T DK CSR REPORT 2 0 1 7
English version

TDK CSR REPORT 2017

Top commitment

Targeting redoubled growth and rapid market responses
Plotting reliable courses for growth strategies and earnings structure reform

Shigenao Ishiguro
President and CEO TDK Corporation

Creating new value through innovation,
TDK pioneers a promising future

After assuming the post of President at the beginning of fiscal
2016, I declared two major corporate missions. The first was
to decisively advance our growth strategies. The second was
to raise our corporate earnings power. The road to be taken forgrowth strategies includes the ongoing business expansion of
our strategic growth products of “sensors and actuators”, “energy
units” and “next-generation electronic components”. Sensors, forexample, are devices particularly indispensable to underpin thegrowth of the IoT. Therefore, we aim to offer wide-ranging sensor
solutions for our customers through the synergies from the sensor
manufacturers we acquired during fiscal 2016. The IoT also hastremendous potential for us to further our mission of contributing
to our world through our business and technologies. Helping resolve some of the various issues our society faces through thecreative solutions with our products and technologies at theircore, is truly the heart of Kotozukuri.
As a case in point, wearable activity trackers excel as truly typical
IoT devices. The biosensors within these trackers make it possible to automatically measure body temperature, pulse counts,
numbers of steps taken, and other data, which can then be monitored with smartphones and other means. Advancing beyond
fitness use cases, the information gleaned from such sources canbe utilized for more effective medical services at hospitals, driving
the industry towards customized optimal insurance for each individual. In other words, we’re being asked to clearly understand avariety of society’s issues and needs in order to deliver solutions
through the fusion of our resources.
Beyond the conventional market focus on Information and Communication Technology (ICT), our goal is expansion in the automotive, the industrial and energy, and the emerging healthcare
markets as well as other fields to complement the areas in which
we have excelled to date. In support of the second major missionof improved earning power, there is a critical need to redouble

our focus on supplying the top caliber components (Monozukuri) truly worthy of a Japanese company. Taking this to heart, we
will further accelerate Monozukuri reforms to ensure their integration with both the “Industry 4.0” thinking advanced to date andthe unique TDK approach to “Zero Defect Quality”. During fiscal
2016, we added new wings to both the Honjo Factory and Inakura
Factory in the Akita region, outfitting these “mother factories” tocarry on the Monozukuri revolution at a global level. Modeling
Arubeki-Sugata (ideal process) Monozukuri activities, we strive,
down to the individual worksite level, to accurately identify whatneeds to be done to give each product optimum quality and productivity. Unlike traditional approaches, in which inspections
are performed at completion, our approach of Arubeki-Sugata
ensures nonstop monitoring of products throughout the manufacturing process. Working to achieve the ultimate goal of zero
defects at completion, meanwhile, also leads to minimal waste ofresources. By analyzing the massive data yielded by each process, our factories have an effective means of eradicating factors capable of causing defects after delivery, thereby facilitating
improvements in our “post-shipment quality”. Close inspectionof production lead-times indicates that waiting times result from
quality evaluations, idle equipment, and other reasons. We aretaking appropriate steps to automate and otherwise reduce suchnon-value-added time to dramatically lift productivity.
In parallel, we are pursuing a “First to Market” philosophy, pioneering new solutions and products that address the needs of themarketplace. Our R&D system spans our four-pole global network, and we continually revise the planning cycle to define andredefine those products that customers most need and when theywant them. From this base, we will reduce the “Design → Evaluation → Product Proposal” cycle time to achieve a more rapid rateof response to our customers’ needs.

Drawing from the dynamism of diversity as the driving force
Encouraging our employees to build a powerful new organization

Rising to the challenge of “Kotozukuri” through fusion
For more than 80 years since its foundation, TDK has harnessed
the power of materials technology focused on ferrite. This cornerstone grounds the Company’s approach to integrated production – namely, the pursuit of products taking full advantage of thecharacteristics of magnetic materials from the materials and process development stage. To elevate that strength to even greater
heights, it is vital to fully grasp the nature of the changing environment surrounding our business. For example, we are witnessing dramatic advances in our lives by the Internet of Things (IoT),
greater attention paid to artificial intelligence, and other particularly rapid and stunning shifts in technological fields.
For its part, the TDK Group must also innovate above and beyond its achievements to date. Conventionally, our business has
consisted of “creating fine products for customers (and therefore
the larger society)”. Now, however, there is also a crucial need to
attune our endeavors to best leverage our knowledge of materials
and technologies to address market needs and social themes.
In other words, TDK’s strategic approach continues to be to layer

1

Kotozukuri (integrated solutions) onto our heritage of Monozukuri(supplying components). Besides simply supplying components
independently, we must combine and integrate products andtechnologies as “solutions” that create value with and for our customers. For TDK, a company that has traditionally flourished as acomponents manufacturer, this stipulation poses a stiff challenge
indeed. But we are up to this challenge.
Within today’s move toward open innovation, TDK clearly perceives the need to utilize distinctive technologies and know-how
to the maximum degree, while simultaneously using external resources for areas in which we are lacking. This promises to be amajor pillar in the move toward progressive fusion.
During fiscal 2016, we advanced an aggregation program ofmerger and acquisition (M&A) to expand our portfolio. Mustering the combination of our unshakable core technology and assets acquired through M&A, we are more determined than everto supply the global market with increasingly higher value-added
products and services.

From our proud Japanese heritage, we have grown into a globalorganization, as the times have demanded us to do. As we have
expanded our Group through M&A and other means, companies
from a wide range of different cultures and environments havejoined our ranks. The transition has required many sacrifices of
us all, as we cope with governance, management, and other issues, to focus on a shared, single objective. TDK has also prospered from the dynamism of the companies we have acquired.
Rather than requiring that they become absorbed into TDK, we
encourage them to use their strengths to continue to excel in theirown fields. This has proven effective to driving new progress, andwill not be changed anytime soon. Yet another critical point is toallow the dynamism of diversity to effectively function throughout
the overall Group, while transforming this energy into bold newstrength. Toward this end, we spare no time or energy in helping
acquired organizations feel rewarded for their decisions to become TDK Group members. Equally indispensable is the push fordiversification throughout the ranks of our human resources. We
have taken considerable steps at the management level, growing the number of our corporate officers representing nationalities
from around the world. This diversity makes possible advanced

discussions that consider the needs of our global customers andpartners. Our goal is to continue to fully marshal the skills of all
our employees representing a wealth of diversified backgrounds
from around the world, to create an environment that puts the right
person in the right job. Within the TDK Group, there is also thegoverning corporate motto of “Vision” “Courage” “Trust”. As theCEO of this organization, I face constant demands to render smart
decisions. I regularly ask myself if a decision I am considering
represents true “vision”, if it will lead to actions embodying “courage”, and if it will earn the “trust” of our stakeholders. In a very
real sense, I regard this clear and simple motto as being rich inwisdom that can be shared on a global scale. My hope is that
employees who are seeking answers about the proper directionin which to proceed or the best action to take will also find thisfoundation to be a precious source of strength and direction. Ourcollective striving to make our professional actions and decisions
a living testimony to the ideals of our corporate motto are knitting
us together as a cohesive team, while also enabling us collectively
to fulfill the long-standing TDK mission to “Contribute to culture
and industry through creativity”.

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TDK CSR REPORT 2017

CONTENTSTop Commitment.............................................. 1
Editorial Policy.................................................. 3
Corporate Philosophy....................................... 4
TDK’s Three Priority Markets and Products,
New Businesses............................................... 5

The TDK Group’s CSR
A Society Created through CSR
Undertaken in Business Activities................ 7
The TDK Group’s CSR Management............ 9

Editorial policy

Each year the TDK Group publishes the TDK CSR Report in two
media formats, as a booklet and on its website, to introduce ourideas and direction regarding corporate social responsibility (CSR)
based on our understanding of the expectations and needs of various stakeholders and to report on the state of progress over the
past year.
Here, we report on progress and achievements over the past year
in addressing important themes based on the Group Materiality set
forth in fiscal 2015, while also listing comments from employees engaged in those efforts. As activities closely attuned to today’s social
trends, we have also engaged in talk sessions with experts andstakeholders and are pleased to introduce selections from such exchanges.
In addition, we present an online profile of our Environment, Social, and Governance (ESG) Information by sectors, and encourage
viewing of this data as well.

Report Formats:
The report is available as a booklet and a web version, in slightly different formats to match the characteristics of the respective media.

Fiscal 2016 Activity Goals andAchievements, Fiscal 2017 Goals................. 11• Booklet: A digest version focusing on the main points of activity

TDK Group Outline........................................... 15• Web version: Compiled with reference to the Global Reporting
Initiative (GRI) guidelines (fourth edition), featuring both comprehensive information and detailed data centering on fiscal 2016activity reports
http://www.global.tdk.com/corp/en/csr/

Corporate Philosophy
Corporate
Motto

Corporate
Principles

TDK Group*

Customer
Focus

Always perform with courage.
Performing power is born by
confronting contradiction andovercoming it.

Always try to build trust.
Trust is born from a spirit ofhonesty and service.

We have;

We have;• Strong determination to contribute to ourcustomers’ success• Aspiration to continuously improve ourselves

HR
Development

Therefore we can;society and growth of businesses

Therefore we can;Major Organizational Changes during the Period Covered:• Offer outstanding quality products, services
and technology to satisfy our customers• Support the development of our colleagues
and build enthusiastic teams

Third-Party Opinion.......................................... 38

Date of Issue:
September 2017 (Previous issue: October 2016; next issue: scheduled for August 2018)

Contact Information:
CSR Group, Legal & Compliance HQ
TEL: +81-3-6852-7115

We have;

Challenge• Culture to turn adverse challenges intochances to develop ourselves

We have;• Strong determination to accomplish ourbusiness goals by overcoming adversity• Teams which respect each other and teamwork which encourages development

Therefore we can;• Accept challenges to make innovative breakthroughs and continue to create new value• Lead our colleagues and collaborate as ateam by sharing the same value• Global network with diverse culture

Diversity

Therefore we can;• Embrace different ideas and opinions• Clearly express our opinions with sincerity
through open discussions

TDK Code of Conduct*
The TDK Code of Conduct stipulates specific behavior guidelines so that the TDK Group and all of its directors and employees
comply with laws and ordinances, social norms, and so on. Furthermore, the TDK Group has compiled the Corporate Charter ofBusiness Behavior outlining the universal matters that should be practiced commonly by the Group.
* The complete text of the TDK Code of Conduct is available at the following website.

3• Motivation to contribute to the advancement of• Passion to be a trusted partner for ourcustomers• Define clear vision/goals and drive ourselvesto achieve themCompliance...................................................... 37

Corporate Governance..................................... 36

Always take a new step forwardwith a vision in mind.
Creation and construction are notborn without vision.

• Deliver inspirational value by standing in thecustomer’s shoes

During the period under review, three special subsidiary companies were excluded from our scope of consolidation: TDK (Shanghai) Electro-Energy Co., Ltd., due to the sale of shares held in thatcompany, together with RF360 Holdings Singapore PTE. Ltd. andRF360 Technology (Wuxi) Co., Ltd. (for which equity holdings weretransferred accompanying the launch of a joint venture with Qualcomm Incorporated).

4 Develop and Prosper in Harmony with
the Global Environment............................. 32

Trust* TDK Group: TDK Corporation and 138 consolidated subsidiaries in Japan and overseas

2 Develop Human Resources...................... 22
3 Consider the Societal and Environmental
Impact of the Supply Chain....................... 26

Courage

TDK Value* Some information covers activities outside this period.

Organizations Covered:

Vision

TDK was founded in 1935, based on the founder’s vision and belief - “contribute to the advancement of the society through thecommercial production of ferrite, a magnetic material which originates from Japan”.
TDK achieved four world-class innovations including “ferrite, magnetic tape, multilayer materials, magnetic heads”, and has
been offering products to support the advancement of the society.
TDK will continue to strive to achieve further innovation and create value for customers through the delivery of outstanding quality
products and services, by utilizing the diverse global resources.
Based on TDK’s corporate motto, TDK will continue to “contribute to culture and industry through creativity”, by revitalizing andprotecting the global environment and creating a pleasant and safe society.

