbook. At the QC Circle Convention,
stories about solutions to issues atoverseas
manufacturing
sites
are
presented, and technologies are shared and passed on to other employees.
As a program for developing engineers at headquarters, we have continued

In addition, last year we established the Invention Discovery Task Force, which
consists of a patent attorney from an external patent office, our engineering
staff and staff from the Intellectual Property Section, for the purpose of
digging into each invention from diverse perspectives simultaneously
to identify patentability or notice something new, to encouraging patentapplications or the improvement of inventions, and eventually helping build astrong patent network. The specific achievements of the task force include
the significant increase in patent applications.

Data Section■ Actuators
We apply our speaker design technologies in the design and developmentof unique vibration devices, including actuators developed for haptics*
and wellness applications. We have acquired various patents for voice coil
actuators (VCA) that are able to create a wider variety of tactile sensations.
These actuators are becoming a great force for entering new markets.
* Please refer to Beyond2025.

Examples of ongoing partnerships■ NTT sonority, Inc.: Practical application of an earphone with
PSZ function
Through a collaboration with NTT sonority, we have launched the world’s
first earphone with a PSZ function which traps sound near the listener’s ears.
We are proposing it widely for in-car use (to be mounted on seats). The
PSZ technology owned by NTT sonority traps high-quality sound near thelistener’s ears and prevents sound from leaking out in any direction. Basedon reverse thinking, with which the sounds from the back side of the speaker,
which are not normally used, are used proactively, this technology controls
interference using software in addition to creative measures devised for
hardware to create a sound shell (a space in which sounds are trapped).

■ NEC Corporation: Development of a hearable device with afunction for acquiring biological information

Important technologies and products forwhich they are applied
We have established a coreCap
Diaphragm
technology which vertically
Surroundintegrates the design andor edgeDamperdevelopment,
evaluationor spider
Voice coiland manufacturing of key
speaker parts in a unique
Frame
Terminal
way. Major examples of the
key parts are the vibrationrelated parts which form thePlatebasis of a speaker’s acoustic
Yoke
Magnetperformance, such as thediaphragm, suspension andvoice coil. With the foundation Core technology affecting the speaker’s acoustic performanceof this core technology, we
have the following wide array of products.
Magnetic circuit

We have established the Engineering Division, which oversees the Group,at the headquarters. Approx. 40% of the employees working at theheadquarters are engineers. In addition, each of our overseas manufacturingbases has design and process engineering departments, which enables
them to develop and manage technologies in collaboration with theheadquarters. The Engineering Division at the headquarters consists ofdesign, process engineering and development departments. Each oneof them designs products for each segment, implements manufacturing
preparations for commercial production, and conducts R&D into the basic
technologies for materials, vibrating parts and acoustics. The engineers
collaborate to develop advanced technologies while sharing the most up-todate information beyond the boundaries between departments. Further, weapply for patents for inventions created through these activities so that ourexpertise is used only internally, increasing our competitive edge.

to provide the A La Carte Training program which includes 45 technologyrelated training options (cumulative total of more than 3,700 participants
since 2011). Each department develops engineers through OJT in addition
to standard training.

Sound Management Structure

Chassis■ Organizations

Strategies for Achieving
Sustainable GrowthVibration-relatedparts

The Aufbau principle that is behind speakers, actuators and other acoustic
products is relatively simple. However, because of its simplicity, there aremany difficulties. Sounds and vibrations can be adjusted in a wide range
by changing the material and shape (such as its thickness or weight) of
the products parts and the combination of these parts. While there arecountless sounds and vibrations, the sounds and vibrations that customers
and consumers demand vary widely. Further, they are different due to place,usage, era and other factors. In a world with infinite options, a world of art, weare creating and accumulating the intellectual capital that is the source of ourcompetitive advantage by working on technology and product development
in a customer-oriented manner.

Foster’s Value Creation Story■ Car speakers
We accumulate technologies for custom-designing car audio device
products in accordance with customer needs, including car audio speakers,
speakers for acoustic vehicle alerting systems (AVAS), speakers for metercluster panels (a part of automotive instrument panels), speakers for electric
toll collection systems, and speakers for eCall. We have a track record of
supplying car speakers, which we began to manufacture in 1982, to morethan 50 companies as of the end of FY2022, and we estimate our global
market share to be more than 30%.

■ Earphones and headphones
We have standardized compact units of various diameters that customers
can choose from according to their intended use, which helps push forward
the design and development of earphone and headphone products. We haveequipped earphones with ear acoustic authentication, speech active noise
cancelling and various sensor functions, as well as functions for listening tomusic. In addition, in October 2022, we newly developed a product with afunction for acquiring biological information (ear canal surface temperature,pulse related information and head tracking information) and began to offer it
in a wide range of markets including in the healthcare domain.

In this collaborative project, we have launched a true wireless-type hearable
device (product name: RN002 TW) with crowdfunding. In this development
project, we equipped the hearable device with an ear acoustic authentication
technology owned by NEC, which identifies individuals based on an acoustic
echo from the outer ear canal. We have thus created a hearable device
which can provide new valuable data combined with personal identification
using various sensors used in conventional products and sensing dataacquired from the area around the ears, including biological information (earcanal surface temperature, pulse related information, and head tracking
information).

■ ShareMedical, Inc.: Joint development of products forhealthcare applications
We jointly developed a next-generation digital auscultation device andmedical acoustic equipment. ShareMedical, Inc. owns a basic patent for
remote auscultation technology enabling online auscultation. The company
has developed and sells Nexstetho, an auscultation device for online medical
examinations. With a long track record in the development and manufacturingof acoustic products, Foster has cooperated to further improve Nexstetho’s
acoustic quality, along with the development and productization ofheadphones and speakers optimized for auscultatory sounds, which are
faint and subtle, and a next-generation auscultation device. This is aimed atsolving acoustic issues in the medical and healthcare field, not to mention
the field of remote medical care which will continue to expand in the future.
Designed in consideration of the convenience of physicians, the products
feature simple designs which enable non-verbal understanding, and minimal
interfaces that enable intuitive operation. Basic patents related to real-time
remote auscultation technologies have also been acquired.

17

Integrated Report 2023

Introduction

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Sound Management Structure

Data Section

Sources of Strengths: Manufactured Capital
Global manufacturingsystemUnited States

With 15 manufacturing sites
in seven countries worldwide(Vietnam, China, Myanmar, UnitedStates, Hungary*, South Korea,
and Thailand), we have establishedacomprehensive,advancedmanufacturing system for producing
everything, from parts to products.

EL PASO OPERATIONS

Korea
ESTec CORPORATION*Commercial production is scheduled to begin
in October 2024.

China
ESTec ELECTRONICS (JIAXING) CO., LTD.

Myanmar

FOSTER ELECTRIC CO., (HEYUAN) LTD.

FOSTER ELECTRIC (THILAWA) CO., LTD.

GUANGZHOU PANYU JIU SHUI KENG
FOSTER ELECTRIC FACTORY*outsourcee
Guangzhou Fourstar Electroacoustic Tech
Co.,Ltd

Vietnam
ESTec PHU THO CO., LTD.
FOSTER ELECTRIC (BAC NINH) CO., LTD.

Hungary*
FOSTER ELECTRIC HUNGARY Kft.

FOSTER ELECTRIC (DA NANG) CO., LTD.
FOSTER ELECTRIC (QUANG NGAI) CO., LTD.

ThailandFOSTER ELECTRIC (VIETNAM) CO., LTD.

FSK (Thailand) Co.,Ltd.

ESTec VINA CO., LTD.

Major manufacturing sites: As of March 31, 2023

18

Integrated Report 2023

Introduction

A manufacturing system that helps us cater
optimally to customer needs■ Sophisticated manufacturing functions
Our major factories also have functions for developing and producing
manufacturing equipment that is capable of producing acoustic products
customized for each client.
Our production lines are designed to enable flexible production while holding
down costs, which is made possible by the use of common base equipment
and switching jigs (auxiliary tools) on a model-by-model basis. In addition, we
produced most of the equipment and jigs in-house so that they are suited toour advanced manufacturing techniques. We have steadily been expanding
in-house production of not only production line equipment but also key parts(such as papermaking, voice coil production, resin molding and magnet
production (planned)). The in-house production of key parts starts from the inhouse design of molds. Synergy with the in-house production of production
line equipment has led to differentiation through product performance.
We have been developing our manufacturing philosophy over the many years
since we began full-scale commercial production in Panyu, China in 1988.
We can say that this philosophy forms the foundation of our competitive
advantage.
The ideal mix of proactively introduced automated equipment and manual
work processes create a harmony of machines and humans that enables
us to cater flexibly to customer needs. Further, reflecting the environmental
needs that are increasing around the world in the modern age, we arepromoting a project to develop a next-generation speaker manufacturingline, aiming to manufacture the products desired by customers in anenvironmentally friendly manner and deliver high-quality products that meetenvironmental needs on time and for an appropriate price.

Foster’s Value Creation Story

standardize parts and raw materials, aiming to achieve the appropriatequality of our products for automotive use and low prices through thoroughstandardization. These efforts include the elimination of unnecessary partsand raw materials which we began in 2016. In addition, to cater to the rapidly
growing environmental needs, we are pushing forward with the replacementof existing materials with environmentally friendly ones and stringently
selecting suppliers based on our environmental policy and other criteria,
aiming to achieve zero environmental impact.

Manufacturing technologies that enableboth high quality and stable commercial
production

Sound Management Structure

Data Section

automobiles are final products that involve human lives. By improving ourquality control capabilities, we have realized manufacturing that ensures both
high quality that meets the quality standards of the International Automotive
Task Force (IATF) and stable commercial production. In addition, we have
set the goal of introducing versatile production lines so that we are able
to manufacture products anywhere. To enable commercial production using
versatile production lines while meeting diverse specification requirements,
we are creating product design rules, process design rules and equipment
design rules steadily in a well-planned manner.

■ Digital transformation (DX) of manufacturing■ Achieving the level of quality that is appropriate for products forautomotive use

Since we began to deliver car speakers in 1982, we have steadily been
accumulating expertise in the launch of the manufacturing of automotive
products by conforming faithfully to automobile quality standards, as

We are proceeding steadily with the Foster Smart Factory System (SFS)
strategy for the automation of production processes, equipment maintenanceand logistics in factories to eliminate human error and prevent problems
using automatic analysis and predictions based on accumulated data. The
final goal is to realize a direct contribution to profits such as the increase ofcustomer satisfaction using the automatic proposal of countermeasures andsystem control.

Main processes of the Foster Smart Factory System

Automation of all
operations of thequality system

Visualization of
production
information
Accumulation ofequipment
information

Real-time
monitoring
through imaging
tests, etc.

Quick visualizationof all processes

Enhancing security inpreparation forcyberattacks

Eliminating
human error

Utilizingon-siteinformation

Guaranteeing
automated
processes

Handling problems
by ensuring
traceability

Preventing factory
shutdowns andinformation
leakage■ Optimization of the material supply chain
We have built a global supply chain that enables us to procure optimal
materials in a timely manner. While the headquarters globally controls
suppliers, we proceed with initiatives such as the standardization of partsand materials, the consolidation of suppliers and the identification of new
suppliers in our efforts to maximize efficiency. For example, we implemented
the following to address supply chain disruption risks. Previously, key
materials for car speakers (including paper, metals, magnets and resins)
were procured mostly from China. We began to increase the percentage ofthese materials that we procure from other countries in our efforts to address
procurement risks. As a result, the percentage of these materials procured
from China was reduced to approx. 30% as of 2022.
In addition, while responding appropriately to recent unprecedented crises
such as the COVID-19 pandemic, we are increasing the sophistication of ourproper inventory management and increasing inventory through the advanceprocurement of irreplaceable materials, such as semiconductors and rareearth elements, in our efforts to optimize costs. The importance of reinforcing
these risk management systems has also been instilled in the employees
working on site. Therefore, with a strong sense of the responsibility we bear
to ensure that customers’ manufacturing lines do not stop even during the
COVID-19 pandemic, our factory employees acted voluntarily to remain
capable of continuing production, preventing delivery delays.
Regarding the materials we procure, we eliminate, consolidate andStrategies for Achieving
Sustainable Growth19Introduction

Integrated Report 2023

Special Feature: FOSTER STORIES

Foster’s Value Creation Story

Strategies for Achieving
Sustainable GrowthComments of the person in charge of the project
How Foster Stories was started

the tones created daily at Foster Electric.

I felt that because our mainstay business is original equipment manufacturing (OEM),
we tend to regard an achievement in our daily work simply and entirely as somethingthat we did to meet a customer requirement. This feeling inspired me to start Foster
Stories. I thought that our future will be brighter if we look back at the past while also
looking forward to see new things and notice the many attractive elements that are
dormant within the company that are not being widely shared.

How the stories are selected

Foster Electric is a specialist in acoustics with more than 70 years of history. Many stories
have been told throughout its long history. These stories are decorated by the diverse tones
that exist every day at Foster Electric. On its website, Foster Electric introduces the thoughts
and challenges of its people who are pursuing ideal sound.
This project was launched in 2020 as a project under the program for supporting employees
in taking on challenges (Foster Incubation Program).* A total of eight short videos have beenposted as Voices.
https://www.foster.co.jp/stories/* Please refer to Human Capital Initiatives.

Data Section

who know us, our customers and our shareholders.

Objectives

We show you

Voices — Our people who resonate with each otherSound Management Structure

I have selected stories that I want everyone to know. Although all of our employees are
involved in great things, these things happen so usually that our employees see them as
nothing special. Believing that these stories will look different when you look at them froma different perspective, I selected great things in our daily lives by looking at them from theperspectives of our external partners and others.

Target stakeholders
I think that stakeholders with whom the stories resonate most strongly are our employees
and students and alumni who are interested in our company. Of course, I feel that we canalso communicate messages to people of all layers of society, including the local residents

The objective is to make our organization more robust by enabling employees to internalize
our vision, “To make contributions for future society through acoustics,” and establish anenvironment, tools, and processes that enable each employee to say, “We are Foster whichmakes contributions for future society through acoustics,” in their own words.

If more employees can talk about the vision as a matter they see as their own,
regardless of their job category, the company’s strengths should be increased
automatically and the level of happiness of employees, who spend the majority of
their time at the company, should also improve. Foster Stories helps embody andsupports Foster Rhythm, which was formulated by employees as a set of values forcherishing our Principles, and enables the visualization and transmission of the things
that are done daily based on this set of values. The final objective of the activities is
to embody Foster Rhythm through actual operations and spread it widely both insideand outside the company.

Responses and achievements
Many people say they like it. Above all, I was very happy to hear how employees’ families
reacted to Foster Stories. I heard that when an employee went back to his parents’ home,
his parents were talking about their son’s company happily to their friends and showing them
Foster Stories videos.

Posted content
VOICESVOICESVOICESVOICES

01

02

03

04

Intellectual capitalIntellectual capitalIntellectual capitalSocial andrelationship capital

An unprecedented sense of immersion realized throughthe rich expression of vibrations achieved through theapplication of speaker technologies

Challenges and pursuits leading to acoustics that defy
imagination

Sound Quality Samples for sharing Foster Electric’s
superior technological capabilities which serve as
guidelines in the pursuit of high-quality soundSpeaker Craft Workshop leveraging Foster’s strengths

This is a story about a six-year-long effort to develop a new vibration
generator called a voice coil actuator. It enables people to experience a
wider range of vibrations with a higher resolution through the application of adrive system that is different from conventional drive systems, such as motor
drives.

VOICESThe Osaka Technical Base studies acoustics in cars on the level of thestructure of the car body and its systems, supporting the development of
the automotive audio products of Foster Electric. This story introduces thechallenges faced by the Osaka Technical Base, which works closely with car
manufacturers and anticipates change in the automotive industry.

VOICESThis is a story about the launch and vision of the Sound Quality Samples
project. This project is aimed at materializing and sharing our expertise intechnologies for the in-house production of cone paper, which determines
the quality of the sounds from a speaker, as a map to be used in our quest
for high-quality sound.

VOICES

Foster Electric’s Speaker Craft Workshop is an educational program thatincorporates speaker making that is provided to individuals in a wide age
range. This story looks at the future of the workshop, which is aimed atincreasing the brand’s visibility and promoting the appeals of speakers.

VOICES

05

06

07

08

Human capitalIntellectual capitalIntellectual capitalIntellectual capital

FIP creates a culture of taking on challenges. It is a
program that supports employees’ initiatives.

You can hear it. We will continue to create these things asmatter of course.

Key parts of speakers — invisible adhesives

The possibilities of in-car sound field simulation with thegoal of replicating the aesthetics of professionals

The Foster Incubation Program (FIP) was launched in 2020 with the goalof fostering a culture of taking on challenges by supporting employees
in their attempts at new initiatives as the business environment
surrounding Foster Electric has entered a phase of major change.
This story focuses on the thinking behind the launch of the program, as wellas its achievements and future outlook.

Audio equipment delivers high-quality sound to people and space throughconnections with various devices. This story looks at the initiatives of theElectronic Engineering Dept., which supports the delivery of sound, and its
activities to achieve its mission of creating markets with new added value of
acoustic and vibration-related products.

The adhesives which support speakers behind the scenes are essential in
the manufacturing of high-quality products. This story showcases Foster
Electric’s R&D efforts related to adhesives as it overcomes many challenges
in pursuit of optimal adhesion methods for the next era. These difficulties
include the need to consider the properties of the parts to be used and use
environment of products, as well as environmental regulations related to
manufacturing.

In-car sound field simulation has the potential to change car speaker
development greatly. If the technology for reproducing in-car environments
using software, without using a real car, is realized, it will streamline thetesting of car speaker systems and enable the proposal of a wide range ofsolutions to clients. This story looks at the challenges Foster faces in thedevelopment of the simulation technology and its future prospects.

20Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Foster’s Sustainability
Message from the sustainability
officer

ESG Management Statement

Since our founding in 1949, we have been working under
the corporate creed of “Sincerity,” our vision of “To makecontributions for future society through acoustics,” andour mission “Through acoustic products or its solutions,a total commitment to help create a comfortable life andpleasure of communication around the world. A truly
global enterprise our future society counts on.” We haveconsistently aimed to become a sustainable company
that is indispensable to society and that continues todevelop.
In March 2021, we established our ESG Management
Statement along with the formulation of medium-termbusiness plan, thus announcing Foster’s commitment
to management focused on E (environment), S (social),
and G (governance) initiatives, both internally andexternally. In April 2022, we reorganized the ESG
Promotion Department into the Sustainability Promotion
Department, reinforcing our structure and enhancing ourability to push forward with ESG management to pursue
the sustainability of Foster and society (medium- tolong-term sustainability). Further, we support the United
Nations Global Compact (UNGC) and refer to the Ten
Principles of the UNGC and the ISO 14001, ISO 45001
and other standards in the promotion and managementof our sustainability activities.
Above all, we position the realization of a decarbonizedsociety as one of the most important businesschallenges we face and engage in initiatives accordingly.
Specifically, we have set a new long-term goal, aim
to achieve carbon neutrality by 2050. We have also
revised our medium-term goal from the previous“reduce total Scope 1 and Scope 2 CO2 emissions 30%
by 2030 from a 2018 base-year” to reduce them by
50%, following a decision to accelerate initiatives. We
will strive to build a sustainable society with all of thetechnological capabilities of the Foster Group, improving
our promotion of ESG management from our previous“social responsibilities to be fulfilled by a company” tothe “source of a differentiating competitive advantage.”

In March 2021, we established the ESG Management Statement. It expresses in specific term our commitment
to working on ESG management in medium to long term and what we want to be like, toward the realization of
the sustainability of both the Group and society, by positioning “Be happy 80%” (see page 5) for our employees
at the root of all corporate activities and by improving their well-being.

Foster Group ESG Management Statement

Akihito Mochizuki
Managing Director, CFO, and Sustainability Officer

Further, in addition to the environment, there have been
growing social concerns about and requirements related
to human rights, for the realization of a sustainable
society. In 2017, the Foster Group joined the United
Nations Global Compact, which supports and respects
human rights protection with its Ten Principles in fourareas. The Foster Group operates globally in Japan, therest of Asia, the Americas, and Europe. Therefore, we
advance initiatives to increase the respect for humanrights within the Group and its supply chain, aiming
to build workplaces and a society where people withdiverse attributes, such as age, gender, nationality, andcreed, respect and accept each other as they are.
Moving forward, we will continue to push forward withcorporate activities with “Sincerity,” our corporate creedthat we set based on ESG management, by leveraging
non-financial capital such as (1) intellectual capital,(2) human capital, (3) manufactured capital, (4) socialand relationship capital, and (5) natural capital, and (6)financial capital, which are the sources of our strengths.
By appropriately addressing the expectations and needsof our stakeholders through the above, we will continue
to enhance our corporate value and contribute to thesustainability of not only ourselves but also society(medium- to long-term sustainability).

Our ESG initiatives stem from our corporate creed, “Sincerity.” The “Sincerity”, is defined in Foster Rhythm*
as “Always tell the truth, be kind to others as well as the planet, and serve with all your heart.”
At Foster, employees play the central role in ESG activities. A company cannot promote ESG if it cannot
make its employees, who are at the root of all corporate activities, happy. Based on this idea, we havepositioned “Be Happy 80%” for employees as the base point of our ESG activities. We would like tocontribute to a future society to fulfill the expectations of all the stakeholders. We believe that 80%, not
100%, is the benchmark for happiness. We have left room to consider the satisfaction of other stakeholders
as well as that of our company and ourselves.
* Foster Rhythm:Corporate philosophies including the corporate creed of “Sincerity” which were expressed in plain words by our employees, sothey will be understood by our global employees

Foster is strongly committed to ESG and aims to achieve the following from along-term perspective.
1. Initiatives to promote “Decarbonized Society”, “Resource Recycling”, and “Harmony with Nature” andtireless efforts to achieve “Zero Emissions”
2. Exciting, unrestricted work styles appropriate for each life stage and goal in life
3. A society where people with diverse attributes, such as age, gender, nationality, and creed, respect
and accept each other as they are
4. A true expert trusted by customers and business partners
5. Having “Zero Defects” established in various aspects, including product quality and business quality
6. Improving the quality of people’s lives by providing solutions through sound and vibration technologies
7. Implementing strict risk management and enhancing the compliance structure, which contributes tostrengthening corporate governance=> Enriching people’s lives with the power of sound and vibration and delivering happiness andsustainable future to all stakeholders -- this is what we desire to do at Foster.

21

Integrated Report 2023

Introduction

The Foster Group’s Promotion of
Sustainability

Sound Management Structure

Data Section

Materiality (Priority Issues)

The Foster Group issued the first version of its CSR Charter*1 in 2006, and updated it
to pursue global versatility and universality in 2010, by incorporating the EICC*2 Codeof Conduct, the CSR standards established by U.S. Electronic Industry Citizenship
Coalition, as our basic policy. Items originally set out by the Company have also been
added to the Code for reinforcement of the Group’s ESG management. In addition tothese efforts, we also promote sustainability by referring to the United Nations Global
Compact and the ISO 14001 and ISO 45001 standards, among other global guidelines.
*1 Revised to Sustainability Charter in March 2022
*2 Electronic Industry Citizenship Coalition (renamed Responsible Business Alliance in 2017)

Foster Group Sustainability Charter
In March 2022, we established the Sustainability Charter as a revision of the CSR Charterto clearly state that we will pursue sustainability of both the Group and society, in addition
to continuing to work on corporate social responsibility (CSR). The Charter is aimed atmaking it known that all officers and employees regard corporate sustainability (mediumto long-term sustainability including ESG elements) to be an important issue and ensuringthat they will be conscious of and achieve sustainability in their daily activities. In thisCharter and its supplemental rules, we stipulate the sustainability activities and ESG
management that are appropriate for the Foster Group as an entity operating businesses
globally. We also state that we will engage in corporate activities in accordance with thecorporate creed of “Sincerity.”

We issued the revised Materiality in March
2021. In identifying Materiality, we conductedbackcasting from our ESG Management
Statement and medium- to long-term goals
under the mid-term business plan and listed
the issues that should be addressed first byreflecting expectations of our stakeholders,
including customers and external ratingcompanies. Further, the ESG Promotion
Task Force, consisting of staff and managers
in each ESG field, held discussions, andmaterial items were determined andapproved by the Sustainability Committee
and the Board of Directors. We will revise
Materiality as necessary by continuing toevaluate and analyze its impact on our
stakeholders and its importance to them,in accordance with the direction of ourbusiness.

Environment (E)Decarbonized Society

Social (S)Governance (G)Product Quality and Safety*CO2 Emissions (Scope1, 2, 3)

Resource Recycling*Resource saving products• Solder-less, adhesive-less, lightweight*Production process improvement• Reduction of waste emissions(reduction of hazardous waste)• Circulation of water resources related
to papermaking

Supply Chain Management
Governance
Enhancement
Creation of Exciting
WorkplaceHarmony with Nature*Management of chemical
substances (no legal violation)

Diversity and Inclusion

Our Approach to Materiality

Sustainability
Promotion Structure
At its headquarters, the Foster Grouphas established the Sustainability
Committee chaired by the president.
The core members of the committee arerepresentatives of related sections. The
Sustainability Committee, including thesustainability representatives and staff
from the headquarters and each site,
meets every month with the sustainability
officer who is the executive chairmanof the committee in attendance. They
monitor the activities of the Group as awhole for the promotion of sustainability
and engage in collaborative activities.
Important matters about which the
Sustainability Committee is consulted
are deliberated and approved during
Board of Directors meetings which
are attended by directors and outside
directors.

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

General Meeting of
Shareholders
Board of Statutory
Auditors

Production Division

Global Corporate Support Division

Quality Assurance Division

For the material items, which are set from theperspective of ESG, the department with the primary
responsibility for each item sets annual targets and KPIs
and pushes forward with initiatives to achieve them.
Progress and results are deliberated at Sustainability
Committee meetings, which are attended by officers
and representatives of related sections, and revisions
are made and improvement measures are taken.
In addition, importance has been attached to humanrights in recent years, reflecting the globally increasing
concerns regarding human rights. Against thisbackground, we are working to prevent infringementsof human rights by ensuring that employees observe
human rights, increasing their awareness of humanrights, conducting human rights assessments andresponsible minerals surveys in the supply chain,
and implementing governance measures, such ascompliance with labor laws, as part of the Materiality
initiatives related to human rights. Through these
initiatives, we understand the importance of humanrights in the implementation of our corporate activities
and we promote initiatives accordingly.

