CSR Report 2018
English version

CONTENTS【 Editorial Policy 】
Editorial Policy

1

Corporate Philosophy

2

Top Commitment

3ーThe TDK Group’s CSR ー

A Society Created throughCSR Undertaken in Business
Activities

5

The TDK Group’s CSRManagement

7

The TDK Group’s Materiality

8

Fiscal 2017 Activity Goals andAchievements, Fiscal 2018
Goals

9

Important CSR Issues within
the Value Chain

11

The TDK Group believes it is crucial to forge ahead with corporatesocial responsibility (CSR) initiatives based on proper understanding of the expectations and demands of our various stakeholders.
With a view to making public the TDK Group’s CSR approach andfiscal year initiatives progress report, as well as our future directions, we publish our CSR report annually in the two media formatsof the Web and booklet form.
This Report provides information on the progress and performance indicators of important themes based on important CSR
issues determined in fiscal 2015, while also listing comments from
employees engaged in those efforts. As activities closely opened
to today's social trends, we have also engaged in the exchange ofviews with experts and stakeholders and are pleased to introduce
some of them.
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.
• Booklet:
A digest version focusing on the main points of activity.
• Web version: Conformed to the "core" option of the Global
Reporting Initiative (GRI) standards, featuring bothcomprehensive information and detailed data
centering on fiscal 2017 activity reports
http://www.global.tdk.com/corp/en/csr/

Corporate Philosophy
Corporate Philosophy
Corporate
Motto

Corporate
Principles

2 Develop Human
Resources
3 Consider the Societal andEnvironmental Impact of
the Supply Chain
4 Develop and Prosper inHarmony with the
Global Environment

TDK Group Outline
Third-Party Opinion

13

Trust

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

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.

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 deliveryof 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 and protecting the global environment andcreating a pleasant and safe society.

TDK Value
We have;

Fiscal 2017 (April 1, 2017 – March 31, 2018）

Customer• Passion to be a trusted partner for ourcustomers

HR

Focus

Therefore we can;Development• Aspiration to continuously improve ourselves

overseas

We have;

29

33
34

Therefore we can;• Support the development of our colleagues
and build enthusiastic teams• Offer outstanding quality products, services
and technology to satisfy our customers* 1 TDK Group: TDK Corporation and 142 consolidated subsidiaries in Japan and• Motivation to contribute to the advancementof society and growth of businesses• Define clear vision/goals and drive ourselvesto achieve them

• Deliver inspirational value by standing in thecustomer’s shoes

Organizations Covered:

We have;

Major Organizational Changes during the Period Covered:• Culture to turn adverse challenges intochances to develop ourselves• Global network with diverse culture

In the first quarter, TDK acquired 100% of the shares of InvenSense,
Inc. and turned InvenSence, Inc. and its subsidiaries into consolidated
affiliates.

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

Date of Issue:
August 2018 (Previous issue: September 2017; next issue: scheduled for August 2019）

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

Challenge

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

Diversity

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

TDK Code of Conduct * 2
The TDK Code of Conduct stipulates specific behavior guidelines so that the TDK Group and all of its directors and employees
comply with the requisite laws, ordinances and social norms. Furthermore, the TDK Group has compiled the Corporate Charterof Business Behavior outlining the universal matters that should be practiced commonly by the Group.
* 2 TDK Code of Conduct is available at the following website.

1

We have;

Period Covered:

TDK Group*1
25

Courage• Strong determination to contribute to ourcustomers’ successSome information covers activities outside this period.

21

VisionCorporate Vision (Vision 2035)

ーThe TDK Group’s Important CSR Issuesー

1 Contribute to the Worldthrough Technology

Contribute to culture and industry through creativity

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

2

TDK CSR REPORT 2018

Top Commitment

Monozukuri (manufacturing excellence) andKotozukuri (integrated solutions)
Our new Medium-Term Plan, which has kicked off in
fiscal 2018, has the central theme of “Value Creation
2020.” It cites three pillars that we will strengthen
over the medium to long term: “Commercial Value”,“Asset Value”, and “Social Value.” Our idea is tocreate more than simply financial value.
Social Value reflects our determination to further
strengthen the link between our business and social sustainability. To this end, we will advance not
only our tradition of Monozukuri but also Kotozukuri.
Kotozukuri involves combining TDK’s various technologies and products to supply solutions that meetthe needs of customers and contribute to society.
As a result, we will be able to connect an evenwider customer base with quality TDK components.

Through the fusion of Kotozukuri and Monozukuri, we
hope to create new values.
In order to realize this vision, we will actively engage
in dialogue beyond the boundaries of our industry
connections and employ a broad perspective to
examine the landscape of possibility. Doing so will
enable us to meet the needs of customers as they
emerge, in real time. Throughout this work, we must
constantly be thinking about how our technologies
can provide practical value. Our starting place mustfirst be to clearly identify the issues to be solved,
the needs, and the goals of the customer, and fromthere to supply useful technologies accordingly.

Aligning corporate growth and social contribution

TDK’s cutting-edge technologies:
Balancing corporate growth and social
sustainability
Toward a society with “no one left behind”
In 2017, major changes took place in the landscapeof electronic components. The accelerated advanceof electric vehicles in the world had a huge impact on
the demand for components and devices. The governments of the United Kingdom and France, for example,
announced plans to end the sale of gasoline- anddiesel-powered cars by 2040. The inter-related trends
toward EVs and autonomous driving have gained significant momentum.
I recently had my first experience of an autonomous
driving car at a home appliance show, and I cameaway with the surety that these vehicles will soon be acommon sight on the roads. With that being the case, I
am confident that communication devices which rely on

3

artificial intelligence, such as smart speakers, are going
to expand as well. Devices that can be operated by voice
input and are designed to be accessible for non-technical users will also see rapid growth in the coming years.
These trends illustrate a key aspect of our collective
future: we have entered an age in which cutting-edge
technologies can empower marginalized members ofsociety, such as the elderly and disabled. This direction
is consistent with the “no one left behind” pledge in the
United Nations Sustainable Development Goals.
As a manufacturer, TDK aims to contribute directly to therealization of this vision for society. We supply values thatsatisfy the needs of customers and foster solutions to
global social issues.

The most important factor in the achievement of our
new Medium-Term Plan is human resources. The
development of human resources, we can say, is thegreatest issue facing TDK. In particular, from now
on we must put a lot of effort into the developmentof global human resources. We will achieve thisgoal by creating systems that identify the particularstrengths and skills possessed by each individual,
and matching those individuals with the appropriate
career paths. To incorporate the dynamism of ouracquired companies and utilize the strengths of theiremployees, we must redouble our efforts to expand
diversity.
We will also continue to put efforts into material
procurement that takes the environment and humanrights into consideration. In particular, at a time
when demand for batteries and motors is expected
to grow as a result of the diffusion of electric vehicles
and other factors, I think it is an important duty for

us to procure rare metals, which are essential forthe manufacture of electronic components, withdue consideration for the environment and humanrights. At the same time, we will strive to reduce theenvironmental load throughout the entire life cycleof products, including the development of magnets
that do not use rare metals and the reduced size
and increased efficiency of products.
I believe that corporate growth and social sustainability are like two sides of the same coin. Businessgrowth becomes truly sustainable when it contributes to society, and a healthy society in turn sustains
consistent growth in the business sector. The pursuitof both of these factors together, I am sure, will raise
our value as a company and generate increased
Social Value.

