Company Introduction

Strategies and Businesses Promotion of ESG Initiatives

Corporate Information

Corporate Governance

Promotion of ESG Initiatives
Further Promoting Initiatives to Sustain
Growth in the Areas of Governance,
Society and the Environment

Corporate GovernanceCorporate Governance Structure — P38–40 Internal Control System — P40

Compliance — P40–41

Information Security — P41–42 Risk Management — P42–43

Toyota Industries strives to enhance its corporate value in a stable manner over the long term and maintains society’s
trust by earnestly fulfilling its social responsibilities in accordance with its Basic Philosophy. To that end, Toyota
Industries endeavors to further enhance its corporate governance in its efforts to maintain and improve management
efficiency and the fairness and transparency of its corporate activities.

Corporate Governance Structure

disclosure of information.
More specifically, the following basic policies drive ourinitiatives.
(1) We seek to ensure shareholders’ rights and equality.
(2)	We seek to promote appropriate collaboration withstakeholders other than shareholders (including
customers, business partners, creditors, local
communities and employees).
(3)	We seek to conduct appropriate information disclosureand ensure transparency.
(4)	We seek to perform the roles and duties of the Board of
Directors appropriately in order to make decisions in atransparent, fair, quick and resolute manner.
(5)	We seek to promote a constructive dialogue withshareholders.

Basic Perspective on Corporate GovernanceToyota Industries regards the most important managerial
task is to earn trust broadly from society and enhance ourcorporate value on a stable, long-term basis. We aim to
do this task based on our Basic Philosophy and earnestly
fulfilling our social responsibilities. Our basic focus is on
contributing to the creation of an enriched society throughbusiness activities, and we believe it is essential to cultivate
good relationships with stakeholders, including shareholders,customers, business partners, creditors, local communities
and employees.
Accordingly, we strive to enhance our corporate
governance in order to maintain and improve management
efficiency, fairness and transparency. For example, we haveestablished a structure to quickly and flexibly respond tochanges in the business environment and have been working
to augment management oversight and ensure the timely

Implementation Structure
Toyota Industries convenes monthly meetings of the Board

Selection and Dismissal of Senior Management
and Appointment of Director and Audit &Supervisory Board Member Candidates

Shareholders’ Meetings
Selection/Dismissal

Selection/Dismissal

Reporting

Cooperation

Independent Auditors

Accounting
Audit

Executive Compensation
Committee

Selection/Dismissal

Reporting

Audit & Supervisory Board
Board of Directors

ReportingExchange of Opinions

Executive Appointment
Committee

Appointment/Monitoring

Management Committee(Deliberates on important matters from management’s perspective)

Management Council

Monitoring
Selection/Dismissal
Cooperation

President

Business Operation Committee(Follows up on the execution of business operations)

Discussion/
ReportingDirection/
Supervision

Reporting
Audit Dept.

(Reports on and confirms execution of business operations)Internal Audit

Functional Meetings*1, Committees*2
Senior Executive Officers

Business Divisions/In-House Company/Departments

Audit & Supervisory
Board Office
Cooperation

Monitoring*1: Functional
Meetings*2: Committees
CSR

Human Resources
Quality

Environmental

Production

Export Transaction
Controls

Procurement

Safety and HealthTechnologies

Profit Improvement

These entities deliberate andfollow up on issues in respective areas.

Subsidiaries/Affiliates(As of June 9, 2020)
Toyota Industries’ Corporate Governance Reports are available at its Website (in Japanese).