(Including procurement department)(Including human resources, general affairs,
governance, legal affairs, and finance departments)(Including quality departments)* For details of our Materiality initiatives, please go to the next page.

Accounting Auditor

Board of Directors
CEO/PresidentInternal Audit
Department
Sustainability Officer
Sustainability Promotion
Department(Including environmental department)

Sustainability Committee

Relevant committees
Compliance Committee
Risk and Crisis Management
Committee
Health and Safety Committee, etc.

Chair: CEO
Executive Chair: Sustainability Officer

Environment Committee

Corporate divisions and businessdivisions
Engineering Division

Sales Division

Group companies

22

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Materiality

Decarbonized society

Sound Management Structure

Data Section*1 CFRTP: Carbon Fiber Reinforced Thermo Plastics*2 Environmentally responsible speaker: A speaker with any environmentally friendly element, such as light weight, reduced applications of VOC or solder, and application of dry process*3 VOC: Volatile organic compounds*4 Important suppliers: Approx. 50 corporate suppliers who together constitute the top 80% or so in terms of the amount of our purchases*5 Rate of conformity to our CSR standards: Suppliers who have achieved CSR self-assessment scores of 66% or higher are deemed to conform to our CSR standards (those with 65% orlower are deemed non-conforming).
*6 1. Examination and global expansion of the BCP structure 2. Management of the overall Group’s fire protection framework 3. Enhancement of information security management systemmeasures 4. Management of suppliers’ business continuity 5. Response to logistics disruptions 6. Other risks predicted based on events which occur during the fiscal year

Our Approach to Materiality (Priority Issues)

ESG

Strategies for Achieving
Sustainable GrowthTarget (KPI)

Achievements until FY2022• Absolute Scope 1, 2 emissions• FY2025 Target: Reduce by 30% from a FY2018 base-year• FY2030 Target: Reduce by 50% from a FY2018 base-year• Absolute Scope 3 emissions• FY2025 Target: Reduce by 3% from a FY2018 base-year• FY2030 Target: Reduce by 15% from a FY2018 base-year

Weight reduction⇒ Develop element technologies to achieve further weight reduction
from conventional car speakers.

FY2025 target: Develop products incorporating elemental technologies for speakers weighing less than
100 g.

Refer to42% reduction from a FY2018 base-year
P. 29

Completed production of a product developed on our own thatincorporates the frame and CFRTP*1 diaphragm material as atechnology for reducing the weight of the product to less than 115 g.

AFFORDABLE AND
CLEAN ENERGY

Environment (E)2022 target• Weight reduction to less than 115 g• Achieve development of a product developed on our own that incorporates a technology for weight
reduction
Resource recycling*2

Increase the ratio of environmentally responsible speakers*2

Increase the ratio of environmentally responsible speakers=> The ratio of environmentally responsible car speakers (per sales): FY2025 target: 22%

RESPONSIBLE
CONSUMPTION
AND PRODUCTION

FY2022: 16%
P. 30• FY2022: 16%• FY2023: 18%• FY2024: 20%• FY2025: 22%
Reduce the use of VOCs*3• The ratio of toluene-free new mobile audio products: FY2024 target: 100%

The number of failures with a serious social impact (human life, property,
environment and so on)

Maintain 0 failures

Social (S)Creation of exciting
workplace

FY2022: 77.7%

0 failures

Percent of suppliers submitting CSR self-assessments• Percent of important suppliers*4 who conduct CSR self-assessments: 100%

P. 34

*5

Supply chain management

CLIMATEACTION• FY2022: 60%• FY2023: 80%• FY2024: 100%Harmony with nature

Product quality and safety

Corresponding
SDGs

100%

• Percent of important suppliers who conform to our CSR standards: 90% or higher

91%

Percent of suppliers that responded to the responsible minerals
survey• Existing suppliers: 99% or higher

99%• New suppliers: 100%100%

• Deviation value of engagement survey (headquarters)• Total working hours per employee (headquarters)• Rate of specific health guidance taken (headquarters)

52.0 or more
Monthly average of 153 hours or less80%

• Rate of periodic health examinations taken (headquarters)• Displaced worker due to nursing care (headquarters)

Maintain 100%
Maintain 0%

51.8
155.8 hours
83.0%* Percentage including people who received a post-health checkup
interview: 84.6%
Maintain 100%
Maintain 0%• Female manager ratio (headquarters)• Ratio of overseas human resources (headquarters)• Employment rate of persons with disabilities (headquarters)• Ratio of males taking leave for spouse’s childbirth and childcare leave(headquarters)

FY2025: 30%
FY2025: 30%
More than 2.3% of the legal employment rate100%

• Provide training to encourage the development of an organization
where diverse people can demonstrate their capabilities(headquarters).

Provide training to eliminate unconscious biases which hamper the active participation of women andforeigners, and deepen understanding of SOGI and LGBTQ+ issues

Enhancement of corporate governance• Compliance with the Corporate Governance Code: 100%
• Promote the governance cycle. (Improve systems and operation based on governance assessment.)

100%

Reinforcement of compliance• Maintain a response rate of 100% to the compliance test and the compliance survey.
• Percentage of employees informed of the internal whistleblowing system: 100%
• Provide compliance training and maintain the satisfaction level at 4 or higher out of 5.

100%
100%
Maintained 4 or higher on average.

• Improve the system and operation of risk and crisis management based on risk assessment.
• Completion rate of measures for key items*6 within the fiscal year, which are identified through themonitoring of the items

100%
100%

Diversity and Inclusion

Governance (G)Governance Enhancement
Enhancement of risk and crisis management

REDUCEDINEQUALITIES

PP. 32-33

PEACE, JUSTICEAND STRONG
INSTITUTIONSGOOD HEALTH
AND WELL-BEING

PP. 36-39
DECENT WORK AND
ECONOMIC GROWTH

12.6% (As of March 31, 2023) 14.2% (As of April 1, 2023)
11.0% (As of March 31, 2023) (Including Officers)
2.1% (FY2022 average)

Ratio of males taking leave for spouse’s childbirth: 85.7%
Ratio of male employees taking childcare leave 62.5%(1) Basic skills training to improve mental toughness (FY2022
participation rate: 91%)
(2) Training for creating a workplace free of harassment (FY2022
participation rate: 96%)(3) Career training for young, mid-career, and female employees given
by a female director

RESPONSIBLE
CONSUMPTION
AND PRODUCTIONGENDEREQUALITY

PP. 38-39
REDUCEDINEQUALITIES

PP. 43-45

P. 46

PEACE, JUSTICEAND STRONG
INSTITUTIONS

P. 46

23

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Sustainable Development Goals (SDGs)
The Foster Group will continue to promote the Sustainable Development Goals (SDGs), which are proposed by the United Nations, and conduct sustainability activities through the
UNGC framework.

Our Actions on SDGs
SDGs
NOPOVERTY

Activities

Business●

Refer toP. 42●

Participation in a blood donation program

Business

SocialContribution

In-house

Refer to●PP. 38-39

Education on promoting diversity
Driving the employment of diverse human resources,

P. 42
●

P. 39

Provision of Speaker Craft Workshop and Parent-and-Child
Speaker Craft Workshop, work experience program for junior●high school students and provision of science education atManagement of chemical substances

●

P. 29

Promotion of recycling

●

P. 29

Environmentally friendly products

●

P. 30

CO2 reduction●

PP. 27 and 29

Promotion of clean energy use

●

P. 29

Environmentally friendly products

●

P. 30

P. 42

junior high schools

CLIMATEACTION

Introduction of online training content related to diversity●

Implementation of career training for young and mid-career

PP. 38-39

female employees
LIFE ONLAND

CLEAN WATER
AND SANITATIONAFFORDABLE AND
CLEAN ENERGY

ActivitiesRESPONSIBLE
CONSUMPTION
AND PRODUCTION

enhancement online seminars

GENDEREQUALITYSDGs

regardless of their nationality

Implementation of Health Point System and health

QUALITYEDUCATION

In-house

REDUCEDINEQUALITIESDonation activities for low-income households, assistancewith food, clothes, necessities, etc.

GOOD HEALTH
AND WELL-BEING

SocialContribution

Water risk management

●

P. 29

CO₂ reduction●

PP. 27 and 29

Management of environmentally hazardous substances

●

P. 29

Work style reform

●

P. 39

Reduction of scheduled working hours

●

P. 39

Lifting the ban on second jobs

●

P. 39

Enrichment of holiday/leave programs

●

P. 39

Multi-track career course system

●

P. 36

●

Planting activities

PEACE, JUSTICEAND STRONG
INSTITUTIONS

Initiatives for responsible minerals sourcing●

PP. 32-33●

Governance structure
PARTNERSHIPSFOR THE GOALS

P. 31

PP. 43-48

CSR assessments and audits●

PP. 32-33

Responsible procurement●

PP. 32-33

DECENT WORK AND
ECONOMIC GROWTH

24

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Initiatives to ensure respect for human rights
Guided by the corporate creed of “Sincerity,” we position respect for humanrights as an important task for society and take initiatives to ensure thathuman rights are respected throughout the processes in our entire value
chain. In January 2017, we joined the United Nations Global Compact
and expressed our commitment to the Ten Principles including respect forhuman rights and protection of labor-related human rights. We are promoting
activities accordingly.

Governance related to human rights
In 2003, we established the Foster Group Corporate Action Guidelines andthe Foster Group Code of Conduct for Staff. They define our respect forhuman rights in compliance with all laws and regulations, international rules,
and their spirit and intent, regarding aspects such as forced labor, child labor,
discrimination, harassment, the protection of personal information, safety
and health and responsible minerals sourcing. We have also established
the Foster Group Supplier Sustainability Code of Conduct, under which
we ensure respect for human rights throughout the entire supply chain withcooperation from suppliers.
Foster Group Corporate Action Guidelines
Foster Group Code of Conduct for Staff
Foster Group Supplier Sustainability Code of Conduct

Respect for employees’ human rights andincreasing employees’ awarenessWe value employees’ well-being and work to ensure that their human rights
are respected, from the perspectives of respect for employees’ humanrights, the prohibition of discrimination, the prevention of harassment, theprotection of personal information and privacy, workplace safety and health,compliance with labor laws, and other perspectives. Further, we provide
harassment training for all employees, which is aimed at increasing theirawareness of the issue, and provide e-learning programs to enable themto increase their understanding of LGBTQ+ issues as part of our activities
promoting diversity. We inform employees of our internal whistleblowing
system using a compliance questionnaire, and the percentage of employees
informed of the internal whistleblowing system has been kept at 100%.

Respecting human rights throughout the
supply chain
We have our suppliers sign a letter of intent to comply with the Foster Group
Supplier Sustainability Code of Conduct, conduct surveys on the status ofinitiatives taken including items related to human rights infringements (CSR
self-assessments), and request that our suppliers take corrective actions asnecessary. Further, in the sourcing of minerals, we conduct due diligence(a survey on responsible minerals sourcing) to confirm that the minerals we
procure do not provide funding to armed forces/groups engaging in serious
human rights violations, and procure minerals only from certified smelters.
Responsible Procurement

Consultation Contacts / Hotline
We have established contacts for consultation and reporting such as theCompliance Hotline and the Harassment Helpline, our internal whistleblowing
system and advise various stakeholders (including employees and officers of
the Foster Group, their families, and employees of our business associates).
When a vigorous investigation confirms a violation of human rights, we takecorrective and punitive actions ensuring that the whistleblower will not be
retaliated against or treated disadvantageously.
Compliance StructureSound Management Structure

Data Section

Participation in the United Nations
Global Compact (UNGC)
About United Nations Global Compact
In January 2017, Foster Groupsigned and joined the United
Nations Global Compact(UNGC), the world’s largest
corporate sustainability initiative.
As a company that operates
globally, we support the 10
principles of the UNGC of“Human Rights”, “Labour,”“Environment”
and“AntiCorruption”
andconduct
activities
forcompliance,
decent work, care for theenvironment, and sustainability
procurement, etc.

Activities as a member of the Global Compact Network
Japan (GCNJ)The Supply Chain Subcommittee, Environmental Management
Subcommittee, Subcommittee to Cultivate Awareness of the Global
Compact, Human Rights Due Diligence (HRDD) Subcommittee,
Disaster Risk Reduction (DRR) Subcommittee, SDGs Subcommittee,
ESG Subcommittee, CSV Subcommittee, WEPs Subcommittee,
Reporting Study Subcommittee, and Circular Economy Subcommitteeof the GCNJ, which consist of the member companies of the UNGC,
not only share the sustainability-related latest trends and study casesof each company through lecture meetings by influential individuals, butalso are working to achieve diverse results supporting the sustainability
activities of many companies based on the wide-ranging experience ofthe member companies. In addition, the knowledge obtained throughthe subcommittees is reflected in our sustainability activities.

25

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Natural Capital Initiatives: (1) Information Disclosure Based on the TCFD Recommendations
		 The Task Force on Climate-related Financial
Disclosures (TCFD) Recommendations
Believing in the importance of topics related to the environment and climatechange, we declared our support for the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD*) in February 2022. At thesame time, we joined the TCFD Consortium, where member companies,
financial institutions, and other entities discuss effective information
disclosure and appropriate initiatives following the TCFD recommendations.
*Task Force on Climate-related Financial Disclosures: This task force was established in 2015 by the

Financial Stability Board (FSB), which comprises central banks, financial authorities, and internationalorganizations from all over the world. It is aimed at considering how to estimate the impact of climatechange on business management and how to disclose such information. It recommends that companies
and other entities disclose information about climate change-related risks and opportunities.

We will identify our climate change-related risks and opportunities and thencontinue to drive effective measures by leveraging internal and external
knowledge. At the same time, we will disclose information proactively byfollowing the TCFD recommendations.

2. Strategy
Under the framework advocated in the TCFD recommendations, weconsidered changes in the external environment in 2030 and analyzed theimpact of climate change on us.
We adopted the 1.5-degree and 4-degree scenarios for analyzing risks
and opportunities. Regarding transition risks, we consider how policies
and markets will change for the alleviation of climate change. Concerning
physical risks, we also analyzed how the frequency and impact of climatechange-related weather disasters will change.

Impact on Business Related to Climate Change Risks and Opportunities
Climate-related risks/
opportunities

Policies andregulations

Technologies
Transition
risks
Market		Impact on business activities• Increase in business costs for responding to climate change-related regulations (including
carbon tax, investments in additional equipment for saving energy and using renewableenergy, and the purchase of green energy certificates)• Increase in cost, which is expected if regulations related to recycling and the use ofrecycled materials are tightened• Risk that market share may be decreased due to a delay in technology development
toward a decarbonized society• The impact that is expected if we fail to respond to business partners’ requests to takeenvironmental measures (such as introduction of renewable energy and use of recycledmaterials)

Assessment

Reputation

Acute
Physical risks• Decrease in business opportunities resulting from insufficient initiatives to tackle climatechange• Risk of a decline in corporate value that may result from lower ESG ratings by customers
and rating agencies• Suspension of factory operations and supply chain disruptions resulting from damage froma disaster caused by climate change

Measures

Large• Promoting CO2 reduction to achieve the mid-term
environmental goals• Introducing solar power generation equipment, procuring
electricity from renewable energy sources, and purchasing
green energy certificates• Strengthening cooperation with suppliers

Large• Understanding the needs of society and developing
environmentally friendly products

Large• Intensification of competition resulting from an increase in new entrants to theelectric vehicle market, which is expected to expand

1. GovernanceViewing sustainability as an important theme, we announced our ESG
Management Statement and set goals of achieving “a decarbonized society”
and “zero emissions in 2050” as part of our materiality (priority issues) in
March 2021. These goals and reduction activities have been shared by all
employees and are being driven by them.
We have set up the Sustainability Committee (which meets every month),chaired by the president, for the purpose of driving ESG management. This
committee meets with the attendance of the sustainability officer, headsof divisions, and persons responsible for the promotion of sustainability
activities appointed by departments of the headquarters and overseas bases.
It identifies climate change-related issues, deliberates on and determines
related policies and measures, and shares and monitors their progress.
The Board of Directors deliberates on and makes decisions on
announcements of support and information disclosure related to TCFD
concerning management issues, as well as reduction targets, measures,and other matters. It also receives reports on deliberations and progress
made by the committee, regularly and as needed, thus supervising thecommittee’s execution of operations.
Link to related page: “Sustainability Promotion Structure” under “Foster
Group ESG Management”

We reflected the identified risks and opportunities in the medium-termbusiness plan. Moving forward, we will also consider the financial impact on
the Company. We are conducting an analysis of the part of the automotive
business, which is subject to a significant impact. We will continue theanalysis by focusing on other businesses as well.

• Collecting information from customers and consumers andanalyzing the information• Engaging in proposal-based marketing activities and giving
feedback to development personnel• Information disclosure regarding responses to climate change

Large

Medium• Formulating BCPs that are appropriate for the regions andbusinesses• Appropriate inventory control

Chronic• Increase in energy consumption for the use of air conditioners and other equipment• Depletion of water resources and restrictions on water intake• Risk of factory inundation resulting from rising sea levels

Small

Resource
effectiveness• Reduction of CO2 to be achieved by promoting local production for local consumption• Increase in sales opportunities resulting from manufacturing appropriate for a recyclingoriented society

Medium• Promoting local production for local consumption• Developing products using circulating materials

Energy sources• Decrease in energy costs resulting from the introduction of energy-saving equipment andtechnologies

Large• Expanding the introduction of renewable energy andenergy-efficient equipment

Products andservices• Increase in sales opportunities achieved by driving the development of technologies for
low-carbon products• Growth in demand for ADAS-compatible products resulting from the expansion of markets
related to electric vehicles (development of a function that sends alerts with sounds andvibrations)

Medium• Expanding sales of environmentally friendly products• Marketing of high value-added products

Opportunities• Introduce energy-saving equipment• Reinforcing the BCP management structure- Target business: Automotive as the Company’s main business- Level of impact on business activities: Evaluated on a three-point scale of Large, Medium, and Small[Scenarios that were used]
Transition risks: International Energy Agency (IEA)(*1- World Energy Outlook 2022:APS(*2, STEPS(*3- Net Zero Emissions by 2050 Scenario(*4Physical risks: Intergovernmental Panel on Climate Change (IPCC)(*5- 6th Report: SSP1-1.9, SSP5-8.5(*6*1. IEA: International Energy Agency*2. APS: Announced Pledges Scenario*3. STEPS: Stated Policies Scenario*4. NZE: Net Zero Emissions by 2050 Scenario*5. IPCC: Intergovernmental Panel on Climate Change*6. SSP: Shared socioeconomic pathways

26

Integrated Report 2023

		

Introduction

Foster’s Value Creation Story

Sound Management Structure

Data Section

3. Risk Management

We have established the Risk and Crisis Management Committee, which is chaired by the president, to ensure thatrisks which may affect business management are addressed promptly and appropriately. This committee evaluatesand manages company-wide risks and devises and implements measures to address them.
Especially, climate change-related risks are positioned among the top risks in the committee’s total risk assessment.
The Sustainability Committee identifies and evaluates such risks, implements measures to tackle them, and takesother initiatives to improve the effectiveness of risk management.
Information about the statuses of risk management and measures is also shared with the Board of Directors, which
supervises and monitors risk and crisis management of the overall company and tries to ensure consistency between
risk management and materiality analysis, thus enhancing the total risk management in the entire company.

		Strategies for Achieving
Sustainable Growth

4. Metrics and Targets

Toward the achievement of sustainability, we have established the Foster Group ESG Management Statement inMarch 2021, under which we aim for “Decarbonized Society” and “tireless efforts to achieve Zero Emissions” in themedium and long run. Under this Statement, we have revised our mid-term environmental goals for 2030 (Scope 1, 2)
in line with the 1.5-degree goal of the Paris Agreement. We have also set a new long-term goal for 2050.

(1) Mid-Term Reduction Goals for 2030
• Scope 1, 2: Reduce absolute CO2 emissions 50% by 2030 from a 2018 base-year• Scope 3: Reduce absolute CO2 emissions 15% by 2030 from a 2018 base-year(2) Long-Term Reduction Goal for 2050
- Aim to achieve carbon neutrality by 2050
To achieve this goal, we have developed the CO2 Reduction Action Program [Ver. 2023]. The headquarters and theother sites will work together in accelerating CO2 reduction activities in a group-wide manner.

(3) Specific Reduction Measures(i) Our own power-saving efforts (steady efforts and innovative activities)■ Steady efforts
Specific measures:- Operational improvements: Improvements of operation, maintenance, heat retention, heat insulation, etc.
- Introduction of energy-saving equipment: Remodeling or replacing equipment■ Innovative activities
Activities:- Studying and introducing new manufacturing methods and design specifications
Specific measures:- Developing innovative technologies through a next-generation speaker project, etc.
(ii) Renewable energy procurement- Switching electricity purchased from electric power companies to an option with 100% renewable energy
sources(iii) In-house power generation from renewable energy sources- Introducing equipment for in-house solar power generation(iv) Purchasing green energy certificates for offsetting (shortfalls)- Considering the use of green energy certificates by overseas factories(4) Specific KPIs
• Setting “Power consumption ÷ Net sales” at each site as a KPI for power-saving activities• Having each site set a goal of building a framework, which makes it possible to post the same amount of net
sales with 23% less power consumption than the actual power consumption in fiscal 2022, by the end of 2024.
We will achieve the interim goal for fiscal 2025 (30% reduction from a 2018 base-year), aiming to surely achieve
the fiscal 2030 goal (50% reduction from a 2018 base-year).

Link to related page: Our Approach to Materiality (Priority Issues)

27

Integrated Report 2023

Introduction

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Sound Management Structure

Data Section

Natural Capital Initiatives: (2) Environment
Environmental Philosophy and Policy
Environmental Philosophy
As a global corporation in the acoustic industry, the Company contributes
to the realization of a sustainable society in all fields of corporate activities
by considering the harmony between; The activities under the company
vision of “To make contributions for future society through acoustics”, andEnvironment as one of essential tasks.

Environmental Policy- Preface Foster Group aims to contribute for “Decarbonized society”, “Resource
recycling” and “Harmony with nature”, by pursuing eco-friendly technologies
in the lifecycle of our products, and people of Foster Group act with priority
on eco-friendliness.
1. We contribute to the realization of a sustainable society by continually
improving our environmental management systems, and bycommunicating and cooperating with our stakeholders proactively.
2. Realization of “Decarbonized society” We reduce CO2 emissions
throughout our value chain including procurement of raw materials,
manufacturing, transportation, selling and disposal of our products.
3. Realization of “Resource recycling” We strive for the waste reduction bypromoting effective use of resources in our group-wide activities andproduct development. We also use water resources responsibly in our
manufacturing processes.
4. Realization of “Harmony with nature” We strive for the promotion ofactivities considering Biodiversity conservation, prevention of pollution
and environmental load reduction by chemical substance management.
5. We comply with domestic and international environmental laws andregulations and other requirements related to our group-wide activities.
6. We develop human resources who practice environmental activities
through enlightening people involved in group activities and educating
employees.

[Issued following the approval by senior management in July 1993.
Revised in March 2021.]

Specific Environmental Initiatives

項目

Based on our Environmental Philosophy and Policy, we have set mid-term
environmental goals to achieve by 2025 for three issues: decarbonizedsociety, resource recycling, and harmony with nature. We are pursuing
specific initiatives to achieve these goals. Countermeasures against climatechange are globally important tasks, and we need to take long-term initiatives.
We are taking action with the aim of achieving carbon neutrality by 2050.
* The Environmental Philosophy shows the goals of our environmental activities while
the preface of the Environmental Policy shows the direction of such activities. The
six items of Environmental Policy show the prerequisites for achieving the goals,
three mid-term environmental goals, and the factors for achieving them, which arereflected in the Foster Group’s environmental management system.

Environmental
Philosophy

環境理念

Environmental Policy Preface

環境方針

Item 1: Continuous improvement of environmental management systems andcooperation with stakeholders

環境方針

Item 2: Decarbonizedsociety

Item 3: Resource
recycling

Item 5: Compliance withlaws and regulations

Item 4: Harmony withnatureItem 6: Human resources
development

Mid-Term Environmental Goals 2025
To achieve the mid-term environmental goals 2025 that we set in 2020, we continue activities to reduce the environmental load from a lifecycle perspective,
by working together with manufacturing sites.
Goals
Item 2 ofEnvironmental
PolicyItem 3 ofEnvironmental
PolicyItem 4 ofEnvironmental
Policy2020-2025

FY2021 result

Scope 1, 2: Reduce absolute CO2 emissions by 30% from a 2018 base-year
Decarbonized CO2 emissions reductionsociety(Scope1, 2, 3)
Scope 3: Reduce absolute CO2 emissions by 3% from a 2018 base-year

Resource
recycling

Resource saving
products
Improvement of
production process- Establish technology for eco-friendly products- Reduce the hazardous waste generated by 5% from a 2018 base-year- Reduce water consumption (Efficient use of water resource)

Refer to page 23of this report.

Management of chemical - Build global management system based on the company standards andsubstances
regulations
Harmony with
Biodiversity conservation - Establish a biodiversity policy and the mid-term action plannaturePartnership with-B
 uild a cooperative structure and implementation of activities with our
stakeholders
suppliers* For details of the mid- and long-termCO2 reduction goals, see “4. Metrics and Targets” of “Information Disclosure Based on the TCFD Recommendations.”

28

Integrated Report 2023

Introduction

Environment Management System and ISO
14001 Certification
We have obtained ISO 14001 certification at headquarters and all overseas
manufacturing sites and embody the Foster Group’s Environmental
Philosophy and mid-term environmental goals.
At headquarters, we monitor the activities conducted at each site andcheck their results. We have expanded the scope of application to the Head
Office of Foster Electric (1-1-109 Tsutsujigaoka, Akishima City, Tokyo) and
its Shizuoka Office (6-12-2 Toro, Suruga Ward, Shizuoka City, Shizuoka)
while maintaining the environment management system. We present the ISO
14001 certification at the request of stakeholders.

Environmental Activities
CO2 Reduction (Scope 1, 2)
The Foster Group’s absolute CO2 emissions in fiscal 2022 were 14% lessthan the previous fiscal year and 42% below the fiscal 2018 level, partly
reflecting restrictions on production activities amid the COVID-19 pandemic.
For Scope 3 emissions, the data can be found in the Data Table at the endof this report.