Shigenao Ishiguro

President and CEO, TDK Corporation

4

TDK CSR REPORT 2018

The TDK Group's CSR

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’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 society

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

Assistance fordisabled persons

Materials
Technology

Process
Technology

Evaluation and
Simulation
Technology

Production
Technology

Product Design
Technology

ICT

Industrial & Energy

Digital divides• Create advanced robots• Create wearable computers

Contribute to culture and industry through creativity
Corporate Motto
Corporate Principles

Corporate Principles“Vision” “Courage” “Trust”
Develop human resources

Vision 2035
[Corporate Strategy] (FY2018–FY2020)

Climate change
TDK Value
CustomerHR
Focus Challenge Development Diversity《Medium-Term Plan Basic Policy》“Value Creation 2020”• Rich pool of talented human resources
capable of acting globally• Dynamic human resources capable ofdisplaying their abilities amid diversity

Leap to new heights by providing market-needed solutions
based on our electronic components businessMedium-Term Plan
Daily Activities

Commercial Value
Execute Growth Strategy

TDK Code of Conduct(Corporate Standards of Business Conduct)

Asset Value
Improve Asset Efficiency

Charter of Corporate Behavior

5• 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

Improve the quality of life

[Corporate Philosophy]
Corporate Motto

Resources, energy

Develop and prosper in harmony
with the global environment

Markets that TDK Focuses On
Automotive

Traffic accidents

A Society Created through CSR
Undertaken in
Business Activities

Social Value
Enhance Enterprise Value

Net sales
1,650 billion yen
Over 10%OP margin
Over 14%
ROE
Capex(3 years) 500.0 billion yen

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

Contribute to society throughsustainable business activities

6

TDK CSR REPORT 2018

The TDK Group's CSR

The TDK Group CSR Management

The TDK Group’s Materiality

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 thoroughimplementation of corporate ethics. Recognizing that
TDK is a social entity supported by stakeholders, suchas customers, suppliers, employees, shareholders,investors, and local communities, we promote CSR
activities through our business activities on the basisof the TDK Code of Conduct and maintain communication with these stakeholders. By carrying out the
TDK corporate motto, we increase corporate value,and subsequently contribute to continuous businessdevelopment and the creation of a sustainable society.

Continuous businessdevelopment

Creation of a sustainable
society*1 The details of the Materiality Finalization Process may be viewed on the following website. http://www.global.tdk.com/corp/en/csr/csr_philosophy/csr02000.htm

Implement the Corporate Motto
Contribute to culture and industry
through creativity

Enhance
corporate
value

Social aspect

CSR Promotion Structure

Economic
aspectEnvironmental
aspectCustomers

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

2

3

4

Board of Directors

Business Ethics & CSR Committee

President & CEO
Executive Committee

Legal &
Compliance
HQ
CSR Group

Corporate
Strategy HQTechnology
andIntellectual
Property HQ

HumanResources
HQ

SCM &Management
System HQ

Production
Engineering
HQ（As of April 1, 2018）

Finalization of the Materiality
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.

High

Shareholders/
Investors

Localcommunities

The CSR Group has in-depth knowledge of social issues and requirements and promotes CSR programs in a professional manner. The
CSR Group strategically 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 otherdepartments 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 CSR Group is currently organized as a part of the Legal & Compliance HQ.

7

STEP

Importance for stakeholders

Suppliers■ CSR Group

HQ
Functions

STEP

TDK’s Code of Conduct

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 theworld. It also issues reports at the start of each quarter addressing the status of implementation and operation of the Code of Conduct.

Business
Companies& BusinessGroupsGRI-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
by getting 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.

Employees

CSR Activities■ Business Ethics & CSR Committee

Electronic
Components Sales& MarketingGroup

The Materiality Finalization Process

TDK’sBusiness Activities

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.

■ Organization

TDK believes it is important to promote CSR activities that respond to changes in stakeholders and the social and businessenvironment surrounding the Group. From fiscal 2013 TDK has promoted the study of materiality in accordance with the fourth
edition of the Global Reporting Initiative guidelines (GRI-G4),*1 and in fiscal 2015, with the approval of management, we finalized
our materiality. With regard to the designated important CSR issues of “Contribute to the World through Technology,” “Develop
Human Resources,” “Consider the Societal and Environmental Impact of the Supply Chain,” and “Develop and Prosper inHarmony with the Global Environment,” we are continuing to promote activities.

Contribution to regions
and communities

Important CSR Issues

Important Themes

to the World
1 Contribute
through Technology• Addressing social issues by developing new kinds of products the world has not yet seen
• 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

Protection of customer privacy

High

8

TDK CSR REPORT 2018

The TDK Group's CSR

Fiscal 2017 Activity Goals and Achievements, Fiscal 2018 Goals
Impor tant CSR
Issues1
Contribute to theWorld throughTechnology

Important Themes

Main Points

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.

Addressing social issues by developing
new kinds of products the world has not
yet seen

FunctionsTechnology HQEach business group

Quality Assurance Function
Each business group2

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

Develop
Human
Resources

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

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.

4
Develop andProsper inHarmony with
the Global
Environment
Management

Continue to promote the developmentof products that contribute to thesolution of social issues in the priority
strategic markets of automotive, ICT,and industrial and energy●

Fiscal 2018 Goals

Boosting development of DC-DC
converters for automotive use,solid-state batteries, motion sensors, etc.
●

Promote development and sale of “First to Market”
products

Number of important claims: 0

CSR Function
Human Resource Development Function●

Number of important claims: 0●

Number of important claims: 0●●

Establish a global consolidated humanresource database●

Expand scope of use of global consolidated human resource database●●

Compile consolidated management
database, and get a solid grasp of thedata●

Complete the consolidated management database●●

Perform 100% CSR self-checks atmanufacturing sites●

100% implementation●●

Secure 100% opportunities forthird-party CSR audits once every two
years (China and Asia region)●

100% implementation

Perform 100% CSR self-checks at manufacturing sites
Perform 100% labor and ethics risk assessment at
manufacturing sites● Secure 100% opportunities for third-party CSR audits
once every two years (China and Asia region)● Perform 100% CSR self-checks at dispatch companies
used by manufacturing sites in the China and Asia areas●

CSR-compliant supplier ratio: over95%●

CSR-compliant supplier ratio: 91.2%●

CSR-compliant supplier ratio: over 95%●

Build a setup to conduct CSR efforts to sub-contractors

Procurement Function
Each business group

Procurement Function
Quality Assurance Function

We will promote environmental activities on
the basis of the TDK Environmental Vision
2035*1.

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.

CSR Function
Compliance Function

Further expand scope of use of global consolidated
human resource database● Introduce global selective training
Consider expansion and improve accuracy of humanresource attribute information collected by the consolidate management database● Implement human resource meetings globally and by area●●

Confirmed DRC conflict-free supplier
ratio: over 85%● Monitor number of customer responses●

Confirmed DRC conflict-free supplier ratio: 92.3%● Implement monitoring●

Improve energy origin CO2 emissions basic-unit by 2.0% compared with fiscal 2014
● Improve product-based CO 2 reduction contributions basic-unit by 2.7%
compared with the previous year●

Worsened by 10.5% compared withfiscal 2014
● Improved by 12.9% compared withthe previous year●●

Continue to implement standardization
and awareness activities in collaboration with industry associations●

Estimated contribution potential ofJapanese electronic component
makers and implementation ofannouncements●●

Achieve 100% participation in compliance e-learning●

Achieved 99% participation in compliance e-learning●●

Reduce environmental load
throughout life cycle stages

Fiscal 2017 Achievements

TDK aims to solve social issues throughunique technological development.

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.

Consider theSocietal andEnvironmental
Impact of the
Supply Chain

Fiscal 2017 Goals●

Pursue zero-defect product quality

3

Based on its 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 2017 activity goals and achievements, and fiscal
2018 goals.

DRC conflict-free procurement supplier ratio: over90%
● Monitor number of customer responses

Improve energy origin CO2 emissions basic-unit by
1.7% compared with the previous year
● Improve product-based CO 2 reduction contributions
basic-unit by 2.7% compared with the previous year
Continue to implement standardization and awarenessactivities in collaboration with industry associations

Achieve 100% participation in corporate ethics
e-learning● Achieve 100% participation in compliance e-learning*1 Details of the goals and achievements of environmental activities, please see
the following website: https://www.global.tdk.com/corp/en/csr/environmental_
responsibility/csr03200.htm

910TDK CSR REPORT 2018

The TDK Group's CSR

Important CSR Issues
within the Value Chain
The TDK value chain extending fromprocurement 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 for society 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.