38

Toyota Industries Report 2020of Directors to resolve important management matters andmonitor the execution of duties by directors. We appoint
outside directors who have a wealth of experience andknowledge concerning business management. They attend
meetings of the Board of Directors and give opinions
and ask questions as deemed necessary based on theirindividual, wide-ranging experience and insights related
to the management of globally operating companies andmonozukuri (manufacturing). Through this supervisory
function of outside directors, we ensure the legality andvalidity of the Board’s decisions as well as directors’
execution of duties from an objective perspective. The
Management Committee, which is composed of directors at
the executive vice president level and above as well as senior
executive officers and other executives, deliberates on avariety of issues concerning important management matterssuch as our corporate vision, management policies, mediumterm business strategies and major investments.
Toyota Industries has a divisional organization system,with significant authority delegated to each business division.
For especially crucial matters, however, we have establishedthe Business Operation Committee to enable the president
to meet with the heads of each business division regularly
to monitor and follow the status of their business execution.
At meetings of the Management Council, directors, audit &supervisory board members and senior executive officers
convene to report and confirm the monthly status of business
operations and share overall deliberations at Board of Directors
meetings and other management-related information.
In addition, issues pertaining to human resources, quality,
production, procurement and technologies are discussed
at the corresponding functional meetings. We have also put
in place committees to deliberate on more specific matters,such as corporate social responsibility (CSR), the environment
and export transaction controls. These functional meetingsand committees discuss important matters and action themes
in respective areas. Moreover, we strive to maintain andimprove internal controls by establishing the Audit Department
and conducting internal audits of Toyota Industries’ businessdivisions and departments as well as our subsidiaries.

Link tothe report.

As our policies concerning selection (and dismissal) of senior
management and appointment of director candidates, we
carry out comprehensive evaluations from the viewpointof placing the right persons in the right positions. We seeka balance between making sound and quick decisions,managing risk appropriately and monitoring execution ofbusiness operations and covering a specific function orbusiness division of Toyota Industries.
In appointing audit & supervisory board member
candidates, we also perform comprehensive evaluations fromthe viewpoint of placing the right persons in the right positions,while ensuring a balance among the financial, accounting
and legal insights, knowledge on our business fields and thediversity of perspectives on corporate management.
Based on these policies, we review proposals, exchange
views and confirm details at the Executive Appointment
Committee, which includes independent outside directors, andsubmit these proposals to the Board of Directors for resolution.

Appointment of Independent Members ofManagement
As a publicly listed company, Toyota Industries strives toensure the fairness and transparency of management.
Following the Securities Listing Regulations stipulated by
the Tokyo Stock Exchange and Nagoya Stock Exchange,
respectively, to further enhance our corporate governanceToyota Industries has appointed as independent membersof management two outside directors and two outside audit& supervisory board members who are deemed to have noconflicts of interest with our shareholders.

Determination of Compensation for Senior
Management and Directors
Compensation for senior management and directors
consists of monthly salaries and bonuses. Our policy is tolink their compensation with the business performance ofToyota Industries, reflecting their duties and performancein compensation. Bonuses, in particular, are determinedbased on consolidated operating profit of each fiscal year
while comprehensively taking into consideration dividends,
employees’ bonus level, trends among other companies,
medium- to long-term business performance and pastrecords of bonus payments.
As procedures to determine compensation, we review
proposals based on this policy, exchange views and confirm
details at the Executive Compensation Committee, which
includes independent outside directors, and submit these
proposals to the Board of Directors for resolution.

Effectiveness of the Board of Directors and Its
Evaluation
Through interviews with outside directors and audit &supervisory board members, Toyota Industries asks themto evaluate the effectiveness of the Board of Directors andcollects their feedback. The results of their evaluation aresummarized below.
(1)	Opportunities are provided to share information andhold discussions about management issues and othermatters.
(2)	Appropriate decision-making and management
oversight are ensured by holding several discussions
on important matters prior to the resolution and byreporting and following up on the progress after the
resolution of these important matters.
(3)	The atmosphere is open, encouraging directors to freely
make comments and engage in lively discussion.
(4)	Meeting materials are simple and clear, andexplanations are right to the point.
As shown above, Toyota Industries’ Board of Directors
has been evaluated as effective. In response to certain
feedback calling for further improvement, we will undertake
improvement efforts on a continuous basis.