Activities to Preserve Biodiversity
We have set “Biodiversity conservation” as one of the tasks for “Harmony
with nature,” a mid-term environmental goal, and continue to hold lecture
meetings and training on biodiversity, sessions for observing the immediate
natural environment, and neighborhood cleanup activities. This fiscal year,
we began to prepare for information collection and other initiatives fordisclosing information based on the recommendations of the Task Force on
Nature-related Financial Disclosures (TNFD).

Water Risk Management
Each site manages water withdrawal and discharge by setting their standards
based on local laws and regulations. The headquarters uses “AQUEDUCT”,
a water risk assessment tool of the World Resources Institute (WRI), tounderstand the local water risks at each site. Since 2020, we have beenaddressing water risks by including “Reduce water consumption” in the midterm environmental plan.

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Japan Climate Initiative (JCI)

Initiatives to Achieve Zero Waste Emissions

In 2020, we joined the Japan Climate Initiative (JCI) by agreeing to its
declaration of “Joining the front line of the global push for decarbonizationfrom Japan”.
URL: https://japanclimate.org/

At headquarters, we are engaged in the recycling of waste and othermaterials through thorough activities to raise awareness of the sortingand separation of regular waste, plastics, and industrial waste. We haveselected a new recycling service provider and continue our activities aiming
to achieve zero waste emissions by continuing to raise awareness ofrecycling and promoting the recycling of waste from our business activities
into raw materials.

Environmental Digital Platform
In March 2023, we joined the Environmental Digital Platform operated byKonica Minolta, Inc.
URL: https://edpf.konicaminolta.com/

Chemical Substance Management
The Group has set forth its autonomous management standard, whichreflects the applicable laws and regulations of countries, including the RoHS
Directive and REACH regulations, and customers’ requests for handlingenvironmentally hazardous substances contained in its products to minimize
their impact on the environment. We eliminate any controlled substancesfrom our products via eco-friendly procurement and management ofnecessary parts and/or materials purchased. Based on the aforementioned
scheme, we have established an optimum management system for theefficient search and collection of information about chemical substancesthat are contained in parts and materials and precise communication of
information necessary in the supply chain.
In addition, to ensure communications of related information, we provide our
suppliers with briefing meetings every year primarily at our overseas sites.

Recycled materials being carried out

Environmental Consideration at Headquarters
Our headquarters employs environmental load reduction technologies suchas lighting control by daytime sunlight, air conditioning by outside air, ice
thermal storage air conditioning system, and doubleskin facade. Electricity
consumption is controlled further by limiting maximum power consumption
during the day, promoting Cool Biz and Warm Biz campaigns, turning off all
the lights in the building for lunch breaks, having employees work from homein response to the COVID-19 pandemic, and promoting the replacement of allof the lights in building with LEDs. The headquarters strongly promotes active
participation in climate control measures by procuring clean energy prior tothe other sites in the Group. In addition, as part of our ESG activities, wehave ended the use of disposable plastics and paper cups and use reusable
cups for the beverages sold in the cafeteria. Further, when renovating thetea server, we introduced a product that uses an environmentally friendly
refrigerant.

External Communications
Green Value Chain Platform
As a corporate member, we participate in a network for promoting Green
Value Chains as part of the Ministry of the Environment’s Green Value Chain
Platform.
URL: https://www.env.go.jp/earth/ondanka/supply_chain/gvc/

LEDs (cafeteria)

Reusable cup

29Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Environmentally friendly products
Actuators

Speakers
We are accelerating moves to develop basic technologies for next-generation
speakers for eco-friendly vehicles and to introduce such technologies tocommercial products.

■ Development of lightweight speakers
We are developing on our own and productizing speakers incorporating
technologies enabling lighter weight, by taking measures including
optimization of resin and metal components, which are made with optimization
design using CAE analysis, and studies of carbon fiber reinforced thermo
plastics (CFRTP) as a new material. At present, we continue to developelement technologies for lightweight speakers, aiming to reduce the weightof 6.5” lightweight speaker, which is approx. 200 g, to 100 g or less by 2025.

■ VOC reduction
As initiatives to reduce the volume of VOCs remaining at production sites andin the passenger cabins of vehicles, we have cut the use of organic solvent
adhesives for bonding parts and drive the development and adoption forcommercial products of an adhesive with a reduced solvent content. We arealso committed to the development of bonding methods which do not use
adhesives, such as ultrasonic welding.

■ Reduction of CO2 emissions
We are undertaking design development activities for reducing power
consumed in manufacturing speakers to cut CO2 emissions. We are making
development efforts to achieve the medium-term CO2 emissions reduction
target, by improving and changing methods of bonding parts and by
reducing the use of a drying furnace in stages.
* We will continue development and introduction with a target of achieving
30% as the ratio (to sales) of commercialized car speakers incorporatingthese environmental technologies.
		
		
		

2022 result: 16%2025 target: 20% or higher
2030 target: 30% or higher

We proactively apply environmentally friendly design to haptic vibration
actuator devices, which are a part of new user interfaces for CASE*, VR,
AR, and other technologies. In consideration of VOC emissions, we haveadopted adhesives that do not contain harmful solvents. To reduce thelabor necessary to manufacture products, we have realized quick curing
using UV radiation and pulse heat soldering. In addition, to reduce solder
consumption, we have developed resistance welding, etc. and put it topractical use. We will maintain our status of using adhesives that 100% do
not contain harmful solvents.
* CASE: Connected, Autonomous, Shared, Electric

Automotive actuator featuring slim
dimensions

Headphones and Headsets
We have been active in incorporating environmental considerations in our
product and/or process design. In reducing environmentally hazardous
substances in our products, we address the most up-to-date information
regarding country-specific legal requirements and the RoHS2, and propose
to our customers. As a way of reducing waste volume, we have also been
keen on minimizing waste materials, reusing raw materials by introducing
new equipment, and developing products made of natural materials. For
products with electronic circuits, we have adopted power-saving parts in ourefforts to develop products with low power consumption.
For microspeakers used for headphones or headsets, we are working
towards environmentally friendly product manufacturing by introducing
adhesives that do not contain toluene for new microspeakers in order toreduce VOCs.
(Replacing the parts that use solvent adhesives.)■ Development target and result for toluene-free products• Target for 2024: The ratio of products that do not contain toluene to be100%.
• FY2022 Result: The ratio of products using toluene-free adhesives: 78%

Example of environmentally friendly
microspeaker (Microspeaker with a 35 mm
diameter for headphones)

Example: Product developed by using
power-saving parts (Bluetooth wirelessearphones)

Adhesives■ Plans for achieving targets

Adhesives• Make confirmations based on requirements on the use of toluene in thedevelopment and design stage.
• Continue to study alternative adhesives to achieve 100% as the ratio of
products using toluene-free adhesives.

Toluene-free adhesives

Toluene-free tapes

Example: Application of toluene-free adhesives

Speakers developed with weight reduction technologies

30Introduction

Integrated Report 2023

Environment Month Activities (Headquarters)

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Environment Month Activities (Overseas)

Environment Lecture Presentation

China

MyanmarWe invited an outside expert to speak on SDGs initiatives to our officers,
department heads, and group leaders (in the form of a Web conference).
The lecture served as an opportunity to think about issues that we should
address.

We performed cleanup activities around each plant to raise employees’
awareness on environmental protection.

We provided environmental training, undertook on-premises planting
activities, and held environmental competitions (including an exhibition ofworks created using recycled items).

Other activities

We solicited photos of the immediate natural environment, provided anenvironmentally friendly lunch menu, and participated in nature observation
sessions, and thus we created catalysts for being in close contact with theimmediate natural environment and thinking about environmental initiatives
from different positions.

■ Headquarters: Akishima City Cleanup Movement (Mini-Clean
Activities)

Training activities

Despite the many times these activities have been postponed or cancelled
and the many employees working from home due to the COVID-19 pandemic,
the annual number of participants increased by as much as 22.1% from theprevious fiscal year, to 138 (participation rate: 25.1%). The total weight ofwaste increased to 15.1 kg. In addition, junior high school students wereable to participate in the activities through a work experience program. Thisfiscal year, we will also participate in the city cleanup movement of Akishima
City.

City cleanup activities

City cleanup activities

Environmental competition

VietnamUSA

We cleaned up the area around each plant. We also undertook planting
activities and provided environmental training internally at each plant.

We participated in activities to clean up neighborhood parks, a ride-sharing
program for commuting (Car pool registration), and a program for planting
trees in parks (Remembrance tree program).

Planting activities

Training activities

Mini-clean activities

Planting activities■ Shizuoka: Environmental training and river cleanup activities
We held a seminar and a tour of environmental facilities as part of internal
training. We also participated in river cleanup activities in Shizuoka City, thus
maintaining and improving the environment.

■ Osaka: Environmental training and awareness-raising activities
We used environment month as an opportunity to motivate employees tothink on their own and had each one of them set environmental targets, suchas turning off the lights in offices and targets related to energy, food and CO2,
thus increasing their awareness.

City cleanup activities

31

Integrated Report 2023

Introduction

Social and Relationship Capital
Initiatives
Promoting Sustainability in the Supply Chain
Driving sustainability activities is not limited within a company or groupcompanies alone, but is to be managed by the entire supply chain including
customers/suppliers. We are proactive in responding to sustainability-related
requests from customers, driving sustainability activities within the Foster
Group, and increasing suppliers’ awareness of responsible procurement
activities.

Customer Audit and Questionnaire
We respond to various sustainability-related requests from over 60
corporate customers concerning labor, human rights, safety and health, theenvironment, ethics, and status of operation of management system related
to them. From April 2022 to March 2023, we conducted on-site sustainability
audits of our manufacturing sites jointly with a third-party organization uponrequest from one corporate customer. In addition, we responded to a total of
40 sustainability-related surveys by 22 corporate customers in the past year.
We will organize issues identified in this process, make improvements, andimprove our sustainability initiatives further.
We will continue to drive sustainability-based manufacturing and sincerely
respond to such requests.

Internal Audit on Sustainability
In 2017, we started an internal audit on sustainability to check the statusof our sustainability activities and to maintain a sound framework for drivingsuch activities. We conducted a total of 21 sustainability-related internal
audits at target sites during April 2022 to March 2023. The standards andguidelines for these audits were based on local laws, in principle, and we also
applied RBA code of conduct, RBA-VAP (Validated Assessment Program),
ISO 14001, ISO 45001, SA8000, TISAX, as well as customer standards.

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Responsible Procurement
In our global expansion, we have developed the “Basic Principles ofProcurement” for the supply chain, including ourselves and our suppliers,
based on which we build fair and healthy relationships.

Basic Principles of Procurement
We will deal with all of our suppliers in good faith.
1. Compliance with Laws and Ordinances
We will comply with the laws, ordinances and regulations in the countries
and regions where we conduct business activities, and will conduct
purchasing duties in accordance with social ethics. We will not accept
any gifts or entertainment that violates laws or social ethics.
2. Fairness and Impartiality
We will keep our doors open and provide equal opportunities to allbusinesses, and will evaluate and select suppliers with impartiality basedon reasonable criteria.
3. Sustainable Procurement
We will promote clean and green procurement based on the Foster
Group Supplier Sustainability Code of Conduct.
4. Partnerships
We will endeavor to deepen mutual understanding with our suppliers andbuild bonds of trust with them.
5. Confidentiality
We will strictly manage confidential information that comes into ourknowledge in doing business.

Clean Procurement
The Foster Group Code of Conduct for Staff stipulates that we shall comply
with laws and internal rules related to entertainment and gifts to and from
customers and suppliers, and prohibits us from providing and accepting
profits in violation of such laws and rules. Specifically, we have set strict
rules on transactions, including the provision and acceptance of money andcoupons, acceptance of gifts, provision of goods as gifts, and provision andacceptance of entertainment.

Representatives and Structures

An internal audit ofour site in China

The Procurement Department belongs to the Production Division andperforms activities under the head of the division (senior executive officer)
as the representative. Each manufacturing site and business division has
a procurement department. We are enhancing sustainability activities
in cooperation with each manufacturing site and business division. We
share basic policies and priority issues, and take appropriate actions at
Sustainability Committee meetings (held monthly), Global Procurement
meetings held including representatives of the Procurement Department
from all sites (held biannually), and the Supplier Procurement Conference,in which suppliers, our president and other directors participate (held once
every two years).

Sound Management Structure

Data Section

Management System
We strive to trade with suppliers who not only provide excellent technologies
and quality and steadily meet delivery deadlines, but also implement
sustainability initiatives regarding human rights, labor, safety, the environment,compliance, information security and other matters.
We believe the Procurement Department’s promotion of sustainability to be
an important business policy and conduct management review on a regularbasis. Our suppliers conduct CSR self-assessments for us, and we include
CSR requirements in the basic transaction agreements that we enter intowith them. Further, we conduct CSR audits of our suppliers and requestthat they take corrective actions to improve based on the results of the CSR
self-assessment and of the regular audits on quality (ISO, VDA, and IATF),
the environment (hazardous substance management and ISO 14001), andCSR (status of CSR activities) and other evaluations regarding delivery dates,
services, and other aspects of the relationships. We work on responsible
minerals sourcing using a method following the OECD Due Diligence
Guidance.

Education
The Procurement Department implements an education and training plan
covering an extensive choice of programs for acquiring a wide array ofnecessary skills, including ones on sustainability operations. In 2022, a totalof 461 employees received training online in 93 courses, mainly those on
overall sustainability matters, legal affairs (contracts and intellectual property),
the environment (management of controlled substances, environmental
measurement, and ISO 14001), quality (ISO, VDA, IATF), QMS, EMS (auditor
training), the Subcontract Act, product technologies, and raw materials andcomponents. These training courses are aimed at improving skills to solve
problems at work sites. We provided the training for overseas sites by using
a video conferencing system and LMS, thus developing human resources
who will fulfill social responsibilities in procurement operations. Further, in
2022, we held an environmental briefing remotely for approximately 300
people from all of our 183 supplier companies and informed them fully ofcontrolled substances and regulatory requirements that have been added,
the time when they would come into effect, and other matters.

Sustainable Procurement
To promote sustainable procurement activities, we established the Foster
Group Supplier Sustainability Code of Conduct in 2016 and have been
driving such activities since then. We first developed related internal rules anddocuments. In 2018, we started requesting suppliers to sign the agreementwith the Foster Group Supplier Sustainability Code of Conduct, performself-assessment, and take corrective actions. In 2022, we conducted SAQ(Self-Assessment Questionnaire) of approximately 300 suppliers, and where
necessary, requested them to take corrective actions and performed on-site
audit, in our efforts to build a sound supply chain. Moving forward, we will
establish initiatives by working together with suppliers in identifying issues
to address.

32

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Overview of Our Supplier Partners
We trade with approximately 300 suppliers, 63% of which are in China.
The machined parts industry accounts for 78% of all business sectors. We
work on sustainability initiatives throughout the entire supply chain and drive
responsible procurement activities with Group companies and suppliers.
Electronics
3%

ASEAN
22%

OthersOthers

15%

15%

Trade
status Trade
ASEAN
Chinastatus(by region) (by region)
22%
63%

Electronics
3%

Materials

Materials

19%

19%

China
63%

sites and interview them as necessary. In fiscal 2022, we had approximately
300 suppliers conduct self-assessments. While no violations of standards
were found, we requested that eight suppliers who were found to haveissues and need improvements take corrective actions and audited fourof them. We created corrective action plans by sharing specific points
needing improvement in the on-site audits and requested the suppliers totake corrective actions proactively. We will continue to request that suppliers
conduct self-assessments regularly and take corrective action immediately
if any problems are identified, in our efforts to build a sound supply chain.

Human Rights Initiatives in the Supply Chain

Trade status Trade status(by business (by businesssector)sector)Machined partsMachined parts
78%

Strategies for Achieving
Sustainable Growth78%

Supplier Selection and Evaluation
The Foster Group sets the implementation of sustainability activities as abusiness condition when selecting suppliers. We ask new suppliers to agree
to the Foster Group Supplier Sustainability Code of Conduct and reply to
the SAQ (Self-Assessment Questionnaire). We conclude a basic transaction
agreement containing CSR requirements with suppliers before starting tradewith them. Regarding our existing suppliers, we identify important suppliers
who together constitute the top 80% or so in terms of the amount of ourpurchases in the previous fiscal year, with a focus on those from whom wepurchase important raw materials or irreplaceable items, and ask them toreply to the SAQ. Based on the results of the SAQ, we conduct audits, give
instructions on corrective and improvement actions, and provide educational
activities for them.

Initiatives for Tier-2 and Lower-Tier Suppliers
Through our tier-1 suppliers, we request that our tier-2 and lower-tiersuppliers comply with the Foster Group Supplier Sustainability Code of
Conduct. Specific initiatives include requesting that tier-1 suppliers distribute
the Code of Conduct to their own suppliers and require that they comply withit, in addition to asking tier-1 suppliers themselves to understand the Codeof Conduct, share it internally and conduct self-assessments to ensure theircompliance with it.

CSR Self-Assessments and Supplier Audits
In fiscal 2018, we began having our suppliers conduct CSR selfassessments concerning their initiatives addressing human rights, labor,
safety, the environment, compliance, and information security. Based on
the results of the self-assessment, we visit suppliers to inspect their work

Based on results of self-assessments, we create opportunities to talk withand request corrective actions from suppliers with concerns regarding humanrights risks related to child labor, forced labor and other items that we deem
especially important. While no supplier violated standards related to these
items in fiscal 2022, we will continue monitoring and make improvements
promptly if we identify any issues.

Intra-Industry Collaboration (Engagement)
Since fiscal 2016, we have been a member of the Global Compact Network
Japan (GCNJ), a network of the United Nations Global Compact (UNGC),and have engaged in the activities of the Supply Chain Subcommittee of the
GCNJ. In this subcommittee, we have discussed the latest global supply
chain trends, beyond the boundaries between industries, and the practicalissues regarding sustainable procurement that are faced by each industry
and company. We work on tasks such as the creation of deliverables forsolving the above practical issues as well as the consideration and revisionof CSR self-assessments, among others. In addition, because the number ofminerals to be managed to ensure responsible minerals sourcing is increasing,we participate in the Outreach Meeting hosted by the Responsible Business
Alliance (RBA) and explanatory meetings on responsible minerals sourcing
hosted by the Japan Electronics and Information Technology Industries
Association (JEITA), to ensure that information is shared regarding the latest
trends and to develop intra-industry collaborations that raise awarenessin the supply chain and improve the efficiency of investigations into theseminerals.
Supply Chain Subcommittee of the GCNJ
CSR procurement self-assessment tool set (Japanese)
https://www.ungcjn.org/activities/topics/detail.php?id=357

Sound Management Structure

Data Section

Responsible Minerals Sourcing
We are addressing risks related to minerals from the Democratic Republicof the Congo, its surrounding conflict-affected areas, other Conflict Affected
High-Risk Areas (CAHRAs) and other areas that are stipulated in the
Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S.
In addition to illegally mined minerals and smuggled minerals that are asource of funding for armed forces/groups, the aggravation of human-rights
violations such as child labor and poor working conditions and environmental
destruction in the minerals supply chain is a significant social problem. We
promote responsible minerals sourcing throughout the entire supply chain toensure the sustainability of our procurement activities.

Our Approach to Due Diligence
We promote responsible minerals sourcing for the entire supply chain bycommunicating our policies to our business partners. Because responsible
minerals sourcing requires cooperation from all the business partners
including smelters, we use the Conflict Minerals Reporting Template (CMRT)
published by the Responsible Minerals Initiative (RMI) as a standard tool. We
also attend the inquiry briefings held by JEITA Responsible Minerals Trade
Working Group and use investigation manuals/guidance commonly sharedwith automotive manufacturers and Japan Auto Parts Industries Association.

Investigations into Responsible Minerals Sourcing
In fiscal 2022, we achieved a 99% response rate for investigations into
responsible minerals sourcing carried out with approximately 300 suppliers.
We conducted risk analysis and evaluation from collected CMRT andrequested further examination according to the risk levels by each supplier.
Among the smelters that we identified, 78% have passed the conformant
smelters audits (RMI). Since fiscal 2018, we have conducted investigating
cobalt and mica according to the due diligence guidance by OECD. We
will continue to conduct investigations for tantalum, tin, tungsten, and gold
(3TG) because the refinery certification status continues changing for theseminerals. If any sourcing of a mineral involving a risk is identified, we will takeappropriate actions by working together with the supplier.

Foster Group Policy on Responsible Minerals Sourcing
https://www.foster-electric.com/procurement/csr.html

Connecting with Our Business Partners in Environmental Burden
Reduction
We have established the Green Procurement Standard for chemical
substances contained in the procured parts, and connect with our business
partners to reduce environmental burdens.

33

Introduction

Integrated Report 2023

Quality and Safety Assurance

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story● Our Quality Assurance Activity System (Main Process) and Mechanism
Quality Assurance Activities based on APQP (Advanced Product Quality Planning)

The Foster Group is promoting and deploying quality assurance activities
based on the FOSTER TQM (Total Quality Management).

Process
Market needs, customers’ expectations, requirements

Our Quality Assurance Policies and Actions
Under our customer-focused philosophy, the Foster Group considers thedelivery of safe, eco-friendly products of reliable quality by fulfilling customers’
expectations and social requirements as the basics of our quality assurance.
In addition, under the TQM policy for each fiscal year, which is in place acrosscompany together with our management policies, we globally promotecomprehensive quality assurance activities to ensure that our products areof high quality.
The safety and reliability of our products and components and the
management of environmentally hazardous substances are achieved
through processes (product/process design, purchasing, and manufacturing)supported by our high-level technologies.

Increasing the satisfaction, trust and reliance ofcustomers, contributing to the community andsociety and preserving/protecting the environment
FOSTER TQM(Total Quality Management)

SystemCreation
Continuous improvement

Product creation
Quality creation
Quality to beaccomplished by theacross-the-board efforts Human
Technologyof the employees
Resource
Creation
Development
Product development
technology
Environmental andsafety-related
technologies
Production technology

Basic Quality Policy

Human resource development
in quality management

Data Section

Enhancing Quality Awareness and Developing Human Resourcesin Quality Management
We drive training in a company-wide manner for developing quality specialists
in each job class. We have also made November the Quality Month and holda variety of events by involving overseas sites to improve quality awareness.

Contract check
Product feasibility review (DR-0)
Design, prototype production
Design/prototype validation and review (DV, DR1/2)
Mass-production of prototype, validation, and evaluation

Quality certification
Mass-production, product inspection, shipment
Customers, marketsNote) DR-0: Product feasibility review, DV: Product design validation, DR1/2: Product design review

TQM and QMS*1 at FOSTER
Quality and Environmental Policy
TQM Regulations/Quality
Management Manual
Quality system rules and/or
regulations
Response to legal requirements

Sound Management Structure

We develop QMS by seeking “Zero Defect”
Our QMS is based on thedevelopment of quality
Zero Defectassurance and management
IATF16949
activities under its customerfocused philosophy.
ISO/TS16949▲	 In 1975, we formulated theISO9001
Total Quality Control (TQC)*2
Regulations, which was
upgraded to Total Quality Management (TQM) Regulations in May 2006.
▲	 Since 1998, all the Group companies have successfully acquired the
QS9000 certification (including ISO 9001: 1994).
▲ In 2004, all the Group companies successfully acquired the ISO/TS
16949 certification.
▲ In 2017, we switched to ISO 9001: 2015 and IATF 16949: 2016
standards company-wide and have continued to comply with them.
*1 QMS: Quality Management System*2 TQC: Total Quality Control

Global Quality Assurance Structure
The Group has developed global
qualityassurancesystems,
connecting the headquarters,
overseas factories and sales
companies to improve the qualityof our products to be supplied
worldwide.

■ Quality-related events including at overseas locations- Quality improvement case exhibition
We hold this exhibition online by collecting cases of quality-related
improvement and know-how we should share from headquarters andall overseas sites, and summarizing them in documents and videos.
- Quality lecture presentation
We invite a speaker from another company, select a quality-related
theme which can be told as an attractive story, share our cases andproblematic points with the speaker and then have a comparison anddiscussion of contents and frameworks of activities.
- Global QC Circle Convention
More than 100 circle teams are conducting activities at overseas sites
under the theme of quality improvement. Among them, teams that won
the QC Circle Convention at each factory give presentations of theirachievements at the company-wide convention.
■ Developing quality specialists
We plan training programs on quality-related standard requirements
and tools which not only provide knowledge but also includes practicalinformation thus driving the development of quality specialists with skill
levels that can be leveraged in practical operations and on site.

Holding the Global Quality Meeting (GQM)
At this meeting, senior management from headquarters and overseas
factories and sales companies share priority measures and issues facedby each division and site and determine commitments for the next fiscal
year, thus unifying the overall company’s direction and awareness regarding
quality.

The Group guarantees product quality in all of the
products it supplies worldwide through its Global Quality
Assurance Structure.

34

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Customer Satisfaction
Foster Group Sales Department

Fostex Company

Policies
We manufacture and sell products with a focus on acoustic transducers for the Speaker, Mobile Audio and Other
Segments. While many of our products are used as components for playing back music, people around the worldcontact our products in many ways, not limited to uses involving playing back music. Our products serve people
in various settings in their lives as micro acoustic components for warning sounds, actuators for haptics and otherproducts. The purposes of use of sounds and vibrations that we offer are expanding daily. Working together withcustomers around the world, our Sales Department acts every day to widely deliver the value of our products to realize
our vision, “To make contributions for future society through acoustics.”

Policies
We provide high quality products at appropriate prices to deliver an enriched and comfortable life to customers whopurchase those products. In addition, the Company seeks to develop products that lead to the peace of mind andsatisfaction of the customers who select and own them. In its after-sales services, the Company also pursues customer
satisfaction by always promptly providing services from the customers’ perspective.