● New product development through[Important CSR Issues]sustained research and development

Contribute to the Worldthrough Technology[Important Themes]■ Addressing social issues by developing

Research and development expenditure● Ensure the quality of purchased

products

new kinds of products the world has not
yet seen■ Pursue zero-defect product quality

103,457

million yen● Promote sales of products that
● Manufacturing process capable of● Ensure logistics quality

reproduction without variation

solve environmental and social
issues● Customer satisfaction● Product assessments● Building of upstream-manage-

ment-type quality assurance structure[Important CSR Issues]

Develop Human Resources● Promote Global Human Resource Training Program

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

350

persons Overseas Trainee Program participants (total to date):31

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 andimplement CSR audits

CSR-compliant supplier ratio● Implement CSR self-checks, and91.2%

CSR self-audits by third party
organizations● Appropriate responses to CSR

CSR self-checks at manufacturing sites● Conflict minerals survey

surveys and other inquiries from
customers

100 %Confirmed DRC conflict-free
supplier ratio

92.3%[Important CSR Issues]

Develop and Prosper in Harmony
with the Global Environment[Important Themes]■ Reduce environmental load throughout life

cycle stages■ Creating a framework for gauging productcontributions

11● Reduce the environmental load of● Promote sales of products thatplants● Green procurement● Creation of products contributing

to the environment● Product assessments

CO2 emissions from production
activities

1,647

thousand t-CO2

contribute to the environment● Reduce the environmental load inlogistics

Reduction of CO2 emissions
through products

2,041

thousand t-CO2

12

The TDK Group's Important CSR Issues

Contribute to the World through Technology

Contribute to the World through Technology
Important
Themes■■Addressing social issues by developing new kinds of products the world has not yet seen
Pursue zero-defect product quality

1

Material

Addressing social issues by developing new kinds of products theworld has not yet seen
The high-level fusion of Monozukuri and Kotozukuri
TDK contributes to society by anticipating customer needs and developing creative responses to issues

Atsushi Yakuwa

affecting customers and society as a whole. Breakthrough solutions are created by combining different

Prepreg Production GroupManager
Production Division, EV Power BU

technologies and products that arise from the manufacturing excellence or Monozukuri that TDK has

Energy Systems Business Group

cultivated for more than eight decades. TDK is now taking Monozukuri to the next level to create solutions

TDK Corporation

with expanded value for customers, partners and society: (a concept we call) Kotozukuri.
The some products demonstrate the high-level fusion of Kotozukuri and Monozukuri to which TDK aspires.
In this section, we take a closer look at how leaders from various divisions deploy these concepts in theirwork.

Expanding the scope of vision beyond materials to anticipate
solutions and contribute to the safety of environment-friendly vehicles
I am a leader in the Manufacturing
Group. The high heat dissipation
substrate prepreg*1 I was in charge ofdeveloping offers outstanding thermal
conductivity, allowing it to be installedon the circuits of components that
emit enormous heat. This innovation
also contributed to the developmentof a new DC-DC converter, which
while compact and lightweight still
offers high output. Embedded within
the product, the material does not callattention to itself or indicate the investment of time put into its development. With
this project, I realized it is important that we look not only at the material, but refine
our sensitivity so that we are constantly aware of our contribution to Kotozukuri, while
also sharing our thinking with those involved in Monozukuri. Going forward, I hope tocontribute to the development of even more compact, higher-performance DC-DC
converters, taking on the challenge of new materials and processes so that we canaid in boosting the popularity and greater safety of environmentally friendly vehicles.
*1 Prepreg: A semi-hardened glass or carbon fiber cloth impregnated with a thermosetting resin.

Automotive DC-DC converters
Automotive DC-DC Converters, Contributing to Reducing the Environmental Load of Cars
Recent years have seen policies

2

Processannounced to promote a shift to EVs

Introduction of robot cells*2 makes low-volume, high-mix Monozukuri
possible stable, high-quality manufacturing contributes toautomobile safetyin Europe, China, and elsewhere, andthe widespread use of EVs is expected

DC converters that are smaller, lighter,I am in charge of deploying robot cells
in the manufacture of the DC-DC converter. This production technique has
allowed us to adjust the number of cells
to respond flexibly to changes in volume,
which in turn has enabled low-volume,
high-mix production without picking,reducing costs and making traceability
by individual product possible. Working
with other departments, the ability toidentify manufacturing problems andquickly provide feedback to the designteam were particularly important factors. Variability or flaws in automotive components
can have serious consequences for life and health. The introduction of robot cells toensure a stable supply of high-quality products is thus directly connected to automotive
safety. Accelerating the cycle by which improvements are reflected in design, as we didwith this project, increases our First to Market advantage. This is why we hope to continue
using Monozukuri technology to play a part in Kotozukuri that responds to market needs.

highly efficient, and highly reliable.

*2 Robot cell: A method in manufacturing where one or more robots are employed in the assembly of products.

to accelerate worldwide. Automotive
DC-DC converters are responsible forcharging auxiliary batteries in EVs,
and for supplying the power needed inelectrical systems, and high-efficiency
DC-DC converters are also in demandfor extending vehicle cruising range.

Monozukuri Element Development

technology accrued through its

Monozukuri Centerswitching power supplies, TDK is

13

Senior Manager

Making full use of the power electronics
development of consumer and industrial
Automotive DC-DC converters▶

Kenji Kotegawa

developing and offering automotive DC-

Department
Production Engineering HQ
TDK Corporation

14

The TDK Group's Important CSR Issues

3

Component

Masahiro Gamou
ManagerDevelopment Division
EV Power BU
Energy Systems Business GroupTDK Corporation

Contribute to the World through Technology

TDK’s Monozukuri conceives new components from materials andrealizes solutions for customers
I am responsible for the optimizationand miniaturization of magnetic components. All car makers have a common
need of requiring the DC-DC converter to be smaller, capable of handlingvery high current and also be highly
efficient. But each customer has different specifications, which presents achallenge for us.
In order to realize Kotozukuri for eachcustomer, we can draw upon our original innovation: ferrite. This essential
material, our core resource, allows us to create new products and solutions thatcompetitors cannot.
Ferrite, uniquely among the various magnetic materials, has the advantages ofbeing low in cost, able to operate in high frequency, and capable of taking myriad
shapes. Working with other TDK divisions, we can create high value-added products from ferrite. In other words, by approaching and advancing our Monozukuri withnew ideas, we can bring about true fusion. I look forward to working closely withother departments and divisions with different experiences and knowledge in orderto shape the next generation of Monozukuri.

Solid-state rechargeable batteries
Safe battery technology for IoT: CeraCharge™ the world's first solid-state rechargeable
battery in SMD technology

Smart home

Healthcare

7/7 WED

Wearables

Energyharvesting

12:30

CeraCharge™ is a unique battery based on solid ceramic-based electrodes and electrolyte produced with

4

Solution

Advancing Kotozukuri and Monozukuri thataligns with customer needs

multilayer technology. This enables a relatively high energy density based on Li-ion battery technologies
and smallest volume to be combined with the high volume manufacturing benefits of multilayer components.
As a key safety feature, CeraCharge™ eliminates the risk of fire, explosion, or leakage.
CeraCharge™ will open up a wide range of possible applications – particularly in devices intended for the

Yoshiaki Ishikawa
Development Division
EV Power BU
Energy Systems Business GroupTDK Corporation

15

My job is designing the substrate
for the DC-DC converter. Since thisproduct serves as the vehicle’s power
supply source, any failure could risk
an accident.
We need to consider every factor,
including the extent to which we canpredict dangerous situations, overall
safety, and reducing the vehicle’s
environmental load.
At times, customer needs range wellbeyond anything we might imagine,
making it essential that we build close relationships with their suppliers and ensure
we are all headed in the same direction. In that sense, you could say my role isthat of a liaison with the Monozukuri worksites, helping customers achieve their own
Kotozukuri.
Working with everyone involved in manufacturing at TDK, I hope to be more in tune
with our customers, ensuring I approach my design work from their point of view,and continuing to take on the challenge of resolving social issues such as safety
and the environment.