Fiscal 2016 (April 1, 2016 – March 31, 2017)

1 Contribute to the World throughTechnology................................................ 16

Contribute to culture and industry through creativity

Corporate Vision (Vision 2035)

Period Covered:
The TDK Group’s Important CSR Issues

Corporate Philosophy

Editorial Policy

The TDK Group’s Materiality......................... 10

Important CSR Issues within
the Value Chain............................................. 13

TDK CSR REPORT 2017

http://www.global.tdk.com/corp/en/about_tdk/code_of_conduct/

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TDK CSR REPORT 2017

TDK Three Priority Markets and Products, New Businesses

TDK’s Three Priority Markets and Products,
New Businesses

1

Realizing zero traffic accidents and autonomous
drivingPriorit y market:

In the quest for greater safety, comfort, and harmony with the environment,
critical issues include mounting effective responses to the rapidly evolving
field of car electronics, minimizing automotive emissions to help resolve theCO2 pollution problem, and other challenges. High expectations are also being placed in realization of so-called “connected” cars linked to the Internet,
the advanced driving assistance system (ADAS), autonomous driving, andother progress. TDK prides itself for its impressive lineup of highly reliable
products supporting greater automobile safety and comfort, hand in handwith environmental-friendly technology.

Automotive

On-board
charger

DC-DC converter
for xEV

Targeting next-generation mobile
communications systems
Smartphones now excel not only in support of communications functions,the Internet, personal computers, cameras, etc., but also as social infrastructure linking the home, automobiles, and industrial plants. They have truly
emerged as key devices in the age of IoT, during which most all things will
become connected online, with TDK products emerging as an indispensable
presence in the quest for new networks. Electronic components and modules, utilizing the original core technologies for which TDK is famed, promise
to further expand the promise and application scope of smartphones.

MEMS
microphone

3

Camera module
actuators

Priorit y market:

Diplexer/ Balun

Industrial &EnergyLithium polymer
batteryThin-film power
inductors

2

Common mode
filters

High-frequency
components

Automotive

Five Priority
Businesses

Priorit y market:

ICT

Inductive devices
High-frequency components
Piezoelectric material products
HDD magnetic heads
Rechargeable batteries

New
Businesses

Industrial
andEnergyICTContributing to a clean and smart society
Against the backdrop of hopes for solutions to the CO2 emissions
problem, more effective use of natural resources, and other environmental challenges, attention has come to focus on potential use
of wind power, solar power, and other renewable energy sources.
In industrial equipment, railroads, and other fields as well, there aredemands for greater efficiency, weight reduction, and precision inpursuit of more effective energy use. Targeting these needs, TDK
marshals its innovative materials and processing technologies tobring key devices to these sectors, contributing to an increasingly
clean and smart society.

Neodymiummagnet forwind power
generation

Five Priority Businesses and New Businesses

3D transponder
coil

SESUB
(Semiconductor
Embedded
Substrate)

Power film
capacitors

5

Magnetic
sensor

The markets in which TDK is most firmly committed today consist of the three priority markets of Automotive, ICT, and Industrial
and Energy. Targeting these three priority markets, the Company champions formidable growth strategies in five priority businesses as its core fields, while also advancing new business endeavors.

Large-capacity
lithium polymer
battery

DC-DC
converter

Neodymiummagnet for
motor

TMR sensors

TDK promotes its business activities on the foundation of medium-term plan. This approach seeks to vigorously advance initiatives viewed as key in the quest for redoubled expansion of corporate value on thestrength of sustained growth. While treating the three priority markets of Automotive, ICT, and Industrial
and Energy, as well as growth strategies in the five priority businesses as the hub of this stance, staunchcommitments are also channeled into thin-film components, wearable devices and health care, automotive
and industrial equipment sensors, automobile and industrial equipment energy units and other dynamic
new growth field businesses.
Thin-film components

Wearables and healthcare

Automobile andindustrial equipment
sensors

Automobile andindustrial equipment
energy units

Fusion of materials
technologies fostered throughthin-film technology and thepassive components business,
fueling expansion in new
product sales.

Expanded sales of power
management units
rooted in applications ofsemiconductor-embedded
substrates (SESUB), compact
module technology, and othercutting edge know-how.

Expanded sales of TMR/GMR
sensors, barometric pressure
sensors, and other productsthat utilize advanced sensing
technology.

Expanded sales of highefficiency bidirectional DC-DC
converters for the renewableenergy field, industrial
equipment wireless powertransfer systems and otherproducts.

Thin-film power
Thin-film
inductors
capacitor (TFCP)
for embedding insubstrate

Semiconductor Wireless power
embeddedtransfer coil unit
substrate(SESUB)TMR sensors

MEMS pressure
sensor dies

Wireless powertransmitting andreceiving coilunit for wirelesspower transfer

Bidirectional
DC-DC
converter

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TDK CSR REPORT 2017

A Society Created through CSR Undertaken in Business Activities

Our society is facing various issues.
The TDK Group seeks to solve social issues through business activities based on our corporate principles.

—The TDK Group CSR—

A Society Created through CSR Undertaken
in Business Activities

The TDK Group’s Businesses, Corporate Philosophy, and Important CSR Issues
Social Issues
that TDK Addresses

Important CSR Issues
Contribute to theWorld throughTechnology

Develop
Human Resources

Consider the Societal
and Environmental
Impact of the Supply
Chain

Develop and Prosper
in Harmony with the
Global Environment

Aging of the
global population

The TDK Group’s approach to CSR is based on the practice of the TDK
corporate motto and thorough implementation of corporate ethics. We
have stipulated important issues in CSR activities with the aims of
implementing our business activities and medium-term plan on thebasis of the TDK Code of Conduct and, furthermore, realizing a sustainable society. We have identified social issues surrounding the TDKGroup from the perspectives of both the TDK Group itself and stakeholders. These important CSR issues are being addressed by the TDKGroup as a whole.

TDK’s Five Core Technologies

Population of
disabled people

Materials
Technology

Process
Technology

Evaluation and
Simulation
Technology

Production
Technology

Device & Module
Technology

A Society Created through CSR
Undertaken in
Business Activities
Develop and prosper in harmony
with the global environment• Create transport systems that can supply
electricity while operating• Use and expand renewable energy• Promote the increased use of eco-cars
and hybrid vehicles• Create electric power generation systemutilizing temperature differences

Markets that TDK Focuses On
Automotive

ICT

Improve the quality of life

Industrial & Energy[Corporate Philosophy]

Digital divides
Corporate Motto
Corporate Principles

Vision 2035
Climate change

Corporate Motto

Contribute to culture and industry through creativity
Corporate Principles“Vision” “Courage” “Trust”

TDK Value
CustomerHR
Challenge Development Diversity
Focus• Create advanced robots• Create wearable computers[Medium-Term Plan]

Develop human resources• Rich pool of talented human resources
capable of acting globally• Dynamic human resources capable ofdisplaying their abilities amid diversity

Basic Policy
Traffic accidents

Medium-Term Plan
Daily Activities

Advance autonomous collaboration of the group and realize further growth

Key Concepts
1 Pursue “zero-defect quality” based on superior technical capabilities

Energy consumption
increase

TDK Code of Conduct(Corporate Standards of Business Conduct)

2 Drive genuine globalization with speedy management
3 Develop a new business with the revenue of over ¥100 billion
following the three major business segments

A society where everyone canlive safely and securely• Develop safe, secure, and comfortable
automotive-based lifestyles• Create wearable devices that can inform
users about their health status at anytime

4 Innovate the corporate culture and cultivate courageous spirits

Charter of Corporate Behavior

7

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TDK CSR REPORT 2017

The TDK group’s CSR management / materiality

The TDK Group’s Materiality

The TDK Group CSR Management
Linkage between TDK Group CSR and the Corporate Philosophy
The TDK Group’s approach to CSR is based on thepractice of the TDK corporate motto and thorough implementation of corporate ethics. Recognizing that TDK is asocial entity supported by stakeholders, such as customers, suppliers, employees, shareholders, investors, andlocal communities, we promote CSR activities throughour business activities on the basis of the TDK Code of
Conduct and maintain communication with these stakeholders. By carrying out the TDK corporate motto, we
increase corporate value, and subsequently contributeto continuous corporate development and the creation ofa sustainable society.

Continued evolvementof business

Creation of a sustainable
society

TDK believes it is important to promote CSR activities that respond to changes in stakeholders and the social and business environment surrounding the Group. From fiscal 2013 TDK has promoted the study of materiality in accordance with the fourth editionof the Global Reporting Initiative guidelines (GRI-G4),* and in fiscal 2015, with the approval of management, we finalized ourmateriality. Here we introduce the process and results. With regard to the designated important CSR issues of “Contribute to theWorld through Technology,” “Develop Human Resources,” “Consider the Societal and Environmental Impact of the Supply Chain”
and “Develop and Prosper in Harmony with the Global Environment,” a new activity portfolio was launched from fiscal 2016.
* The details of the Materiality Finalization Process may be viewed on the following website.

Implement the Corporate Motto EnhanceContribute to culture and industry
through creativity
Social aspect

Economic
aspectEnvironmental
aspectCustomers

corporate
value

CSR Activities

The Materiality Finalization Process
GRI-G4 made a revision from requiring comprehensive information disclosure to requiring information disclosure with the focus
on materiality. The objective of this revision was to encourage companies to determine their reporting content purposefully bygetting management to be more deeply involved in CSR. TDK held discussions with stakeholders outside the company, implemented a dialogue with management, and finalized materiality through the following process.
STEP

STEP

STEP

STEP

Identifying social issues

Prioritizing material issues
from TDK’s own perspective

Prioritization fromstakeholders’ perspectives

Finalization of materiality

We confirmed the daily communications
content with stakeholders and conductedsimulations of various social issues inlight of ISO26000 and other international
standards relating to CSR.

We prioritized the importance of theaforementioned identified social issues by“management strategies,” “impact of theGroup’s business on society,” “degree ofstakeholder interest,” and “responses to thecurrent situations.”

We studied on prioritization fromstakeholders’ perspectives, reflecting the
CSR Report review conducted by experts
from Asia, Europe, and the U.S. andexchanges of views with CSR experts.

We reconsidered the prioritization fromthe perspectives of TDK and stakeholders
and, after gaining approval from the
Executive Committee, finalized themateriality of the TDK Group.

1

Employees

TDK’s
Business Activities

CSR Promotion Structure
Based on the activities of the Business Ethics & CSR
Committee, which reports directly to the Board of Directors, the entire TDK Group acts in concert to address awide range of CSR topics through collaboration with the
CSR Group and other departments and business groups
at TDK headquarters and TDK sites around the world.

Suppliers
Shareholders/
Investors

Localcommunities

n CSR GroupThe CSR Group has in-depth knowledge of social issues and requirements and promotes CSR programs in a professional manner. The CSR Groupstrategically examines the various demands received from customers and society from such perspectives as their urgency and importance, their impact
on TDK, the capabilities of TDK, and the degree of contribution to society. Working closely with other departments in the company, the CSR Group formulates policies and implements responsive actions. The CSR Group also promotes CSR awareness in TDK and organizes training programs. The CSRGroup is currently organized as a part of the Legal & Compliance HQ.

Business Ethics & CSR Committee

President & CEO
Executive Committee

CSR Group

Corporate
Strategy HQTechnology
andIntellectual
Property HQ

HumanResources &Administration
HQ

SCM &
Management
System HQ

Production
Engineering
HQ

Importance for stakeholders

Board of Directors

HQ
FunctionsContribution to regions
and communities

Important CSR Issues

Important Themes

to the World
1 Contribute
through Technology• Contribute to resolving social issues through development and provision of new products inthree priority markets• Pursue zero-defect product quality

2 Develop Human Resources• Develop global human resources• Cultivate a corporate culture that respects diversity

Consider the Societal and3 Environmental Impact of
the Supply Chain

Protection of water
resources

Develop and Prosper• Consider the work environment at manufacturing sites• Consider the work environment of suppliers• Response to conflict minerals

4 in Harmony with the Global• Reduce environmental load throughout life cycle stages• Creating a framework for gauging product contributions

Management• Ensure corporate governance and compliance

Environment

Business activities in considerationof biodiversity

Supply of product information
to consumers

Importance for the TDK Group

9

4

The prioritization in Steps 2 and 3 was conducted on the basis of 46 items chosen in consideration of items required by the
GRI-G4, and 19 material issues were identified. These issues were further sorted and classified and finally condensed into thefollowing 10 important themes for the promotion of activities from now on. After approval has been received from the Executive
Committee, the competent departments in the TDK headquarters are taking the initiative in setting key performance indicators
in coordination with TDK Group companies in order to promote related activities.

n Organization

Legal &
Compliance
HQ

3

Finalization of the Materiality

High

The TDK Business Ethics & CSR Committee, an organization reporting directly to the Board of Directors, is chaired by a director or corporate officer
appointed by the Board, with its membership designated by major HQ Function Managers and the Chair. The Committee’s mission is to resolve TDK
Code of Conduct related problems impacting employees in TDK Group companies around the world. It also issues reports at the start of each quarter
addressing the status of implementation and operation of the Code of Conduct.