Audit & Supervisory Board System
Toyota Industries has four audit & supervisory board
members, two of whom are full-time members and two ofwhom are outside members.
The four members attend meetings of the Board of
Directors and provide their opinions as appropriate. The
full-time members also attend other important meetings toreceive reports on the execution of duties by directors and39Company Introduction

Strategies and Businesses Promotion of ESG Initiatives

Corporate Information

Corporate Governanceother responsible persons. They also carry out on-site audits
at the Head Office, major business sites and subsidiaries asnecessary and collaborate with independent auditors and the
Audit Department for overall audits.
Meetings of the Audit & Supervisory Board are held every
month to share information on audits conducted by thefull-time members with the outside members and to receive
reports from directors, responsible persons and independent
auditors. At these meetings, the members also discuss andmake decisions on important matters, such as audit policies
and plans, the audit method used by independent auditors
and the appropriateness of their audit results.
Initiatives for Enhancing Corporate Governance1971 Introduced a divisional organization system
2006 Reduced the number of directors (from 30 to 17)
2006 Introduced a managing officer system
2010 Appointed independent members of management
2016 Reduced the number of directors (from 17 to 11)2017	Conducted an evaluation of the effectiveness of the Board of
Directors
2019	Revised executive management structure and reduced thenumber and rank of executives

Internal Control System
In accordance with the Companies Act, in May 2006 Toyota
Industries’ Board of Directors adopted the Basic Policies
for the Establishment of an Internal Control System (Basic
Policies) to ensure compliance, risk management as well as
the effectiveness and efficiency of business operations by
incorporating these policies into each business segment’s
annual policies and day-to-day routine management. The
CSR Committee, at its meeting held in March, assesses the
progress made in implementing the Basic Policies in theyear under review and determines actions for the coming
year, including reviewing the implementation structure andenhancing day-to-day operational management.
Furthermore, based on the Financial Instruments andExchange Law (so-called Japanese Sarbanes-Oxley Act(J-SOX)), we have established and appropriately operated aninternal control system to maintain the reliability of financial
reporting. The system’s status and progress are reviewed by
the Audit Department and audited by independent auditors.
We determine which Toyota Industries Group companies fallwithin the scope of J-SOX based on the degree of impact on
the reliability of financial reporting. We determined that ourinternal controls over financial reporting as of the end of fiscal
2020 were effective, and accordingly, submitted an Internal
Control Report in June 2020. The report was reviewed byInternal Control Assessment System (Based on J-SOX)
Internal control activities undertaken by eachdepartment and consolidated subsidiary(Establishment and operation of internal controls)

Toyota Industries Report 2020

We believe that compliance means both adhering to laws andregulations as well as ethics and social norms. As such, it isvital to promote compliance throughout the Toyota Industries
Group under the leadership of top management.
To promote compliance, we have established theCompliance Subcommittee (led by the head of the
Corporate Headquarters) as a subordinate organization to
the CSR Committee (led by the president). Every year, thesubcommittee formulates an action policy that covers theentire Toyota Industries Group and conducts a follow-up
check on the progress of corresponding activities twice
during that year.

Formulating and Thoroughly Instilling the Code of
Conduct
Toyota Industries has formulated and distributed to
executives and all employees the Toyota Industries
Corporation Employee Code of Conduct, which serves asconduct guidelines that should be observed by employees.
Accordingly, we have been working to instill the Code throughgroup training and other means. Consolidated subsidiaries
in and outside Japan have formulated their own Code of
Conduct appropriate to their respective business lines andcorporate cultures and have been providing Company-wide
education once a year.
Regarding bribery, which could have a significant impact
on management, Toyota Industries has formulated the Global
Guidelines for Bribery Prevention. Particularly, in countries
high on the Corruption Perceptions Index, each company has
developed internal rules in accordance with the applicablelaws in respective countries and been conducting activities
to familiarize employees with them. As for antitrust laws, weoperate a system to conduct a check and review before andafter employees of Toyota Industries contact competitors
and have been cultivating awareness among employees
for not acting in a manner that may possibly constitute a
violation of antitrust laws. Moreover, we have designated aparticular month as “Antitrust Law Compliance Month” since
fiscal 2016 to carry out enlightenment activities at relevant
departments.
In addition, we have created and disseminated e-learningmaterials on 49 topics in order to cultivate a deeper
understanding of compliance among employees of Toyota
Industries Corporation and our consolidated subsidiaries inJapan and to create an environment in which employees
foster compliance consciousness on their own.

a compliance officer (outside Japan) to lead and promoteautonomous activities in respective communities. In North
America, Europe, China and Asia/Oceania, complianceofficers regularly hold conferences and facilitate collaborative
activities within each region.
In fiscal 2020, we held the second Compliance
Officer Meeting in India with compliance officers from four
companies to share information on the Code of Conduct ofeach company, bestpractices of complianceactivities and updates
to relevant laws.
Through these efforts,
they work together toincrease the level ofcompliance throughout
Second Compliance Officer Meeting in India
their business in India.