Internet of Things, such as energy storage devices for Bluetooth Beacon, wearables, energy harvesting, orbackup battery for real-time clocks.

Material

Process

Component

Solution

New kinds of solid lithium-oxide
powders enable safe energy
storage.

An extremely precise
manufacturing process combinedmaterial know-how with multilayer
and thermal process control.

The CeraCharge™ design was
validated and aligned to the realneeds of both our customers andtheir customers.

CeraCharge™ was developed toprovide a reliable and safe energy
source, especially for compact
mobile applications.

16

The TDK Group's Important CSR Issues

1

Material &Process

Contribute to the World through Technology

Combining our material and multilayer technology know-how with
our thermal process expertise2

Component

Material and process go hand in hand with CeraCharge™. It was first necessary tocreate new kinds of solid ceramic materials that could store sufficient energy safely
and be able to perform up to 1,000 charge/discharge cycles.
The solution was innovative lithium-based oxide powders for both electrodes andelectrolyte that are perfectly matched to each other and are capable of being co-fired
in a special multilayer process.

Dr. Yongli Wang
Co-project leader CeraCharge™,
Piezo & Protection Devices BusinessGroup, Corporate R&D Materials,
Deutschlandsberg, Austria

In addition to the materials themselves, an extremely precise manufacturing process
had to be implemented for the high-volume production of the multilayer components.
Our challenge was to transfer the breakthrough technology to the Piezo & Protection
Devices Business Group (PPD) and integrate it into an industrial-scale process.
To do so, we faced the key challenge of combining our knowledge about all-ceramic-battery material systems and multilayer technology with our expertise in precise
thermal process control for the copper inner electrodes.
We succeeded in setting up sample production on a pilot line thanks to the extensive
material know-how at the TDK Technology HQ in Chiba, Japan, and the industry-leading competence of PPD for multilayer processing, thermal process control and backend processes acquired through years of experience with a broad range of ceramic
and piezo products at the PPD in Deutschlandsberg, Austria.
The introduction of such novel components into the existing PPD ecosystem requireda totally new mindset and multicultural communication to enable an efficient cooperative development process between the BG, Technology and IP HQ.
The challenge will be to tap into the technological competence from the entire TDK
organization and our lead customers in order to provide solutions that fulfill dynamically changing requirements with more flexible designs, shorter lead times, better
performance, higher quality and more reliability.

Masahiro Oishi
Co-project leader CeraCharge™,
Piezo & Protection Devices BusinessGroup, Corporate R&D Materials,
Deutschlandsberg, Austria

3

Solution

Markus Puff
Head of Corporate R&D, Piezo &Protection Devices Business Group,
Deutschlandsberg, Austria

17

More than 30 key customers were visited to gather valuable
feedback about applications and markets
My focus during the transfer of the CeraCharge™ technology from TDK's Technology
and Intellectual Property HQ in Japan to the PPD BG in Deutschlandsberg, Austria,
was on the development of the actual component. The first stage involved material
screening and development and process screening.
For these purposes we developed first prototypes and established valid characterization procedures. The definition and implementation of a supply chain for thematerial demand throughout the R&D process was a special challenge in order to beable to produce CeraCharge™ prototypes. All along, our objective was to develop amarketable component, and in order to promote the new product to the customers,
actual demonstrators were built.
Already in the early stages of development, more than 30 key customers were visitedand shown the product's features and specification range. We used these meetings
to gather valuable feedback about the potential applications and markets as well as
validate and align our design to the real needs of our customers and their customers,
and this information was fed back into the development process.
At the same time, we intensified cooperative development activities with IC companies
on a system level. To create even more value for customers and users, we focused not
only on the development of the CeraCharge™ component alone, but also considered
how CeraCharge™ can be used and how we can create new markets.

The development focus is always on the solution and how
customers integrate CeraCharge™ into their systems
In the context of the "Kotozukuri" philosophy for creating solutions with expanded value
for customers, partners and society, we sought to create a CeraCharge™ solution thatmeets all market requirements.
To accomplish this goal, it is necessary for all aspects of material and process designand component development to be optimally coordinated and interconnected. For
this we defined USPs and benefits, analyzed the advantages and disadvantages of
the technology on system level, performed benchmarking and feasibility studies, andexplored cooperation with IC companies and other market leaders. Our development
focus is always on the solution and the target applications with a strong emphasis on
the benefits for our customers and how they integrate CeraCharge™ into their systems.
Over the entire development process, open and direct fact-based communication
among the global, multicultural team proved to be the key to solving any challenges
that arose. In order to realize our objectives and make a substantial contribution to thenext generation of energy storage devices, we must further broaden and deepen ourapplication know-how.
At the same time, we must also intensify the cooperation between Technology HQ,
PPD BG, Sales, customers and other partners in order to enhance the benefits anduser experience of the new CeraCharge™ technology.

18

The TDK Group's Important CSR Issues

Contribute to the World through Technology

Pursue “Zero-defect Product Quality”

Motion sensors

ICM-42600 6-axis motion sensor with 2 auxiliary interfaces
to support dual-OIS camera modules for Smartphones

With its proprietary technology, TDK has emphasized the pursuit of zero-defect product quality, based on

Monozukuri that contributes to culture and industry through creativity. This is because we believe the key tosuccessful Kotozukuri, or providing integrated solutions, lies in the pursuit of zero-defect product quality.

MEMS Motion Sensors are Semiconductors that

The Pursuit of Zero-defect Product Quality Starts from the Breaking Point

include microscopic structures whose exact
movement is measured through capacitancechanges in surrounding electrodes. Acceleration● Protecting customer safety is our lifelinea n d ro t a t i o n a re m e a s u re d a l o n g 3 a x i s ,Why pursue zero-defect product quality? First and foremost, theobjective is to protect customer safety, which is the lifeline of TDK’s
business. Only by building product quality into every level, fromdevelopment and production processes onward, can we respondto the needs of our customers. For example, conducting pre-risk
assessments during design screening and prior to mass production
allows us evaluate latent risks, with the goal of achieving zero product defects when we do move to mass production. After taking thoseefforts to the breaking point, we work even harder. That is the true
pursuit of zero-defect product quality.

allowing the sensor to accurately track thechanges in position and orientation of a device.
Motion Sensors provide critical inputs to control
and navigation systems. One key applicationis the use of motion sensors to control Optical
Image Stabilization (OIS) in camera modules
for Smartphone and Digital Cameras. TDKInvenSense new motion sensor can support

Satoru Sueki
General Manager of Quality Assurance HQ

2 independent OIS systems, a key enabler ofCorporate Officer

dual-camera OIS solutions in Smartphones, and▲︎ICM-42600: World’s first 6-axis MEMS Motion Sensor
supporting dual-camera with dual-OIS image stabilizationa World first.

DesignProcess

Test

Solution● Everyone participates in working toward a larger goal

TDK Corporation

In pursuing zero-defect product quality, it is crucial that each of us thinks and acts in terms of what each of us can do fromthe standpoint of our respective positions. This leads to the creation of value, and to the development of a global workforce
comprised of employees who draw on their individual capabilities and bring ever greater motivation to enhancing their value of
their work. The pursuit of zero-defect product quality involves more than simply reaching a numerical goal. As social changes
progress, the quality expected of us will also grow. Today, we face issues such as an aging society and widening inequality, andgoing forward, we will be expected to generate value from a humanitarian and social welfare perspective. We will continue our
pursuit of zero-defect product quality, responding to the evolving need for greater quality as we work toward this larger goal.

TOPIC: Introduction of a Model Line
Making use of sensing
PressureMultilayering

Layout of a single-die 6-axis
MEMS Gyroscope andAccelerometer Motion Sensor

8-inch wafer from TSMC with
TDK-InvenSense 6-axis MEMS
Motion Sensors

TDK-InvenSense proprietary“high-speed tester” for functional
compliance verification of 6-axis
MEMS Motion Sensors

World’s first dual-OIS 6-axis
MEMS Gyroscope andAccelerometer, ICM-42600

Process

Product

Pursuit of the ideal conditions▶︎ The full article of Motion sensors can be found on our website.