Business
Companies& BusinessGroups2

TDK’s Code of Conductn Business Ethics & CSR Committee

Electronic
Components Sales& MarketingGroup

http://www.global.tdk.com/corp/en/csr/csr_philosophy/csr02000.htm

Protection of customer privacy

High

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TDK CSR REPORT 2017

Fiscal 2016 Activity Goals and Achievements, Fiscal 2017 Goals

Fiscal 2016 Activity Goals and Achievements, Fiscal 2017 Goals

Based on its newly finalized materiality, the TDK Group works through the PDCA (plan-do-check-act) cycle to promote initiatives
aimed at realizing a sustainable society and company. Here, we report on our fiscal 2016 activity goals and achievements, andfiscal 2017 goals.

Important CSR
IssuesImportant Themes

Main Points

1

Contribute to resolving social issues
through development and provision of
new products in three priority markets

TDK aims to solve social issues, such as
helping to save, store and reuse energy,
through original technological development
and supply of products in markets, especially the automotive, ICT, industrial and energy.

Technology HQEach business group

Pursue zero-defect product quality

On the basis of our high level of technology,
we will pursue zero-defect product quality
through uniformly managed production processes from materials to manufacturing.

Quality Assurance Function
Each business group

Develop global human resources

Toward the promotion of genuine globalization, we will strive to develop the humanresources that will serve as its foundation.

Human Resource Development Function● Set global-scale key performance

Cultivate a corporate culture that
respects diversity

In order to continue generating innovative
creativity, we will build a tolerant corporate
culture that respects the diversity of humanresources.

Human Resource Development Function● Set global-scale key performance

Consider the work environment at
manufacturing sites

In light of the latest requirements, we will
gauge considerations for the labor environment at production sites, which we need asa supplier, and if necessary implement education and guidance toward improvement.

Consider the work environment of
suppliers

In light of the latest requirements, we will
gauge considerations for the labor environment at suppliers, which we need as abuyer, and if necessary implement education and guidance toward improvement.

Response to conflict minerals

We will execute our social responsibility as a
midstream company appropriately throughthe continued implementation of required
efforts and an understanding of the latest
requirements.

Contributeto the Worldthrough
Technology

2

Develop
Human
Resources3

Consider theSocietal andEnvironmental
Impact of the
Supply Chain

4

Develop andProsper inHarmony with
the Global
Environment

FunctionsFiscal 2016 Achievements

Fiscal 2017 Goals● Continue to promote the develop-● Promoted the development of● Continue to promote the development of products

ment of products that contribute to
the solution of social issues in thepriority strategic markets of automotive, ICT, and industrial and energy● Number of important claims: 0

indicators (KPI)

indicators (KPI)● Perform 100% CSR self-checks at

CSR Function

manufacturing sites● Secure 100% opportunities forthird-party CSR audits once every
two years (China and ASEAN region)● Set global-scale key performanceindicators (KPI)● Set global-scale key performance

Procurement Function
Quality Assurance Function

Safety and Environment
Function

Creating a framework for gauging
product contributions

Through the setting of common gauging
product contributions in the industry, we
will promote social understanding of TDK’s
environmental contribution value.

Safety and Environment
Function

Ensure corporate governance andcompliance

Through the development of appropriate
corporate governance and thorough implementation of compliance, we will aim toenhance our corporate value.

indicators (KPI)

11● Number of important claims: 0● Revised related themes● Revised related themes● 100% implementationthat contribute to the solution of social issues in thepriority strategic markets of automotive, ICT, andindustrial and energy● Number of important claims: 0● Establish a worldwide consolidated human re-source database● Compile consolidated management database, andget a solid grasp of the data
● Perform 100% CSR self-checks at manufacturing

sites● 100% implementation● Secure 100% opportunities for third-party CSR au-

dits once every two years (China and Asia region)● Complete the setting global-scale● CSR-compliant supplier ratio: over 95%

key performance indicators (KPI)● Complete the setting global-scale

key performance indicators (KPI)● DRC conflict-free procurement supplier ratio: over85%
● Monitor number of customer responses● Improve energy origin CO 2 emissions● Worsened by 6.0% compared with

● Improve energy origin CO 2 emissions basic-unit bybasic-unit by 1.1%
● Improve product-based CO 2 reduction contributions basic-unit by 2.7%

fiscal 2014
● Improved by 23.0% compared withfiscal 2014

● Improve product-based CO 2 reduction contribu-

2.0% compared with fiscal 2014
tions basic-unit by 2.7% compared with the previous year
* For goals and achievements of activities other than those above,please see the following website:
http://www.global.tdk.com/corp/en/csr/environmental_responsibility/
csr03200.htm● Implement standardization andawareness activities in collaboration
with industry associations● Achieve 100% participation in com-

Management

direct angle sensors, micro electro
mechanical system (MEMS) microphones, and industrial equipment
wireless power transfer systems

Procurement Function

We will promote environmental activities on
the basis of the TDK Environmental Vision
2035.

Reduce environmental load
throughout life cycle stages

Fiscal 2016 Goals

pliance e-learning
CSR Function
Compliance Function● Implemented awareness activitiesin Germany and Japan● Achieved 98% participation incompliance e-learning● Established compliance HQ in
October 2016
● Established Basic Policy on Corporate Governance● Continue to implement standardization and aware-ness activities in collaboration with industry associations● Achieve 100% participation in compliance e-learn-

ing

12

TDK CSR REPORT 2017

Important CSR Issues within the Value Chain

Important CSR Issues
within the Value
Chain
The TDK value chain extending from procurement of raw materials to development,
manufacturing, logistics, and sales extends
throughout various regions of the world
and involves numerous social issues. Here
we present the things we consider forsociety in each stage and TDK’s initiatives
for important CSR issues.

Procurement

Development

Manufacturing

Logistics

Sales

TDK procures raw materials from aroundthe world. Consideration for human rights
and the environment by suppliers is also apart of TDK’s role.

The development process of technology
and human resources hold the key to how
TDK products can contribute to society
and the environment.

The environment and human resources
will be priority areas, including reductionof the environmental load at the time of
manufacturing, the eradication of defective
products, and labor health and safety.

The mission of logistics is the stable,
reliable, and timely supply of TDK products
to customers.

We seek to maintain high product quality
while providing products that satisfy customers through contribution to society andenvironment issues.

• Manufacturing process capable ofreproduction without variation• Ensure logistics quality• Promote sales of products that solve
environmental and social issues• New product development throughsustained research and development[Important CSR Issues]

Contribute to the World throughTechnology[Important Themes]• Ensure the quality of purchased
products• Contribute to resolving social issues
through development and provision of
new products in three priority markets

Research and development expenditure

91,254

million yen• Customer satisfaction• Product assessments• Building of upstream-management-type quality assurance structure• Pursue zero-defect product quality[Important CSR Issues]

Develop Human Resources• Promote Global Human Resource Training Program

IMD Training participants (total to date):• Technological innovation• Innovative craftsmanship training

328

persons

Overseas Trainee Program participants (total to date):

28

persons[Important Themes]• Develop global human resources• Cultivate a corporate culture that
respects diversity[Important CSR Issues]

Consider the Societal andEnvironmental Impact of the
Supply Chain[Important Themes]• Consider the work environment at
manufacturing sites• Consider the work environment of
suppliers• Response to conflict minerals• Use CSR check sheets and implement CSR audits• Implement CSR self-checks, andCSR self-audits by third party organizations

No. of companies given check sheets
improvement guidance*

778• Conflict minerals survey[Important Themes]• Reduce environmental load throughout life
cycle stages

manufacturing sites

DRC conflict-free item ratio*:91%* Targeting suppliers engaged in transactions withTDK Corporation.

[Important CSR Issues]

Develop and Prosper in Harmony
with the Global Environment• Appropriate responses to CSR
surveys and other inquiries from
customers

CSR self-checks conducted atcompanies• Green procurement• Creation of products contributing to
the environment• Product assessments• Reduce the environmental load ofplantsCO2 emissions from production activities

1,463

thousand t-CO2• Reduce the environmental load inlogistics• Promote sales of products that contribute to the environment
Reduction of CO2 emissions throughproducts

1,675

thousand t-CO2• Creating a framework for gauging productcontributions

13

14

TDK CSR REPORT 2017

TDK Group Outline

TDK Group Outline

High level of globalization

The importance to our company

The TDK Group is active in over 30 countries and regions all over the globe, selecting suitable bases for plants, research facilities, and sales offices from the viewpoints of marketability, product range, distribution, etc. The TDK Group consists of 138
consolidated subsidiaries—18 in Japan and 120 overseas (58 in Asia, 42 in Europe, and 20 in the Americas). The Group’s total
work force is 99,693 persons.

Net sales

1,178,257 million yen

Operating income

208,660 million yen

Net income

145,099 million yen

In accordance with our Medium Term Plan which started in fiscal 2015, we are focusing on the three priority
markets of automotive, ICT and industrial & energy,
taking advantage of our proprietary technology development capabilities to open up new business opportunities and realize Monozukuri reform. The overall
aim is to offer products that make a meaningful contribution to society while also resulting in a sustainableimprovement of corporate value.

Expectations by stakeholders
Responding to climate change by harnessing TDK’s
core technologies, in particular energy conservation
and renewable energy, promote the development of
new technologies and the spread of products that
help to bring about a low-carbon society.

(External)

Americas
Net sales

Japan(Internal)

104,910 million yen

105,233 million yen

Net sales

(External)(8.9%)

Number of employees
(Internal)	(External)(8.9%)

4,216(4.2%)

9,308

Number of employees
Consolidated net sales (external)(Internal)	(9.3%)

1,178,257 million yen
EuropeNet sales

Consolidated employees (internal)

146,201 million yen(External)(12.4%)

Number of employees
(Internal)	

99,693 persons

7,674

Asia and others
Net sales

821,913 million yen

Important
ThemesContribute to the World through Technology• Contribute to resolving social issues through development and provision of new products in threepriority markets• Pursue zero-defect product quality(External)(69.8%)

Number of employees

(7.7%)

1

Important CSR Issues

78,495(Internal)	(78.7%)

Basic Policy
Net sales by product segment (fiscal year ended March 2017)
Other

Capacitors

32,136 million yen

136,790 million yen
Film Application
Products

247,693
million yen

87,563 million yen

Inductive Devices
Passive
Components

145,334 million yen

548,730

Other Magnetic
Application Products

million yen

Magnetic Application
Products

349,698
Recording devices

262,135 million yen

million yen

Contribute to the world through technology is a key concern for TDK. Toward this end, we are focusing on innovative technology development in our three key markets of automotive, ICT and industrial & energy, helping to save,store, and reuse energy and solve other pressing issues that modern society is facing. Furthermore, the pursuitof “zero defect quality” based on superior technological competence and realized through a unified production
process that extends from the raw materials to the final product will continue unchanged in the future. Providing
high quality products and services is our way of striving for the advancement of humankind.

Other Passive Components

266,606 million yen

Summary of Fiscal 2016 and Outlook Going Forward
Under the basic policy of the Medium-Term Plan through fiscal 2017, “Advance autonomous collaboration of thegroup and realize further growth”, TDK mobilized magnetic technology, the core of its engineering expertise, todevelop next-generation products for the IoT market, while also channeling keen energies into building an evenmore efficient development system. As one phase for pioneering magnetic sensor technology, an area being
strengthened as a key TDK growth field, we realized the world’s first measurement and visualization of cardiac
activity using MR sensors.
Completed in October 2016 were a streamlined new Monozukuri mother factories in the Akita region, earmarked
as a driving force in promoting growth strategies. In the quest for “Industry 4.0 + Zero Defects,” these factories
are positioned to function as pivotal sites in supplying state-of-the-art parts and components “from Akita to theworld.”* Following organizational changes conducted in the first quarter of the fiscal year ended March 2017, one portion of products belonging to Other was reassigned to Inductive Devices
and Other Passive Components under the Passive Components segment. Likewise, selected products belonging to Film Application Product were reassigned to Other.