Structure
We engage in sales activities through five regional sales offices in Japan, the US, Europe, China and Asian countries
and regions other than Japan and China. The value that is required is different in different markets around the world withdifferent business customs, cultures and social situations. We have established a structure for satisfying customers
around the world by sharing the value and ideas that only we can provide between regions while responding flexibly
to local values. During the last few years, when business travel was restricted significantly, we established a system
to enable inter-regional exchange to be more lively than ever before, transcending distance and time differences using
new communication tools.
Activities
We emphasize making proposals for the future, and of course making sure that we deliver the products that are in
demand every day. The things that are required of products change according to ever-changing social and economic
situations, widespread environmental awareness, and many other factors impacting the business environment. By
proactively proposing the functions that are appropriate for the sustainability of society in the future in addition to
performance and prices, we will be a strategic partner that can be involved in development and design from a position
that is closer to customers, aiming to achieve high-level customer satisfaction.

Structure
We always listen to our customers’ comments and seek the products that they need today and they will need in
the near future. As such, we have established a project promotion structure across our sales and technical units. In
addition to the domestic market, we also understand global needs to develop products specific to each region.
Activities
We share information with the dealers who are constantly in contact with our customers and also make efforts to listen
to as many customers’ voices as possible at exhibitions and trial listening events. As part of our educational activities
for audio equipment, we offer speaker craft classes and lectures on working principles of speakers at universities,
vocational schools, local junior high schools and in other places.
Future Plan
We will continue to supply products of our trusted original brand, FOSTEX, to introduce our high technical competences
and the high competitiveness of our products. We will continue to develop products that can deliver greater pleasurein the creation of and listening to music.

Future PlanWe aim to be an acoustic solutions partner that contributes for a future society. In our existing mainstay business,
automotive products, we will enhance the lineup of products and services related to sound and vibration in addition
to audio devices. We will also take on new outside-the-box challenges to expand the business in anticipation of the
future. We will develop new business fields including entertainment and wellness and engage in activities to leverage
our strengths to solve social issues.

TH900mk2 (OB), a model commemorating the 50th anniversary of FOSTEX that is offered exclusively outside of Japan35

Integrated Report 2023

Introduction

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Sound Management Structure

Data Section

Human Capital Initiatives
Promotingdiversity &inclusion

Initiatives to Improve Wellbeing
We respect the diversity of all of the employees working for
Foster and value the environment which enables them to choose
their workstyles and careers. We aim to enable employees tomaintain and improve their physical and mental health while
ensuring that their work enables them to develop personally,
be satisfied in their jobs and take pride in their contributions
to society.
To achieve this, we have set the goal, “Be Happy 80%.” Our
goal is to enable all of Foster’s employees to be happy, reflecting
not only satisfaction with our company and ourselves but also
consideration for others. The 80% happy goal expresses astate of happiness with room left for the consideration of others,
which is an ideal we aim to achieve at Foster. In “others,” weinclude not only our stakeholders and other people but also allmatters, such as the environment and living things.
The wellbeing we aim to achieve is based on the assumptionthat we can continue to achieve “Be Happy 80%” for our
employees by improving employee engagement, enabling
employees to be motivated and giving them opportunities for
personal development.

Feeling approved,
appreciated, andsatisfied with work

Providing growth
opportunities

Building apleasant work
environment

Realizingwork-life
integration

Realizing fairtreatment

Fostering a sound organizational culture and climate by instilling and practicing the corporate philosophy and Foster Rhythm

Promoting and achieving various measures with a human resources management system
Utilization of human resources

Securing
human resources

Career course
systemAssignment
and transfer

Human resource
development systems

360° Feedback
SystemPerformance
Personnel evaluation
management systemsystem

Employment and work management system
Foster Rhythm Project,
activities for instilling Foster’s philosophy

Qualification
grading system

Remuneration
systemHealth and productivity management and employee
welfare programs

Turnover ofhuman resources

Foster Incubation Program,a program for supporting employees taking on challenges

Enhancing engagement(Feeling for work or organization + Willingness to contribute)

Improving wellbeing
Realizing “Be Happy 80%”(a state in which all employees can feel happiness with room left for the consideration of others)		

1. Human Resource Development

Policies
Our human resource development is based on “continuous
performance by linking various personnel systems
with individual development goals determined by mid/long term business strategy and individual personality(strength/ weakness)”. We have formulated the Personnel
Grand Design by viewing recruitment, development,utilization, assessment, and treatment organically and in
an integrated manner from a long-term perspective, built
a Personnel Framework that enables every employee
to demonstrate their capabilities with pride and job
satisfaction, and promote the development of humanresources to solidify our human resource foundation for
Foster in the next generation.
■ Ideal for human resource development• Personnel who embody our vision through their duties
and who have a “strong will” and “initiative” to work
toward their realization.
• Personnel who do not remain complacent about thecurrent situation but utilize every opportunity to improvetheir own abilities and grow with ingenious attempts andefforts.

• Professional personnel who use their expertise to play a
key part in strategy formulation and implementation andwho can create value continuously.
• Self-directing personnel who are conscious about their
expected and assigned roles and missions and who cantake responsibility for their own actions and results.

Main Activities■ Initiatives for independent career development
Employees’ voluntary initiatives shaping their careers are
essential in the development of human resources. We
believe that employees’ thinking about how they want todevelop personally and the skills they need to acquire andacting accordingly will form the foundation of our humanresource development and be a source of increased
added value. We have established a career course
system, which permits employees to choose options
flexibly in accordance with the career plan and life stage of
each, thus encouraging and helping employees to develop
themselves independently under the system.

Career stages
Period for completing
Managementcareer developmentlevel employees
Establishing a domain where
Employees witheach can contribute tohigh-level
management to complete
specialist jobs
their career development

Mid-career
employees

Period for improving
employability
Enhancing specialist
capabilities with opportunities
to broaden employees’
perspectives and experiencefor broadening and deepening
occupational abilities
Period for establishing corecompetencies
Laying a foundation ina specialized field andimproving businesscapabilities

Junior level

Period for developing coreskillsEnhancing basic capabilities

Career courses(Career interviews are conducted every year to select and determine the course.)

Global Course

Expert Course

Associate Course

Developing career
assuming duties will be
executed in a global
environment, beyond
national boundaries(proactively creating
opportunities to takeon diverse challenges
including overseas
assignments)

Developing careers
exclusively in specificdomains assuming
duties will be executed
mainly in Japan

Developing careers byattaching importanceto the consideration of
personal circumstances(with consideration ofand limitations on job
responsibilities, thecontent of work, theamount of work, theplace of work and othermatters)

Basic Course
Positioned as a period for the development of core skills when basic capabilities
are enhanced and various opportunities for bringing out future potential are
created for the development of employees’ careers

36Integrated Report 2023

Introduction■ Initiatives for developing next-generation managerial humanresources
As part of our continuing strategies for developing managerial personnel, we
implement the Global Leadership Development Program (GLDP) to globally
foster human resources for the next and future generations.
The GLDP was developed based on a program for fostering managerial
human resources that we began to fully implement in 2010. This program
was rebuilt and newly systematized into the GLDP in 2019. Intended for
personnel who are candidates for key posts, this program is implemented toindividually develop the capabilities appropriate for each post.
In addition, in fiscal 2023, we introduced the Start Up Program, a development
program that solicits participants from among young employees to develop
future managerial human resource candidates.

Foster’s Value Creation Story■ Initiatives for retaining young employees and developing young
employees’ work-related skills as early as possible
To reinforce the system for following up on the growth of new employees andyoung employees in their early years at the company, we have introduced
the Escort Runner Program, in which dedicated personnel staff serve as
escort runners in the process of their development, in addition to the existing
Brother/Sister Program and Mentorship Program by Officers. The staff incharge of these programs work together to meticulously support every
young employee.
Further, as a new initiative, we held meetings of officers and young
employees sitting in a circle, where young employees and officers are able
to freely interact and exchange opinions on equal footing. In fiscal 2022,
seven of these meetings were held with a total of 79 participants. The
meetings included questions and answers about business strategies andSound Management Structure

Data Section

Human resource development programs

Managerial humanresource candidates

Global Leadership Development Program

Executive Candidates

Training/action learning

Practical experience

GLDP for NL

Next Leaders
Selection

Future Leaders

GLDP for FL

Rising Suns

GLDP for RS

Junior employees■ Initiatives for developing globally competitive human resources
We make use of new employee training, training for newly promoted
employees, manager training, lectures by senior management, and otherprograms to improve inter-cultural communication skills, promote diversity
and inclusion, and foster and enhance the global mind of our employees.
We promote various forms of international employee reassignment, including
the Global-eye Program, an overseas training program for young employees,
and the Overseas Trainee Program intended for mid-career employees, thus
promoting the planned and continuous development of the next-generationof global leaders in a group-wide manner.
Further, in fiscal 2023, we will sequentially resume the program for the practicaltraining of young employees at overseas plants, which was suspended dueto the COVID-19 pandemic. We position practical experience at overseas
manufacturing sites as a valuable opportunity to acquire the basics ofmanufacturing at Foster, including the basics of manufacturing processes,
quality control, initiatives for production innovation, and global teamwork
beyond national boundaries.

Strategies for Achieving
Sustainable Growth

Application

Lectures by
seniormanagement/
Foster College

Stretchassignments

Participation in
management

Start Up Program
A training program in which participants build a foundation andlearn the basics for participating in the GLDP

lively exchange of opinions about concerns and recommendations of young
employees beyond the boundaries between organizations and job classes.
■ Initiatives for passing down skills and developing engineers
We have introduced the A La Carte Training as a program for the developmentof engineers. This permits participants to choose necessary courses fromamong approx. 45 courses, with a total length of more than 200 hours,in accordance with their needs. We have also built an environment whichallows them to watch videos of classes that have been taught in the past.
The greatest features of this program are that the content of the programis optimized for the practical operations at Foster because all the lectures
are given by internal staff and the internal lecturers are being developed
continuously as the training is being provided to participants.
This initiative is improving our technological capabilities, facilitating thepassing down of skills, and serving as the foundation for Foster’s reliable
technological capabilities.
Having been introduced in 2011, more than 3,700 people have participatedin this training program.

■ Initiatives for instilling the philosophy and improving engagement
We implement the Foster Rhythm Project globally to instill our corporate
philosophy. In this project, we have redefined “the ideal company” for the
Foster Group and verbalized our principles and values, with employees
themselves thinking on their own and generating ideas. We summarizedthese into a guidebook and a card and distribute them to our employees
around the world. In addition, we continue to hold workshops and implement
many training programs in our efforts to develop human resources who
can embody our corporate philosophy and to create a lively organizational
environment.
Further, the program supporting employees that are taking on challenges(the Foster Incubation Program)* includes the production of short videos,
FOSTER STORIES, as an initiative to tell the public about our strengths andappeal. These and other activities for improving engagement continue tospread and evolve.
* An internal initiative launched in 2020.
In this program, employees themselves launch projects to do something exciting or take onchallenges leveraging their ideas and skills, and support for these projects is provided to them.

■ Initiatives for reforming the organizational climate
Based on the results of stress checks and the employee satisfaction/
engagement survey which we conduct every year, we perform anorganizational analysis to identify issues. In addition, in fiscal 2022, we
introduced the 360° Feedback System which encourages managerial
employees to self-reflect and change their behaviors, thus enhancing
initiatives to build a better workplace environment.
In addition to the above, we have continued to identify issues based on
various requests and recommendations received through labor-management
consultations via the “Shinjukai,” an employee organization that is analternative to a labor union, the results of exit interviews with people leaving
the company, the results of employee questionnaire surveys conducted
after interviews for providing feedback on personnel evaluations, and otherchannels, and we ensure personnel measures reflect these issues.

37Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

		 2. Diversity and Inclusion
Policies
The co-creation of value with our diverse human resources through global
cooperation is essential for our manufacturing.
We are driving the creation of an organizational culture that respects thediversity of various personal qualities, such as age, gender, sexual orientation,
physical trait, values, educational background, career, hometown, race,
ethnicity, and nationality, and which at the same time permits employees towork vigorously with a peace of mind by catering to diverse needs, including
individual circumstances and life events such as childcare and nursing care.
We aim to build a Win-Win relationship between the company and its
employees and create synergies with the realization of enjoyable personal
lives for each employee, the creation of new value, and improvement in thecompany’s creativity and competitiveness.
With our activities recognized as a company that leads diversity promotion
to its management, we were selected as “the New Diversity Management
Selections 100 (2017)” by the Ministry of
Economy, Trade and Industry. We will continue
to create a working environment that makes themost of the employees’ diversity with various
backgrounds.

ty
rsi
ve
i
D

Securing human resourcesthat are rich in diversity

Age

GenderNationality

Race andethnicity

Sexualorientation

Inclusion
PhysicaltraitsHometown

Developing anorganizational culture thatrecognizes, accepts, andleverages diversity

Values
Educational
background/
careerCreation of new value and improvement in the company’s competitiveness

Activity Promotion Structure
We have established the Diversity Management Section, a specialorganization dedicated to promoting diversity and inclusion, within the
Human Resources Department.

Main Measures and Activities (Headquarters)■ Educational activities on diversity
We have set up a special website on diversity on our internal intranet, where
we provide various information to foster a better understanding of the factthat active participation of diverse human resources will lead to new value
creation by the company. On this website, we are also raising awarenessof inclusive language, which is aimed at promoting communications withrespect for diversity.
We have also introduced online training content as activities for raisingawareness of and eliminating unconscious prejudice and preconceptions(unconscious bias). More than 90% of employees have received this training
to date.
In 2018, we added “Actions for diversity that have been taken” to thepersonnel evaluation items. We are working to create a more inclusive,
diverse workplace by raising awareness of diversity among all employees
and encouraging them to engage in self-driven activities.

■ Our activities for promoting understanding of LGBTQ+ (sexual
minority)
We are carrying out activities to deepen understanding of LGBTQ+ andpromoting the number of allies (those who show understanding and support
for LGBTQ+ people). We have introduced online training content, including
a course for learning about LGBT to turn diversity into an organizational
strength and a course for creating a harassment-free workplace. More than
90% of employees have received the training so far.
■ Promoting women’s empowerment
Having set a goal of increasing the ratio of female managers to 30% by2025, we are developing female employees in a well-planned manner andsupporting their career development. In fiscal 2022, we provided career
training for young and mid-career female employees, in the form of lectures
given by a female director. This training is aimed at deepening trainees’
understanding of diverse career options, so that they will have a clear pictureof their career development, while building a network of female employees.
Employees who received this training gave comments, such as “I could
discuss career frankly with female employees of my generation, which
was a valuable experience” and “It was a highly meaningful opportunity toreconsider my future career.”■ Support for employees raising children and providing nursing care
To promote a working environment where employees who are raising young
children or providing nursing care can work at ease, we have improved oursystem to support the balance between work and child care or nursing care.

Since April 2018, we have extended the childcare leave period to three years
maximum and the nursing care leave period to 183 days maximum. We havealso expanded the range of employees eligible for sick/injured childcare leavefrom the those stipulated by law to all who are raising children who are juniorhigh school students or younger. In addition, we have signed a joint use
agreement with company-led childcare centers and introduced preferredbenefits such as the right to the early nursery applications. We have also
introduced an internal consultation service to provide appropriate advice
and information individually. We are also proactive in using the consultation
service to deepen our understanding of male employees’ participation inchildcare, raise awareness in the overall workplace, and enhance support
measures.
■ Initiatives for global human resource employment
We emphasize diversity in the employment of human resources as well. We
are proactive in employing non-Japanese people to promote the globalizationof human resources at headquarters, not to mention ensuring fair selection
without discrimination. The percentage of overseas human resources among
new graduates for the last ten years has been more than 20%. We are alsoemphasizing globalization in our mid-career hiring. In addition to recruiting
human resources through conventional means, we are using diverse
recruitment channels, such as establishing a program for employmenttransfer from overseas Group companies to headquarters in Japan. In doing
so, we attract human resources with different nationalities and cultures to ourorganization, aiming to increase diversity and inclusiveness.

38

Integrated Report 2023

Introduction■ Reform of retirement pension plans
We worked on the reform of our retirement pension plans to expand options
in response to the diversification of individuals’ life plans and to build a systemthat will enable stable pension payment into the future. In July 2022, we unified
our retirement pension plans into the defined-contribution pension.
At the same time, we introduced the retirement benefit advance payment
plan, which permits employees to receive advance payment of retirement
benefits, to respond flexibly to needs associated with life events, suchas their children’s education or the purchase of a home. The provision ofthese options also reflects the consideration we give to employees of nonJapanese nationality, whose future place of residence may not be Japan.

Future Plan
• Female manager ratio (at headquarters): To increase the ratio to 30% by2025.
• Ratio of overseas human resources (at headquarters): To increase the ratio
to 30% by 2025.
• Employment rate of persons with disabilities (at headquarters): To keep therate above the mandatory rate required by law.
• Displaced worker for nursing care (at headquarters): To maintain 0% fordisplaced worker due to nursing care and enhance the nursing care leavesystem.
• Ratio of males taking leave for spouse’s childbirth and childcare leave (atheadquarters): To achieve 100%

3. Labor (Labor Practices and Decent Work)
Policies
We believe it is important to create a worker-friendly environment whereemphasis is placed on permitting each employee to achieve personal
development through work and to demonstrate their capabilities while finding
their job rewarding. We also seek to create an environment where employeeswith various backgrounds support each other spontaneously through daily
communications and give ideas to each other. Under labor-management
trust and mutual cooperation, we seek to create an organizational culture
and develop various institutions, aiming to create an environment where
employees with various lifestyles and aspirations can work in the style thatsuits their situation.

Activity Promotion Structure
In addition to the activities led by the Diversity Management Section, we haveestablished the innovative working style project with cooperation between
labor and management.

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Main Measures and Activities (Headquarters)■ Workstyle reform initiatives
Since September 2016, we have established the systems and culture thatsatisfy a variety of work-style to promote diversity and realize a work-lifebalance. In fiscal 2017, we applied the flex time system to all employees andintroduced the work-at-home program.
As for the work-at-home program, we introduced
it at full scale without limiting the targets, andwere selected as one of the “Top 100 Telework
Pioneers” by the Ministry of Internal Affairs andCommunications for its telework initiatives in 2018.
In fiscal 2020, we reduced scheduled working hours per day by 15 minutes,
to 7 hours and 30 minutes. At the same time, we enabled all employees
to work using the flex time system without core time. We have engaged
in creating a work environment where employees can work flexibly to suit
their lifestyles regardless of time or place by fundamentally overhauling work
procedures and utilizing ICT.
In fiscal 2021, we eliminated distance constraints to give employees more
freedom to choose their place of residence. This has enabled us to respondflexibly to cases where an employee moves to a distant place due to the job
relocation of their spouse.
We will continue to work on work-style reform to become a company thatcan offer a more desirable work environment and fulfilling career.
■ Initiatives to enhance the leave system and the leave of absence
systemWe are taking initiatives to enhance the leave system and the leave ofabsence system, aiming to promote the diversity of work styles, respond todiverse lifestyles, and improve working conditions.
We offer various leave systems, including the volunteer leave system,
systems that grant a leave of absence to employees desiring to pursue
further education and those who desire to accompany their spouses onoverseas assignment. We also enhanced the Paid Leave Accumulation
Program, which permits employees to accumulate expired annual leave, andoffer family-care leave, leave for fertility treatment, and sick/injured child careleave. In addition, in July 2022, we introduced the Leave for Attending Childrelated Event, so that employees can attend events such as their children’s
entrance ceremonies and graduation ceremonies without hesitation.
■ Removal of ban on second jobs
On September 1, 2020, we introduced a second job system. This reflects
our belief that a wide variety of experience gained outside the company will
increase opportunities to demonstrate one’s capabilities in new domains
and achieve personal development, thus helping to increase the breadthand depth of career development of individuals. At present, more than ten
employees are utilizing the second job system. They are broadening theirperspective by doing work that they cannot experience in their primary jobs,
thus acquiring diverse skills and expertise.

Sound Management Structure

Data Section■ Health enhancement initiatives
Mental and physical health is essential for employees to feel job satisfaction
and have a fulfilling career. We position employees’ health as an importantmanagement issue and are taking various initiatives. We have expanded
the scope of employees who should be interviewed by industrial doctors
individually, follow up the conditions of new employees after they join thecompany, and have enhanced health counseling services by industrial healthnurses, in our efforts to prevent mental health problems and illnesses, detect
them early, and prevent them from becoming severe.
In addition, to raise employees’ health awareness, we implement the Health
Point System. In this system, we give points to employees when they havereceived health examinations or comprehensive medical examinations,participated in health-related seminars, and received training related tomental health, for example, and provide them with health incentives. Each
year, we run a number of online seminars on health issues. We have also built
an environment which permits employees to view videos of the seminars. We
have also introduced online training content for acquiring basic knowledge
about mental health, and more than 90% of employees have received thistraining so far.
Our initiatives for improving employee health were evaluated and we received
a “Certification of Excellent Company in Health: Gold Accreditation” fromthe Tokyo Promotion Council for Healthy Company Declaration in December
2018. (This certification was renewed on January 1, 2023.) In addition, in
March 2023, we received recognition for a “certified Health & Productivity
Management Outstanding Organization (Large Enterprise Category)” by the
Ministry of Economy, Trade and Industry.

Future Plan
Target for fiscal 2023:• Total working hours per employee (at headquarters): Achieve 153 hours orless per month on average• Rate of periodic health examinations taken (at headquarters): Maintain100%• Rate of specific health guidance/post-health checkup interviews taken (atheadquarters): Achieve 80%39Integrated Report 2023

		

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

4. Health and Safety

Policies
Foster Electric has established a rule to prioritize health and safety, and endeavors to create a safe and healthy
working environment. Based on this rule, we are advancing redressing activities, which are carried out mainly by the
Health and Safety Committee that governs health and safety, and the health and safety management organizationsat respective sites.
Abstract from the Code of Conduct
1. Understand laws and orders concerning work-related health, safety and emergency and comply with them. And
minimize and prevent a recurrence of an accident in a reliable manner.
2. Employee exposure to potential safety hazards is to be controlled through the proper design, engineering andadministrative controls, preventative maintenance and safe work procedures.
3. Procedures and systems are to be in place to prevent, manage, track and report occupational injury and illness.
4. Employee exposure to chemical, biological and physical agents is to be identified, evaluated, and controlled.
5. Employee exposure to the hazards of physically demanding tasks is to be identified, evaluated and controlled.
6. Production and other machinery is to be evaluated for safety hazards.
7. Employees are to be provided with ready access to clean toilet facilities, canteen with suitable drinking and eating
environment.

Activity Promotion Structure
The health and safety activities are operated by the Health and Safety Committee at headquarters in cooperation
with industrial doctors, under the supervision of its upper-level organization, the Risk and Crisis Management
Committee. By sharing information among the health and safety management organizations at each site, the Groupis working as one to create an appropriate working environment.
CEO/President

Risk and Crisis
Management Committee
Health and Safety
Committee

Industrial doctor

Outsourced contractor

Fire control and disasterprevention administrator(self-defense fire-fighting force)

Health supervisor

Organic solvent manager

Health and safety
management organization
at each Group company

Building healthadministrator

Hazardous material
safety supervisor

Chief press machine
operator

Specially controlledindustrial waste manager

Safe driving administrator

Main Activities
Every year, we implement health and safety education, which is the basis of occupational activities. Further we tackle
group-wide issues based around the Risk and Crisis Management Committee at headquarters. As part of the activities
based on the “Health and Safety Management Regulations,” the health and safety management organization, which
consists of representative workers and management, discusses site specific issues, legal inspection, risk assessment,
and so on at each site to prevent accidents and eliminate risks.
With regard to the group-wide issues, we take initiatives to resolve occupational health and safety issues for all
employees by following “the Occupational Health and Safety Management Program Procedure Manual,” which isbased on “the Foster Group Corporate Action Guidelines” and “the Foster Group Code of Conduct for Staff.” Infiscal 2022, to continue to deal with the threat of COVID-19, which was in its third year, we globally implemented
infection control measures with the Health and Safety Committee through risk and crisis management. Because thenumber of infections subsequently decreased in a number of countries, we returned to normal operation in 2023.
At headquarters, we worked to “drive the development of infrastructure and systems to reduce risks by assuming
the occurrence of a disaster,” which is the policy of the Health and Safety Committee, and focused our efforts on
addressing various risks. We also developed an accommodation environment for people who might have difficulty
returning home and clarified the solution to the toilet problem that will occur in the event of a water outage and theprocess of treating human waste. We will continue to address every possible problem that might be assumed.

<Initiatives at headquarters>● Activities related to remote work during the COVID-19 pandemic● Provision of instructions on a healthy diet in the form of e-learning, which is aimed at managing employees’
health● Remote self-defense fire-fighting training provided using content offered by the Tokyo Fire Department● Remote traffic safety exercise with the participation of police officers from the local precinct● Continuation of initiatives to start reducing volatile organic compounds (VOC) in the development phase● Activities to enhance the health of all employees

40Integrated Report 2023

Introduction

Foster’s Value Creation Story■ Measures to tackle COVID-19
At manufacturing sites, the number of COVID-19 infections decreased, and we began to return to normal operation inline with ease of restrictions by the government of each country. Our development facilities, including headquarters,also saw an easing of restrictions by the government. In response, we decided to stop taking measures to prevent
COVID-19 infections at headquarters. Regarding health management at normal times, we continue to encourage each
employee to be aware of infection control in their activities via the Health and Safety Committee.
Main examples of measures that we stopped taking at headquarters• Wear a face mask
• Social distancing• Partitions set up in areas for eating and drinking, etc.
• Operation of meeting rooms and reception rooms• Recording behaviors and reporting infections• Restrictions on events to be held internally or externally and on participation in such events• Treating an absence for vaccination as attendance
We will maintain a safe, secure system globally by taking health management measures thoroughly.
■ Bicycle safety
In recognition of our employees’ safe use of bicycles and our traffic accident prevention activities, we were certified by
the Japan Traffic Management Technology Association as a Model Company for National Bicycle Safety in February
2017, with our activities being seen as making us a role model. The certification was again renewed this year inrecognition of our continuing activities. This year, the use of bicycle helmets began to be recommended, so we madeit mandatory to wear a helmet when using a company-owned bicycle for work. We will continue striving to ensure
employees’ safety.