Industry 4.0 + Pursuit of “zero defect”

At the Honjo Factory East Site completed in 2016, TDK is
moving forward to deploy a model line for the pursuit ofzero-defect product quality in the production of multilayer
ceramic chip capacitors. In the multilayering process,which can have a significant impact on the quality ofthese capacitors, we compare a vast amount of sensor
data regarding equipment operational status and productworkmanship against data on product quality in pursuit of
the ideal conditions for a non-defective product. Results
obtained with this model line will be rolled out across otherprocesses going forward.

http://www.global.tdk.com/corp/en/csr/important/technology/csr30000.htm

1920

The TDK Group's Important CSR Issues

Develop Human Resources

Develop Human Resources
Important
Themes■■Develop global human resources
Cultivate a corporate culture that respects diversity

Stakeholder Dialogue
Diversity rooted in common
values and a license to createPeter David Pedersen
Co-founder, E-Square Inc.
(sustainability consultancy),
Executive Director, TACL

— Develo p Glo bal Human Resourc es
Orchestrating the HR Vision
as a ‘trusted enabler’Andreas Keller
Corporate Officer
General Manager of Human Resources HQ
TDK Corporation

̶ The Academy for Corporate Leadership

Date of implementation: March 6, 2018

Building on last year’s first dialogue on Global Human Resource Development and a year of new one,
Human Resources General Manager Andreas Keller and consultant Peter David Pedersen discuss thecurrent state of HR-related initiatives and the road ahead.

21

Dialogue on Global Human Resource
Development

State of Human Resources: Addressing
and Accommodating Diversity

In March 2018, General Manager of Human Resources
HQ Andreas Keller sat down with sustainability expert
and corporate consultant Peter David Pedersen to takestock of corporate HR-related initiatives. The discussion
built upon last year’s dialogue, covering subsequentdevelopments influenced by the 2017 dialogue.
The discussion revisited the current state of HR
development at TDK in the context of its needs as
an increasingly diverse corporate group in a world ofintensifying competition.

Since 2000, the TDK Group has grown rapidly throughmultiple mergers and acquisitions (M&As). Today thegroup boasts a portfolio of more than 100 companies
and over 100,000 group employees. Moreover, only 10%
of TDK personnel are now located in Japan and roughly
80% have joined the group through M&As.
This growth has been accompanied by new needs inthe areas of HR. Key challenges include establishinga platform to ensure that diverse talented entities andindividuals can fully engage as group members rooted
in a core concept of harnessing diversity for greater
resilience and global success.

Milestones and the Road Ahead

Strength through Unity

A number of HR-related initiatives were launched following
last year’s dialogue. Major milestones included a global
HR meeting and the first group-wide career development
program launching in 2018.
These initiatives are part of the new Global HR Midterm Plan 2018-2020, which includes key performanceindicators (KPIs) for each initiative. The initiatives include
succession planning, defining global competencies,
global grading, talent management and outreach to raiseawareness of global HR initiatives. All of this is supported
by an IT talent management system that is being rolled
out to enable the integration of these activities.
“The idea is not just to utilize talent from Japan, but fromaround the world. In order to do so, we need to havecommon platforms and definitions of certain things likeglobal competencies and evaluation criteria,” Keller
explained. In addition, standardized global KPIs will makeit easier for local and global management to monitor andmanage risk to improve the resilience of TDK, he added.

Keller reported that last year’s dialogue had contributed
to the TDK Group organizing its inaugural global HR
and Administration meeting. (See page 23 for details.)“At the meeting we were able to firm up our visionand mission statements with the primary objective offunctioning as an enabler for group members. We are
now aligned and heading in the same direction,” Keller
explained.
Meeting participants agreed on the need to better
share TDK’s common values and enhance group-wide
compliance while harnessing the unique strength andculture of group companies. This vision and mission
statement subsequently formed the cornerstone of
the new Global HR Mid-term Plan.The second global
HR meeting will be held in 2018 to build on last year’s
progress. The gathering will bring TDK personnel to
Akita Prefecture in Japan—the birthplace of TDK.

22

The TDK Group's Important CSR Issues

Identifying and Tapping Talent
One of the areas that saw significant progress in fiscal
2017 was talent management and development. The new
Territorial Career Development Program (TCDP) is TDKGroup’s first group-wide career development initiative.
This scheme is an example of intra-group sharing ofknow-how and best practices. It was premised on a
subsidiary-run program with a long and successful
track record in Greater China. A key pillar of HR efforts
to develop next-generation talent worldwide, the new
initiative has been adapted to be applied across thegroup with the roll out happening in spring 2018 inEurope, Asia and the Americas.
The goals of the annual program include strengthening
leadership and management, fostering a supportive
corporate culture and creating stronger bonds among
TDK Group members.
“We have received so many applications. Expectations
on both the part of management and employees are
extremely high,” Keller said, adding that the program is
expected to bring more non-Japanese employees to HQ.

Develop Human Resources

Embracing ‘Enabling’ and Referencing
Research
Pedersen praised the initiatives, direction and progress
made over the past year.
“I’d say you are definitely on the right track. I would
keep ‘trusted enabler’ at the center of your discussions
always.” Pedersen said. He emphasized the need forcompanies to engage and enable employees by giving
them a “license to create or innovate.”“If employees feel that they are part of a company it
becomes possible for people from diverse backgrounds
to come together around an issue and provide their own
ideas and create something together,” Pedersen said.
“With more than 100,000 group employees worldwide,
it is crucial to have common group values. Moving
forward, you will want to consider how to link or anchor
these programs to the fundamental elements of thecompany— the original principles of TDK of vision, trustand courage,” he added.

Global HR and Administration Meeting in Munich
TDK held its inaugural global HR and Administration meeting bringing on July 13–14, 2017. The meeting brought over to TDK
members from group operations around the world to Munich, Germany. During two days of meeting and workshops, participants
crafted a vision and mission statement to guide future HR and Administration activities and policy. The gathering also set in motion
a concerted effort to put in place a more integrated HR and administrative policy to realize a common platform to better harness thediverse talent of the TDK Group.

Cultivate a Corporate Culture that Respects Diversity
Presented here are reports on an important theme—and progress made during fiscal 2017—on cultivating a
corporate culture that respects diversity. Staff working outside of their home country share their background,experiences, and situation.

Fiscal 2017 Goals and Achievements

Achievement● Compile consolidated● Complete the consolidated

management database, and geta solid grasp of the data

management database● Consider expansion and improveaccuracy of human resource
attribute information collected by the
consolidate management database

Technical Collaboration
and Respecting Local Business Culture

Meeting People of All
Kinds Leads to Personal Growth

I work in Israel, a country that has many innovative
startups and prestigious universities. My job is to assess
promising local technologies and to plan and promotecollaboration with TDK's technology and products.
When having a discussion, if you have an opinion toexpress, you sometimes have to interrupt others to get
it out. That is a big difference from how things are donein Japan, so I appreciate the effort it takes to adapt
to a different business culture. Our office has opened
only recently, so we have no storehouse of know-how,and there are still many problems we face trying tocommunicate with each other in English, but we havebeen getting tremendous assistance from the folks at
TDK-Lambda in Israel. While enjoying myself on the job,
I will continue exploring ways toachieve better collaborations thatwill lead to outstanding new TDK
products and services.

My job is to customize software products to meetthe needs of customer around the world andto support resolving issues prior to the start ofproduction. The most exciting things are learninga wide range of things both through my job andby working with others, plus working with newtechnologies.
When you work overseas, it is important to stepout of your personal comfort zone. In San Jose I
am able to encounter people who have differentc u l t u re s , l a n g u a g e s a n d s t y l e s o f w o r k i n g .
Meeting those people and building trust havehelped me to grow as a person. I will do my best
to support customers with the idea of seeing
things from “customer focus”
in our TDK Value.