15

16

1

Contribute to the World through Technology

Contribute to resolving social issues through development and provision of new products in three priority markets

Int er view

TDK’s Three Priority Markets

TDK technology
contributes to building a“Super Smart Society,”
ensuring greater
affluence and fulfillment
Dai Matsuoka
General Manager of Technology and Intellectual Property HQ
TDK Corporation

AUTOMOTIVEICTIndustrial and Energy

Contribute to environmental
burdens reduction with new
HAC 37xy sensor

Bringing professional audio
quality to smartphones

Further enhancing wirelesspower transfer technology,
bringing innovation to theindustrial equipment market

This new direct angle hall sensor provides high performance in strength
evaluation of horizontal and verticalmagnetic field components and enables angle measurements of up to360° or linear measurements of up
to 40 mm. It contributes to reductionof fuel consumption and CO2 /NOxemissions, and also provides cost
reduction. This product is the accomplishment of collective effort of several
experts.

Smartphones and action cams already offer great video. My team’s design goal was to create a miniature microphone with the best audio. Thanks
to our patented MEMS* design, theT4071 MEMS microphone sets thebenchmark for nearly noise-free signal quality and lowest distortion – atrue competitive advantage for TDK.
As a result, users of these compact
devices can now make videos withprofessional audio, even with reallyhigh sound levels.

A revolutionary product engineered
for wireless and automatic charging
of batteries primarily onboard industrial equipment. This eliminates theneed to insert and extract plugs andreplace batteries. The results include
24-hour operation based on the automatic charging system, reduced
maintenance costs, lower electric
shock risk, and other benefits. For the
emerging industrial equipment market, this product holds outstanding
potential for use in automatic guided
vehicles, industrial robots and otherapplications. Looking ahead, our goal
is to raise overall system efficiency
based on keen attention to safety andthe environment.

* Micro electro mechanical systems (MEMS)
are extremely small highly-functional devices
and systems. Their miniaturized integrated
mechanical components and electronic circuit
are manufactured using microfabrication
techniques similar to those used for ICs.

Creating new value to address social needs

Developing highly social-sensitive engineers

For the TDK Group, which subscribes to the corporate motto of“Contribute to culture and industry through creativity,” utilizing
technical expertise to enrich people’s lives is an unwavering corporate mission. Under the guidance of the government’s 5th Scienceand Technology Basic Plan, Japan is currently working to emerge
as a “Super Smart Society*.” Revolutionary social changes driven
by innovation are christened “Society 5.0*”—a domain we are positioned to contribute to through the various technologies of the TDKGroup. The “Society 5.0” vision speaks not only to Japan, but also
to advancing global culture and industry. TDK is now grapplingwith the question of how best to approach this vital new challenge.
Closer communications with customers, while raising the synergy
between the Technology and Intellectual Property HQ and other
TDK business groups, holds the key to creating new value. This
also harbors potential for expanding new products and services
beyond the current three priority markets of Automotive, ICT, andIndustrial and Energy. The cornerstone of such progress promises
to be magnetic technology—the DNA embodying the TDK Group.
Recent years have witnessed steady expansion in fields in which
TDK products and services are being put to use. Examples include magnetic sensors applying HDD head technology, automotive electronic components for EVs, HEVs, and other eco-friendly
cars, and sensors for use in the medical and health care field. Fully
harnessing strengths that only TDK can deliver, our goal is to help
pave the way to making “Society 5.0” a reality.

People must shoulder the technologies that support society, pointing to an equally critical need for individual engineers to raise theirawareness and sensitivity toward the world around them. Demanded today is the perspective of identifying special social issues,
systems to help resolve those challenges, and the products to get
the job done. As CTO, I believe that my foremost role is to promote
the milestone mindset shift from Monozukuri to Kotozukuri. Fromthe standpoint of training young people, the Technology and Intellectual Property HQ dispatches engineers to the various businessgroups in their third to fifth years with TDK. There, they are expected to actively engage in new product launches, etc., think on theirown and steadily accrue opportunities to expand experience. Moving forward, one of the key challenges is to establish an effective
R&D system on the foundation of worldwide personnel exchange.
Likewise, in view of the growing number of engineers also raisingfamilies, a scheme to support a positive balance between workand child-raising is another key to success. Taking this to heart,
my mission is to make TDK a work-friendly company for our vastly
diversified employees, fully utilizing people potential to raise theessential technologies at TDK to ever-greater heights.

Power feeding unit

Coil units for power
feeding
Coil units for powerreceive
Power receiveunit

HAC 37xy uses a so-called pixel cell consistsof horizontal and vertical Hall elements andprovides multidimensional measurement.

The T4071 MEMS microphone features theindustry’s lowest noise and distortion in loudenvironments.

A system built to utilize the magnetic resonancebetween power feeding and receiving units
combining coils and capacitors*Super Smart Society
Addressing a vast range of needs with the supply of the necessary goods andservices to customers when they need them and in the proper quantities, in supportof an energetic and comfortable society where everyone enjoys access to top-caliber
services.
*Society 5.0
Creation of a new social mode, following in the footsteps of the hunting, agricultural,industrial, and information societies before it, championed by technological innovation.

Mr. Michael Besemann (Left)

Dr. Anton Leidl

Yoichi Kyono

Project Leader R&D
TDK-Micronas GmbH

Head of R&D MEMS Microphones Business Division,
TDK Sensor Systems Business Company, Munich
EPCOS AG

Development Office II,
Energy Unit Development Division
Technology and Intellectual Property HQ
TDK Corporation

Mr. Jens Schubert (Right)
Product Marketing Manager Magnetic Sensors
TDK-Micronas GmbH

17

18

1

Contribute to the World through Technology

Pursue “zero-defect quality”

Int er view
Mobilizing the Akita
Future Project totriumph in global
competition
Hiroyuki Uemura
Senior Executive Vice President,
Chief Executive Officer of Electronic Components Business Company,in charge of Magnet Products and Safety & Environment
TDK Corporation

Honjo Factory East Site
A mother factory for multilayer products, aiming for zero defects
Completed in September 2016 in Yuri-Honjo City, Akita Prefecture. The
Factory is designed mainly to serve as a mother factory for multilayer
products, covering the development of new products, from prototyping tomass production, as well as the development of elemental technology. In
addition, a model line targeting zero defects is to be configured here, todemonstrate TDK’s Monozukuri power to visiting customers.

Inakura Factory East Site
A mother factory for ferrite, the magnetic material in TDK’s DNA
Completed in August 2016 in Nikaho City, Akita Prefecture as a ferrite
mother factory. This facility features an integrated production system
ranging from ferrite through coil products, located adjacent to a materials technology development center. Engineers specializing in capacitors,
high-frequency components, and various other products gather here,
where they engage in precious information exchange.

Cutting-edge Monozukuri site drives grow th strategy
Zeroing in on the future from Akita
The Akita region is a birthplace of TDK, and for many years has
served as the thriving hub of Monozukuri in the passive components field. Each business division has pooled people and technology rich in regional strengths, launching subsidiaries to serve as
manufacturing sites, and charting steady progress. This approach
generated solid growth in the midst of the fierce competition thatcharacterized Japan’s period of accelerated economic growth andother market boom times. However, as global rivalry heated up
against the backdrop of market stagnation and offshore transfer
of production bases, concerns emerged regarding possible declines in the essence of Monozukuri. Such worries reflected signsof lowered efficiency, scattering of elemental technology and otherconsequences of transfers between business sites. This directedattention to the need for initiatives targeting the strength of TDK, a
company that had accumulated major capacity in the Akita region.
We regarded how best to utilize that capacity as a corporate group,
ensure sustained growth, and effectively link such approaches torenewed progress. The Akita Future Project was conceived withthis background in mind.
The goal of the Project is to integrate business sites that havegrown decentralized, pursue optimization and improved efficiency for both people and technology, build employee-friendly workplace environments and use other activities to achieve sustained
progress for the electronic components business, nurturing thepower to compete in the global marketplace.

19

Production base reorganization, mobility of humanresources, and sustained earning power
The Akita Future Project is conceived from the three cornerstonesof “production base reorganization,” “mobility of human resources,” and “sustained earning power.” While products may differ,
there are numerous areas shared in common for elemental andother basic technology. However, with sites and business departments having drifted apart, it has become difficult to surmount thewalls to link those operations together. Thus, one key goal of the
Akita Future Project is to concentrate and reorganize production
bases with the focus on elemental technology, thereby enabling a
rapid response to market changes with swift new product development. Regarding effective utilization of human resources as well,
the idea is to eliminate the conventional sense of distance between
the “thinkers” and the “manufactures,” advance optimum mobility
in the use and placement of personnel and promote greater technology sharing and efficiency.
When attempting to infuse change, it is vital for each team member
to shoulder their own responsibilities. For older and outdated sites,
the Company will do everything in its power to make improvements
aimed at comfortable working environments. As such, one of the
key messages in the Akita Future Project is to encourage all employees to manifest the full extent of their abilities within such newworkplaces.
My aim is to encourage everyone to work hard to realize a reliable
cycle devoted to creation of quality products generating positive
fruits and profit, empowering growth of human resources and theability to sustain our business at this location.

Global support as mother factories
Under the Akita Future Project, we are incorporating model lines
envisioned to fundamentally transform the mother factories of the
Honjo Factory East Site and Inakura Factory East Site into the realmof Monozukuri.
The greatest emphasis within such efforts is the pursuit of “Defect-free Monozukuri.” In my view, the most critical need is to firmly
grasp how customers actually use TDK products and how best to
satisfy them, then use that knowledge to build in optimum productquality. For that, we must thoroughly pursue the four quality domains in which TDK truly shines—design, materials, process, andmanagement technology. This stems from the belief that quality isclearly the ultimate service, as well as the source of all competitive
strength.
The primary mission of the mother factories is to use the launchof this type of model line construction to empower manufacture of
products with equal quality at any site around the world, in otherwords, location-independent capability. While moving forward inthat direction, each site will also continue to innovate and evolveon its own, increasingly carrying those achievements overseas in a
genuinely endless challenge.
The environment currently surrounding our business is both global and marked by a complex mix of diversified issues. Change,
furthermore, is certain to grow increasingly fast and fierce. Within such a climate, it is critical to staunchly develop our businesson the foundation of sustained growth, remaining keenly aware ofmarket changes as all employees approach their work with a firm
understanding of the respective roles and responsibilities. My aspi-

ration is to join with all of you in advancing this Project, beaming out
the message and lessons of cutting-edge Monozukuri from Akita
to the world.

General Outline of Monozukuri Innovation
Industry 4.0
Monitoring network with sensors
Real-time control of manufacturing processes
Quality data analysis and feedback to
manufacturing processes

Monozukuri
innovation

Inventory control
innovation

Pursuit of zero
defects
Building of upstreammanagement type
quality assurance
structure

Energy efficiency
innovation

Implement this innovation at new factories in Akita Prefecture
Roll out to other factories around the world20

1

Contribute to the World through Technology

Pursue “zero-defect quality”

Int er view

The importance to our company
At TDK, we consider our employees to be one of ourmost important assets in carrying out our corporatemotto of “Contribute to culture and industry throughcreativity,” as well as in achieving ongoing growthover the medium to long term.
We therefore respect each of them as individuals,
working to maximize their unique abilities and potential and at the same time encouraging a high level of
independence.

Pursuing the ArubekiSugata to create thebest Monozukuri andworkplace environment

Expectations by stakeholders
In tandem with implementing systems and a corporate culture that respect the differences and valuesof each of our employees, we also provide specificopportunities and the optimal environment designed
to maximize the individual abilities and potential of ouremployees and to impart them with a significant degree of independence.