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section■ Initiatives at warehouses in Japan
We improve matters related to occupational health and safety, and fire /disaster prevention through internal andexternal audits.
At Iga Logistics Center, a disaster prevention audit was conducted by an external insurance institution, and we carriedout improvement activities based on potential risks that were identified in the audit. We undertake disaster control
measures by improving facility operation and equipment.
■ Initiatives at overseas sites
We seek to improve areas related to health and safety at overseas plants and other overseas sites, either on our own or
through externally certified management systems. We minimize the occurrence of work-related injuries and diseases
with safe, hygienic work environments, in an effort to ensure high quality products and services and uniformity of
manufacturing, retain workers, and increase their motivation to work. We also share information with employees andprovide them with ongoing training, so as to identify and solve health and safety problems in workplaces.
Certification under the ISO 45001 international standard for occupational health and safety was obtained by the Bac
Ninh Plant (Vietnam), the Panyu and Heyuan Plants (China) in 2019 and by the Binh Duong Plant (Vietnam) in 2022.
In addition, the ESTec Group, our subsidiary in South Korea, has also obtained this certification at its Binh Duong Plant(Vietnam), Phu Tho Plant (Vietnam), Jiaxing Plant (China), and the headquarters plant (South Korea).
Among the 15 manufacturing sites of the Foster Group, the above eight sites have obtained the ISO 45001 certificationand have continued to renew the certification every year.
At sites that have yet to obtain the ISO 45001 certification for occupational health and safety, we have stipulated thatspecific actions shall be taken by following “6.1.4 Planning Action” shown in the standard. We aim for appropriate
operation based on the structure of each site.

Future Plan
We will continue to examine our global BCP structure by assuming disasters affecting our overseas plants andenhance the management of our fire protection framework, pushing forward with the development of the Multi-hazard
BCP System for responding flexibly to a range of risks such as COVID-19, and the Health and Safety Committee willcontinue to promote information sharing.

Model Company for Bicycle Safety certification

41

Integrated Report 2023

Introduction

Social Contribution and Philanthropy
Basic Approach
We support the SDGs and the philosophy of UNGC and desire to contributeto the development and wellbeing of local communities while also fulfilling
our corporate social responsibilities. Having smooth communication withlocal communities and building relationships of social trust with them will
have a positive impact on the company’s long-term growth.
Article 18 of the Foster Group Code of Conduct for Staff states the following
about social contribution activities.
Contribution to Society: As Good Corporate Citizen, Foster Group Directors
and Staff actively participate in the social contribution activity and contributeto the development of the society. We continuously execute the social
contribution activity such as sponsorship of culture and art, cooperation
to regional community, participation in volunteer activity or contribution tointernational society and perform the role as a corporate citizen.”
We engage proactively in effective communication and philanthropic
activities in the countries and regions where we operate, aiming to be acompany that develops together with people from local communities andthat enjoys widespread trust.

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

We continue to participate in “Akishima-shi Environment Consideration
Enterprise Network,” which carries out environmental activities withbusinesses in the city, as a vice-president. Although various annual events
hosted by this organization were cancelled due to the COVID-19 pandemic,
city clean-up activities were continued, and environmental contribution wasmade by making the city beautiful.
In addition, Foster is promoting activities to enable people to encounter
local traditional cultures through Akishima Showa No Mori Arts and Culture
Promotion Association and Akishima Tourism & City Planning Association, in
which we participate. Foster is also cooperating with the Akishima Location
Service to engage in activities for revitalizing the local area.
■ Social contribution through education
We take various opportunities to hold a Speaker Craft Workshop. We also
co-host the Speaker Craft Workshop for Parents and Children, classes given
to the citizens of Akishima City. We accepted junior high school students
for work experience and held science classes for second-year students atjunior high schools in Akishima City (six schools in total). Using speakers asmaterials, we provided opportunities to enjoy learning about the principles
and mechanisms of how speakers work.

Main Activities

Sound Management Structure

Data Section

China
June to July 2022: Our employee volunteers participated in blood donation
programs at our plant in Heyuan City and the Cultural Center in Panyu
District, Guangzhou City. We also engage in care and welfare activities inPanyu District, Guangzhou City each year, providing care to residents of the
district aged 60 or older.

Korea
September 2022 and January 2023: Charity funds for neighbors raised by
officers and employees of ESTec Corporation, a Group company in South
Korea, were donated to those in need of support in Yangsan City through the
inhabitant life support office of the city government.

Japan■ Communicating with the community
In fiscal 2014, we acquired the naming rights for Akishima Community Halland gave this facility a nickname, KOTORI Hall. In April 2023, we used
the renewal of the naming rights contract as an opportunity to give it a
new nickname, FOSTER Hall. We will continue to create opportunities tocommunicate with the community. The blue parts of the new logo, FOSTER
and ALL reflect our strong desire that the hall will contribute to the growth of
all the people who use it.

■ Relief money for employees affected by the flooding in Thailand
Early in October 2022, heavy rainfall in the north area of Chao Phraya Rivercaused the river to rise and resulted in a dam discharge, which caused
flooding in areas including the midstream and tributary areas. Some partsof tributaries overflowed, causing more than 100 houses of employees
working at our Thai plant to be flooded under or above the floor level. To
aid our employees affected by this flooding, we solicited relief funds fromheadquarters employees and provided a total of approx. 280,000 yen,including a contribution from headquarters, to the plant in Thailand.

VietnamJanuary 2023: We received “the Gold Heart award” from Red Cross Societyof the Cam Le district in recognition of our outstanding achievements with
our donations for local people facing financial difficulties from Cam Le districtand Hòa Vang district of Da Nang.

42

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Data Section

Sound Management Structure

GovernanceCorporate Governance
Policies
To maximize our corporate and shareholder values, we recognize theimportance of establishing a fair and sound corporate management system
and a managerial structure that enables quick and accurate decision
making to accommodate an ever-changing business environment, and theexecution of legitimate and appropriate business operations. To that end, we
are working to improve and enhance our approach to corporate governance.

■ Board of Corporate Auditors
In the last fiscal year, meetings of the Board of Corporate Auditors wereconvened 9 times.
⿟ Members of the Board of Corporate Auditors and their attendance at its
meetings
The Board of Corporate Auditors consists of four members (including
three independent corporate auditors). Each auditor has considerable
knowledge in accounting, tax affairs, or legal affairs.

Corporate Governance Structure

General Meeting of Shareholders
Election anddismissal

Remuneration Committee
Director

Independent
Director

Independent
Corporate
Auditor*Election anddismissal

8 Directors

4 Auditors

Directors and Board of Directors

Corporate Auditors /Board of Corporate Auditors(3 Independent Directors)

Director

Independent Director

Director

Independent
Director

Independent
Corporate
Auditor* The standing independent corporate auditor attends the
Remuneration Committee meetings as an observer.

Election anddismissal(3 Independent Corporate Auditors)
Independent
Corporate Auditor

Accounting Auditor

Corporate Auditor

Nominating Committee<Accounting Audit><Supervision>
Appointment andsupervision■ Board of Directors
The Board of Directors meetings are held regularly on a monthly basis, inprinciple, and whenever necessary to discuss and decide important agenda
items and the execution of important business concerning the Group’s
management policies and strategies. It also supervises the managementfrom an independent and objective standpoint.
⿟ Members of the Board of Directors and their attendance at its meetings
The Board of Directors meeting currently consists of eight directors andfour corporate auditors present. Seven of the meeting attendants (three
independent directors and four corporate auditors), who constitute themajority, are in a position to supervise or audit management from an
independent standpoint. In addition, the Board of Directors is chairedby the president (during the last fiscal year). Because we are in aperiod of business transformation, with many agenda items related toimportant business execution, we believe that the smooth operationof the Board of Directors is enabled by having the president, who isfamiliar with the status of business execution and the internal situation,
host the meetings as the chair. In addition, sessions for exchanges ofviews between directors, which are hosted by independent directors,
are held to increase the effectiveness of the Board of Directors.
Members of the Board of Directors and their attendance at its meetings
are as shown in Table 1 (page 45).
⿟ Major matters considered by the Board of Directors
The Board of Directors vote on important matters related to businessexecution, including management policies, business plans, andsustainability-related issues, in addition to agenda for the general
meeting of shareholders and legal matters for resolution. Progress inimportant matters of business execution is also reported. Matters to bereported include those requested at sessions for exchanges of views
between independent directors and corporate auditors and among
independent officers, leading to a lively exchange of opinions.

⿟ Major matters considered by the Board of Corporate Auditors
They include audit policies, the legality of business reports and annexed
detailed statements, the appropriateness of the execution of duties bydirectors, the internal control system and its status of operation, and thereasonableness of the methods and results of audits conducted by theaccounting auditor.

<Supervision> (Including on-site inspections of subsidiaries)
Managementmonitoring
Male<Business execution>

FemaleNon-Japanese

CEO/President(Executive directors)
Board of Managing Directors

Management Meeting<Internal control>

Division Head Meeting
Legal Advisors, etc.

Internal Audit Department

Advice and guidance

Checks and balances
Corporate Staff Departments
Business Divisions

Sustainability Committee
Environment Committee
Domestic Group Company Meeting

Compliance Committee

Global Budget Meeting, etc.

Risk and Crisis Management Committee

HotlinePersonal Information Management
Committee, etc.

43Integrated Report 2023

Sessions for exchange ofviews between officers
We hold the following sessions
for exchanging views for the
purpose of strengthening corporate
governance. At each session,
attendants
haveunrestricted,
constructive
discussion
andexchange of views, including
the presentation of problems.
The content is utilized for the
discussion and operation of theBoard of Directors, supervision ofmanagement, business execution,and other purposes.

Introduction

Meeting name

Foster’s Value Creation Story

Chairperson

Strategies for Achieving
Sustainable Growth

Organizer

Month

Session for exchange of views between
directors hosted by independent directors

Lead Independent
Director

Improving the effectiveness of the Boardof Directors

May 2022

Session for exchange of views between
independent officers

Full-time Corporate
AuditorExchanging views from independent
standpoint

June 2022

Session for exchange of views between
independent directors and corporate
auditors

Full-time Corporate
AuditorExchanging views from the standpoint ofauditor or supervisor

August 2022
February 2023

Session for exchange of views between
the president, independent directors, andcorporate auditors

CEO/President

Recommendations to the president fromauditors or supervisors

September
2022
March 2023

Session for exchange of views between thepresident and corporate auditors

Full-time Corporate
AuditorReporting audit results, giving
recommendations for improving theexecution of duties, etc.

November
2022

Officers’ camp for discussing the mediumterm business plan

CEO/President

Discussing the progress of the mediumterm business plan, issues, improvement
measures, etc.

September
2022

Status of activities of the Nominating Committee
The committee is chaired by the lead independent director and its members
are three independent directors, two directors, and the standing independent
corporate auditor.
To ensure the fair, transparent selection and appointment, etc. of officers(directors and corporate auditors), the committee drafts agendas on
appointment or dismissal of directors and corporate auditors that theBoard of Directors submit to the general meeting of shareholders, as well
as agenda items on the appointment or dismissal of the president for the
Board of Directors meetings. In the process of appointing the president, thecommittee has the authority to select a succession plan and candidates andinterview the candidates.
During the last fiscal year, the committee met five times.
- Discussion of specific criteria for the selection of CEO candidates- Interviews with CEO candidates- Selection of CEO candidates- Selection of candidates for directors and corporate auditors to be submitted
to the 89th Ordinary General Meeting of Shareholders and submissionof the candidates to the Board of Directors and the Board of Corporate
Auditors
The status of attendance of each member is as shown in Table 1 (page 45).

system, criteria, and policies and content of remuneration of individual
directors, within the amount limits set by resolution by the general meetingof shareholders and within the scope specified in internal regulations on
remuneration, so as to ensure fair, transparent decisions on directors’
remuneration, their treatment, and other areas.
In the last fiscal year, this committee met once.
- Review of business performance of the overall company and each divisionin the last fiscal year-Evaluation of individuals based on the above for performance-linked
remuneration for the fiscal year
- Review of the progress of the medium-term business plan and evaluationof individuals for medium- to long-term performance-linked remuneration,
which are made based on the above
The total amount of remuneration of directors was submitted for discussion
at the Board of Directors meeting held on June 24, 2022 and received
approval. Regarding the amount of remuneration of each director (and each
executive officer), it was resolved that the Board of Directors would leave thedecision to the committee within the total amount and the scope set forthin the internal regulations on remuneration of directors, etc. In response, thecommittee determined the amount.
The status of attendance of each member is as shown in Table 1 (page 45).

Status of activities of the Remuneration Committee

Evaluation of effectiveness of the Board of Directors

The committee is chaired by the lead independent director and its members
are three independent directors and two directors. The standing independent
corporate auditor also attends its meetings as an observer.
This committee has the authority to determine the director remuneration

To increase the effectiveness of the Board of Directors, we evaluate
the effectiveness based on the results of questionnaires of directors andcorporate auditors. We also leverage the results of surveys in the operationof the Board of Directors.

Sound Management Structure

Data Section■ Overview of results of the effectiveness evaluation of the Board of
Directors
1. L ast fiscal year (FY2022)(1) Composition
The Board of Directors has a well-balanced composition, with internaland external officers with diverse experience and insights, including
female and non-Japanese members. Its size is appropriate for having
sufficient communications and lively discussions. Meanwhile, a futuretask is to develop candidate human resources for appointing directors
with expertise in strategies to strengthen R&D and other areas as well as
female internal directors.
(2) Status of operation
To help the Board of Directors conduct meaningful discussions, materials
are distributed to its members before a meeting is held, thus having themunderstand the background, purpose, and content of each agenda. In
addition, where necessary, explanations are given by the secretariat to
the Board of Directors or others. The set frequency of meetings is also
appropriate, and meetings are also held as necessary. On the other
hand, while improvements have been made in the early presentationof materials, there is room for improvement in the earlier provision ofmaterials and prior explanations about important matters. In addition, inthe case of an important matter, holding repeated deliberations, such as
holding an extraordinary meeting of the Board of Directors without waiting
for a regular meeting, will further vitalize the operations of the Board of
Directors.
(3) Status of deliberations
In the last fiscal year, the duration of each meeting of the Board of
Directors was extended. This has resulted in unrestricted, constructive
discussion and exchanges of views made more actively than ever, further
increasing the effectiveness. Moving forward, more active discussion andenhancement of the system for reporting specific measures and theirprogress need to be achieved by increasing the effectiveness of priorexplanations of important agenda items, among other means.
2. Future initiatives
In light of the results of evaluation for the last fiscal year, the following
initiatives will be taken in an attempt to enhance deliberations by the
Board of Directors and further increase its effectiveness.
• Enhancing deliberations of management strategies and importantmatters and follow-up reporting• Enhancing reporting and activating discussion about sustainability• Presenting materials earlier, ensuring the early provision of materials
about important matters, and improving prior explanations about suchmatters

44

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Overview of director remuneration system

Table 1: Activities of each director and corporate auditor in the Board of Directors, Board of Corporate Auditors, and arbitrary committees (April 2022 to March 2023)

Name

Title

Board of Directors

Board of Corporate
Auditors

Nominating
Committee

Remuneration
Committee

Hiromi
Yoshizawa

Director andChairperson

〇
12/12

〇
2/5

〇
1/1

AtsushiNarikawa

CEO

◎
12/12

〇
3/5

〇
1/1

Lu San Tie

Senior Managing
Director

Kazuhiro Kishi

Managing Director

〇
12/12

Hiroki Miura

Director〇
12/12

MinoruMatsumotoLead Independent
Director

Independent

〇
12/12

◎
5/5

◎
1/1

Yasuhiro Goto

Independent Director

Independent

〇
12/12

〇
5/5

〇
1/1

Female

〇
12/12

〇
5/5

〇
1/1

Female

△
12/12

◎
9/9

〇
5/5

△
1/1

△
12/12

〇
9/9

Non-JapaneseIndependent

〇
12/12

Kaoru Chujo

Independent Director

SatokoKimotoFull-time Corporate
Auditor

Tsutomu
InokumaCorporate Auditor

Takashi Suzuki

Independent Corporate
AuditorIndependent

△
12/12

〇
9/9

Takuma Ino

Independent Corporate
AuditorIndependent

△
2/2

〇
3/3

Aiko Oue

Independent Corporate
Auditor

△
10/10

〇
6/6

Independent

Independent

FemaleData Section

Sound Management Structure◎: Chairperson, 〇: Member, △: Attendant(Note) 1. The above information about the positions applies to the period from April 1, 2022 to March 31, 2023.
2. Mr. Takuma Ino resigned at the close of the 88th Ordinary General Meeting of Shareholders of the Company that was held on June 24, 2022.
3. Ms. Aiko Oue was appointed as a corporate auditor at the 88th Ordinary General Meeting of Shareholders of the Company that was held on June 24,2022.
4. The Nominating Committee meetings include interviews (two times) by outside officers who are members with candidates for president.

The remuneration of directors and corporate auditors is paid in such a waythat the amount will not exceed the limit on remuneration, a resolution onwhich was passed at the general meeting of shareholders.
Regarding the remuneration of directors, the remuneration system,
criteria, and policies and content of remuneration of individual directors are
determined by the Remuneration Committee so as to ensure fair, transparent
decisions on directors’ remuneration, their treatment, and other aspects.
The remuneration of internal directors consists of the basic remuneration,
performance-linked remuneration for each fiscal year, and medium- to longterm performance-linked remuneration.
The system, criteria, and policies for the remuneration of corporate auditors
and the contents of remuneration of individual corporate auditors are
determined by the Board of Corporate Auditors.
Performancelinked
remuneration foreach fiscal year

Basic
compensation

Fixed

Paid in cash, withthe amount set foreach position

Medium- to longterm performancelinked
remuneration––

Paid in cash,
based on the levelof performanceachieved in eachfiscal year

Stock is granted
based on the levelof achievement of
the medium-termbusiness plan.

–

Operating profit

Operating profit ratio–

0~100%

50~100%

Payment timing

MonthlyMonthly

On retirement

Performance
evaluation
period–1 yearRecipients

Director
Corporate Auditor
Executive Officer

Payment
methodVariable –Evaluation
indicators/
criteria
Coefficient/
payment rate

1 year and theperiod of themedium-termbusiness plan
Directors (excluding Directors (excluding
Outside Directors)
Outside Directors)
and Executiveand Executive
Officers
Officers

Corporate Governance Guidelines
The Foster Group has established Corporate Governance Guidelines that
express our basic way of thinking and framework with regard to corporate
governance. (The following site is in Japanese.)https://www.foster.co.jp/csr/governance/pdf/corporate_governance_
guidelines.pdf

Foster Group Corporate Action Guidelines
The Foster Group has established Corporate Action Guidelines that express
our actions with public decency in compliance with laws and regulations
inside and outside Japan, international rules, and their spirit and intent aswell as corporate ethics.
https://www.foster.co.jp/csr/governance/pdf/corporate_action_guideline.
pdf

45

Introduction

Integrated Report 2023

Compliance
Policies
The Foster Group emphasizes compliance (with laws, regulations andcorporate ethics) as a core element of its CSR philosophy and promotes
a compliance program—setting internal rules and building a structure formanagement—to all Group companies.

Compliance Structure
The Foster Group places emphasis on the internal whistleblowing
system to promote compliance. Such system is under operation through“the Compliance Hotline” and “Harassment Helpline” that connects
whistleblowers to external corporate lawyers available for 24 hours
by email. Internally, the highly independent internal audit office and HR
representative act as a window to early detect violations of compliance.
The whistleblowing hotline is extensively available to employees andofficers of the entire Group as well as to their families and the employees ofbusiness associates. We also hold briefings on the Compliance Hotline andHarassment Helpline for employees, to ensure that they are fully informedof the internal whistleblowing system.
For the protection of whistle-blowers, internal regulations, including internalreporting regulations, are established and disseminated to ensure that they
are treated fairly or not involved in any trouble as a result of their actions.
Further, partly reflecting the revision of the Whistleblower Protection
Act, our internal reporting regulations clearly state that the obligation tomaintain the confidentiality of information that enables the whistleblower
to be identified shall be ensured, and that any violation of the prohibitionof searching for the whistleblower and prohibition of retaliation against anddisadvantageous treatment of the whistleblower may result in disciplinary
action.

Organization of the Compliance Committee(The same applies to the Risk and Crisis Management Committee)
Chief Executive
Chairperson

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Compliance Committee

Risk and Crisis Management Committee

The Compliance Committee leads compliance programs with the president
serving as chief executive. This committee was set up in accordance with“the Foster Group Code of Conduct for Staff.”
In fiscal 2022, we conducted a compliance test and a questionnaire on
overall compliance matters, including “the Foster Group Code of Conduct
for Staff.” We also gave all employees online compliance training related tocontracts, the Subcontract Act, insider trading, secret management, andexport management and took other measures in our efforts to raise theirawareness of compliance.

The Committee identifies and evaluates risks based on the result of risk
reexamination conducted by respective department each year. Fromamong risks, the Committee selects important risk items that it needs tocontrol. Specific measures which have been taken to address such risk
items are monitored through regular meetings of the Committee, which
are held every three months. The risk evaluation result is also referenced
during the business policy planning. The Committee reports the statusof its operation, risks faced by the Group, and measures that have beentaken to tackle those risks to the Board of Directors as appropriate. The
Board of Directors fulfills its function of supervising risk management, suchas by giving advice and instructions based on specialized knowledge ofoutside officers. Our important risk items that were monitored in fiscal 2022
included suppliers’ business continuity management, response to thelogistics disruption, validation and global expansion of the BCP structure,
management of the fire protection framework of the overall Group,and management of countermeasures under the information security
management system.
The Risk and Crisis Management Committee held weekly meetingsin addition to its regular meetings because the future of the economy
remained uncertain due to factors including the spread of the highly
infectious COVID-19 variant, lockdowns in Vietnam and China, and therising tensions in Ukraine. At the weekly meetings of the Committee,
departments and sites collected and shared customer information, supplierinformation, and other information, identified top risks from among various
materialized risks, and clarified the responsible department and action
policy for each of such risks, thus handling them in an appropriate, timely,
flexible manner.

Future Plan
The Foster Group will continue to promote activities such as the enrichment ofinternal trainings and provision of information on related laws and regulations,which are led by the Compliance Committee, to enhance and improve thecompliance structure.

Risk Management
Policies
The Foster Group is focused on predicting risks and taking preventive
measures so that such risks will not materialize. They also focus on
minimizing damage to the Company should a risk develop and materialize,
resulting in the occurrence of danger. Specifically, we are working to
make the risk control matrix (RCM) framework more sophisticated andto reinforce our structure for managing and sharing information under thebasic operating policy of “being prepared for forward-looking risk and crisis
management.”

Risk Management Structure
As the foundations for “the Foster Group’s risk management structure,” wehave established the Rules on Risk and Crisis Management and the Risk
and Crisis Management Committee with the president as the chairman to
identify risks using a checklist, analyze such risks and promote preventive
measures on a Group-wide basis.
In the event of any incidents or accidents, we set up a task force, mainly
consisting of the Risk and Crisis Management Committee members, andtake other prompt measures to minimize damage, restore the original state
as early as possible, and prevent any recurrences.

Future Plan
In addition to monitoring important risk items through regular meetings of
the Risk and Crisis Management Committee, we will pursue a higher levelof risk control based on management policies, headquarters policies, andother criteria.
We will also associate incidents with business process risks, thus improving
our ability to examine and predict risk linkages, and identify risk topics ateach overseas site to improve the completeness of identified risks and ourability to handle them promptly. Meanwhile, we will strengthen the Group’s
risk management system by creating elaborate risk maps and identifying
top risks, mainly through regular meetings with the responsible person fromeach overseas site.

Vice Chairperson
Consultation Contacts / Hotline

Secretariat

Committee members from the headquarters /Committee members from Group companies

46

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Business Continuity Plan (BCP)
Activity Promotion Structure

Policies
The Foster Group is taking steps to prevent and avoid various business risks
and crises as risk/ crisis control and to minimize the damage to the Company
and avoid inconvenience to customers should a risk occur or be embodied,with the highest priority given to preventing the recurrence of risks/crises.

The Foster Group promotes business continuity through the function
recovery activities undertaken by each function department of
headquarters and through collaboration with the task forces at eachsite in accordance with the decisions made by the Risk and Crisis
Management Committee consisting of its senior management.

Executive Chairperson

Vice Executive Chairperson

Main Activities and Measures■O peration of the emergency-contact system (Safety Confirmation
System)We have introduced a safety confirmation system using mobile phones to beprepared for emergencies, such as the predicted inland earthquake in Kantoarea, and other disasters. This system is aimed at keeping headquartersfunctional by allowing it to issue an emergency notice to confirm the safetyof its employees and their families and ensure a prompt initial response. In
addition, in October 2022, we conducted response training in considerationof the work-from-home system during the COVID-19 pandemic, so as toget ready to operate remote disaster headquarters in the event of a disaster.
Further, in December 2022, we conducted a questionnaire to be ready toserve people having difficulty returning home and reviewed what items are in
the stockpile and how many of them are in stock.
■ Disaster-prevention activities
We received a letter of gratitude from the Akishima Fire Department inrecognition of our victory in a competition for the training of in-house
firefighting teams, as well as our daily disaster prevention activities andregional disaster prevention activities. Further, our headquarters areregistered as Pipo-kun-no Ie (an emergency shelter where children can seekhelp). In future, we will continue to work to be a company that is needed in
the community. In December 2022, we conducted a joint global disaster drill
involving headquarters, assuming a fire at an overseas manufacturing site (aplant in China). We made improvements based on problems found throughthis training, as part of our efforts to enhance our business continuity plan
globally to continue deliveries to customers.

The victory plaque we won in a competition
for the training of in-house firefighting teams

Chairperson of the Risk
and Crisis Management
Committee CEO/President

Secretariat

Committee members fromthe Production Division

Committee members
from the Global Corporate
Support Division

Committee members
from the Quality
Assurance Division

Committee members
from the Internal
Audit Department

Committee members
from the Sales Division

Committee members
from the Engineering Division

Committee members
from the Fostex Company

Committee members
from Group companies

Tackling COVID-19 Coronavirus

Disaster Drills at Overseas Sites

At overseas manufacturing sites, the number of COVID-19 infections
decreased, and governments are easing restrictions. In these circumstances,
we attach importance to the continuation of deliveries to customers andcontinue to take basic measures, including managing health, washinghands, and wearing masks. In 2022, we promoted vaccinations and gave
COVID-19 tests as part of our comprehensive infection control measures.
We will maintain a safe, secure production system.

We appoint a person in charge of BCP for each overseas site and implement
disaster drills once a year to improve our employees’ awareness of disasterprevention.

