Promotion of ESG Initiatives
Further Promoting Initiatives to Sustain
Growth in the Areas of Governance,
Society and the Environment
Corporate Governance Structure
Cross-ShareholdingsInternal Control System
Compliance
Information Security
Risk Management
Messages from Outside Directors

Corporate Governance

P. 39–42
P. 42
P. 42
P. 43–44
P. 44–45
P. 45–46
P. 47

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.
changes in the business environment and have been working
to augment management oversight and ensure the timely
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
disclosure and ensure transparency.
(4) We seek to perform the roles and duties of the Boardof Directors appropriately in order to make decisions in
a transparent, fair, quick and resolute manner.
(5) We seek to promote a constructive dialogue withshareholders.

Corporate Governance Structure
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 to

Shareholders’ Meetings
Selection/Dismissal

Selection/Dismissal

Reporting

Cooperation

Independent Auditors

Reporting

Audit & Supervisory Board
ReportingAccounting
Audit

Selection/Dismissal

Executive Compensation
Committee

Board of Directors

Exchange of Opinions
Appointment/
Monitoring

Executive Appointment
Committee

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

Discussion/
ReportingMonitoring

Selection/Dismissal
Cooperation

Management Council

Direction/
Supervision

Toyota Industries’ Corporate
Governance Reports are available on
its Website (in Japanese).

Monitoring

Cooperation*1: Functional
Meetings

President

Business Operation Committee(Follows up on the execution of business operations)Audit & Supervisory
Board Office

Link tothe report

Reporting
Audit Dept.

(Reports on and confirms execution of business operations)

Human Resources

CSR

Quality

Environmental

Production

Export Transaction
Controls

Procurement

Safety and HealthTechnologies

Profit Improvement

Internal Audit

Functional Meetings*1, Committees*2
Senior Executive Officers

Business Divisions/In-House Company/Departments
Subsidiaries/Affiliates*2: Committees

These entities deliberate andfollow up on issues in respective areas.

(As of June 10, 2021)

39

Company Introduction

Strategies and Businesses

Promotion of ESG Initiatives

Corporate Information

Corporate Governance

Implementation Structure
Toyota Industries convenes monthly meetings of the Boardof 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 ofbusiness 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 specificmatters, such as corporate social responsibility (CSR), theenvironment and export transaction controls. These functional
meetings and committees discuss important matters andaction themes in respective areas. Moreover, we strive tomaintain and improve internal controls by establishing the
Audit Department and conducting internal audits of Toyota
Industries’ business divisions and departments as well as our
subsidiaries.

Selection and Dismissal of Senior Management
and Appointment of Director and Audit &Supervisory Board Member Candidatesn Policies for Selection (and Dismissal) of Senior
Management and Appointment of Director Candidates
We carry out comprehensive evaluations from theviewpoint of placing the right persons in the right positions.
We seek a balance between making sound and quick
decisions, managing risk appropriately and monitoring
execution of business operations and covering a specificfunction or business division of Toyota Industries.
In appointing audit & supervisory board member
candidates, we also perform comprehensive evaluations
from the viewpoint of placing the right persons in the rightpositions, while ensuring a balance among the financial,accounting and legal insights, knowledge on our business40

Toyota Industries Report 2021

fields and the diversity of perspectives on corporate
management.
n Method of Determination
Based on these policies, we review proposals, exchange
views and confirm details at the four-member Executive
Appointment Committee, which consists of Toyota
Industries’ chairman, president and two independent
outside directors, and submit these proposals to the Boardof 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 Directors andAudit & Supervisory Board Membersn Matters Related to Policy for Determining Individual
Compensation for Directorsl Basic Perspective• We ensure fairness and transparency.
•W e emphasize incentives for achieving better businessperformance and sustainable growth, link compensation
with the business performance of Toyota Industries andreflect individual duties and performance.
l Compensation Structure•C ompensation for directors consists of fixedcompensation (basic compensation) and bonuses(compensation linked to business performance).
•A bonus is further divided into a portion linked to a single
fiscal year indicator and a portion linked to medium-term
indicators. However, bonuses for outside directors do
not include the portion linked to medium-term indicators.
l Method of Determining Individual Compensation•W e have established the Executive Compensation
Committee comprising four members, namely Toyota
Industries’ chairman, president and two independent
outside directors.
•T o ensure the Committee’s objectivity and transparency,
we have a rule that independent outside directors makeup a half or more of the total number of its members.
•T he Executive Compensation Committee deliberates
on a policy for determining individual compensation for
directors, proposed compensation for each director andimportant matters related to compensation.
•T he Board of Directors votes on the policy based on
the results of deliberations made at the Executive
Compensation Committee.
•F rom the standpoint of determining directors’ individualcompensation amounts flexibly and swiftly, the Board of
Directors delegates the related decision-making authority
to the president (or to the chairman).
•T he president (or the chairman) determines the directors’
individual compensation amounts based on the policy

and the results of deliberations made at the Executive
Compensation Committee.
l Policy for Determining Fixed Compensation, Bonuses
and Their Ratio—Fixed Compensation—• Fixed compensation for directors consists of monthly
salaries, which are paid periodically while in service.
• We determine a reasonable level of individualcompensation amounts while giving consideration toother companies’ compensation levels as well as therank and duties of each director.
—Bonuses—• We pay a bonus at a certain time after the end of theGeneral Shareholders’ Meeting in each fiscal year.
• For the portion linked to a single fiscal year indicator,
we use consolidated operating profit as the indicator andcalculate the amount of bonuses for each rank basedon the amount of consolidated operating profit for theprevious fiscal year.
• For the portion linked to medium-term indicators,
we evaluate such management indicators as operating
profit ratio of the past three fiscal years and calculate
the amount of bonuses for each rank based on theevaluation results.
• We have selected the said indicators because we havedetermined that they appropriately align with the basic
perspective of our policy for determining individualcompensation for directors.
• In determining the amount of bonuses, we giveconsideration to dividends, employees’ and othercompanies’ bonus levels, past records of bonus
Breakdown of Executives’ Compensation
Bonus(compensation linked tobusiness performance)