Toshiaki Yamamoto
General Manager of Production Engineering Center in Production Engineering HQ
Head of Akita Admin. Dept., Japan Administration Division,
Human Resources & Administration HQ
TDK Corporation

Mobilizing the Akita Future Project to reorganize
domestic Monozukuri
Roughly half of TDK Group sales come from the passive components business. The Akita region undertakes new product and elemental technology development as the location of passive components business mother factories, with those fruits channeled to
manufacturing sites worldwide. However, as a regrettable result of
the relocation of manufacturing operations overseas and other developments in recent years, the quality of the Monozukuri here has
declined. In reaction to that impending crisis, and in the interest ofcompeting globally, we reached the conclusion that revamping ourfactories in the Akita region was crucial. That mindset prompted
the launch of the Akita Future Project—a vision based on threecore policies.
In practice, we outline the specific Arubeki-Sugata, and advanceendeavors to achieve that state. This term is difficult to translate
into English. In our experience, it has proved more effective to earn
the understanding of our colleagues at overseas sites by showing
them the actual activities, rather than verbal explanations.
While Arubeki-Sugata is sometimes translated as “ideal process,” it
actually differs from the realm of “ideal.” It lies closer, rather, to theidea of “processes possible to adopt and achieve.” Specific explanations are provided of the targeted processes, with computationof the technical skills and time needed to realize them. In this way,
we identify processes absolutely possible to achieve. To bolster“sustained earning power,” the third pillar of the Akita Future Project, it will be indispensable to raise the caliber of our Monozukuri
and human resources as the two Arubeki-Sugata in this area.

Teaming up to achieve the Arubeki-Sugata of Monozukuri
One initiative being energetically advanced at Monozukuri
worksites is zero-defect quality. While quality must naturally bemaintained when shipping products, it also needs to be ensured
when customers actually incorporate products in their own systems
and put them to use. In a word, our Arubeki-Sugata must consist of
Monozukuri promising that products will not grow defective duringuse. To take that step, it is necessary to advance the rather plain
and unrefined task of reassessing the Monozukuri advanced over
the years by the TDK Group, and by Japan in general. Bringing onboard elemental technology development, process development,21

and control technology as well, our key personnel must unite in
meticulous pursuit of the essence involved, striving to build up aseries of small successes. Only when this is achieved do we reachthe realm of zero-defect quality. Simply stated, we mobilize newprocesses to create new products through the zero-defect quality
mindset. This begins by establishing solid and reliable Monozukuri,
paving the way to the next stage of Kotozukuri. At our frontlines, I
sense a marked increase in professional awareness compared towhat has existed in the past. Our roles and responsibilities lie inbringing this stance to fruition at the earliest possible point in time.
The know-how cultivated in this way must also be spread globally,
through horizontal deployment, throughout the TDK Group at large.

The workplace environment and communication
Arubeki-Sugata for staffers
We also energetically advance endeavors to realize the
Arubeki-Sugata at the staff level. While the workplaces where we
report daily are naturally key sites of Monozukuri, we must also devote serious consideration to the proper status of employee cafeterias, restrooms, entrances, etc. These areas also fall under therealm of Monozukuri, as well as the pursuit of the essence of ourbusiness. My aim, therefore, is to muster the staffers of our personnel, general affairs, facilities, and other administrative divisions as
the focus in drafting rules for the Arubeki-Sugata, and apply thosesame tenets throughout the entire Akita region.
What we are after, in short, is the creation of factories that customers will yearn to visit again. In addition to customers, we are equallyinspired to build workplace environments where TDK Group employees and staffers from the Akita region itself can relax and focus
on performing their jobs. The Akita region spans numerous sites,
each with its own distinctive culture. The Akita Future Project visionseeks to integrate the Akita region into an integrated whole. While
we have linked the factories there with a focus on elementary technology, the presence of largely invisible walls poses an extremely
serious problem. Communication provides a vital tool in surmounting such barriers. My own upbeat impression is that such communication is currently unfolding with substantial energy and momentum. My goal is to also carry and develop these activities overseas,
devoting close consideration to the cultures and customs in thoseregions. Going forward, I am more determined than ever to direct
the full thrust of our energies into realizing the ONE TDK ideal.

2
Important
ThemesImportant CSR Issues

Develop Human Resources• Develop global human resources• Cultivate a corporate culture that respects diversity

Basic Policy
Our aim at TDK is growth by way of becoming a genuine global company. In this connection, human resources
development is considered a cornerstone concept. Along with identifying highly capable human resources andfostering an environment that draws out their individual abilities and potential, we also work to forge a corporate
culture that respects the diversity of our human resources and also encourages mutual respect and recognitionof efforts between our employees. Shaping a global business environment that attracts truly global personnel to
the TDK Group, we at TDK are committed to generating innovative products and services on an ongoing basis
and thereby doing our part for society in general.

Summary of Fiscal 2016 and Outlook Going Forward
The TDK Group positions diversity as one key TDK Value, promoting activities toward that end around the world.
In Japan, we have compiled three action plans in response to the Act on Promotion of Women’s Participation
and Advancement in the Workplace, legislation enacted in April 2016. As one such plan, our goal is to raise thepercentage new women employees entering TDK to 30% or more in 2018. To keep pace with the rapid changes
in our markets, meanwhile, the Human Resources & Administration HQ was launched in April 2017. This new unit
is being utilized to further strengthen our development of human resources plans in promoting the quest for genuine globalization. We are also taking steps to build the caliber of information infrastructure needed to advancesuch initiatives throughout the TDK Group.

22

2

Develop Human Resources

Develop global human resources

PedersenKellerStakeholder Dialogue on Global— Human Resource Development
In the run-up to the launch of the human resources master plan that takes effect on April 1,
2017, General Manager of Human Resources & Administration HQ Andreas Keller sat downwith sustainability expert Peter David Pedersen. In the dialogue, the two men identified anddiscussed specific human resource challenges, upcoming initiatives, and action areas for the
future in the context of TDK positioning the development of global human resources as one of
its CSR materiality issues.

Peter David Pedersen

Andreas Keller

Co-founder, E-Square Inc.
(sustainability consultancy),
Executive Director, TACL
— The Academy for Corporate Leadership

General Manager,
Human Resources &Administration HQ
TDK Corporation
Date of implementation: March 21, 2017

Background: State of Human Resources
Mergers, acquisitions, and partnerships have forged a TDK
that is more vibrant and diverse than ever. At the same time,
this process has been accompanied by welcoming different
cultures and values that make management and communication more complex. TDK now boasts close to 100,000
employees with less than one-third from the original TDK
operations.
In the belief that people make the difference, Keller explained how TDK is working to create a global pool of TDKGroup talents that enables individual employees to realize
their potential while maximizing organizational performance.

In Pursuit of Resilience
Peter David Pedersen facilitated the dialogue, laying out aconceptual framework for building a resilient organization.
Pedersen praised TDK for an approach that frames thedevelopment of human resources as a component of CSR
policy. “More important than ever is a management mindset allowing the company to be anchored, adaptive, and23aligned” he said. Dubbing these terms the three As, Pedersen stressed the importance of being anchored in purpose
with a foundation of trust, being highly adaptive, and beingaligned with society and stakeholder expectations.

Leveraging Diversity as a Strength:
Challenges and Opportunities
The dialogue touched on several issues integral to addressing the complexity of TDK’s Group growth and fully parlaying
diversity into a differentiating factor. One topic identified as
being of paramount importance was cross-cultural communication.
“In my 17 years at TDK, I’ve seen that we have many creative
individuals, but we’re not always able to transmit our ideas
in the most constructive way due to diverse management
styles or cultures. That is why communication is a key requirement to connect across the Group,” Keller said.

Trust Through Transparency
Improved communication is intricately related to two additional recurrent dialogue themes: transparency and trust,

both of which are seen as key to taking full advantage of
TDK’s diversity. TDK’s Global Human Resources Department(GHRD) is promoting transparency and trust in a number of
direct and indirect ways. It is in the midst of establishing acommon talent management platform, succession planningfor key positions, global grading, evaluation and incentive
schemes, and global English communication and training.
Through heightened transparency and better communication,
TDK seeks to implement more global management to develop
global talent and, through better visualization of HR information, bring immense value to the Group by better harnessing
its many talented human assets around the world. In addition,it also aims to better share best practices to maximize synergy to create advantages of scale with enhanced competitiveness. At the same time, the overseas trainee program is also
a powerful tool for HR development.
As such, TDK plans to leverage it more efficiently to develop young employees by time spent at Group companies
abroad. “I see trust as an issue that also relates to anchoring.
If employees feel that they are part of a company and cantrust each other, then it is possible for people from diverse

backgrounds to come together around an issue and provide
their own ideas and create something together,” said Pedersen, stressing that it is equally important to ask if people feelthey have a “license to create” (relating to adaptiveness) as
this enables the unleashing of innovation across an organization.
He also stressed the need to remember that there is not onlyalignment internally but also with society, which is where
CSR can enter into the equation. He added that sustainability goals and tackling big challenges such as solving societal
issues can be both exciting and deeply motivating for staff.

Conclusion: Moving Forward
Through the dialogue Keller and GHRD were able to gain
new insights and reaffirmed the validity of current initiatives.
At the same time, the discussion also served to reinforce anunderstanding of the importance of moving forward together
to foster global human resources in a corporate environmentthat values diversity.

24

2Develop Human Resources

Cultivate a corporate culture that respects diversity

Report on major initiatives targeting regional diversity
In addressing the critical theme to “Cultivate a corporate culture that respects diversity,” programs are advanced with keen consideration for the respective patterns of diversity in each region. Here, we present the progress made in such efforts during fiscal
2016, examining the comments of managers in their local human resource divisions.

Japan

China

Major expansion of female
employment

Value the workplace withdiversity

To address efforts to promote the advance- Takashi Otake
ment of women, one of the crucial issues Senior Manager,
Relations Department
faced by Japan today, TDK has channeled Labor
Japan HRD Divisionenergies into environmental improvements Human Resources &HQgeared to enable women to remain in the Administration
TDK Corporation
workforce, while likewise strengthening ourhiring activities in that regard. In fiscal 2016,
we set our percentage for regular hiring of women at 25%. While the final
performance fell short of that target at 19%, that represents a considerable gain over the average 13% for the most recent five year period.
For fiscal 2017, we have further raised this goal to an aggressive 30%.

In China, workplace environments with di- Yvonne Ha
versity are so important that we foster an en- Senior Director
Resources
vironment which enhances diversity in our HumanEPCOS Greater China Sales
multi-cultural environment. We believe thata diverse workforce encourages and enforces a respectful dialogue
between different groups, it strengthens the generation and implementation of new ideas and creates an environment where employees feelsafe to learn with and from each other. Each Sales team is made up of
diverse members with individual backgrounds, we provide equal opportunities to all employees independent of their age, gender, etc.

ThailandIsraelDeepening understandingfor other religions

Aiming “Equal”,
contributing handicapped
employment

In TDK Thailand, the majority of its em- Watcharin Permgusol
ployees are Buddhists, so we plan candle Human Resources & General Affairs
Managercasting on Important Buddhist day. In oth- Department
TDK (Thailand) Co., Ltd.
er hands, not only for Buddhists, we also
have engaged into considerations for otherreligions such as preparing the praying room for Muslim employees.
Moreover, we hold the workshops which enhances employees’ understanding of different religions.

In order to achieve “Full Equality”, we have Ariel Yerushalmi
progressed improving workplace environ- Director
ment that any employees with any back- TDK-Lambda Ltd.
ground can feel themselves as “company
nation”. In recent years, we have made a strong effort to hire disable
people, and set a goal of employing those people at least 5% in total
employees. We have contributed to make adjustments in the company to create work-friendly environment for disability employees while
communicating with external associations that promoting the disabled
to work.

America25

The importance to our company

Expectations by stakeholders

TDK is a midstream company group that functions asboth a supplier and a buyer. Along with avoiding risk
by taking steps to protect the environment and social
interests by way of our supply chain, we also boost thecompetitiveness of our supply chain through training
and guidance.

At TDK, we not only comply with and observe the relevant laws and global industrial regulations, we also fulfill our social responsibilities by providing assistanceto our suppliers. Additionally, we work to ameliorate
the social impact of corporate activities including issues such as conflict minerals.

3
Important
ThemesImportant CSR Issues

Consider the Societal and Environmental Impactof the Supply Chain• Consider the work environment at manufacturing sites• Consider the work environment of suppliers• Response to conflict minerals

Basic Policy
Consider the Societal and Environmental Impact of the Supply Chain represent extremely important issues for the
TDK Group as a midstream company. In light of the latest related laws and ordinances as well as global industrial regulations, as part of our responsibilities as a supplier we take note of the labor environment at TDK Group
production sites. Similarly, as a buyer, we ascertain the labor environment conditions of our business partners.
We then implement training and guidance as required with a view to improvement. In this way we forge a solid
supply chain — from upstream to downstream — to fulfill our social responsibilities.