Pest control measures
We regularly take measures to prevent the occurrence of pests at overseas
manufacturing sites. We thus prevent damages from pests including red
imported fire ants, which have gone on the rampage in the past.

A sign put up at the entrance saying“Pipo-kun-no Ie”
A pest control measure being taken (China)

Rescue of affected people (Myanmar and Vietnam)

47

Our Stance on Tax Matters
Basic Stance
The Foster Group works to maintain and improve tax compliance andperform proper filing and payment of taxes in accordance with the local taxrelated laws and international rules based on its business and sustainable
development strategies.

Governance
The Foster Group has established the global tax department within the
Finance and Accounting Department of the Global Corporate Support
Division at headquarters, so as to manage and monitor tax risks. Criticalissues are reported to the top management including Board of Directors fortheir directions.

Transactions with Related Parties Outside JapanThe Foster Group determines prices based on the arm’s length principle.

Relationship with Tax Authorities
The Foster Group provides information and otherwise responds to tax
authorities in good faith. In addition, the Group has requested bilateraladvance pricing arrangement (BAPA) to ensure the predictability of theapplication of transfer pricing taxation.

Ensuring Transparency and Responding to Pillar Two
The Foster Group prepares and discloses its financial statements incompliance with the Financial Instruments and Exchange Act and related
laws. It also discloses tax information in the financial statements based on
the related laws and regulations.
The Group responds appropriately to income taxes concerning the global
minimum corporate tax rate, which was established based on Pillar Two in
the BEPS 2.0 project that has been discussed by the OECD and G20.

Information Security

Sound Management Structure

Data Section

Main Activities and Measures

Policies
We recognize the importance of securing the trust of our customers, suppliers,
shareholders, employees and other stakeholders based on our corporate
creed of “Sincerity.” We also understand that appropriate management of
information assets is an important part of the management agenda.
To appropriately protect and handle the information assets possessed by theGroup, we define the information security policies as follows:- Information security management system- Development of internal regulations regarding information security- Implementation of information security measures- Provision of information security education- Implementation of continuous improvement activities

The Group takes appropriate measures as organizational, human, physicaland technical safety management initiatives against security threats, whichchange daily, to prevent unauthorized access, damage, leakage, falsificationand other accidents involving information assets.

Mid-term Plan
- Penetration of the infrastructure for information protection and management
on a global basis.
- Conduct of risk analyses and plan of concrete preventive measures basedon the Business Continuity Plans (BCPs).
-
Assurance of the awareness of the information security policies andrespective regulations

Information Security Policies:
https://www.foster-electric.com/security/index.html

Activity Promotion Structure
For protection and appropriate management of all information assets
possessed by the Group, it has established the Information Security
Committee, whose members include the president serving as a chief
executive and management, to maintain the system for understanding themanagement status of information security and prompt implementation ofrequired security measures according to the risk analysis results.
Information Security
Committee

Information Security
Auditor

Chief Executive

Vice Chairperson

Chairperson

Secretariat

Task force

Committee
memberIn addition to drawing up and executing a business continuity plan (BCP)
to tackle the threat of another surge in COVID-19, which still continues tomutate, we will aim to build the Multi-hazard BCP System that will allow us toaddress every one of the recently diversifying risks and respond flexibly evento an international emergency.

Committee
memberFuture Plan

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Committee
memberIntroduction

Committee
memberIntegrated Report 2023

Chief of Secretariat

Secretariat at
the headquarters

Secretariat at eachGroup company

48

Introduction

Integrated Report 2023

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Data Section

Sound Management Structure

Directors, Audit and Supervisory Committee Members, and Officers
Directors
Joined The Fuji Bank, Limited (currently Mizuho Bank,
Ltd.)
Nov. 1997 Assistant General Manager, Kudan Branch, The Fuji
Bank
Apr. 2002 Deputy Manager, Americas Non-Japanese Sales
Division No. 2, Mizuho Corporate Bank, Ltd.
Mar. 2003 Deputy Manager, Americas Products Sales
Department, Mizuho Corporate Bank, Ltd
Apr. 2004 Deputy Manager, Americas Business Administration
Division, Mizuho Corporate Bank, Ltd.
Mar. 2006 General Manager, Seoul Branch, Mizuho Corporate
Bank, Ltd.
Apr. 2009 Executive Officer, General Manager of Corporate
Banking Division No. 13, Mizuho Corporate Bank, Ltd.
Apr. 2010 Managing Executive Officer, Mizuho Corporate Bank,
Ltd.
Jul. 2010 Chief Officer for the European Region, Mizuho
Corporate Bank, Ltd.
Jul. 2013 Managing Executive Officer, Head of the European
Region Unit, Mizuho Bank, Ltd.
May 2015 Advisor of the Company
Jun. 2015 Senior Managing Director and Assistant to the
President of the Company
Jan. 2017 General Manager, Global Corporate Support Divisionof the Company
Jun. 2020 President and Representative Director, COO of theCompany
Jun. 2022 President and Representative Director, CEO of theCompany
Jun. 2023 Director and Chairperson of the Company (to thepresent)

CEO

Managing Director and CFO

Apr. 1988

Akihito Mochizuki

Mar. 2003

Director and Chairperson

Atsushi Narikawa

Apr. 1982

Joined The Fuji Bank, Ltd. (currently Mizuho Bank,
Ltd.)
Assistant General Manager, Kanda Branch, Mizuho
Bank, Ltd.
Jan. 2006 Deputy Manager, Corporate Planning Division, Mizuho
Bank, Ltd.
Oct. 2010 General Manager, Kofu Branch, Mizuho Bank, Ltd.
Apr. 2013 General Manager, e-Business Sales Division, Mizuho
Bank, Ltd. and Mizuho Corporate Bank, Ltd.
Nov. 2013 General Manager, Compliance Promotion Division No.
1, Mizuho Financial Group, Inc. and Mizuho Bank, Ltd.
Apr. 2015 General Manager, Planning Administration Division,
Mizuho Financial Group, Inc. and Mizuho Bank, Ltd.
Apr. 2017 Executive Officer, General Manager, Planning
Administration Division, Mizuho Financial Group, Inc.
and Mizuho Bank, Ltd.
Apr. 2018 Managing Executive Officer, Mizuho Financial Group,
Inc. and Mizuho Bank, Ltd. / Chairman of the Planning
Committee, Japanese Bankers Association
Apr. 2019 Managing Executive Officer, Mizuho Financial Group,
Inc., Mizuho Bank, Ltd., and Mizuho Trust & Banking
Co., Ltd. / Head of Internal Audit Group
Apr. 2020 Senior General Manager, Mizuho Bank, Ltd
Jun. 2020 Audit & Supervisory Board Member, Mizuho ResearchInstitute Ltd.
Apr. 2021 Senior General Manager, Mizuho Bank, Ltd.
May 2021 Advisor of the Company
Jul. 2021 Senior Executive Officer of the Company
Jul. 2021 General Manager, Global Corporate Support Divisionof the Company
Oct. 2021 General Manager, Global Corporate Support Division,and General Manager, Corporate Management
Division of the Company
Apr. 2022 CFO, General Manager, Global Corporate Support
Division of the Company (to the present)
Jun. 2023 Managing Director of the Company (to the present)

Skill Matrix
Title

Joined the Company
Deputy Manager, Sales Department, IT Equipment
Division of the Company
Apr. 2003 Manager, Sales Department, IT Equipment Division of
the Company
Apr. 2004 Manager, Sales Department No. 2, Sales Division of
the Company
Feb. 2006 Executive Officer, Deputy General Manager, HP
Division of the Company
Feb. 2007 Deputy General Manager, HP Business Division of theCompany
Dec. 2008 Deputy General Manager, Mobile Audio Business
Division of the Company
Jun. 2009 Director of the Company
Jun. 2010 Acting General Manager, Mobile Audio Business
Division of the Company
Apr. 2011 General Manager, Sales Division of the Company
Apr. 2013 General Manager, MA Business Division of theCompany
Jun. 2014 Managing Director of the Company
Apr. 2017 General Manager, New Business Development
Division and General Manager, Sales of the Company
Aug. 2019 General Manager, Sales Division and General
Manager, Sales of the Company
Apr. 2020 General Manager, Sales Division, Head of Sales &Marketing, and in charge of the Americas of theCompany
Jun. 2023 President and Representative Director, CEO of theCompany (to the present)

Senior Managing Director

Independent Director

Oct. 1983

Independent Director

Minoru MatsumotoMar. 1987
Sep. 2012
Oct. 2013
Jun. 2014

Kazuhiro Kishi

Mar. 1986
Oct. 2002

Feb. 2015
Jun. 2015
Feb. 2016
Mar. 2021
Mar. 2022
Oct. 2022

Joined Tohmatsu Aoki Audit Firm (currently Deloitte
Touche Tohmatsu LLC)
Registered as Certified Public Accountant
Resigned from Deloitte Touche Tohmatsu LLC
Set up Minoru Matsumoto CPA Office (to the present)
Outside Corporate Auditor, Sanshin Electronics Co.,Ltd.
Outside Corporate Auditor, JASTEC Co., Ltd.
Independent Director of the Company (to the present)
Outside Director (Audit and Supervisory Committee
Member), JASTEC Co., Ltd. (to the present)
Outside Audit & Supervisory Board Member, Toyo Ink
SC Holdings Co., Ltd.
Outside Director (Audit & Supervisory Committee
Member), Toyo Ink SC Holdings Co., Ltd. (to thepresent)
Representative Partner of Terada Accounting Tax
Corporation (to the present)

Lu San Tie

Jul. 1997
Jun. 2001
Jun. 2004
Feb. 2006
Apr. 2006
Jun. 2007
Jul. 2009
Feb. 2010
Apr. 2011
Apr. 2012
Apr. 2014
Apr. 2016
Jun. 2018
Oct. 2018
Apr. 2022

Yasuhiro Goto

Joined the Company
Director, Foster Electric Co., (Hong Kong) Ltd.
Vice President, Foster Electric Co., (Hong Kong) Ltd.
Executive Officer of the Company
President, Foster Electric Co., (Hong Kong) Ltd.
Director of the Company
General Manager in charge of Manufacturing of theCompany
President, Foster Electric Co., (Heyuan) Ltd.
General Manager, Production of the Company
General Manager, Manufacturing Division, Manager,
Manufacturing Strategy Department of the Company
and Chairman, Foster Electric Co., (Hong Kong) Ltd.
General Manager, Southeast Asia Production of theCompany, President, Foster Electric Co., (Hong Kong)
Ltd. and Chairman, Foster Electric Co., (Heyuan) Ltd.
Managing Director of the Company
Senior Managing Director of the Company (to thepresent)
General Manager in charge of Manufacturing of theCompany, and Managing Director, Foster Electric(Singapore) Pte. Ltd.
China CEO and Managing Director, Foster Electric(Singapore) Pte. Ltd. (to the present)

Apr. 1984
Sep. 1988
Jan. 1990
Sep. 1992
Sep. 1997
Sep. 2000

Joined Nikkei Inc.
Assigned to Bahrain Bureau, Nikkei Inc.
Assigned to London (Europe Headquarter), Nikkei Inc.
Industrial Department, Tokyo Head Office, Nikkei Inc.
Assigned to Beijing (Chinese Headquarter), Nikkei Inc.
Senior Staff Writer, Industrial Department, Tokyo Head
Office, Nikkei Inc.
Mar. 2002 Editorial Writer and newscaster on Nikkei CNBC,
Nikkei Inc.
Mar. 2008 Head of Editorial Office in Asia, Nikkei Inc.
Apr. 2010 Senior Staff Writer, Nikkei Inc.
Mar. 2016 Resigned from Nikkei Inc.
Apr. 2016 Professor, Faculty of Urban Innovation, Asia University(to the present)
Jun. 2017 Outside Corporate Auditor of the Company
Jun. 2020 Outside Director of the Company (to the present)
Jun. 2021 Outside Director of The San-in Godo Bank, Ltd. (to thepresent)
Dec. 2021 Advisor, Hazama Ando Corporation (to the present)

Apr. 1985
Apr. 2003

Joined the Company
Deputy Manager, Engineering Department, CAR
Equipment Division of the Company
Feb. 2006 Manager, Engineering Department No. 2, SP Divisionof the Company
May 2008 Director, Foster Electric Co., (Hong Kong) Ltd.
Jul. 2010 Deputy General Manager, Mobile Audio Business
Division of the Company
Apr. 2011 Deputy General Manager, Engineering Division of theCompany
Jan. 2013 Deputy Manager, Quality Assurance Center andManager, MA Quality Assurance Department of theCompany
Oct. 2013 General Director, Foster Electric (Vietnam) Co., Ltd.
Nov. 2014 Chairman and General Director, Foster Electric(Vietnam) Co., Ltd.
Jun. 2018 Deputy General Manager, SP Business Division of theCompany / Meister
Oct. 2018 Deputy General Manager, SP Business Division andGeneral Manager, Engineering of the Company
Apr. 2019 Executive Officer, Deputy General Manager, SP
Business Division, and General Manager, Engineeringof the Company / Fellow
Aug. 2019 General Manager, Engineering Division and Head ofEngineering of the Company / Fellow (to the present)
Jun. 2021 Director of the Company
Jun. 2023 Managing Director of the Company (to the present)

Managing Director

Hiroki Miura

Independent Director

Kaoru Chujo

Apr. 1983
Mar. 2000

Joined Fujitsu Limited
IP Networking Research Senior Researcher, Fujitsu
Laboratories of America, Inc.
Dec. 2009 General Manager, Advanced Technologies Division,
Mobile Phone Business Unit of Fujitsu Limited
Jun. 2013 General Manager, Advanced Technologies Division,
Ubiquitous Business Strategy Unit of Fujitsu Limited
Feb. 2016 General Manager, Ubiquitous IoT Business Unit of
Fujitsu Limited
Apr. 2017 General Manager, AI Service Business Unit of Fujitsu
LimitedJul. 2019 Executive Director in charge of AI alliance, Software
Business Unit of Fujitsu Limited
Dec. 2020 Founded SoW Insight, Inc., President and CEO (to thepresent)
Jun. 2021 Outside Director, ITOCHU-SHOKUHIN Co., Ltd. (tothe present)
Jun. 2021 Outside Director of the Company (to the present)
Apr. 2022 Outside Director, Mitsubishi UBE Cement Corporation(to the present)

To establish an effective corporate governance system for sustainable growth, the Company nominates Directors with wide ranging business experience and diverse expertise and knowledge. The experience, specialties, etc. of the Company’s directors are as follows.
* Including the climate-change issues
International
Corporate
Manufacturing
Technology/
Legal/
Nominating
Remuneration
experience/
Sales/Marketing
Finance
Sustainability*
Industry knowledge
Namemanagement(Production/Quality)
Development
Risk management
Committee
Committee
Global businessDirector and Chairperson

Atsushi Narikawa

●

●

●

CEO

Kazuhiro Kishi

●

●

●

Senior Managing Director

Lu San Tie●●

Managing Director

Hiroki Miura●●

Managing Director and CFO

Akihito Mochizuki●●

Independent Director

Minoru Matsumoto●

Independent Director

Yasuhiro Goto●

Independent Director

Kaoru Chujo

●

●

●

●

●
●

●
●

●

●

●

●

● (Chairperson)● (Chairperson)

●

●

●

●

●
●

●

●
●

●

●

●
●

●
●

●

49

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Data Section

Sound Management Structure

Corporate Auditor
Standing Corporate Auditor(Independent)

Apr. 1983

Satoko Kimoto

Jul. 2007
Jul. 2008
Jul. 2010
Jul. 2011
Jul. 2014
Jul. 2018
Apr. 2020
Jun. 2020
Jun. 2021

Joined Large Enterprise Examination Division, Large
Enterprise Examination and Criminal Investigation
Department, National Tax Agency
Assistant Regional Commissioner of First Taxation
Department, Kanto-Shinetsu Regional Taxation Bureau
Assistant Regional Commissioner of Planning and
Administration Department, Sendai Regional Taxation
BureauDirector of Consumption Tax Office, Taxation
Management Division, Taxation Department, National
Tax Agency
Director of Information Technology Office, Planning
Division, Commissioner’s Secretariat, National Tax
AgencyVice President, National Printing Bureau
Director-General, Nagoya National Tax Tribunal
Visiting Professor of Graduate School of Accounting &Finance, Chiba University of Commerce
Corporate Auditor of the Company
Standing Corporate Auditor of the Company (to thepresent)

Standing Corporate Auditor

Oct. 1991

Joined Price Waterhouse Aoyama Auditing
Corporation
Assigned to PricewaterhouseCoopers Ho Chi Minh
OfficeJul. 2000 Assigned to PricewaterhouseCoopers Bangkok Office
Jul. 2002 Assigned to PricewaterhouseCoopers Beijing OfficeNov. 2003 Returned to PricewaterhouseCoopers ChuoAoyama
Auditing Corporation (Audit Department No. 1)
Apr. 2005 Joined SoftBank Corp. (Internal Audit Office)Apr. 2007 Joined PricewaterhouseCoopers Aarata Auditing
Corporation (Internal Control Advisory Department)
Oct. 2011 Set up Tatsuhito Tanaka CPA Office (to the present)
Oct. 2011 Joined the Company
Apr. 2014 Executive Officer, General Manager, Administration
Division of the Company
Jan. 2017 Executive Officer, General Manager, Corporate
Management Division of the Company
Jun. 2018 Senior Executive Officer, General Manager, Corporate
Management Division of the Company
Oct. 2021 Senior Executive Officer of the Company, and Advisorof Foster Electric (U.S.A), Inc.
Apr. 2023 Senior Executive Officer of the Company
Jun. 2023 Standing Corporate Auditor of the Company (to thepresent)
Oct. 1998

Tatsuhito Tanaka

Independent Corporate
AuditorTakashi Suzuki

Apr. 1988
Apr. 1988

Registered as an attorney-at-law
Joined Anderson Mōri & Rabinowitz (currently
Anderson Mōri & Tomotsune)Jan. 1996 Established Takashi Suzuki Law Firm
Jun. 1999 Partner, Hamada & Matsumoto (currently Mori
Hamada & Matsumoto)
Sept. 2003 Partner, KYO SOGO LAW OFFICES (to the present)
Oct. 2006 Outside Auditor, MONEY PARTNERS CO., LTD.
(currently MONEY PARTNERS GROUP CO., LTD.)
Jun. 2015 Outside Director (Audit and Supervisory Committee
Member), MONEY PARTNERS GROUP CO., LTD.
Jun. 2015 Supervisory Director, TAKARA LEBENINFRASTRUCTURE FUND, INC. (to the present)
Jun. 2016 Corporate Auditor of the Company (to the present)

Independent Corporate
AuditorAiko Oue

Jan. 2017
Jan. 2017
Apr. 2017
Jan. 2020
May 2020
Jan. 2022
Jun. 2022
Jun. 2022
Jan. 2023

Admitted to Japanese Bar
Entered Nakamoto Law Office
Policy researcher of the Secretariat of the Public
Interest Corporation Commission of the Cabinet Office
Joined Kaikai Kiki Co., Ltd.
Outside Director of Kakiyasu Honten Co., Ltd. (to thepresent)
Returned to Nakamoto Law OfficeOutside Director of Sourcenext Corporation (to thepresent)
Corporate Auditor of the Company (to the present)
Joined JLX Partners (to the present)

Officers
Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Hidetoshi Shirakawa

Yasuhide Takahara

Naoki Kanai

Hiroyuki Asada

Yuji Sakuta

Executive Officer

Executive Officer

Executive Officer (Part-time)

Executive Officer (Part-time)

Executive Officer (Part-time)

Hiroyuki Akutsu

Takashi Asukagawa

Nguyen Quan Hoang

Tan GuiHai

Wong Wing Chung

50

Integrated Report 2023

Introduction

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

External Recognition
Japan

GlobalNew Diversity Management Selection 100 (fiscal 2017)

Certification of Excellent Company in Health: Gold Accreditation

CDP

March 2018: Recognized for our activities to promote diversity and achieve
work-life balance, we were selected as one of
the winners of the New Diversity Management
Selection 100 (fiscal 2017) by the Ministry of
Economy, Trade and Industry.

January 2023: Highly evaluated for our active initiatives to realize healthand productivity management, we received the Certification of Excellent
Company in Health: Gold Accreditation from the Tokyo Promotion Councilfor Healthy Company Declaration in December 2018. The certification has
since been renewed every year.

December 2022: We received “B-: Management Level” both for Climate
Change and Water Security category for the 2022 survey by CDP, a
British non-profit organization that evaluates and discloses information onorganization’s environmental management. (CDP applies an eight-point scaleconsisting of A, A-, B, B-, C, C-, D, and D-.)Top 100 Telework Pioneers (fiscal 2018)
November 2018: To realize a flexible workstyle using ICT that fits individuals’
lifestyles and is free from restrictions such as
time and place, we have introduced the workat-home program and implemented initiatives
to establish the environment. Evaluated forsuch activities, we were selected as one of
the winners of the Top 100 Telework Pioneers(fiscal 2018) by the Ministry of Internal Affairs
and Communications.

“Kurumin” Certification (obtained in 2021)
January 2021: We have been working to enhance programs for helping
employees balance work and family life. These efforts are aimed atcreating an environment where employees with small children can workwith peace of mind, in accordance with the
Act on Advancement of Measures to Support
Raising Next-Generation Children. Because of
these initiatives, we were granted the Kurumin
Certification by the Minister of Health, Labourand Welfare in January 2021, recognized as acompany supporting childcare. We received
this certification for the second time following
2014.

2023 Health & Productivity Management Outstanding
Organization (Large Enterprise Category)March 2023: Recognized for our health and productivity management
initiatives that consider employee’s health from the management perspective
and practice it strategically, we were certified as one of the winners of the2023 Health & Productivity Management Outstanding Organizations (Large
Enterprise Category) by the Ministry of Economy, Trade and Industry andJapan Health Council for the fifth consecutive year since 2019.
(Certified as White 500 in 2019)

Selected as a constituent of the S&P/JPX Carbon Efficient
Indices by the Government Pension Investment Fund (GPIF)
We have been selected as a constituentof the S&P/JPX Carbon Efficient Index(evaluated based on the disclosure status
and results of CO2 emissions data) for thesixth consecutive year, an ESG index which
was adopted by the GPIF since 2018.

EcoVadisNovember 2022: We received a Gold recognition from EcoVadis, France, inrecognition of our sustainability initiatives in the CSR assessment to evaluate
suppliers based on the following categories: Environment, Labor & Human
Rights, Ethics, and Sustainable Procurement.

Selected as a constituent of SOMPO Sustainability Index (fiscal
2022)
March 2022: We have been selected
as a constituent of the SOMPO
Sustainability Index, which is operated
by Sompo Asset Management Co.,
Ltd., for the seventh consecutive year.
The index places weight on the ESG
evaluation by rating firms.

[Surveys from External Organizations]
The Foster Group responds sincerely to the sustainability surveys
received from external investigatory bodies.
In fiscal 2022, we responded to a total of eight surveys, including thesurvey for the Toyo Keizai CSR Ranking, the Nikkei SDGs Management
Survey, the Nikkei Smart Work Management Survey, and a survey onsocially responsible investments by The Good Bankers Co., Ltd. We
will continue to respond to survey requests from external investigatory
bodies with sincerity and make use of the survey results and what welearn from the surveys in initiatives to enhance the corporate value ofthe Foster Group.