Activities in the Toyota Industries Group

Basic Perspective

Each consolidated subsidiary of the Toyota Industries Group
has set up a compliance committee (in Japan) and appointed

We recognize that the personal information of customers,
employees and business partners as well as information
concerning our technologies and sales activities are assetsthat need to be protected. Accordingly, with the aim ofsafeguarding our information assets and strengthening their
management, we have formulated the Basic Policies for
Information Security.

Main Compliance Officers

EuropeToyota Material Handling Europe AB

Information Security

Andreas Lundh

Basic Policies for Information Security

United States(1) Legal compliance	We comply with laws and regulations related to information
security while fostering awareness of them among employees.
(2) Maintaining a stable business foundation
	We safeguard and manage information assets appropriately,
carry out information security-related education andenlightenment activities on an ongoing basis and seek tomaintain a stable business foundation.
(3) Providing safe products and services
	We provide safe products and services to customers andsociety by implementing information security measures in ourbusiness activities, including development, design andmanufacture of products and services.
(4) Information security management
	We build a governance structure to enforce and manage
information security and continue to promote and refine thestructure.

Toyota Industries North America, Inc.
Sheena Seger
China
Toyota Industries Management (China) Co., Ltd.
Zhu Lingling
India
Toyota Material Handling India Pvt. Ltd.
Pragya Sharma
Vanderlande Group
Vanderlande Industries Holding B.V.
Carl Messemaeckers

Organization for Promoting Compliance and Information Security under the CSR Committee
CSR Committee
Activity reports

Approval and instruction

Example Topics of e-Learning Materials

Internal Control Audit Report

Audit on internal controls by independent auditors

40

Compliance

Basic Perspective and Implementation Structure

system to report and seek consultation on compliancerelated issues. In Japan, North America, Europe and China, inparticular, we operate a compliance hotline (external helpline)that allows employees and other relevant parties to seek
advice from external experts on compliance-related matterswithout being exposed to negative consequences. In fiscal
2020, we received 86 reports and inquiries from within Toyota
Industries and from its consolidated subsidiaries in Japan onsuch matters as labor management, working environment andethics. After verifying each report and inquiry, we have taken
appropriate action regarding each case. Our responses havebeen reviewed and judged appropriate by external lawyers.
In fiscal 2017, we also set up a hotline for our major
business partners to report and inquire about possible
compliance violations by Toyota Industries employees.
Through these initiatives, we ensure the early discovery
and prevention of issues and intend to become a “company
on which society places greater trust.”

Annual financial report

Internal Control Report

Improvement of Detection of Review of internal
controls byinternal controls deficiencies
Audit Department

independent auditors and judged fair in their Internal Control
Audit Report.

Compliance; Antitrust laws; Prevention of bribery; Human rights;
Various types of harassment; Safety behavior; Occupational accidents;
Mental health; Environmental protection; Management of confidential
information; Traffic safety; Product liability; Accounting process

Compliance Subcommittee (in charge of compliance)

Information Security Subcommittee (in charge of information security)

Europe, North America and China

Early Detection and Prevention of Issues via
Compliance Hotline

Toyota Industries Corporation

Consolidated subsidiaries
in Japan

Consolidated subsidiaries
outside Japan

Regional headquarters

Consolidated subsidiaries outside JapanThe Toyota Industries Group has in place a whistle-blower