Germany

Broadening qualified
candidates, hiring
diversified employees

Bringing out diversified
employees’ potential

At TCA we are working to develop effective Jon (Jay) Sebastiansources of qualified diverse candidates. In Director & ECO
Human Resources andFebruary we attended a career fair held by General Affairs
the Society of Women Engineers. We also TDK Corporation of America
utilize their resume database. Through efforts like these we are striving to increase the number of qualified diverse candidates for open positions. Ultimately, it is the hiring manager’s
responsibility to hire the most qualified candidate regardless of gender,
age, race, etc. HR works to ensure that the hiring manager has a diverse
group of qualified candidates from which to choose.

TDK Europe Germany is made up of em- Stephanie Demlployees with diversified backgrounds in HR Manager
terms of age, gender, nationality, religion, TDK Europe GmbH
existence of disabilities, etc. We believe that
it is our important role to create a working environment without prejudice
and exclusion. Our recruitment and promotions are determined solely
on the benchmarks of the skills and potential, not biased by individual
backgrounds. Diversity means giving room for different cultures, individual perspectives, experiences and ways of thinking and acting, so we
can meet challenges in a creative and fast way.

Summary of Fiscal 2016 and Outlook Going Forward
Fiscal 2016 also saw implementation of CSR self-checks and CSR self-audits by third party organizations TDKGroup manufacturing sites. Likewise advanced were CSR procurement initiatives targeting customer companies
keyed to the conditions at each Group company, replies to conflict mineral surveys, the setting of global key
performance indicators (KPI) and clarification of the status of the various efforts to advance measures with asense of solidarity. In each and every case, workshops, customer briefings, and other steps were advanced inrecognition of the critical need to earn the understanding and collaboration of our stakeholders. For action on
conflict minerals, TDK continued its participation in the JEITA’s Responsible Minerals Trade Working Group, while
also promoting programs on an industry-wide basis.

26

3Consider the Societal and Environmental Impact of the Supply Chain

Consider the work environment at manufacturing sites / Consider the work environment of suppliers

Opinions and Proposals from the Experts

1

Highly transparent supply chain management through communication withindustry groups, suppliers, and newly acquired companies

Takeshi Shimotaya
President & CEO
Sustainavison Ltd.

The United Nations Human Rights Council approved its Guiding Principles on Business and Human Rights in
2011. Since then a steady stream of international guidelines addressing the need to respect human rights havebeen announced. Related moves include disclosure of human rights related intelligence in many different nations, passage of laws to confirm and report upon human rights issues within supply chains for companies totake action in this area. International initiatives have also picked up steam at the Electric Industry Citizen Coalition(EICC) and other industrial bodies. Clearly, TDK can also expect to face demands for global collaboration withother companies in its field from here on. Being viewed with particular importance these days are moves to engineer effective CSR procurement approaches through cooperation with suppliers. To further heighten transparency, more and more companies are also choosing to publicly disclose their specific suppliers. Going forward, it
will grow increasingly important to maintain a firm grasp of one’s own company’s international business structureand supply chain, followed by the use of country risk and other publicly available information as references inclarifying risk, establishing priorities and otherwise advancing human rights due diligence. In the promotion of
CSR procurement as well, active communication with firms acquired through M&A promises to be indispensable.
If progressive precedents are available, the know-how from such cases should be constructively infused anddeveloped within the sphere of the corporate group.

Opinions and Proposals from the Experts

2

Proactive human rights initiatives, followed by management infusing
the voices of frontline workers

Implementation Date: April 14, 2017

Targeting Human Rights Reponses at the Supply Chain
The United Kingdom passed the Modern Slavery Act in March 2015—a clear indication of rising global moves toward humanrights related legislation at the supply chain level. In such an environment, and with the overseas production ratio of the TDKGroup rising above 80%, the need has definitely emerged for responses keyed to the international trends. To more thoroughly
explore the proper approach for TDK in addressing human rights within its supply chain, two outside experts were invited to takepart in a study session addressing that very theme.

Masaki Wada
CEOEnergetic Green

Learning from Frontline Human Rights Responses
For this study session, welcomed as speakers were Mr.
Takeshi Shimotaya of Sustainavison Ltd., a figure with penetrating insight in the field of global human rights issues, andMr. Masaki Wada of Energetic Green Co., Ltd., a man witha long history of promoting CSR procurement at corporate
frontlines. Five TDK employees also took part, including two
corporate officers in charge of procurement and CSR.
TDK clearly declares its posture of respect for human rights
within the Group’s Code of Conduct, moving to fulfill thosesocial responsibilities rooted in close consideration of human rights, workplace environments, and other crucial matters in all procurement transactions as well.
In fiscal 2016, three important themes were establishedwithin one of our CSR issues: Consider the Societal andEnvironment Impact of the Supply Chain. This was a moveto bolster the Group stance on that front. In the wake ofpassage of the UK Modern Slavery Act, the TDK Group
Policy on Human Rights was formulated in August of 2016,
followed by regular disclosure of the status of approaches
under the guidelines.
27

This study session was positioned to further expand thedepth of initiatives advanced to date to more closely zeroin on the future. The idea was to acquire outside perspectives to help determine specific areas demanding keener
attention, rethinking our conventional approaches to widen the channels of mutual understanding. The talks by Mr.
Shimotaya and Mr. Wada were both presented from theirrespective specialized viewpoints. They sought to profile
international moves toward human rights friendly legislation, the status of forced labor, child labor, and other illicit
practices confirmed worldwide, the rising global attention to
Japan and the supply chains of Japanese companies in the
run-up to the 2020 Tokyo Olympic and Paralympic Games,
and other relevant developments. At the opinion exchange
following the main session, brisk discussions ensued with
TDK personnel in attendance. Key queries included how toestablish more pronounced awareness of CSR throughout
the Group as a whole, and what approaches to adopt upon
difficulties in achieving the understanding of such mattersfrom suppliers.

Laws and regulations for corporate compliance in adoption of supply chain based labor management are emerging with the focus on Europe and the U.S. They include bans on imports and exports of products for which forcedlabor is detected along supply chains, with substantial impact on business practices already being reported. The
consequences of related problems will inevitably be felt on stock prices, not to mention prompting commentsfrom the media and NGOs. In advancing procurement, therefore, it is critical to constantly put yourself in theposition of the stakeholders. Moreover, while laws and guidelines are naturally important, being content to simply
satisfy such demands can generate mistaken impressions of what truly needs to be done. With supplier audits,
although detailed checks of documents must be performed, it is more critical to directly listen to the voices ofworkers. Potent methods on that front include setting up hotlines with supplier employees and other schemes tospeedily identity problems. When understanding with suppliers is slow in coming, communication as an extension of “5S” activities or other initiatives already widely used in the manufacturing sector offers the potential for
progress. Workplace-based human rights problems are prone to lead to quality defects in sectors characterizedby human operation, with efforts to promote understanding of the linkage between such dynamics and quality
control suggesting one potentially effective countermeasure.

Reflections on the Expert opinions

Atsuo Kobayashi
Executive Vice President
General Manager
SCM & Management System HQ
TDK Corporation

This session provided the opportunity toinquire about global trends and specificexamples, underscoring the severe risks
posed by forced labor within the supply
chain. Grasping the nature of such risks
makes it easier to mount countermeasuresin advance, enabling rapid responses toactual issues occurring at the supplier level. I also felt that appropriate human rights
responses play an extremely important rolein raising competitive strength as a progressive company, and otherwise transforming risk into opportunities. We must
avoid becoming overly preoccupied withlaws, guidelines, and other administrative
rules. Instead, we need to set our sights onmoving beyond that domain with initiatives
capable of realizing the ideal process at ahigher dimension of understanding.

Takakazu Momozuka
Corporate Officer
Chief Compliance Officer &General Manager
Legal & Compliance HQ
TDK Corporation

While confirming the status of supply chainsthat reach around the world is obviously noeasy task, this exchange reconfirmed thatthe first step in that direction is to develop a firm grasp of the overall schemes inplace. After that, we need to prioritize therisks to target, formulate policies and thenwork through the PDCA cycle to promote
effective initiatives. As we move to advanceaggressive M&A, companies with different
cultures and labor practices will also join
the Group. This creates the need for solid
human rights due diligence, proper sharing of the TDK corporate philosophy and
DNA throughout the Group as a whole,
thereby paving the way to genuine growth
as a combination of financial and non-financial operations alike.

28

3Consider the Societal and Environmental Impact of the Supply Chain

Consider the work environment at manufacturing sites / Consider the work environment of suppliers

Upstream company

Midstream company

Downstream company

Upstream company

Midstream company

Supplier

TDK

Customer

Supplier

TDK

Procurement

Supplier

Buyer
Supplier

Procurement

Procurement

Supplier
Buyer

Buyer
Supplier

Downstream company
Customer
Procurement

Buyer

Efforts as a Supplier

Efforts as a Buyer

As a supplier from which customers procure products, TDK channels tireless efforts into fulfilling its social and environmental
responsibilities at all of our sites.

As a buyer procuring materials, TDK engages in CSR procurement emphasizing communication and builds solid relationshipsof trust. We believe that these efforts enhance the corporate value of both suppliers and TDK.

(Consider the work environment at manufacturing sites)

Fiscal 2016 Goals• Perform 100% self-checks at manufacturing sites• Secure 100% opportunities for third-party CSR audits once every two years(Consider the work environment of suppliers)

Fiscal 2016 Goals• Set global-scale key performance indicators (KPI)(China and ASEAN region)

Activity Details• TDK CSR Checksheet at 78 targeted sites during fiscal 2016
• Third-party auditing companies CSR self-audits at four of the 38 targeted sites in the region inquestion.

Activity Details• Perform CSR procurement and audits at each Group company• Set group-wide shared KPI based on the results of actual CSR procurement(In fiscal 2015, CSR audits by customers and CSR self-audits by third-party auditing companies were performed at 25
sites; in fiscal 2016, CSR audits by customers were performed at 13 sites)• CSR internal auditor training sessions in China (courses completed by 198 persons through fiscal 2016)

Efforts at TDK
TDK has compiled the TDK CSR Self-Check Sheet, based on the Electronic Industry Citizenship Coalition (EICC) Code of Conduct, with theaims of identifying issues in CSR activities and replying speedily to customers. This self-diagnosis is implemented at all production sites every
year. Furthermore, TDK responds to requests from customers for CSR audits, which have been increasing in recent years, seeing them as agood opportunity to further raise the level of CSR activities.
Regarding production sites in high-risk regions of China and ASEAN, including these customer CSR audits, once every two years we conduct
CSR self-audits by third-party auditing companies. Since 2013 TDK has also been implementing CSR internal auditor training every year withthe aims of conveying a systemic understanding of the requirements of these CSR audits to employees and upgrading CSR activities at production sites.

CSR Workshops in China and Malaysia
CSR workshops were held in China in September and Malaysia in November. The objective was the useof information exchanges between Group bases to further raise the caliber of CSR activities. In China, 21
persons participated in the session, which included explanations of activities conducted in various locations
nationwide, as well as exchanges of views on audit initiatives, work environment troubleshooting, and othertopics. The Malaysia workshop attracted 15 participants, who joined with experts in discussing how to deal
with issues related to foreign workers.

TDK treats CSR as a key component of its purchasing policy, while striving to earn understanding of the importance of CSR from suppliers andencourage increased awareness in that area. We incorporate provisions into contractual agreements keyed to the specific conditions at each of
our Group companies, while industriously advancing evaluations based on CSR check sheets, CSR audits, and other efforts. When problems
are found in the details, individual requests for improvements are issued. As one example of such a request from a CSR audit, the detection of
defects in wastewater treatment equipment led to improvements by the supplier involved.

Supplier Meeting in Zhuhai
Zhuhai FTZ invited some 50 of its suppliers to improve their understanding of the plant’s CSR requirements, among others. The factory, which produces film capacitors, varistors, PTCs and temperature
sensors, presented the company’s CSR organization and summarized its CSR situation in 2016: ofcourse no child labor, 0 employees work more than 6 consecutive days, 0 employees work more than
60 hours a week, and the plant fully complies with the ISO 14001 and OHSAS 18001 standards forenvironmental and occupational health and safety management systems. Zhuhai FTZ selects only
suppliers that likewise comply with the UN Global Compact’s Ten Principles for human rights, labor, environment and anti-corruption. Compliance is a knock-out criteria in the procurement process. Supplierrepresentatives confirmed that the Supplier Day greatly increased their awareness of CSR.