Narutoshi Fukuzawa
Manager
Israel R&D Office, Technology Planning Group
Technology and Intellectual Property HQ
TDK Corporation

23

Main activities andmeasures

Goal

Suma Veerabhadrappa
Sr. Staff Application Engineer
MEMS Sensor Business Group
Sensor Systems Business Company
InvenSense, Inc.

24

The TDK Group's Important CSR Issues

Consider the Societal and Environmental Impact of the Supply Chain

Consider the Societal and Environmental Impact of the Supply Chain■ Consider the work environment at manufacturing sites
Important
ThemesResponse to Conflict Minerals■ Consider the work environment of suppliers■ Response to conflict minerals

Against the backdrop of rising interest in responsible mineral sourcing, we act in the capacity of a midstream
company to promote problem-solving initiatives throughout the entire supply chain.

TDK’s Approaches

TDK’s Supply Chain Responsibility
Upstream company(Supplier)

Midstream company (TDK)

Downstream company(Customer)

Human rights issues surrounding mineral procurement have emerged as a crucial social challenge worldwide, prompting keen
and rising interest in responsible procurement of such resources. For example, there are cases when minerals mined in the
Democratic Republic of the Congo (DRC) and adjoining countries serve as the source of funding for armed groups. This brought
notice to how such minerals are used to bankroll conflict, resulting in human rights violations against local residents and othercrises. At TDK, in April 2013, the TDK Group Policy on Conflict Minerals*1 was issued. This prompted each company to set up
survey response systems based on the new rules, along with efforts in compliance with the OECD due diligence guidelines.
*1 Details of the TDK Group Policy on Conflict Minerals, please refer to the following website:
https://www.global.tdk.com/corp/en/csr/social/supplier_responsibility/csr02210.htm

Automotive

Raw materials

Fiscal 2017 Goals and Achievements
Sub materials

Communicationequipment

Electrodematerials

Industrial
equipment

Mechanicalcomponents

Electronic components

Infrastructures

Goal

Achievement● Confirmed DRC conflict-free● Confirmed DRC conflict-free

Main activities andmeasures● Implementing surveys at Groupsupplier ratio: over 85%

supplier ratio: 92.3%● Monitor number of customer● Implement monitoring

responses

companies and promotion of DRC
conflict-free initiatives based onGroup common KPI● Promotion of issue solutions

in collaboration with industry
associations

Responses to Surveys and Promotion of DRC Conflict-free at Each Group Company
Executing Our Responsibility as a Midstream Company
TDK offers high-value-added solutions based on materials and components technologies. As globalization
accelerates and we expand our target markets, we develop ongoing relationships with a wide range ofcustomers and business partners. Buyer and supplier relationships with other companies are not uncommon
in some business areas.
Responsible management of supply chains is coming under strict scrutiny with the strengthening of legal
systems and international industry initiatives. For example, the United Kingdom passed the Modern Slavery
Act in March 2015, and the Electronic Industry Citizenship Coalition (EICC) changed its name to the
Responsible Business Alliance (RBA) in October 2017. Because these trends greatly affect TDK’s businessenvironment, it is vital that we take suitable measures in our business supply chains.
A shared understanding of social issues and common investigative practices is essential for the practicaland effective implementation of CSR in the supply chain. To bring improvements in efficiency to the entire
supply chain, TDK is working with other organizations from the stage of formulating rules, cooperating with
the industry as a whole, and proposing the standardization of investigative methods.

25

TDK is calling upon suppliers to be DRC conflict-free and uses the Conflict Minerals Reporting Template (CMRT) developedby the Responsible Minerals Initiative (RMI)*2 to facilitate the collection of sourcing information relating to conflict minerals. In
fiscal 2017, according to the conflict mineral survey conducted by our group companies, 92.3% of TDK's suppliers are DRC
conflict-free, exceeding the year's goal of 85%. At this point in time, no minerals suspected of being involved in the funding ofarmed forces in the DRC and adjoining countries have been confirmed. Furthermore, TDK has been responding appropriately
to requests from customers, and is monitoring the number of responses.
* 2 Responsible Minerals Initiative (RMI): An organization of over 350 companies and associations that leads the effort for responsible mineral sourcing.

Promotion of Issue Solutions in Collaboration with Industry
Associations
TDK is a founding member of the Japan Electronics and Information Technology
Industries Association (JEITA)’s Responsible Minerals Trade Working Group.*3
In fiscal 2017 TDK helped to lead JEITA’s Conflict Minerals Inquiry Briefing. We havebeen cooperating with efforts to revise the EU’s Conflict Mineral Data ExchangeStandard (IPC-1755) and have been working on conflict-free certification for smelters.
* 3 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

JEITA’s Conflict Minerals Inquiry Briefing (June 20l7)

26

The TDK Group's Important CSR Issues

Consider the Societal and Environmental Impact of the Supply Chain

Upstream company

Midstream company

Downstream company

Upstream company

Midstream company

Supplier

TDK

Customer

Supplier

TDK

Supplier

Procurement

Buyer
Supplier

Procurement

Supplier

Procurement

Buyer

Buyer
Supplier

Downstream company
Customer
Procurement

Buyer

Efforts as a Supplier (Consider the work environment at manufacturing sites)

Efforts as a Buyer (Consider the Work Environment of Suppliers)

As a supplier from which customers procure products, TDK channels tireless efforts into fulfilling its social

As a buyer procuring materials, TDK engages in CSR procurement, emphasizing communication and building

and environmental responsibilities at all of our sites.

strong relationships of trust. We believe that these efforts enhance the corporate value of both suppliers and TDK.

TDK’s Approach

TDK’s Approach (Purchasing Principles, Purchasing Policies)

As a supplier from which customers procure products, TDK is aware that making efforts to consider social and environmental
factors at the Group’s production sites and fulfilling its social responsibility are important also for the continuation of business.
TDK strives to identify issues and make improvements by, for example, implementing CSR self-checks and conducting CSR
audits in response to risks in the countries where sites are located.

TDK engages in global production with production bases in Japan and other Asian countries, the Americas, and Europe. Within
the procurement activities that support production, the development of global procurement structures are crucial, and we
strive to use those systems to develop products rapidly to remain competitive in the race to be ﬁrst to market in the electronics
industry. Production bases engage in local procurement, but in todayʼs society with ubiquitous IT networks, materials
procurement activities require close collaboration with suppliers in ways that overcome time and distance. In addition, measures

Fiscal 2017 Goals and Achievements

to fulﬁll corporate social responsibilities such as compliance with applicable laws and regulations, observance of social norms,
and preservation of the global environment are promoted actively through partnerships between TDK and its suppliers. TDK

Goal

Achievement

Main activities andmeasuresputs these principles into practice by engaging in purchasing activities that adhere to our Purchasing Policies.*1*1 Details of the TDK Purchasing Policies, please refer to the following website: https://www.global.tdk.com/corp/en/about_tdk/procurement/pro02.htm● Implement CSR self-checks at all 82 sites● Perform 100% CSR self-checks

at manufacturing sites● Secure 100% opportunities forthird-party CSR audits once
every two years (China andAsia region)● 100% implementation● 100% implementation● Of the 39 targeted sites in the China and Asia region,

implement independent third-party CSR audits ateight sites that have not undergone CSR audits bycustomers in the last two years● Implement CSR internal auditor training in Japan(received by a total of 217 persons up to andincluding fiscal 2017)

Goal

Achievement

Main activities and measures● CSR-compliant supplier● CSR-compliant supplier● Request CSR check sheet returns or implement CSR

ratio: over 95%

ratio: 91.2%

audits in response to conditions at Group companies
based on Group-wide shared KPIs

Self-checks, Audits and Ongoing Improvement Efforts

Promotion of CSR procurement

TDK has compiled the TDK CSR Self-Check Sheet, based on the self-assessment requirement for membership in the RBA withthe aims of identifying issues in CSR activities and replying speedily to customers. This self-assessment is implemented annuallyat all targeted manufacturing sites. Furthermore, TDK responds to requests from customers for CSR audits, seeing it as a good
opportunity to further raise the level of CSR activities. Regarding manufacturing sites in high-risk regions of China and Asia, once
every two years we conduct CSR self-audits using third-party auditing companies, including customer CSR audits. TDK has also
been conducting CSR workshops and internal auditor training regularly to convey a systemic understanding of the requirementsof CSR audits to employees and enhance CSR activities at manufacturing sites.