41

Company Introduction

Strategies and Businesses Promotion of ESG Initiatives

Corporate Information

Corporate Governance

Implementation Structure
Toyota Industries has set up the Information Security
Subcommittee (led by an executive in charge of the General
Administration Department) as a subordinate organization to
the CSR Committee to reduce information security risks.
To thoroughly implement the initiatives adopted by thesubcommittee, we appoint information security managers*1
and information security administrators*2 at each departmentof Toyota Industries.
For consolidated subsidiaries around the world, we
regularly hold meetings of information technology (IT)managers in each region to share information on security
incidents and countermeasures both in and outside the Toyota
Industries Group and to disseminate relevant policies. Throughthese and other measures, we are increasing the levels of
security and security awareness throughout the Group.
*1: Head of each department*2: A person within the department, appointed by the head

Information Security ManagementInformation Security Monitoring and Incident
Response
To ensure the early detection of and prompt action against
cyberattacks, we have in place systems to monitor the
security of PCs and all other terminals used within the
Toyota Industries Group and to respond to incidents 24hours a day, 7 days a week. Upon the occurrence of anincident, we immediately report it to the president andsenior management and share relevant information within
Toyota Industries. We also share threat information with ourconsolidated subsidiaries in and outside Japan to swiftly alert
each company.
Providing Education on Information Security
We believe that awareness among all executives, employees
and contract employees is crucial in preventing information
security incidents. Based on this belief, we provide training on
targeted attacks via e-mail and after-action education morethan four times a year per person. We also send periodic
reminders internally using incidents that have occurredelsewhere as examples.
Preventing Leakage of Confidential Information
We strive to raise the level of information security by holding
workplace meetings and conducting self-checks regarding
our information security practices. In terms of technologicalmeasures, we implement a multi-layer defense that includes
encrypting PCs, restricting and monitoring the copying of files
on recording media and preventing malware penetration anddata leakage caused by cyberattacks.
Conducting Information Security Audits
In accordance with the All Toyota Security Guidelines(ATSG)*3, we biannually inspect the implementation
status of information security at Toyota Industries and ourconsolidated subsidiaries around the world in order tomaintain and improve the level of information security on acontinuous basis.

42

Toyota Industries Report 2020

Primary Activity Examples

Activities in fiscal 2020
• Enhancing security services for consolidated subsidiaries in Japan• Facilitating tools (measures) to support actions against leakage ofconfidential information• Extending the target group of participants for information leakage
response training• Increasing the frequency of e-mail security training (once a year/
person to four times a year/person)• Conducting information security audits at consolidated subsidiaries
outside Japan• Performing a more stringent check on information devices brought
into the plant premises from outside• Providing information security education to on-site plant workers*3: Security guidelines of the Toyota Group, which conform to the Cyber Security Frameworkof the National Institute of Standards and Technology (NIST CSF) and ISO 27000 seriesof standards for information security management systems

Risk Management

Basic Perspective

Based on the Basic Policies for the Establishment of anInternal Control System in compliance with the Companies
Act, Toyota Industries is working to strengthen regulations
and a structure to promote risk management. We regard
the following aspects as the basics of risk management andimplement initiatives accordingly.
(1)	Incorporating measures to prevent and reduce potential
risks into daily routines and following up on the progressof implementation(2)	Ensuring quick and precise actions to minimize theimpact on business and society when a risk becomesapparent

Implementation Structure
Business divisions and other departments at the Head
Office develop and promote annual action policies that
integrate measures to prevent and control risks related
to quality, safety, the environment, personnel, exporttransactions, disasters and information security. Progress is
assessed and followed up by each functional management
entity such as the CSR Committee and the Environmental
Committee. At the same time, functional departments atthe Head Office such as those responsible for quality, safety
and the environment formulate rules and regulations andcreate manuals from a Group-wide perspective, including
consolidated subsidiaries. By confirming and following up
on the progress through operational audits and workplaceinspections, they provide support for raising the level of risk
management at each business division and consolidated
subsidiary.
We have also formulated the Risk Response Manual,
which defines our initial response to an emergency. Thismanual lays out basic rules to be followed when a risk
becomes evident. The aim is to ensure quick reporting to top
management, perform an accurate assessment of the impact
on society and business activities and minimize damage
through appropriate actions. As a countermeasure to theongoing COVID-19 pandemic, we are making an appropriate
response based on this manual. The content of the manualis reviewed and revised as deemed necessary in response tochanges in businesses and the surrounding environment.