51

Integrated Report 2023

Introduction

Strategies for Achieving
Sustainable Growth

Foster’s Value Creation Story

Sound Management Structure

Data Section

Financial Summary (10 years)
Unit

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022Financial Results
Net sales

Million yen

167,640

189,124

190,928

160,896

184,800

140,303107,298

85,22091,106

121,338

Gross profit

Million yen

21,873

26,741

27,052

17,36924,35917,534

14,687

11,1237,484

16,155

%

13.0%

14.1%

14.2%

10.8%

13.2%

12.5%

13.7%

13.1%

8.2%

13.3%

Million yen

6,021

9,747

10,351

2,963

9,307

3,937

2,064

0.7

(7,757)

2,445

%

3.6%

5.2%

5.4%

1.8%

5.0%

2.8%

1.9%

0.0%

(8.5%)

2.0%*1

Million yen

12,462

15,675

15,893

9,885

17,462

8,345

5,223

3,149

(4,548)

6,010

EBITDA margin

%

7.4%

8.3%

8.3%

6.1%

9.4%

5.9%

4.9%

3.7%

(5.0%)

5.0%

ProfitMillion yen

2,321

4,858

6,833

1,088

4,265

(2,026)

1,565(3,363)(7,017)848

Cash flows from operating activities

Million yen

9,469

15,49924,057

4,372

8,153

17,961

11,092739(12,767)

354

Cash flows from investing activities

Million yen(4,249)(4,417)(3,946)(11,089)(7,131)(3,425)516(1,960)(3,071)(1,321)

Free cash flow*2

Million yen

5,220

11,082

20,111(6,717)

1,022

14,536

11,608(1,221)(15,838)(967)

Cash flows from financing activities

Million yen(5,388)(11,513)(6,676)

1,690(2,859)(2,937)(8,823)(2,624)

6,771

1,776

Capital expenditures

Million yen

3,315

3,641

5,843

10,262

5,937

3,994

4,328

2,131

2,749

2,559

Depreciation

Million yen

6,441

5,928

5,542

6,922

8,155

4,408

3,159

3,148

3,209

3,565

R&D expense

Million yen

2,664

2,600

2,714

2,305

2,421

2,380

2,740

2,476

2,619

2,780

Gross profit margin
Operating profit
Operating profit ratio
EBITDAAs of the End of Fiscal Year
Cash and cash equivalents

Million yen

5,836

5,924

17,85812,037

10,15021,52423,93020,37312,08913,646

Interest-bearing debt

Million yen

22,555

14,061

8,761

13,376

11,702

14,605

6,542

5,203

13,366

17,456

Net assets

Million yen

48,60464,94467,01763,901

66,79259,29458,99555,993

51,63256,515Per Share Information
Earnings per share (EPS)

Yen

99.50

206.18255.4441.16

165.78(83.21)

69.15(148.47)(315.53)

38.23

Book value per share (BPS)

Yen

1,944.73

2,279.32

2,350.26

2,316.09

2,412.06

2,404.10

2,369.46

2,276.20

2,125.72

2,302.49

Dividends

Yen

40

40

50

40

55

20

35

15

10

20

Dividend payout ratio

%

40.2%

19.4%

19.6%

97.2%

33.2%

-

50.6%

-

-

52.3%

ROIC*3

%

6.0%

8.5%

13.3%

1.8%

10.3%

3.8%

2.2%

(0.8%)(13.6%)

2.6%

ROE

%

5.4%

9.1%

11.0%

1.8%

7.0%

(3.5%)

2.9%(6.4%)(14.4%)

1.7%

Overseas sales ratio

%

93.9%

94.0%

93.2%

91.2%

91.7%

87.5%

83.7%

79.1%

80.0%

81.3%

Equity ratio

%

46.3%

58.2%

63.7%

58.2%

61.5%

59.5%

66.5%

65.6%

54.7%

55.0%

Yen

100.49110.62119.99108.72110.71111.07108.95105.95113.06136.00

Other Financial Indicators

Foreign Exchange Rates
US dollar exchange rate
(average for the fiscal year)*1 EBITDA = Operating profit + Depreciation*2 Free cash flow = cash flows from operating activities + cash flows from investing activities*3 ROIC = (operating profit - income taxes) ÷ (trade receivables - trade payables + inventories + non-current assets (property, plant and equipment + intangible assets))

52

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Non-financial Data
FOSTER ELECTRIC CO., LTD. (Headquarters)

Consolidated (1)All overseas sites of FOSTER ELECTRIC

Consolidated (2)FOSTER ELECTRIC CO., LTD. (Headquarters), FOSTER BUSINESS SERVICE LTD., FOSTER ELECTRONICS LTD., GUANGZHOU PANYUJIU SHUI KENG FOSTER ELECTRIC FACTORY (* outsourcee), Guangzhou Fourstar Electroacoustic Tech Co.,Ltd, FOSTER ELECTRIC
CO., (NANNING) LTD., FOSTER ELECTRIC CO., (HEYUAN) LTD., FOSTER ELECTRIC CO., (TAIWAN) LTD., FOSTER ELECTRIC (VIETNAM)
CO., LTD., FOSTER ELECTRIC (DA NANG) CO., LTD., FOSTER ELECTRIC (QUANG NGAI) CO., LTD., FOSTER ELECTRIC (BAC NINH)
CO., LTD., FOSTER ELECTRIC (THILAWA) CO., LTD., FOSTER ELECTRIC (U.S.A.), INC. (EL PASO OPERATIONS), FOSTER ELECTRIC(EUROPE) GmbH and group companies

Significant locationsof operations (GRI’s
definition)

Data Section

Japan: Ministry of the Environment, 2018 factor based on CO2 conversion factor of electric power supplier (2020)
Overseas: Fiscal 2018 factor based on IEA CO2 Emissions Factors 2020
Japan/overseas: Factor based on the “Greenhouse gas emissions calculation and report manual” released by the Ministry of the Environment, Ministry of Economy, Trade and Industry.
Global warming potential
Incorporated 100 year value of IPCC Fifth Assessment Report (AR5)
We have set a medium-term target of reducing 50% from a FY2018 base-year by 2030 based on the 1.5-degree target of Science Based Targets.
Net sales:
Amount of consolidated net sales excluding ESTec CORPORATION* The scope of sites, actual sales and per sales unit for FY2019 and thereafter were corrected reflecting revisions of targets and data.
CO2 conversion factor (Fuel)Non-consolidated

Consolidated (4)Sound Management Structure

CO2 conversion factor (Electric)

Boundaries (scopes of reporting) are as follows.

Consolidated (3)Strategies for Achieving
Sustainable Growth

Climate change
Scope 3

FOSTER ELECTRIC CO., LTD. (Headquarters, Shizuoka Office, Osaka Office, Iga Logistics Center), FOSTER BUSINESS SERVICE LTD.,
FOSTER ELECTRONICS LTD., GUANGZHOU PANYU JIU SHUI KENG FOSTER ELECTRIC FACTORY (* outsourcee), Guangzhou Fourstar
Electroacoustic Tech Co., Ltd, FOSTER ELECTRIC CO., (NANNING) LTD., FOSTER ELECTRIC CO., (HEYUAN) LTD., FOSTER ELECTRIC
CO., (TAIWAN) LTD., FOSTER ELECTRIC (VIETNAM) CO., LTD., FOSTER ELECTRIC (DA NANG) CO., LTD., FOSTER ELECTRIC (QUANG
NGAI) CO., LTD., FOSTER ELECTRIC (BAC NINH) CO., LTD., FOSTER ELECTRIC (THILAWA) CO., LTD., FOSTER ELECTRIC (U.S.A.), INC.
(EL PASO OPERATIONS)､ FOSTER ELECTRIC (EUROPE) GmbH and group companies

Unit
Upstream cate- 1. Purchased products and services
gories
2. Capital goods
3. Fuel- and energy-related activities(not included in Scope 1 or Scope2)
4. Upstream transportation anddistribution

FOSTER ELECTRIC CO., LTD. (Headquarters), GUANGZHOU PANYU JIU SHUI KENG FOSTER ELECTRIC FACTORY(* outsourcee), FOSTER ELECTRIC CO., (NANNING) LTD., FOSTER ELECTRIC CO., (HEYUAN) LTD., FOSTER ELECTRIC (VIETNAM) CO.,LTD., FOSTER ELECTRIC (DA NANG) CO., LTD., FOSTER ELECTRIC (QUANG NGAI) CO., LTD., FOSTER ELECTRIC (BAC NINH) CO.,LTD., FOSTER ELECTRIC (THILAWA) CO., LTD., and FOSTER ELECTRIC (U.S.A.), INC. (EL PASO OPERATIONS)
Downstream
categories

Headquarters and nine overseas sites of the Company with large net sales

2020

2021

2022

147,202

117,453

139,466

121,972

8,697

3,573

4,288

4,549

7,591

6,764

6,460

5,601

23,972

16,64020,597

11,5605. Waste generated from operation

2,140

2,189

1,251

932

6. Business trip

1,661

352

321

607

7. Employee commute

4,309

3,562

3,066

2,817

9. Downstream transportation anddistribution

3,206

2,237

2,809

2,316

73,323

155,887

160,565

111,952

11. Use of sold products

Breakdown: FOSTER ELECTRIC CO., LTD. (Headquarters), FOSTER BUSINESS SERVICE LTD., FOSTER ELECTRONICS LTD., FOSTER ELECTRIC
CO., (HONG KONG) LTD., FOSTER ELECTRIC CO., (GUANGZHOU) LTD., FOSTER ELECTRIC CO., (HEYUAN) LTD., FOSTER ELECTRIC(VIETNAM) CO., LTD., FOSTER ELECTRIC (BAC NINH) CO., LTD., ESTec CORPORATION, FOSTER ELECTRIC (U.S.A.), INC. (EL PASO
OPERATIONS), FOSTER ELECTRIC (EUROPE) GmbH and group companies

t-CO2

2019

t-CO2

12. Disposal of sold products

4,945

9,095

2,843

2,139

277,046

317,752

341,667

264,444

Unit

2019

2020

2021

2022

Total consumption

MWh112,299

101,449

97,172

86,046

Total consumption

MWh

-

-

-

1,149

Solar power generation

MWh

-

-

-

1,108

MWh

112,299

101,449

97,172

84,938

Electricity

MWh106,323

95,917

91,82679,700Kerosene

liter

-

-

9,556

8,051

Gasoline

liter

216,155

242,058

178,885

137,869

Light oil

liter

49,92435,06530,142

38,687LPG

kg

104,30277,84988,261

68,840Natural gas

m3

62,264

133,321

151,734

188,027

City gasm3

92,521

10,334

10,813

11,301

2,364

2,834

3,160

2,584

108,401

96,87392,021

81,085

1,534

1,639

1,902

2,302

-

102

89

75

Total

Boundary

GRI
Standards

Consolidated (2)305-3Boundary

GRI
Standards* Results for fiscal 2019 and after were corrected reflecting the addition of sites in the scope.

“-” in the columns for fiscal 2019 to 2021 indicates data that in the past was not disclosed and therefore the columns are left blank.

Consumption of resources● Environment
Environmental investment and environmental conservation cost

Unit

2019

2020

2021

2022

Boundary

GRI
Standards

Energy consumption
within the organization

Costs for measures taken to manage risks and opportunities - total environmental
protection expenditures and investments

Renewable energy

Non-renewable energy Total consumption

Environmental preservation cost (classified by business operations)(1) Business area cost

22,744(1)-1 Pollution prevention costs	Air and water control-related prevention
countermeasures(1)-2 Global environmental
conservation costs

Prevention of global warming andenergy-saving measures(1)-3 Resource circulation costs

Waste disposal and recycling

1,009

Thousand yen(4) R&D costs: Research and development, etc.
(5) Social activity costs

6,971

26,338
3,756

1,587

2,114

3,479

1,632

14,122

18,14920,950

0

0

0

0

7,401

9,685

12,486

13,345

1,729,571

1,554,511

1,597,994

1,587,556

631

207

342

529

0

0

0

0

1,760,346

1,582,533

1,639,421

1,627,768

Tree planting, etc.

(6) Environmental damage handling costs
Total

1,894

28,59920,148(2) Upstream/downstream cost: Green purchasing expenses(3) Administration costs: Environmental education, EMS construction expenses etc.

18,131

Non-consolidated

201-2
Energy consumption within theorganization

Breakdown by site

Asia
North America

Greenhouse gas
emissions

Scope 1
Scope 2
Scope 1+Scope 2

t-CO2

2019

2020

1,501

2021

1,214

2022

1,152

Boundary

Water intake andwastewater

Total

58,564

51,33348,354

41,292t-CO260,06552,54749,50542,375

100 million
yen

876

675

594

731

Emission intensity per unit of reve- (t-CO2/100
nuemillion yen)

69

78

83

58

Carbon dioxide

t-CO2

-

52,54749,50542,375

Methane

t-CO2

-

0.02

0

0

Dinitrogen monoxide

t-CO2

-

0.04

0

0

Net sales

GRI
Standards

Water intake amount

959,622900,313954,475

761,419

Wastewater amount

769,186

721,415

764,924

527,125

Total water consumption

190,436

178,898

189,551

234,295

Water intake amount

9,925

7,635

8,828

9,128

Wastewater amount

9,429

7,253

8,387

8,672

496

382

441

456

947,482

891,080

943,894

750,531757,986

712,882

755,133

517,043

Total water consumption
Asia

1,083

t-CO2

302-1

-

* Calorific Value (Fuel): Japan/Overseas: Factor based on the “Greenhouse gas emissions calculation and report manual” released by the Ministry of the Environment, Ministry of
Economy, Trade and Industry.
* The scope of sites was changed in FY2021.

Japan

Unit

MWh

Europe* “Investment” refers to equipment investments for the purpose of environmental conservation. “Cost” refers to personnel and miscellaneous expenses/costs incurred for environmental
conservation activities.
* The amount invested was 0 in all of the years.

Climate change

Japan

Consolidated (3)Water intake amount
Wastewater amount
Total water consumption

Consolidated (3)302-3,
305-2,
305-5

North America

189,496

178,198

188,761

233,488

Water intake amount

2,215

1,586

1,741

1,748

Wastewater amount

1,772

1,269

1,393

1,398

443

317

348

350

Water intake amount

-

12

12

12

Wastewater amount

-

11

11

11

Total water consumption

-

1

1

1

Total water consumption
Europem3Consolidated (2)303-3,
303-4,
303-5

53

Integrated Report 2023

Introduction

Consumption of resources

Unit

Water resources

Total water consumption
Waterintakeamount

Total

Waste directed todisposal

2019

2020

2021

2022

Boundary

190,436

178,898

189,551

234,295

959,622900,313954,475

761,419

Surface water

-

-

-

-

Groundwater

-

-

-

-

Seawater

-

-

-

-

Produced water

-

-

-

-

959,622900,313954,475

761,419

769,186

721,415

764,924

527,125

Surface water

-

-

-

-

Groundwater

-

-

-

-

Seawater

-

-

-

-

Produced water

-

-

-

-

Third-party water

769,186

721,415

764,924

527,125412.52323.85273.29212.79

75.90

60.64

53.24

52.52

336.62263.21220.05160.10m3

Third-party water
WastewateramountFoster’s Value Creation Story

Total

Hazardous waste direct- Total waste
ed to disposal
Recyclington

Landfill
Non-hazardous waste
directed to disposal

Total waste
Recyclington

Landfill

Procurement (environment)

Unit

Recycled input materials used
* Percentage of recycled materials among all the resin materials purchased
New suppliers that were screened using environmental criteria

3,309.69

3,389.80

3,345.59

4,480.09

2,195.55

2,288.54

2,219.35

3,028.99

1,114.14

1,101.26

1,126.24

1,451.11

2019

2020

2021

2022

%

11

8

7

%

100

100

100

GRI
Standards

Strategies for Achieving
Sustainable Growth

Number of employees

Unit
By region

Consolidated (2)303-3,
303-4,
303-5

Age

Consolidated (4)306-3,
306-5

GRI
Standards

Gender16,275
597

573

China

6,254

5,439

3,649

3,911

13,34012,276

11,91913,356

71

73

78

83

South America

0

0

0

0

Europe, Africa
and Middle East

30

31

32

33

-

-

-

3,405

-

-

-

709

Female

-

-

-

2,696

Less than 30 year
old

-

-

-

4,188

-

-

-

13,077

-

-

-

691

228

517

687

544

-

-

-

215

-

-

-

329

-

-

-

3,949

-

-

-

924

-

-

-

3,025

-

-

-

23

Male

GenderTotal
Male

PeopleFemaleTotal
Male
FemalePeople

2019

2020

2021

2022

598

592

534

503

465

457

407

376

133

135

127

127

20,374

18,49016,275

17,956

3,966

3,821

3,428

3,804

16,408

14,66912,847

14,152PeopleMale
FemaleAll procure9
ment sites

301-2

Number of new
graduates who wererecruited

All procurement sites

308-1

Number and ratio of
new employee hires*2

GRI
Boundary
Standards

PeoplePeopleFemaleGenderGender

%

-

-

-

21

15

7

15

9

10

4

7

2

5

3

8

-

-

17

23

-

-

11

15

Female

-

-

6

8

Total

-

-

3

4
4

Male

PeopleFemale
Total
Male

Age

-

-

2

Female--46Less than 30
year old

-

-

8

15
4

30-50 year old

Non-consolidated
401-1
Consolidated

People

-

-

7

-

-

2

4

Less than 30
year old

-

-

13

23
2

％

-

-

2

Over 50 year old

-

-

1

2

Total

-

-

7,812

5,177

-

-

2,049

1,099

Female

-

-

5,763

4,078

Total

-

-

43

25

-

-

61

26

Female

-

-

39

25

Less than 30
year old

-

-

5,180

3,307

Male

Male

Age

%

Over 50 year old

30-50 year old
GenderPeople30-50 year old

People%People

-

-

2,578

1,853

Over 50 year old

-

-

54

17

Less than 30
year old

-

-

84

61

-

-

23

13

-

-

9

3

30-50 year old
Over 50 year old%

GRI
Standards

17,956

11

Total

Male

Unit

PeopleTotal
Male● Social
Number of employees

PeopleTotal
Male

GenderBoundary

671

FemaleRatio of non-regular
employees (contract
employees + temporary employees)*1

2022

18,490Over 50 year old
Temporaryemployees

2021

679

30-50 year old
Indirectly hired
employees*1

2020

20,374Contract employees
Totalincluded in the above
Gender2019

Data Section

Japan

North America* We distribute our environmental regulations to all the suppliers, update them and obtain environment-related materials.

Directly hired
employees(Number of employees)*1

Total

Asia and Oceania

Boundary

100

Sound Management Structure

2-7

Consolidated
405-1

2-7

-

Non-consolidated-

Non-consolidated

401-1

Consolidated*454

Introduction

Integrated Report 2023

Number of employees
Total employee turnover and turnoverrate*3

Unit
Gender

2019

Total

-

40

-

36

Female

-

-

-

4

Total

-

-

-

8

-

-

-

9

-

-

-

3

30-50 year old%

PeopleOver 50 year old
Less than 30
year old
30-50 year old

-

-

-

5

-

-

-

19

-

-

-

16

%

-

-

Age

Non-consolidated

Less than 30 year old%%

Female401-1

AgeLess than 30 year old
30-50 year old

8

Ratio of female
managers*1

-

-

19

28

-

-

16

24

Female

-

-

3

4

Total

-

-

3

5

-

-

4

6

Female--23Less than 30
year old

-

-

8

5

-

-

7

18

North
America
EuropeProportionof seniormanagement hiredfrom the local
community*1
Non-consolidated

2022

Boundary

78

77

76

75

22

23

24

25

9

9

10

11

49

51

51

47

42

40

39

43

95

93

88

21

5

74

12

79

0

0

0

23

20

24

73

71

80

76

4

%

81

79

79

76

-

%

-

-

9

-

-

-

45

Japan

FOSTER ELECTRIC CO., LTD. (Headquarters)

100

100

100

95

Asia

FOSTER ELECTRIC CO., (HONG KONG) LTD. and groupcompanies

90

78

76

57

75

78

72

80

-

88

90

52

FOSTER ELECTRIC (U.S.A.), INC. and group companies

70

100

100

50

FOSTER ELECTRIC (EUROPE) GmbH and group companies

100

100

100

100

FOSTER ELECTRIC (VIETNAM) CO., LTD. and group companies%

ESTec CORPORATION and group companies

-

2021

29

%

Ratio of women to
junior managers*1

2020

%

Over 50 year old
Ratio of female
employees*1

8People%Male

Data Section

2019

Over 50 year old
Gender7%Male30-50 year old-

PeopleGenderFemale-30-50 year old
Over 50 year old

-

-

2

5

Less than 30
year old

-

-

13

8

Employment rate of persons with disabilities

%

2.2

2.2

2.3

2.1

Ratio of overseas human resources*2

%

11

10

10

11

Nationality with the highest ratio

-

-

-

Japan
(92%)

Nationality with the 2nd highest ratio--- China (4%)

Nationality with the 3rd highest ratio

-

-

-

Vietnam(1%)

Nationality with the 4th highest ratio

-

-

-

Myanmar(1%)

Other nationalities

-

-

-

Others
(2%)

-

-

-

Japan
(94%)

-

-

- China (2%)--- Korea (1%)

Nationality with the 4th highest ratio

-

-

-

Vietnam(1%)

Other nationalities

-

-

-

Others(2%)

30-50 year old

%

-

-

2

7

-

-

1

2

-

-

9,455

6,433

-

-

1,967

1,368

Female

-

-

7,488

5,065

Total

-

-

52

32

-

-

58

32

Female

-

-

51

31

Less than 30
year old

-

-

5,137

3,782

Over 50 year old
Total
Male

Male

30-50 year old

People%People

-

-

4,169

2,482

Over 50 year old

-

-

149

169

Less than 30
year old

-

-

37

70

30-50 year old%

Over 50 year old

-

-

24

17

-

-

52

25

*1 As of March 31 of each year
New employee hires for the period from
April 1 to March 31 (of the following year)
Total number of employees as of April 1 of each year
*3 Employee turnover rate =Diversity of employees

-

Male

Unit

*1

-

Total

Sound Management Structure

Diversity and Inclusion

-

Male

*2 New employee hires rate =GRIStandards

Strategies for Achieving
Sustainable Growth-Over 50 year old

AgeBoundary-Less than 30
year old

Gender2022-

PeopleFemale

Age

2021

-

Male

GenderResignations for
personal reasons included in the above

2020
-

Male

Age

Foster’s Value Creation Story

Employee turnover for the period from
April 1 to March 31 (of the following year)
Total number of employees as of April 1 of each year

*4 Figures for new employee hires, employee turnover, and turnover rate tend to be high at manufacturing sites because staff are assigned in accordance withchanges in production volume.

Nationalities of non-Japaneseemployees and their ratios

Consolidated*4

401-1

PeopleNationalities of managers and their
Nationality with the highest ratio
ratios*2
Nationality with the 2nd highest ratio
Nationality with the 3rd highest ratio

PeopleGRIStandards

Non-consolidated
405-1
Consolidated

405-1
Consolidated-

Significant
locationsofoperations

202-2

Non-consolidated

405-1
405-1

Non-consolidated-*1 As of March 31 of each year
*2 Officers are included in the scope.

Parental Leave

Unit

Parental leave*1 Number of employees entitled to parental Total
leave
Male

People*2

FemaleNumber of employees who took childcare Total
leave
Male

People*3

FemaleNumber of employees who returned to
work

Total
Male
FemalePeople*4

2019

2020

2021

19,69017,29916,269*6

2022

Boundary

GRI Standards

Consolidated

401-3

17,879

3,445

3,676

3,419

3,757

16,245

13,623

12,84014,122

1,866

1,177

981

624

203

174

109

75

1,663

1,003

872

549

1,574

1,036

896

540

204

173

107

77

1,370

863

789

463

55

Introduction

Integrated Report 2023

Parental Leave

Unit

Number of retained employees

Total
Male

People*5

FemaleReturn to work rate

2019

Retention rate

%*4

2020

2021

2022

Boundary

1,575

1,069

803

436

163

172

146

64

1,412

897

657

372

92

93

95

90

Total
Male

Foster’s Value Creation Story

100

99

99

99

Female

91

92

94

89

Total

74

63

76

65

71

82

91

83

73

61

76

63

54.5

30.0

57.1

62.5

Male

*5

%

FemaleRatio of male employees taking parental
leave

%

GRI Standards

Work-related
injuries

Work-related fatalities

Unit
Total

Consolidated

Non-consolidated

Work hours
401-3

2021

2022

0

0

0

Indirectly hired employees

0

0

0

0

Total

0

0

0

0

0

0

0

0

0

0

0

0

-

-

-

-

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0

0

0

0

0

0

0

0

Indirectly hired employees

0

0

0

0

Total

1

1

0

1

1

1

0

1

0

0

0

0

-

Bone
fracture-Bonefracture

0.00

0.03

0.00

0.00

0.00

0.00

0.00

0.00

1

0

0

1

Indirectly hired employees

Occupational accident frequen- Directly hired employees
cy rate*1
Indirectly hired employees
High-consequence work-related Total
injuries
Directly hired employees

Directly hired employees

PeoplePeopleIndirectly hired employees
Main causes of work-related
injuries
Occupational accident frequen- Directly hired employees
cy rate*2
Indirectly hired employees
Total
Directly hired employees

1

0

0

1

Indirectly hired employees

0

0

0

0

Total

46

30

46

31

46

28

43

30

0

2

3

1

Directly hired employees
Indirectly hired employees
Main causes of work-related
injuries

2020

0

Main causes of work-related
injuries

PeoplePeopleDirectly hired employees

Hours

2020

2021

2022

1.01

0.72

1.42

0.00

1.93

3.21

0.86

46,953,372

40,117,513

31,181,654

43,614,577

Boundary

GRI
Standards

Consolidated

403-9

Consolidated

403-10Boundary

GRI
Standards

0.71

46,396,637

39,082,494

30,246,026

42,456,140

Indirectly hired employees

556,734

1,035,019

935,627

1,158,437

Frequency Directly hired employees
rateIndirectly hired employees

1.03

0.74

1.19

1.78

0.00

1.93

3.21

0.86

Directly hired employees

-

-

-

0.01

Indirectly hired employees

-

-

-

0.00

Severity
rate*4-

GRI
Boundary
Standards
0

People

2019

Total

Number of fatalities as a result of work-related injury × 1,000,000*1 Rate of fatalities as a result of work-related injury =0

Directly hired employees

Unit

Data Section* Injuries while commuting were excluded from occupational accidents for fiscal 2020.

0PeopleHealth and Safety

Total of all occupational accidents

0

Directly hired employees

Recordable work-related injuries

2019Sound Management Structure

Occupational accident frequen- Directly hired employees
cy rate*3
Indirectly hired employees*1 The employees who have taken parental leave who are assigned to overseas sites are counted locally.
*2 Total number of employees that were entitled to parental leave during the reporting period*3 Total number of employees that were entitled to and took parental leave during the reporting period*4 Employees due to and did return to work after parental leave*5 Employees retained 12 months after returning to work following a period of parental leave in the prior reporting period*6 Values for fiscal 2021 were corrected.

Health and Safety

Strategies for Achieving
Sustainable GrowthBone fracture,
Bone fracture, Bone fracture, Cutting, bruise, cut, bruise,
cutting, bruise, cutting, bruise, sprain, burn, sprain, chemicalsprain, etc.
sprain, etc.
etc.
ocular injury,etc.