Supplier Day at the Zhuhai FTZ plant

CSR workshops in China

Voice

Voice

Tang Xiao Yan
EHSAmperex Technology Limited

29

Efforts at TDK

The frequency of customer CSR audit has been trended up year by year, and ATL has received
a lot of CSR audits in this trend. ATL had no significant nonconformity in these audits, and established strategic partnership with customers, also shared our best practice with our customer’s suppliers. Besides, ATL has contributed to the Industry through participating in compilingthe international standards and guidelines. ATL and partners are willing to assume corporatesocial responsibility, and grow together on the path of ATL.

Helen Ye

In 2016, we completed process audits with an integrated CSR focus for 17 suppliers. We also
certified 7 experts from our procurement team as CSR internal auditors. In 2017 four of the 20
suppliers to be audited will be selected for an intensive CSR audit. We also take every opportunity to meet with suppliers, either in our plant or theirs, to explain our CSR requirements. It is
my goal to further promote CSR compliance throughout the entire supply chain.

Head of Sourcing
EPCOS (Zhuhai FTZ) Co., Ltd.

30

3Consider the Societal and Environmental Impact of the Supply Chain

Response to Conflict Minerals

Response to Conflict Minerals
Against the backdrop of rising interest in responsible mineral procurement, we act in the capacity of a midstream company topromote problem-solving initiatives throughout the entire supply chain.

Fiscal 2016 Goals

Activity Details• Set global-scale key performance indicators (KPI)

Expectations by stakeholders

The importance to our company
To support sustainable development of society, the
TDK Group unites in the quest to reduce CO2 emissions, effluents and waste in production activities, andotherwise use its business activities to minimize theglobal environmental load.

TDK complies with all environmental laws and regulations, working to lower the environmental load of its
business activities, promote and invigorate the natural environment and advance other basic initiatives.
Through its products, the Group also contributes toreducing energy consumption and implementing climate change countermeasures.

• Responses to surveys and promotion of DRC conflict-free procurement at each Group company• Setting of group-wide shared KPI based on the results of survey results• Promotion of issue solutions in collaboration with industry associations

Efforts at TDK
Human rights issues surrounding mineral procurement have emerged as a crucial social challenge worldwide, prompting keen and risinginterest in responsible procurement of such resources. For example, there are cases when minerals mined in the Democratic Republic of theCongo (DRC) and adjoining countries serve as the source of funding for armed groups. This brought notice to how such minerals are used tobankroll conflict, resulting in human rights violations against local residents and other crises. At TDK, conflict mineral countermeasures werelaunched in 2010, the year of passage for the Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S. In April 2013, the TDKGroup Policy on Conflict Minerals*1 was issued. This prompted each company to set up survey response systems based on the new rules, alongwith efforts in compliance with the OECD due diligence guidelines. Moreover, with growing awareness that resolutions to the conflict mineral
problem require that initiatives be incorporated throughout the supply chain, such efforts are being promoted through close cooperation withindustry organizations.

4
Important
ThemesImportant CSR Issues

Develop and Prosper in Harmony
with the Global Environment• Reduce environmental load throughout life cycle stages• Creating a framework for gauging product contributions*1 Details of the TDK Group Policy on Conflict Minerals, please refer to the following website: http://www.global.tdk.com/corp/en/csr/supplier_responsibility/csr02210.htm

Participation in Work to Revise Conflict Mineral Data Exchange Standards
The Conflict-Free Sourcing Imitative (CFSI*2) CMRT,*3 a shared tool for investigating conflict minerals, is formulated from the contents of the
Conflict Mineral Data Exchange Standard (IPC-1755). In view of the potential impact on survey responses throughout its entire supply chain,
TDK collaborates with activities advanced by the Japan Electronics and Information Technology Industries Association (JEITA)’s Responsible
Minerals Trade Working Group*4 to join in formulating and revising the IPC-1755 standard. The actual studies began from 2014, with the focus
on clarifying interpretations of Securities and Exchange Commission (SEC) regulations and the handling exchanges of smelters information,with revisions made in 2017. In recognition of its contributions to this standard revision work, TDK was honored by IPC with the Distinguished
Committee Service Award.

Basic Policy
As stated in the TDK Environmental Charter, “Develop and Prosper in Harmony with the Global Environment”
is one of the TDK Group’s most important business themes. “TDK Environmental Vision 2035” has been established to contribute to developing a sustainable society. Based on this vision, “TDK Environment, Health and
Safety Action 2025” has been formulated as a basic action plan for specific steps. The Company also strives toformulate industry standards for gauging product contribution, thereby promoting greater social understandingof the value of its eco-friendly contributions*2 An organization addressing conflict mineral issues established by the Electronic Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI)*3 Conflict Minerals Reporting Template*4 For details on JEITA’s Responsible Minerals Trade Working Group, please refer to following website: http://home.jeita.or.jp/mineral/eng/index_e.html

Summary of Fiscal 2016, Outlook Going Forward

Comment

Kazuko Andersen
Washington DC Office
Japan Electronics andInformation Technology
Industries Association (JEITA)

31

The JEITA Washington DC Office collaborates with CFSI in its quest to find solutions for the conflict minerals
problem. JEITA joined CFSI soon after it was inaugurated, working from the perspective of Japanese companies within CFSI, a body comprised almost exclusively of OEM firms, particularly to share opinions with companies located along the supply chain. We make every possible effort to propose balanced solutions designed
to avoid unfair burdens. CFSI meetings are convened weekly, with discussions of CMRT, IPC Data ExchangeStandards, methods for companies to effectively respond, and other topics. In the event of specific proposals
or demands, prompt responses are a must. From TDK, we always receive timely feedback on the technical andpractical application fronts in our work of preparing industry standards focused on supplier surveys, with that
intelligence reflected in the IPC and CFSI. As the scope of our activities expands through the formulation of EU
regulation on conflict minerals, the vital importance of leadership and commitment will steadily grow. Joining
with top-caliber companies like TDK, we look forward to continuing to team up with all stakeholders in a rigorous
push to hammer out resolutions for human rights problems.

Throughout fiscal 2016, which marked the start of both TDK Environmental Vision 2035 and TDK Environment,
Health and Safety Action 2025, concerted efforts were advanced to instill greater awareness of these schemes
throughout the TDK Group. With the expression of the Environmental Vision based on our specific corporate
vision, activities are being steadily expanded with aim of motivating each Group employee to devote profoundthought to these issues and take concrete action. With the new Environmental Vision stressing the importance of
lifecycle perspectives, strong moves are afoot to deploy foundations for activities in domains beyond the scope
covered to date. Looking ahead, preparations will be advanced for conversion of each TDK environmental loadfactor into CO2 levels, seeking to provide valid standards for quantification of the ideal targets of our Environmental Vision. Efforts will likewise be redoubled in moving toward shared standards across the electronic components industry for computation of the specific magnitude of CO2 reduction contributions.

32

4Develop and Prosper in Harmony with the Global Environment

Reduce Environmental Load throughout Life Cycle Stages

Reduce Environmental Load throughout
Life Cycle Stages“TDK Environment, Health and Safety Action2025” Basic Environmental Action Plan

At TDK, we view promotion of long-term environmental action as a vital key in realizing sustained development for our society.
Within TDK Environmental Vision 2035, newly launched from fiscal 2016, the goal is outlined for reducing the overall environmental load, from procurement through disposal, firmly rooted in a constructive lifecycle perspective.

Formulation of the TDK Environmental Vision 2035
Trends in TDK Environmental Activities
2003
TDK Environmental Action 2010
Strengthened EMS
Addressing risk management anda recycling-oriented society

2006
TDK Environmental Action 2015
Implementation of environmental
management
Moving from image generation to
management essentials

2011
TDK Environmental Action 2020
Environmental growth strategies
Envisioning an era of environmental
performance driven productdifferentiation

Revitalizing and Protecting the Global
Environment in Preparation for the TDKCentennial Anniversary
The TDK Group achieved its carbon neutral target, originally outlined in our third basic environmental action plan TDK Environmental Action 2020, far ahead of schedule in fiscal 2014. Announced
in 2015, prior to the formulation of our next regular environmental vision was Vision 2035, a corporate commitment keyed to theCompany’s centennial year still two decades away. In Vision 2035,
TDK pledge to strive to achieve further innovation and create value
for customers through the delivery of outstanding quality products
and services, by utilizing the diverse global resources. Based on
this corporate motto, TDK will continue to “contribute to culture andindustry through creativity”, by revitalizing and protecting the global environment and creating a pleasant and safe society. Our Environmental Vision comprises one phase of Vision 2035, we envisionbusiness operations under the environmental load within natural
circulation. According to this idea, the goal of “to halve the CO2
emission basic-unit in a life-cycle perspective by 2035” hasbeen formulated as “TDK Environmental Vision 2035.” This stancestems from the belief that minimizing the environmental load inbusiness activities, and revitalizing the natural environment, is theduty of companies that supply products designed to contribute toits customers and the society. Moreover, modeled on the United
Nations Climate Change Conference (COP 21) Paris Agreement,
which seeks to curb global warming by achieving a balance between greenhouse gas emissions and absorption sources, this isalso considered the ideal corporate posture for all TDK activities.

Until 2035

* Details on the TDK Environment, Health and Safety Action 2025 Action Plan may
be assessed on the following website:
http://www.global.tdk.com/corp/en/csr/environmental_responsibility/csr03200.htm

TDK Environmental
Vision 2035

Conversion of Pure Water Production
Heat Sources

TDK Environmental Vision 2035

Procurement

Disposal

Due to the risk of electronic component metal plating acting
to undermine quality due to impurities in the water, pure water
is used for this work. At the Iwaki Factory of TDK Akita Corporation, conversion from the fuel heating method to heat pumpstyle electric heating has been engineered in the heat sourcefor producing and heating the pure water used in electronic
component plating. This approach allows easier temperature
management, while also lowering CO2 emissions. For fiscal
2016, CO2 emissions reduction volume was computed at
117 tons for the year.

half
Development/
Production

Use

Heat pump type electric heating
equipment installed at the factory

backcasting

Super-Long-Term
Environmental Vision 2035
The operation under the environmentalload within natural circulation
Halve the CO2 emission basic-unit ina life-cycle perspective by 2035

TDK Environment, Health and Safety Action 2025
Continuity from “TDK Environmental Action 2020”• Mitigation of the environmental burden in theprocess and revitalizing the global environment• Deliver products to contribute customers andsocietyforecasting• Creating a pleasant and safe work place

Die Bonder Systems Contribute to
Lower Environmental Load
Die bonders are mounting devices mobilized within the manufacturing process for semiconductors embedded substrates(SESUB)—components used to downsize and slim electronic
machinery. More specifically, these bonders serve to actually embed the slimmed IC in substrates. TDK mobilizes its advanced production technology, one of the Company’s coretechnological strengths, in structuring these bonders to meetthe needs of actual production sites. The reduced installation
area and energy-efficient design are instrumental in lowering the environmental load
upon their delivery to customers, as well as upon actual
operation. In terms of CO2
conversion, the environmental
contribution of these products
Die bonder equipment
is 289 tons.

Achievements in Fiscal 2016

Achievements in Fiscal 2016

CO2 emissions
from production
activities*

Reduction of
CO2 emissions
through products*

Logistics

Expanding Action Spheres from a Lifecycle Perspective
Within TDK Environmental Vision 2035, the declaration is made to reduce the environmental load from a lifecycle perspective. This represents
an initiative not limited to measures at the manufacturing stage in factories and the use stage for customers, aspects outlined in the conventional
TDK Environmental Action 2020 policy. To expand in this way, we deem it critical for all TDK Group employees to share the same vision andmove forward with the same objectives in mind.
The “revitalizing and protecting the global environment” expressed in this corporate vision refers to the skillful operation of our business hand inhand with the natural environment. Without that commitment, there will be no sustainable development on the horizon. Going forward, the aim isfor all members of the TDK Group to share the same vision, while structuring their activities in means friendly to the formulation of autonomous
initiatives.