TDK treats CSR as a key component of its purchasing policy, while striving to earn
understanding of the importance of CSR from suppliers and encourage increased
awareness in that area. We incorporate provisions into contractual agreements keyed tothe 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. In fiscal 2017,
audits confirmed that 91.2% of suppliers of our Group companies were CSR compliant,an 8.8% improvement over fiscal 2016, but still short of the 95% target. We will continue
to strengthen our efforts with regard to Group companies and suppliers.

CSR Trainings in Japan, China and Malaysia

CSR Audits of Major Contract Manufacturers

In fiscal 2017, CSR training was conducted in Japan, China, and Malaysia to further
enhance CSR activities. In Japan, 19 people participated, with RBA internal auditor
training carried out. In China, 28 people participated, deepening understanding of therevised RBA Code of Conduct and the training system. In addition, 14 people participated in Malaysia, with a local CSR voluntary audit carried out, along with practical training
on CSR auditing methods.

Since fiscal 2015, TDK has been conducting CSR audits of major contract manufacturers
upon whom TDK has high dependence in China, a country in which there is high risk inthe labor environment. In fiscal 2017, three CSR audits were conducted, and 21 issues
were identified in total. One important item was a deficiency in protective equipment forworkers, and requests were made for improvements in this area.
CSR training in Malaysia (December 2017）27

Fiscal 2017 Goals and Achievements

Group CSR procurement training(November, 2017; Japan)

Breakdown of CSR audits at
Chinese contractor locations■ Labor 24%■ Health andsafety 66 %■ Environment

10 %

28

The TDK Group's Important CSR Issues

Develop and Prosper in Harmony with the Global Environment

Develop and Prosper in Harmony with
the Global Environment
Important
ThemesIncreasing corporate value by reducing
environmental impact at every life cycle stage■ Reduce environmental load throughout life cycle stages■ Creating a framework for gauging product contributions

Reduce Environmental Load throughout Life Cycle Stages
TDK Environmental Vision 2035
At TDK, we believe that long-term environmental action plays a key role in the effort to achieve sustainable deveropment
in society. TDK Environmental Vision 2035, newly launcheded in fiscal 2016, sets the goal of "to halve the CO2 emission

Osamu Hikita

basic-unit in a life-cycle perspective by 2035", based on operating businesses with low enough environmental load notGeneral Manager of Production

to disturb natural cycles. This stance stems from the belief that minimizing the environmental load in business activities,

Manager of Technology and Intellectual

Engineering HQ, and Deputy Generaland revitalizing the natural environment, is the duty of companies that supply products designed to contribute to its

Property HQ, and General Manager ofcustomers and the society. Moreover, modeled on the United Nations Climate Change Conference (COP 21) Paris

Technology and Intellectual Property HQAgreement, which seeks to curb global warming by achieving a balance between greenhouse gas emissions andIntellectual Property Rights Center ofCorporate Officer

Creating a safe, healthy work environment that does the least harm to the global
environment is a foundational premise of our business activities. TDK Environmental Vision 2035 will guide our efforts with regard to the global environment
as we continue to deliver products and services that benefit customers andsociety. We must understand environmental impact from the perspectives ofvarious stakeholders, as we generate impact through the entire life cycle ofour products. Our formulation and implementation of a plan that incorporates
efforts to reduce environmental impact into all business processes will shape
our path forward. Toward that end, in fiscal 2018 we made an organizationalchange, integrating the departments in charge of production technology andenvironmental policy. This decision unifies environmental considerations andmanufacturing initiatives, and it advances the pursuit of "zero defect quality"
which will eliminate waste generated by defects and yields. Going forward, we
will continue to improve corporate value by reducing environmental impact as
our business contributes to society.

TDK Corporation

absorption sources, this is also considered the ideal corporate posture for all TDK activities.

Procurement

Disposal■CO2 emissions

basic-unit(FY2014=100)

FY2025FY2014FY2035

100
80

▲30％

▲50％

60

half

40

Development/
ProductionUse

CO2 emissions
cut in half

200

Environmental load reduction, merit indicators anda lifecycle perspective

Logistics

Major achievements
Trends in CO2 Emissions from Production Activities (Global)*1

Trend in the Reduction of CO2 Emissions through Products*1

2,000

2,500

100

1,500
1,000

1,190

1,269

109.1

106.0

1,474

1,463

110.5
1,647

120
100
80
60

0
FY2013

FY2014FY2015CO2 emissions (kt-CO2）

FY2016

118.7

2,000
100

1,500

1,580

123.0

2,041

1,675

150
120
90

1,251

60

Tetsuya Kuwashima

20

500

30

Environmental Planning Group

0

0

0

TDK Corporation

40

500

138.9

FY2017CO2 emissions basicunit (FY2014=100)

1,000

886

FY2013

FY2014FY2015CO2 emissions (kt-CO2）

FY2016FY2017CO2 emissions basicunit (FY2014=100)

General Manager of Production Engineering and
Production Engineering HQ

In the effort to halve our CO2 emission intensity by 2035 as outlined in TDK
Environmental Vision 2035, TDK has adopted standards for CO2 conversion
that calculate full-lifecycle environmental impact that extends across a seriesof business activities. The main life cycle stages for emissions in electronic
components are generally: materials procurement, company operations, andproduct use. For this reason, we have augmented our efforts beyond improvements to the Group’s manufacturing facilities and products themselves andbegun working with procurement departments to ascertain the current status
at suppliers so that we can visualize the environmental load in the supply
chain. I also consider it important to set goals matching actual conditions at ourbusiness locations rather than basing goals on CO2 conversion or numericaltargets. Collective motivation toward goals is much easier to maintain whenthose goals can be mapped to practical circumstances. I aim to improve the
TDK infrastructure so that all employees feel motivated to contribute via theirautonomous actions to reducing our environmental load at all business sites.

*1 A third party review of the calculation method was performed. Please refer to the detailed information on TDK web.
https://www.global.tdk.com/corp/en/csr/csr_data/csr05900.htm

2930

The TDK Group's Important CSR Issues

Reduce Environmental
Load Throughout
Life Cycle Stages
In order to reduce environmental impact
on a global scale, efforts are needed that
not only reduce our own environmentalload but cover the entire value chain,
as well. Presented here is an outline of
TDK's lifecycle-based environmental
approach and our main initiatives.

Asking Suppliers to Take
Further Environmental Action
TDK invites suppliers to briefing seminars forbusiness partners. Issues to be addressed infiscal 2018 will include reducing environmental
impact at the procurement stage.
TDK recognizes how important it is in management to assess environmental impact throughout the full lifecycle of products.
Through these seminars TDK plans to emphasize to suppliers the importance of issues bothsocietally and for business, and we will ask
suppliers to take further environmental action
and cooperate by making the necessary improvements.

Develop and Prosper in Harmony with the Global Environment

Procurement

Development andManufacturing

Logistics

Use

Disposal

TDK is promoting green procurement
and eliminating the use ofrestricted substances, while
also taking measures to reduce
suppliers' environmental
impact.

TDK is promoting environmentallyc o n s c i o u s d e s i g n t h ro u g hp ro d u c t a s s e s s m e n t s a n d
reducing environmental loads
during manufacturing by cutting
down on energy and resourceuse.

TDK is working with customers
to reduce environmental loadon top of enhancing in-houselogistical efficiencies.

TDK is producing eco-friendly
products to help customers reduce
their environmental load, while
promoting understanding of thevalue of doing so.