*2 Rate of high-consequence work-related injuries =(excluding fatalities)

Number of hours worked
Number of high-consequence work-related injuries (excluding fatalities) × 1,000,000
Number of hours worked
Number of recordable work-related injuries × 1,000,000*3 Rate of recordable work-related injuries =Number of hours worked

Non-consolidated

Total number of lost workdays x 1,000*4 Severity rate =Work-related
ill health

Consolidated

Non-consolidated

403-9
Consolidated

Total number of hours worked
Fatalities Total

0

0

0

0

0

0

0

0

Indirectly hired employees

0

0

0

0

Number Totalof people
in ill health Directly hired employees

0

0

0

0

0

0

0

0

Indirectly hired employees

0

0

0

0

Main reasons for work-related ill health

-

-

-

-

Directly hired employees

Human Resource Development
Average hours of training per year per employee

People

Unit

2022

14

13

11

21

12

11

25

15

15

11

20

62

12

9

10

Regular employees

2

13

12

23

Total

19

17

17

21

21

20

16

25

18

16

17

20

Management

21

31

31

10

Regular employees

19

16

16

22

Total

92

96

96

95

Male

93

96

98

96

86

94

91

91

Management

92

98

100

99

Regular employees

92

95

95

93

Total

48

50

53

47

61

98

70

61

45

95

49

43

Management

73

85

95

33

Regular employees

47

49

52

50

FemalePercentage of employees receiving regularperformance and career development reviews

2021

14
Hours

Male

Consolidated

2020

Male

Management

Non-consolidated

2019

Total

FemaleConsolidated

PeopleFemale

Hours

%

Male
Female%Non-consolidated

404-1

Consolidated

Non-consolidated

404-3

Consolidated

56

Introduction

Integrated Report 2023

Human Resource Development

Unit

Deviation value of engagement survey

Deviation
value

Measures related to human rights

Unit

Employee training on human rights policies or procedures Total hours

Hours

Ratio of employees who
received the training

Security personnel trained in human rights policies or procedures

Foster’s Value Creation Story

2019
-

2019

-

2020

Expenses
for social
contribution
activities

Expenses for
activities

Philanthropy
expense ratios

Unit
Total
Cash donations
Voluntary activities by employees
In-kind donations
Indirect management costs
Philanthropic donations
Community investment
Expenses for promotional activities

Payments and benefits
Wage gap
between men
and women at
headquarters

-

2021

51.8

2022

1,121

726

46,859103,799

66,59455,506

59

100

100

100

87

96

95

85

100

100

100

100

2019

98

2020
-

Million
yen

%

Unit

2022

115

91

Social Contribution

2021

521

%

%

2020

2019

98

2021
-

2020

2022
-

2021

GRI
Standards

Non-consolidated-

Boundary

GRI
Standards

Non-consolidated
Consolidated
Non-consolidated
Consolidated
Non-consolidated
Consolidated

Boundary
10
8
0
1
0
44
30
26

2022

Consolidated

-

-

-

-

102

-

Payments and benefits
Benefits provided
to full-time
employees thatare not provided
to temporary or
part-time employees
Ratios of stanJapan
dard entry level
Asia
wage to local
minimum wage
* Same ratio formen and womenNorth
America
Europe410-1

GRI
Standards

-

-

84

77

-

-

100

107

-

-

97

96

-

-

88

85

-

-

- *2

- *2

-

-

-

Unit

FOSTER ELECTRIC CO., LTD. (Headquarters)
FOSTER ELECTRIC CO., (HONG KONG) LTD. andgroup companies
FOSTER ELECTRIC (VIETNAM) CO., LTD. and groupcompanies
ESTec CORPORATION and group companies
FOSTER ELECTRIC (U.S.A.), INC. and group companies
FOSTER ELECTRIC (EUROPE) GmbH and groupcompanies

Procurement (Social)
Proportion of
spending on
local suppliers*1

GRI
Standards

2020

2021

2022

Boundary

Retirement allowance

Non-consolidated

Life insurance, disability and illness compensation, medical insurance, parental leave, retirement allowance, etc.

Consolidated

105

107

108

108

112

102

113

130

105

109

119

117

-

124

118

120

103

100

114

128

114

116

116

116

%

Unit

2019

2020

2021

2022

GRI
Standards

401-2

Significant
locationsofoperations

202-1

Boundary

GRI
Standards

Manufacturing in
China*1

Percentage of materials that are procured
locally in China

%*2

88

89

90

83

-

Manufacturing in
ASEAN countries*1

Percentage of materials that are procured
locally in ASEAN countries

%*2

64

65

70

73

-

100

100

100

All procurement sites

414-1

Boundary

GRI
Standards

204-1

%

100

● Governance
GovernanceDiversity of governance bodyNon-consolidated

2019

Data Section*1 Local / Significant locations of operation: The above-mentioned areas where Foster’s manufacturing sites reside.
*2 Indicates the percentage in transaction amount for material procurement with corporations in above sites.

Unit
GenderMale
FemaleAgeLess than 30 yearold
30-50 year old%%

Over 50 year old

93-Sound Management Structure

New suppliers that were screened using social criteria

Boundary

Basic salary
Total amountof remuneration
77.0
77.9
70.7

FOSTER ELECTRIC CO., LTD. (Headquarters)%*1
Gender wage gap among all employees
Gender wage gap among regular employees
Gender wage gap among contract employees
Ratio of basic
Directly hired employees - Managers
salary and reJapanFOSTER ELECTRIC CO., LTD. (Headquarters)
muneration of
Asia
FOSTER ELECTRIC CO., (HONG KONG) LTD. andwomen to mengroup companies
FOSTER ELECTRIC (VIETNAM) CO., LTD. and groupcompanies%*1
ESTec CORPORATION and group companies
USA
FOSTER ELECTRIC (U.S.A.), INC. and groupcompanies
EuropeFOSTER ELECTRIC (EUROPE) GmbH and groupcompanies
Directly hired employees - Non-management employees
Japan
FOSTER ELECTRIC CO., LTD. (Headquarters)
Asia
FOSTER ELECTRIC CO., (HONG KONG) LTD. andgroup companies
FOSTER ELECTRIC (VIETNAM) CO., LTD. and groupcompanies%*1
ESTec CORPORATION and group companies
USA
FOSTER ELECTRIC (U.S.A.), INC. and groupcompanies
EuropeFOSTER ELECTRIC (EUROPE) GmbH and groupcompanies*1 Ratio of the amount paid to women to the amount paid to men with the amount paid to men set at 100*2 Calculation is impossible because only people of one gender work in the location.

100

Boundary

Strategies for Achieving
Sustainable Growth

GenderMale
FemaleAgeLess than 30 yearold
30-50 year old%%

Over 50 year old

405-2
Attendance rate

Board of Directors
Nominating Committee

100

Significant
locationsofoperations
81

-

111

95

Board of Corporate
Auditors

-

-

100

90

-

-

91

93

-

-

86

96

-

-

100

100

Remuneration Committee

Communication and training on
Governance body members
anti-corruption policies and procedures.

%

2019

2020

2021

2022

96

92

92

86

4

8

8

14

0

0

0

0

4

4

4

18

96

96

96

82

94

93

88

92

6

7

12

8

0

0

0

0

22

20

24

26

78

80

76

74

-

-

-

100

-

-

-

94

-

-

-

100
100

-

-

-

Total*

26

26

27

24

%*

100

100

100

100

Total*

83

81

88

86

%*

84

88

81

93

Non-consolidated

405-1

Consolidated-

Non-consolidated

-

205-2

Consolidated (1)* Total number and percentage of notifications on anticorruption related organizations policies and procedures.
Operations assessed for risks related to corruption

Total

13

13

13

12

%

72

72

72

67

-

205-1

57

Introduction

Integrated Report 2023

Governance

Unit

Foster’s Value Creation Story

2019

2020

2021

2022

Boundary

GRI
Standards

Substantiated complaints concerning breaches of customer privacy and losses ofcustomer data

Strategies for Achieving
Sustainable Growth

Employees

PP. 53-60-

Non-financial Data
` Securities Report (available in Japanese)

2-8

Workers who are not employees

PP. 53-60-

Non-financial Data
` Securities Report (available in Japanese)

2-9

Governance structure and composition

PP. 43-48
P. 49-

Governance
Officers` Securities Report (available in Japanese)` Corporate Governance Guidelines (available inJapanese)

2-10

Nomination and selection of the highest
governance body

PP. 43-48
P. 49-

Governance
Officers` Securities Report (available in Japanese)

2-11

Chair of the highest governance body

PP. 43-48
P. 49-

Governance
Officers` Securities Report (available in Japanese)

2-12

Role of the highest governance body inoverseeing the management of impacts

PP. 21-25
PP. 26-27
PP. 43-48-

Foster Electric’s Sustainability
Initiatives on Natural Capital: (1)TCFD
Governance` Securities Report (available in Japanese)` Corporate Governance Guidelines (available inJapanese)

2-13

Delegation of responsibility for managing
impacts

PP. 21-25
PP. 43-48

Foster Electric’s Sustainability
Governance

2-14

Role of the highest governance body insustainability reporting

PP. 21-25

Foster Electric’s Sustainability

2-15

Conflicts of interest

2-16

Communication of critical concerns

PP. 43-48
PP. 53-60

GovernanceNon-financial Data

GRI 1: Foundation 2021

2-17Collective knowledge of highest governancebody

PP. 21-25
PP. 53-60

Foster Electric’s Sustainability
Non-financial Data

-

2-18

Evaluation of the performance of the highest
governance body

PP. 43-48-

Governance` Securities Report (available in Japanese)

2-19

Remuneration policies

PP. 43-48-

Governance` Securities Report (available in Japanese)

2-20

Process to determine remuneration

PP. 43-48-

Governance` Securities Report (available in Japanese)

2-21

Annual total compensation ratio

2-22

Statement on sustainable development
strategy

2-23

Policy commitments

PP. 21-25
PP. 28-31-

Foster Electric’s Sustainability
Initiatives on Natural Capital: (2) Environment` Corporate Action Guidelines` Code of conduct for staff

2-24

Embedding policy commitments

PP. 21-25
PP. 32-35

Foster Electric’s Sustainability
Initiatives on Social and Relationship Capital

2-25

Processes to remediate negative impacts

PP. 43-48

Governance

2-26

Mechanisms for seeking advice and raisingconcerns

PP. 43-48

Governance

-

-

0

-

-

-

0

-

-

-

0

0

0

0

0

Non-compliance with laws and regulations

Total

0

0

0

0

Non-compliance with environmental
laws and regulations

0

0

0

0

0

0

0

0

0

0

0

0

Violation of customer privacy

0

0

0

0

Non-compliance regarding productinformation and labeling

0

0

0

0

Marketing communications

0

0

0

0

Long working hours and unfair dismissal

0

0

0

0

Human rights violations and harassment

0

0

0

0

Non-compliance regarding corrupt
practices

Cases

Non-compliance regarding customer
health and safety

-

418-1

3. GovernanceConsolidated

2-27,
205-3,
406-1,
416-2,
417-2,
417-3,
418-1* There were no financial penalties or surcharges incurred due to non-compliant practices.
Total

0

0

0

0

Lobbying activities

0

0

0

0

0

0

0

0

Trade associations

0

0

0

0

Others0000

Political activities

Yen

Non-consolidated-

GRI content index
Foster Electric Company, Limited has reported in accordance with the
GRI Standards for the period from April 1, 2022 to March 31, 2023.

Applicable GRI Sector Standard(s)GRI 2: General Disclosures 2021
Disclosures

GRI Standards
1. The organizationand its reporting
practices

1. The organizationand its reporting
practices

No.

Disclosure item

Where the information is disclosed
Refer toThis report and corporate website

P. 61
-

Corporate Overview / Stock Information` Securities Report (available in Japanese)

Entities included in the organization’ssustainability reporting-` Securities Report (available in Japanese)

2-3

Reporting period, frequency and contact point

P. 1-

Contents/Editorial Policy` Securities Report (available in Japanese)

2-4

Restatements of information

PP. 53-58

Non-financial Data
(Information including changes in scope isdisclosed.)

2-5

External assurance

2-1

Organizational details

2-2This report and corporate website
Foster’s BusinessInitiatives on Social and Relationship Capital` Securities Report (available in Japanese)

2-7

Cases

-

Compliance with public laws, regulations and other rules

GRI 1 used

Where the information is disclosed
Refer toActivities, value chain and other business
relationships

Total number of identified leaks, thefts, orlosses of customer data

Statement of use

Disclosure item

2-6Complaints from regulatory bodies

Political
contributions

No.

Data Section

P. 10
PP. 32-35-

Complaints received from outside parties
and substantiated by the organization

Non-compliance with laws and regulations

Disclosures

GRI Standards
2. Activities andworkers

Sound Management Structure-(External assurance not received)

4. Strategy, policies
and practices

P. 49
-

P. 5
P. 21

Officers` Securities Report (available in Japanese)` Corporate Governance Guidelines (available inJapanese)

Message from the CEO
Foster Electric’s Sustainability

58

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Disclosures

GRI Standards

No.

Disclosure item

4. Strategy, policies
and practices

2-27Compliance with laws and regulations

2-28

Membership associations

5. Stakeholder
engagement

2-29

Approach to stakeholder engagement

2-30

Collective bargaining agreements

Where the information is disclosed
Refer toPP. 53-60
PP. 36-42-

This report and corporate website
Non-financial Data

Strategies for Achieving
Sustainable Growth

GRI Standards
GRI 207: Tax 2019-

GRI 3: Material Topics 2021
Disclosures

GRI Standards

No.

Disclosure item

Where the information is disclosed
Refer toProcess to determine material topics

PP. 21-25

Foster Electric’s Sustainability

3-2

List of material topics

PP. 21-25

Foster Electric’s Sustainability

Management of material topics

PP. 21-25
PP. 26-31
PP. 32-35
PP. 36-42
PP. 43-48

Foster Electric’s Sustainability
Initiatives on Natural Capital
Initiatives on Social and Relationship Capital
Efforts on Human Capital
Governance

EconomyGRI Standards
GRI 201: Economic
Performance 2016

Disclosures
No.
201-1

Direct economic value generated anddistributed

201-2

Financial implications and other risks andopportunities due to climate change

201-3

201-4

GRI 202: Market
Presence 2016

GRI 203: Indirect
Economic Impacts
2016

Disclosure item

Defined benefit plan obligations and otherretirement plans

Financial assistance received from government

PP. 53-60

-

207-4

Country-by-country reporting-` Securities Report (available in Japanese)

GRI 302: Energy
2016

GRI 303: Water andEffluents 2018

Disclosures
No.

Disclosure item

Where the information is disclosed
Refer to-This report and corporate website

301-1

Materials used by weight or volume301-2

Recycled input materials used

301-3

Reclaimed products and their packaging
materials

-

302-1

Energy consumption within the organization

PP. 53-60

302-2

Energy consumption outside of the organization

302-3

Energy intensity

PP. 53-60

Non-financial Data

302-4

Reduction of energy consumption

PP. 53-60

Non-financial Data

302-5

Reductions in energy requirements of products
and services

P. 30

Environmentally Friendly Products

303-1

Interactions with water as a shared resource

P. 30

Environmental Activities

P. 30

Environmental Activities

PP. 53-60-

Non-financial Data
Non-financial Data-

Non-financial Data

-

303-4

Water discharge

PP. 53-60

Non-financial Data

303-5

Water consumption

PP. 53-60

Non-financial Data

Operational sites owned, leased, managed in,or adjacent to, protected areas and areas ofhigh biodiversity value outside protected areas

-

-

304-2

Significant impacts of activities, products, andservices on biodiversity

-

-

304-3

Habitats protected or restored

-

-

304-4

IUCN Red List species and national
conservation list species with habitats in areas
affected by operations

-

-

305-1

Direct (Scope 1) GHG emissions

PP. 53-60

Non-financial Data

305-2

Energy indirect (Scope 2) GHG emissions

PP. 53-60

Non-financial Data

Non-financial Data

305-3

Other indirect (Scope 3) GHG emissions

PP. 53-60

Non-financial Data

Initiatives on Social and Relationship Capital
Non-financial Data

305-4

GHG emissions intensity

PP. 53-60

Non-financial Data

305-5

Reduction of GHG emissions

PP. 53-60

Non-financial Data

-

305-6

Emissions of ozone-depleting substances (ODS)

-

-

305-7

Nitrogen oxides (NOx), sulfur oxides (SOx), andother significant air emissions--

Infrastructure investments and services
supported

P. 42
PP. 53-60

PP. 53-60

205-2

Communication and training on anti-corruption
policies and procedures.

PP. 32-35
PP. 53-60

205-3

Confirmed incidents of corruption and actions
taken

-

Legal actions for anti-competitive behavior,anti-trust, and monopoly practices-

PP. 53-60

203-1

GRI 206: Anticompetitive Behavior 206-1
2016

207-3

Water withdrawal

Non-financial Data

Operations assessed for risks related tocorruption

-

303-3

PP. 53-60

205-1

-

Stakeholder engagement and management ofconcerns related to tax

201-4-a, 201-4-b
ii. Subsidies
Total amount of employment adjustment subsidy
and other subsidies received at sites in Japanand South Korea: ¥75 million (Japan: ¥66
million, South Korea: ¥8 million)

Proportion of senior management hired fromthe local community

GRI 205: Anticorruption 2016

Tax governance, control, and risk management

303-2

202-2

Proportion of spending on local suppliers

207-2` Securities Report (available in Japanese)

Non-financial Data

204-1

Our Stance on Tax Matters-

PP. 53-60

Significant indirect economic impacts

P. 48

This report and corporate website

Approach to tax

Management of water discharge-related
impacts

Ratios of standard entry level wage by gendercompared to local minimum wage

203-2

GRI 301: Materials
2016` Securities Report (available in Japanese)

202-1

GRI 204:
Procurement
Practices 2016

GRI Standards

This report and corporate website

Non-financial Data

Where the information is disclosed
Refer toEnvironment

Where the information is disclosed
Refer toDisclosure item

Data Section

207-1

This report and corporate website

3-1

3-3

Disclosures
No.

Efforts on Human Capital-Sound Management Structure-

GRI 304: Biodiversity
2016
304-1

Social Contribution and Philanthropy
Non-financial Data-

GRI 305: Emissions
2016

59

Introduction

Integrated Report 2023

GRI Standards
GRI 306: Waste
2020

GRI 308: Supplier
Environmental
Assessment 2016

Foster’s Value Creation Story

Disclosures
No.

Disclosure item

Where the information is disclosed
Refer toThis report and corporate website

306-1

Waste generation and significant waste-related
impacts

-

-

306-2

Management of significant waste-related impacts

-

-

306-3

Waste generated

306-4

Waste diverted from disposal

-

306-5

Waste directed to disposal

PP. 53-60

Non-financial Data

308-1

New suppliers that were screened using
environmental criteria

PP. 53-60

Non-financial Data

308-2

Negative environmental impacts in the supply
chain and actions taken

PP. 53-60-

Strategies for Achieving
Sustainable Growth

GRI Standards-

No “Negative environmental impacts in the supply
chain and actions taken,” according to the results of
CSR self-assessments containing these questions

Disclosures

405-1

Diversity of governance bodies and employees

PP. 53-60

Non-financial Data

405-2

Ratio of basic salary and remuneration of
women to men

PP. 53-60

Non-financial Data

406-1

Incidents of discrimination and corrective
actions taken--

Operations and suppliers in which the right tofreedom of association and collective bargaining
may be at risk-

No “Operations and suppliers in which theright to freedom of association and collective
bargaining may be at risk,” according to theresults of CSR self-assessments containing
these questions

408-1

Operations and suppliers at significant risk forincidents of child labor-

No “Operations and suppliers at significant risk
for incidents of child labor,” according to theresults of CSR self-assessments containing
these questions

409-1

Operations and suppliers at significant risk forincidents of forced or compulsory labor-

No “Operations and suppliers at significant risk
for incidents of forced or compulsory labor,”
according to the results of CSR self-assessments
containing these questions

GRI 410: Security
2016

410-1

Security personnel trained in human rights
policies or procedures

PP. 53-60

GRI 411: Rights ofIndigenous Peoples
2016

411-1

Incidents of violations involving rights ofindigenous peoples

-

413-1

Operations with local community engagement,
impact assessments, and development
programs

P. 42

413-2

Operations with significant actual and potential
negative impacts on local communities

-

414-1

New suppliers that were screened using social
criteria

PP. 53-60

414-2

Negative social impacts in the supply chain andactions taken-

GRI 415: Public
Policy 2016

415-1

Political contributions

GRI 416: Customer
Health and Safety
2016

416-1

Assessment of the health and safety impacts ofproduct and service categories

416-2

Incidents of non-compliance concerning thehealth and safety impacts of products andservices

417-1

Requirements for product and service
information and labeling

417-2

Incidents of non-compliance concerning
product and service information and labelingPP. 53-60

Non-financial Data

417-3

Incidents of non-compliance concerningmarketing communications

PP. 53-60

Non-financial Data

418-1

Substantiated complaints concerning breachesof customer privacy and losses of customerdata

PP. 53-60

Non-financial Data

GRI 407: Freedomof Association andCollective Bargaining 407-1
2016
GRI 408: Child Labor
2016

SocialGRI Standards
GRI 401:
Employment 2016

GRI 402: Labor/
Management
Relations 2016
GRI 403:
Occupational Healthand Safety 2018

GRI 404: Training
and Education 2016

Disclosures
No.

Disclosure item

Where the information is disclosed
Refer toThis report and corporate website

401-1

New employee hires and employee turnover

PP. 53-60

Non-financial Data

401-2

Benefits provided to full-time employees thatare not provided to temporary or part-time
employees

PP. 53-60

Non-financial Data

401-3

Parental Leave

PP. 53-60

Non-financial Data

402-1

Minimum notice periods regarding operationalchanges-

The minimum notices are given according to thelaw of the countries / regions.

403-1

Occupational health and safety management
system

PP. 40-41

4. Health and Safety

403-2

Hazard identification, risk assessment, andincident investigation

PP. 40-41

4. Health and Safety403-3

Occupational health services

PP. 40-41

4. Health and Safety

403-4

Worker participation, consultation, andcommunication on occupational health andsafetyPP. 40-41

4. Health and Safety

403-5

Worker training on occupational health andsafetyPP. 40-41

4. Health and Safety

403-6

Promotion of worker health

P. 39
PP. 40-41

3. Labor (Labor Practices and Decent Work)
4. Health and Safety

403-7

Prevention and mitigation of occupational healthand safety impacts directly linked by business
relationships

PP. 40-41

4. Health and Safety

403-8

Workers covered by an occupational health andsafety management system

PP. 40-41

4. Health and Safety

403-9

Work-related injuries

PP. 40-41
PP. 53-60

4. Health and Safety
Non-financial Data403-10Work-related ill healthPP. 40-41
PP. 53-60

4. Health and Safety
Non-financial Data

404-1

Average hours of training per year per employee

PP. 53-60

Non-financial Data

404-2

Programs for upgrading employee skills andtransition assistance programs

PP. 36-37

1. Human Resource Development

404-3

Percentage of employees receiving regularperformance and career development reviews

PP. 53-60

Non-financial Data

Where the information is disclosed
Refer toGRI 406: Nondiscrimination 2016

No.

Data Section

Disclosure item

GRI 405: Diversity
and Equal
Opportunity 2016

Non-financial Data

Sound Management Structure

GRI 409: Forced orCompulsory Labor
2016

GRI 413: Local
Communities 2016

GRI 414: SupplierSocial Assessment
2016

GRI 417: Marketingand Labeling 2016

GRI 418: Customer
Privacy 2016

PP. 53-60-

PP. 53-60-

This report and corporate website

Non-financial Data-

Social Contribution and Philanthropy

Non-financial Data
No “Negative social impacts in the supply chain
and actions taken,” according to the resultsof CSR self-assessments containing thesequestionsNon-financial Data-

Non-financial Data-

60

Introduction

Integrated Report 2023

Foster’s Value Creation Story

Strategies for Achieving
Sustainable Growth

Sound Management Structure

Data Section

Corporate Overview / Stock Information
Corporate Overview (as of March 31, 2023)

Stock Information
Stock Information (as of March 31, 2023)

Company Name Foster Electric Company, Limited
June 20, 1949

FoundedTotal number of sharesauthorized to be issued
by the Company

Common Stock 6,770,360,135 yen
The Prime Market of the Tokyo Stock Exchange

会社概要・株式情報80,000,000 shares1-1-109, Tsutsujigaoka, Akishima City, Tokyo, 196-8550
会 社概要(2023年3月31日現在)
Phone: +81-42-546-2311(main
number)Headquarters

年度株価の推移

4.0 %Distribution of Shareholders
by Shareholder Type

Foreignentities, etc.

21.7%

Total number ofshares issued

Major Shareholders

Financial
institutions

45.2%

Shareholder’s Name

The Master Trust Bank of Japan, Ltd. (trust account)

Individuals
and others

20.8%

15,493 (Number includes our outsourcee
in Panyu, China)
25,000,000 shares
フォスター電機株式会社

Employees

商号
英文商号
創業
資本金

Foster Electric Company., Limited
Securities companies 9.0%
Number of shareholders
1949年6月20日
Domestic corporations, etc. 3.3%
7,252
* Excluding treasury stock
6,770,360,135円
東京証券取引所 プライム市場
Foster’s Global Network〒196-8550 東京都昭島市つつじが丘1-1-109
本社
電話 042-546-2311(代表)
The Group operates 37 bases in 12 countries
worldwide
as bases for development, manufacturing, and sales activities.
15,493名（中国・番禺の製造委託先を含む）
従業員and regions
Sales/Development Bases

Sales Bases

Manufacturing Bases

Number of Shares Held

OthersRatio of Shares Held(thousands)

(%)

4,601

20.5

Custody Bank of Japan, Ltd. (trust account)

2,499

11.1

JPMorgan Securities Japan Co., Ltd.

1,290

5.7

Mizuho Bank, Ltd.

1,016

4.5

MUFG Bank, Ltd.

945

4.2

Morgan Stanley MUFG Securities Co., Ltd.

502

2.2

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

411

1.8

Mizuho Trust & Banking Co., Ltd.

405

1.8

NOMURA PB NOMINEES LIMITEDOMNIBUS-MARGIN (CASHPB)

392

1.7

BNP PARIBAS LUXEMBOURG/2S/JASDEC/FIM/
LUXEMBOURGFUNDS/UCITS ASSETS

337

1.5

Treasury stock (2,649,824 shares) is excluded for the calculation of the “Ratio of Shares Held.”フォスターのグローバルネットワーク
EUROPE3

全世界12ヵ国・地域、37か所に開発・製造・販売拠点を展開しています。
bases

JAPAN

8

bases

株
価の推Price
移
Share
Trend
AMERICAS

6
ASIA

bases

FosterElectric
フォスター電機

150

TOPIX

Thousand shares
千株

5
4

100

3

(excluding Japan)

20

bases

2

50

1
0

0

WebsiteWebサイトのご案内

FOSTER ELECTRIC CO., LTD. website
Japanese version
https://www.foster.co.jp/
フォスター電機株式会社ホームページ
English version
https://www.foster-electric.com/
日本語版 https://www.foster.co.jp/

Highestprice
最高値

Investor Relations
Japanese version

最安値
Lowestprice

English version

英語版
https://www.foster-electric.com/
Sustainability      Japanese version English version

FY20192019年度FY20202020年度FY20212021年度FY2022
2022年度

2,137 yen 1,592円
1,592 yen 1,344円
1,344 yen -----円
1,207 yen
2,137円
631円
850円
850 yen 1,005円
1,005 yen
631 yen ----円 657 yen

株主・投資家情報
日本語版

英語版

サステナビリティ
日本語版 英語版

61FOSTER ELECTRIC CO., LTD.

Foster Electric Company, Limited
1-1-109 Tsutsujigaoka, Akishima City, Tokyo, 196-8550, Japan
Phone: +81-(0)42-546-2311
Fax: +81-(0)42-546-2317
https://www.foster-electric.com/
Month of issue: July 2023
Contact:
Foster Electric Company, Limited
Phone: +81-(0)42-546-2311
Fax: +81-(0)42-546-2317