33

Conceived on the cornerstone of TDK Environmental Vision2035 was a new basic environmental plan extending throughyear 2025, namely TDK Environment, Health and Safety Action
2025. The action categories and target figures of “TDK Environment, Health and Safety Action 2025” reflect dual consideration
for “backcasting” from TDK Environmental Vision 2035, andcontinuity and “forecasting” from “TDK Environmental Action
2020. At present, seven action categories have been determined. In the near future, plans call for integrating the environmental loads of these targets through CO2 conversion, followedby the promotion of action plans targeting the ideal targets enumerated in TDK Environmental Vision 2035.
With regard to safety and health as well, steps will be taken to
newly stipulate original action categories and goals, thus moving to realize truly safe and healthy workplace environments.

Environment, Health and Safety Action
2025 Action Plan

(environmental load)

1,463

thousand t-CO2(environmental contribution)

1,675

thousand t-CO2*The calculation method was subjected to a third-party review. For the contents of that review, please refer to the following URL:
http://www.global.tdk.com/corp/en/csr/csr_data/csr05900.htm

34

4Creating a Framework for
Gauging Product Contributions

Develop and Prosper in Harmony with the Global Environment

Building Factories with Maximum Environmental Consideration
When constructing new factories or other buildings, TDK works closely with the architects to adopt designs and execution methods based on maximum environmental
consideration. The new factories in Akita, completed in 2016 as cutting-edge Monozukuri site, were designed with keen attention to raising energy efficiency. For example, taking advantage of the winter weather in Akita Prefecture, the Honjo Factory East
Site is able to store accumulated snow in pits. The snow is then channeled throughheat exchangers to assist in cold energy recovery, while accumulated rainwater isused to flush toilets. Solar power generation there reaches a maximum of 125kW.
That capacity is sufficient to supply up to 70% of the total lighting power consumed
across the entire Honjo Factory East Site. The angles of solar panels installed on therooftop are optimized, while adoption of panels capable of generating power on bothsides ease the impact of winter snowfall to help raise power generation efficiency.
On a related front, the workplace environments here are engineered to be superbly employee-friendly. Parking lots, for instance, are installed with in-factory arcades
and snow-melting systems to prevent damage from wind and snow. The parking lot
snow-melting equipment utilizes terrestrial heat and factory waste heat—further examples of the concerted push to realize a factory based on maximum environmental
consideration.

Solar power generation (located not only on the rooftop, butalso installed vertically as blind walls)

Arcade and snow-melting systeminstalled in the parking lot

Corporate GovernanceCorporate Governance
Basic Policy

Corporate Governance System

In 2016, TDK formulated the TDK Basic Policy on Corporate Governance* with the aim of contributing to the Group’s sustained
growth and enhancement of corporate value over the medium tolong term. The basic views behind this policy is outlined below (selected excerpts).

Honjo Factory East Site

Snow use pit (left: Input port; right: pit interior)Creating a Framework for Gauging ProductContributions
Striving through formulation of industry-shared standards, steps are taken to promote social understanding of the Company’senvironmental contribution value.

Efforts at TDK
Expand reduction of CO2 emissions through products (product contributions) is one of the core initiatives within TDK Environmental Vision 2035 and Environment, Health and Safety Action 2025. To mount potent appeals for the social contributions by
TDK products as the fruits of technical initiatives, these product contributions have been calculated and disclosed from TDK
Environmental Action 2020 (the Company’s previous medium- to long-term plan). Public awareness activities are also being
advanced to gain understanding of the contributions of electronic components as intermediary parts, along with moves to formulate coherent industry standards for calculation methods positioned to serve as the basis for earning appropriate evaluationsof product contributions performance.
During fiscal 2016, TDK held a lecture event at Electronics Goes Green
2016+, in an international environmental related conference convened in Berlin, Germany in September, under the title of Methods to Calculate GHG Reduction Contributions of Electronic Components. At a later date, employees
from TDK Group company EPCOS familiarized German industry groups withthe contents of that presentation. In November, at the JEITA 3rd Environmental Seminar—IT and Electronics Contributing to Prevention of Global Warming, TDK represented the electronic components industry with a talk used to
Lecture delivered at JEITA Environmental Seminar
discuss Contributions by Electronic Components to Reducing CO2.

35

TDK CSR REPORT 2017

1. Adoption of the Company Auditor System and Strengthening of the Supervisory Function:
TDK has adopted the Company Auditor System pursuant to theCompanies Act of Japan and has appointed three independent
Outside Company Auditors (of the five Company Auditors) who
have no conflicts of interest in TDK in order to strengthen the
supervision of TDK’s management.

(1) Based on the founding spirit “Contribute to culture and industry through creativity,” as the Corporate Motto of TDK which wasestablished in 1935 as the world’s first company to industrialize amagnetic material called ferrite, TDK unremittingly pursues originality and increased corporate value through provisions of products and services which have created new value.
(2) TDK builds satisfaction, trust, and support among all stakeholders (shareholders, customers, suppliers, employees and communities, among others), continues to be helpful by resolving social
issues, and contributes to the development of a more sustainable
society.
(3) TDK clearly declares as the TDK Charter of Corporate Behavior
that TDK will continue to respect human rights; comply with relevant laws, regulations, and international rules and the spirit thereof;and carry out its social responsibility with a strong sense of ethics,
domestically and overseas. All members of the TDK Group seek tobehave in strict compliance with the Corporate Standards of Business Conduct prescribed by the TDK Code of Conduct.
(4) TDK aims to achieve its management targets and further improve corporate value through the creation of products by adhering to Corporate Motto. At the same time, TDK strives to foster asound corporate culture and sincerely conduct business activities,
always aware of its place as a member of society.
(5) TDK will be accountable to stakeholders through comprehensive, accurate, timely, and impartial disclosure of information.

2. Strengthening the Function of the Board of Directors andIncreasing the Accountability of Directors:
TDK has a small number of Directors to expedite the management decision-making process. At the same time, TDK has
appointed objective, independent Outside Directors (three) inorder to enhance the supervision of TDK’s management. In addition, the Directors’ terms of office are set at one year to give
shareholders an opportunity to cast votes of confidence regarding Directors’ performance every business year.

3. Adoption of a Corporate Officer System for Expeditious
Business Execution:
TDK has adopted a Corporate Officer system that separates the
management decision-making and Director supervisory functions of the Board of Directors from the execution of business.
Corporate Officers are in charge of business execution and carrying out decisions made by the Board of Directors and thereby
expeditiously execute business operations in accordance withmanagement decisions.

4. Establishment of Advisory Bodies to the Board of Directors:
The Business Ethics & CSR Committee, Disclosure Advisory
Committee, Compensation Advisory Committee, and Nomination Advisory Committee have been established as advisory
bodies to the Board of Directors.

* For the full text of the TDK Basic Policy for Corporate Governance, please refer tofollowing website:
http://www.global.tdk.com/corp/en/ir/tdk_management_policy/governance/basic/

TDK group’s corporate governance system
Ordinary general meeting of shareholders
Information disclosure (Reports, Submit proposals)

Business Ethics & CSR
Committee

Elect and dismiss, Supervise

Advice/Board of Directors
report 7 directors (including 3 outside directors)

Ensure compliance with corporate
ethics, promote CSR activity

Management decision making

Disclosure Advisory
Committee

President

Discuss and examine important
corporate information disclosure

Compensation Advisory
Committee

Chaired by Outside director

Review the remuneration for
directors and corporate officers

Board of Audit & Supervisory
Board Members

Audit

5 auditors (including 3 outside auditors)
Management supervision

Elect and dismiss, Supervise

Decide policies and measuresrelated to business execution

Elect and dismiss, Supervise

Review policies and measuresrelating to business execution
Discuss andreport important
projects

Guide andsupervise

Nomination Advisory
Committee

Corporate Officers

Chaired by Outside director

Business execution

Deliberate matters concerning
nomination of directors, Audit &Supervisory Board members, andcorporate officers

Divisions andGroup companies

ReportAccounting Auditors

Cooperate

Accounting audits

Audit & Supervisory Board Members Office
ReportReportAssist Audit & Supervisory Board Members
ReportReportExecutive Committee

Elect and dismiss, Supervise

Enterprise Risk Management
Committee
Promote enterprise risk
management (ERM)

Management Review &Support Group

Cooperate

Audit consistency of businessexecution and management policies
and management efficiency

Crisis Management Committee
Countermeasures against
unexpected contingencies

Information Security Committee
Undertake information security
measures36

TDK CSR REPORT 2017

Compliance

Compliance
Basic Policy

Spreading Compliance Awareness

The TDK Group endeavors to gain the satisfaction, trust, and support of all stakeholders, including customers, suppliers, employees, shareholders, and local communities; to continue as an entitythat solves social issues and is useful to society; and to contributeto the development of a sustainable society. To this end, we havestated clearly in the TDK Charter of Corporate Behavior that both inJapan and in other countries we shall respect human rights, obey
related laws, international rules, and their spirit, and fulfill our social
responsibility with a high ethical sense. All members of the TDKGroup shall act in strict accordance with the standards of behavior
stipulated in the TDK Code of Conduct.
Furthermore, in order for employees to abide by the TDK Group’s
management philosophy, including the corporate motto and corporate principles, and social norms, including related laws, international rules, and their spirit, the Business Ethics & CSR Committee
thoroughly publicizes the TDK Code of Conduct, which stipulates
specific behavior guidelines, and endeavors to imbue practice ofthe corporate motto, thorough implementation of corporate ethics,
and understanding of the significance of social responsibility.

TDK provides every TDK Group employee with a copy of the TDK
Code of Conduct Handbook, which they can use as a guide for
their individual business activities, and also endeavors to spreadawareness by, for example, displaying posters.
Also, in order to deepen employees’ understanding of compliance,
TDK implements training for specific ranks and e-learning for all
employees, as well as lectures for management by responsible
directors and outside speakers. During fiscal 2016, e-learning programs were arranged for 98% of all TDK Group employees.

TDK’s Worldwide Internal Reporting System
Board of Directors

HQ

Business Ethics & CSR Committee
Americas*1

Third-party
Help Line

Regional HQs

Help LineEurope*1Asia*1Third-party
Help Line

Help Line

Third-party
Help Line

Help Line

Subsidiaries

Subsidiaries

Subsidiaries

Ethics Council

Ethics Council

Ethics Council

Consultation
HotlineEmployees

Consultation
HotlineConsultation
HotlineEmployees

Employees*1; Employee consultation route37

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

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

Compliance Strengthening Efforts
Recent years have seen increased prosecutions of competition law
in nations around the world. This is prompting numerous cases ofcompanies being taken to court by the antitrust (competition law)authorities for suspected cartel activities, with many ordered to
pay massive fines for their alleged actions. There has also been asteady stream of criminal charges filed against individual officers
and employees, damage claims from suppliers and consumers,
shareholder lawsuits, and other harsh developments.
The TDK Charter of Corporate Behavior stipulates that TDK willcomply with the laws and regulations in each and every nation
where it does business, while living up to its social responsibilities from a powerful ethical perspective. Against this backdrop,
education aimed at preventing cartel activities is provided in theform of workshops taught by outside experts, e-learning and otherprograms advanced worldwide.
Despite this stance, however, the Japan Fair Trade Commission
launched an on-site investigation at TDK related to the HDD suspension business, with the Company fully cooperating with the investigating authorities.
In October 2016, Compliance HQ was newly establishd, with regional compliance officers assigned to each region, a system deployed to promote related global activities and employee compliance programs implemented in increasingly thorough fashion.

Third-Party Opinion

Third-Party Opinion

1. Contribute to the World through Technology

Help Lines
In order to prevent violations of compliance in advance and also
to detect violations as quickly as possible and deal with them, the
TDK Group enables all TDK Group members to report complianceviolations. As a system contributing to the thorough permeation ofcompliance, TDK has established consultation hotlines in Ethics
Councils and an internal help line in each region.
Furthermore, in order to facilitate the speedy resolution of serious
compliance problems, third-party help lines have been set up in
the Americas, Europe, and Asia to enable employees to directly
inform the Business Ethics & CSR Committee through a third party,
such as a law office. The TDK Code of Conduct Program stipulates
the protection of informants so that they do not suffer any unfair
treatment or disadvantages.

TDK CSR REPORT 2017

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

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

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

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

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

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

38

TDK Corporation
Shibaura Renasite Tower,
3-9-1 Shibaura, Minato-ku, Tokyo 108-0023
CSR Group, Legal & Compliance HQ
TEL : +81-3-6852-7115
http://www.global.tdk.com/corp/en/