TDK is using recyclable materials
and designing products for easy
disassembly in consideration of thedisposal of products at the end of
their lifetime.

Reducing Energy in
Manufacturing and Fostering
the Next-generation
TDK has been working to support improvements
and other projects aimed at reducing environmental
impact, particularly targeting manufacturing sites in
the Group that have high CO2 emissions.
As a result, in fiscal 2017, the Group as a wholeachieved a 2.1% year-on-year reduction in emissions, equivalent to 31,388 t-CO2.
We have also been fostering the next-generation,
sending energy specialists to provide training at
each site, especially with regard to energy management.

Ag-stacked Film Reduces Environmental Impact
TDK’s Ag-stacked film (transparent conductive film) is used as a light-control film
for windows and communication antennas. It features high transmittance with low
resistance, and will have great potential for use in the fields of energy and organic
solar cells in the future. Because of its low power consumption, Ag-stacked film
can be used as a driving electrode for light-control film to reduce annual CO2 emissions by 3.2 tons. The potential for saving energy will only increase with the further
expansion of applications.

Creating a Framework for Gauging Product Contributions
Striving through formulation of industry-shared standards, steps are taken to promote social understanding of theCompany’s environmental contribution value.

Efforts at TDK

Briefing seminar for suppliers (October 2017)31

On-site training by persons in charge of energy

TDK has quantified and announced its greenhouse gas (GHG) emission reduction contribution by product, and is also working to establish
industry standards for methods to quantify the reduction contribution of electronic components. In fiscal 2017, the Electronic Components LCA
Working Group of the Electronic Components Board of JEITA, in collaboration with Mizuho Information & Research Institute, Inc., collected andclassified examples of greenhouse gas emissions mitigation by electronic components, and outlined a basic approach to quantification. Basedon this guideline, JEITA estimated the contribution potential of Japanese electronics manufacturers in the global market presently and in the
future (2030), which it announced at the 13th Meeting of The Institute of Life Cycle Assessment, Japan in March 2018. Additionally, informationon the contribution potential of electronic components in 2030 was provided to the Liaison Group of Japanese Electrical and Electronics
Industries for Global Warming Prevention and will be adopted as explanatory materials for the Electrical and Electronics Industries' "Action Plan
for Commitment to a Low-Carbon Society" being promoted by the Japan Business Federation, a government advisory council.

32

TDK CSR REPORT 2018

TDK Group Outline
The TDK Group is active in over 30 countries and regions all over the globe, selecting suitable bases for plants,

Third-Party Opinion

research facilities, and sales offices from the viewpoints of marketability, product range, distribution, etc. The TDKGroup consists of 142 consolidated subsidiaries—15 in Japan and 127 overseas (60 in Asia, 45 in Europe, and 22
in the Americas). The Group’s total work force is 102,883 persons.

Net sales

1,271,747 million
yen

Operating income

Americas（External）

Net sales

112,929 million
yen（External）（8.9%）（Internal）

Consolidated net sales (external)（5.0%）

1,271,747million yen

EuropeConsolidated employees (internal)

Net sales

166,192 million
yen（External）（13.1%）（Internal）（Internal）

5,123

Number of
employees

Number of
employees

85,633 million
yen102,883

8,045

Net income

63,463 million
yen

Japan
Net sales

113,743 million
yen（External）（8.9%）

Number of
employees

9,590（Internal）（9.3%）

Asia and others
Net sales

878,883 million
yen（External）（69.1%）

Number of
employees

80,125（Internal）（7.8%）（77.9%）Net sales by product segment ( fis c a l ye a r e n d e d M a rc h 2 018 )Other

Capacitors

52,342million yen

156,990 million yen

Film Application
Products

370,953
million yen

333,235

95,370 million yen

million yen

237,865

Inductive Devices

157,529 million yen

437,639
million yen

Magnetic
Application Products

Other Magnetic
Application Products

Recording devices

Passive
Components

Other Passive Components

123,120 million yen

Sensor Application Products

77,578 million yen

To start, I would like to highlight two of the statements madeby President Shigenao Ishiguro. The first is the aim to connect electronic components to solutions and the other is his
vision of a society in which no one is left behind. The former
is the core of his management philosophy and latter lays
the foundation of TDK’s ideals. In other words, the vision ofa truly inclusive society directly informs the solutions which
TDK is producing. This fiscal year’s report foregrounds theconnections that TDK has made between the technicalstrength of its electronic components and the realization of
integrated solutions which promote a society with "no one
left behind." These connections operate on all levels of the
production chain and exemplify TDK's corporate social
responsibility. I would like to share my observations on how
CSR connects to such a grand aspiration. First, TDK actively looks externally for necessary assets which link technologies to solutions rather than relying solely on in-house
expertise. M&A play a critical role in this process, and one
which mandates that TDK develops its social awareness.
The investment made into these social considerations will
equip TDK to rise to any CSR challenges.
Next is the supply chain. As of this year, TDK has effectively embarked upon the Plan-Do-Check-Act (PDCA)
cycle of improvement actions. This is a commendable newdevelopment. Among the topics reviewed, supply chain
management in fiscal year 2017 was unique in that it did notmeet the set goals. With any M&A, the acquired company’s
supply chain becomes part of the supply chain of thepurchaser - suddenly expanding the scope and scale ofwhat must be managed. Though the managers responsible
for making such acquisitions a success face numerous
challenges, it is critical that all involved prioritize this goal.
In this way, each individual will be included in the effort toconnect electronics components and solutions.
And then there is the human factor. The key to TDK group’s
growth rests on shared corporate values and how they arepracticed. TDK will need leaders, more than ever before,
who can contribute to an environment with shared common
values and a commitment to work together toward the realization of those values. For this reason, one of the articles
in this year’s CSR Report I found particularly engaging
concerns the development of the company’s workforce. I
congratulate the company on its development of ‘trusted
enablers’ (those who are trusted by others and are able toactualize the ideals). These trusted enablers personify thetype of people who can transcend national and cultural
boundaries to help create an inclusive society with ‘no one
left behind’.

I was also very interested in the interviews with engineers inthe section titled “Contribute to the World through Technology”. Each engineer’s heightened awareness and passion
for their work is palpable, and their desire to generate
high-quality solutions unites a truly global engineering
team.
Next, I would like to comment on some steps TDK can taketo add to this strong momentum. Increasing transparency,
by sharing the information that guides decision-making,will support the company’s goal of building Social Value.
In supply chain matters, though the ratio of current suppliers who meet the CSR criteria is noted, neither priorcompliance status of these suppliers nor the standards
applied appear. In next year’s report, I hope to see thesecriteria clearly identified. Ideally, the report would specify
the areas that did not meet the criteria and resulting actions taken with non-compliant suppliers.
On the environmental front, the application of the life
cycle perspective obliges TDK to investigate and report
the quantity of CO2 emissions in each production stage
including product use and disposal. Effective methodsof reduction are specific to each stage, making this information essential for the formulation and prioritization ofcountermeasures.
Finally, I believe TDK should foreground the concept of ‘noone left behind’ in its CSR policy. Management decisions
informed by a solid CSR policy link growth with values.
As such, TDK stands to benefit by clarifying the inclusive
and inter-connected future which it seeks to create; doing
so allows discernment of the decisions that facilitate therealization of such a society. By advocating measures thecompany is taking to move toward an ideal society, TDK’s
CSR and the company’s management will step forward
together as one.
Thank you for allowing me to share my opinions with you
regarding this year’s CSR report. I sincerely believe thisyear’s report does an excellent job illustrating the waysthat TDK is contributing to the future of our society - inJapan and throughout the world.

Toshihiko Fujii
Visiting Professor
Rule Making Strategy Reserch CenterTama University

million yen* Following organizational changes conducted in the first quarter of the fiscal year ended March 2018, we have newly established the report segment Sensor Application Products.
In addition, some products belonging to Other have been reassigned to Other Passive Components in the Passive Components segment, and some products belonging to Recording
Devices in the Magnetic Application Products segment have been transferred to Other.

33

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