Response to Possible Major Earthquake
We consider the impact of a major earthquake as one of
the most significant risks and have accordingly formulated
a business continuity plan. Based on the three basic
policies of placing maximum priority on human life, placing
top priority on the recovery of local communities andensuring the quickest possible recovery, we are making
Company-wide efforts in three relevant areas, specifically,“precautionary, pre-disaster mitigation,” “initial response to befollowed immediately after the disaster” and “restoration of
production.”

Disaster Prevention Structure
We strive to reinforce our disaster prevention structure toenable a smooth transition from the initial response stage tothe production restoration stage.
The Disaster Prevention Response Headquarters, led by
an executive vice president and consisting of representatives
from the functional departments at the Head Office, is
responsible for collecting information from plants and otherrelevant parties and making Company-wide decisions basedon the information collected.

Aggregating information within a plantReviewing policies on how to return home

2. Initial Response Training at Plant Response
Headquarters
In fiscal 2020, we continued to focus on practical training
by using predetermined procedures and forms. Each Plant
Response Headquarters planned a drill, created a scenario
and served as a moderator to confirm the actions thatshould be taken by its head (plant manager) and members.
By conducting training repeatedly, we intend to create astructure under which every member understands his or herrole and responds to the situation flexibly.

Disaster Prevention Structure
Disaster Prevention Response Headquarters (Established in Kariya Plant)
Plant Response
Headquarters
Kariya Plant
Obu Plant
Kyowa Plant
Nagakusa Plant &Morioka Works
Takahama Plant
Hekinan Plant
Higashichita Plant
Higashiura Plant
Anjo Plant

Key Facility
e-Lab (information
systems headquarters)

Remote Sites

Educational Sites

Affiliated Companies

Company dormitories
Company resort
facilities

Suppliers

Tokyo Office
Toyota L&F Customer
Center Tokyo
Toyota L&F Customer
Center Osaka
TMHG Training Center(Handa)Promoting Disaster Prevention at Home andRelated Enlightenment Activities
Starting from fiscal 2017, we have been undertaking
enlightenment activities for employees and their families as ameasure to promote disaster prevention and avoid disasterinflicted damage at home. Specifically, we encourage themto take three actions: preventing the overturning of furnitureand securing an evacuation route; deciding how to contact
and where to meet with family members in a disaster; andstockpiling emergency goods, food and other necessities.

Efforts to Cultivate Personnel to Engage inDisaster Prevention Activities
1. Training at Disaster Prevention Response
Headquarters
As one important role assigned to the Disaster Prevention
Response Headquarters that oversees Company-wide
disaster response, we conduct training in which employees
collect information on damages to both inside and outside thecompany premises, swiftly make decisions and disseminate
these decisions throughout Toyota Industries. In fiscal 2020,
we conducted a drill assuming an earthquake occurring in
the early hours of the morning as an effort to strengthen ourreadiness against earthquakes around the clock.

Analyzing damage information

Confirming initial response actions

3. Individual Training at Each Planta) Power Restoration Drill
Based on the procedures to restore power supplies,
including electricity and gas, which are essential inrestoring production activities, each plant conducts
genchi genbutsu (go and see for yourself) training on aperiodic basis. Through the training, we are identifying
problems and making improvements to step up ourefforts to ensure quick restoration activities.
b) System Restoration Drill
We conduct system restoration drills jointly with Toyota
Industries IT Solutions, Incorporated, a consolidated
subsidiary engaged in development and operation of
information infrastructures and systems, and work to
improve our readiness for quick restoration.
4. Training for Identifying Disaster Damage
We repeatedly conduct drills jointly with our affiliatedcompanies and business partners in order to familiarize
them with the use of IT tools to quickly identify thedamage status during a disaster.

Future Activities
Preparing for floods and other natural disasters in addition
to earthquakes has been gaining significance. Accordingly,
we will draw on our response measures that have been
implemented mainly for earthquakes and extend our efforts
to other disasters in order to increase our overall disasterreadiness.

43