About

40%

¥90 million or below per month(Of which, outside directors:¥3 million or below)

Monthly salaries(fixed compensation)

About

60%

Compensation for Directors and Audit & Supervisory Board
Members
Executive
category

Director(Of which, outside director)

Audit & supervisoryboard member(Of which, outside audit &supervisory board member)

Total

Total
compensation

Monthlysalaries

Bonuses(¥ million)(fixedcompensation)(Compensation
linked tobusiness
performance)

546
(52)

346
(36)

200
(16)

No. ofapplicable
executives

payments and execution of duties and assigned work.
—Ratio—• As a guide, we use the ratio of fixed compensation toa bonus of directors (excluding outside directors) of
60:40, with the portion linked to medium-term indicators
accounting for roughly 10% of the bonus. However, thisdoes not preclude us from using another ratio dependingon the amount of operating profit for the corresponding
fiscal year.
n Compensation for Audit & Supervisory Board Members
Compensation for audit & supervisory board members
only consists of fixed compensation, which is determinedthrough discussion of audit & supervisory board members
based on certain criteria determined by Toyota Industries.

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.
n Evaluation(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. The Board
successfully draws opinions and advice from outside
directors and audit & supervisory board members
based on their experiences in their respective
companies and individual perspectives.
(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.
n Suggestions for Further Improvement of theEffectiveness(1) Regarding major investments and other important
projects, more opportunities should be provided toreport the progress of each.
(2) To further invigorate the Board’s discussion, more
opportunities should be provided to directly listen to the
Meetings of the Board of Directors and Relevant Committees
Meeting body

No. of meetings
held per year

Average attendance rate

Board of Directors

1098%(Directors and audit &supervisory board members)

Executive Compensation
Committee

1100%(All committee members)

Executive Appointment
Committee

1100%(All committee members)

Audit & Supervisory Board

12

100%
(Audit & supervisory board
members)

10
(3)

106
(27)

106
(27)

—
(—)

5
(2)

653

453

200

15

Notes:
1. T he figures include one director and one audit & supervisory board member who resigned
at the closing of the 142nd General Shareholders’ Meeting held on June 9, 2020.
2. B
 onuses show the amounts approved by resolution of the 143rd General Shareholders’Meeting held on June 10, 2021.

41

Company Introduction

Strategies and Businesses

Promotion of ESG Initiatives

Corporate Information

Corporate Governancevoice of each site, including subsidiaries outside Japan.
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 andother responsible persons. They also carry out such activities
as on-site audits at the Head Office, major business sites andsubsidiaries as necessary 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

Exercise of Voting Rights
While respecting management policies of individual investee
companies, we determine how we exercise our voting rights
by checking each item on the agenda from the perspectivesof medium- to long-term enhancement of corporate value,policy concerning shareholder returns, corporate governanceand social responsibility.

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
2021 were effective, and accordingly, submitted an Internal
Control Report in June 2021. The report was reviewed byindependent auditors and judged fair in their Internal Control
Audit Report.
Internal Control Assessment System (Based on J-SOX)

Cross-Shareholdings
Basic Policy
Cooperative relationships with various companies are
essential in expanding business and achieving sustainablegrowth. From the medium- to long-term perspective ofenhancing corporate value, our policy is to determine if
cross-shareholdings are needed by comprehensively giving
consideration to their importance in terms of our businessstrategies and relationships with business partners.

Internal control activities undertaken by eachdepartment and consolidated subsidiary(Establishment and operation of internal controls)

Annual financial report

42

Toyota Industries Report 2021

Formulating the Employee Code of Conduct andThoroughly Implementing Awareness-Raising
Activities
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.
It covers such topics as prevention of bribery, corruption
and profit sharing, conformance to antitrust laws, respectfor human rights, safety and health as well as environmental
conservation. Accordingly, we have been working to instill the
Code through group training and other means. Consolidated
subsidiaries in and outside Japan have formulated their own
Code of Conduct appropriate to their respective businesslines and corporate cultures and have been implementing
Company-wide awareness-raising activities once a year.
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
learn about compliance on their own.

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

Internal Control Audit Report

Verifying Appropriateness of Cross-Shareholdings
Each year, the Board of Directors verifies if the purposeof cross-shareholdings is appropriate and if associatedbenefits and risks are commensurate with capital cost.
More specifically, we conduct verification by using bothquantitative information, which is based on comparison of
total shareholder return and weighted average capital cost as
well as return on equity (ROE) of each investee company, andqualitative information, such as the transaction status and theoutlook of future business relationships.

CSR Material Issuen Number of serious compliance violations in the Toyota
Industries Group: 0

Example Topics of e-Learning Materials
Internal Control Report

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

vital 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. We have also established a system to report
serious violation cases that occur within the Toyota Industries
Group, including bribery, corruption and violations of antitrust
laws, to the Compliance Subcommittee.

Audit on internal controls by independent auditors

Compliance
Basic Perspective
We believe that compliance means both adhering to laws andregulations as well as ethics and social norms. As such, it isPerceptions Index in accordance with their respective,
applicable laws) and been conducting activities to familiarize
employees with them in each country and region.

Efforts for Ensuring Compliance with AntitrustLaws and Competition Laws
As for antitrust laws, we operate a system to conduct a
check and review before and after employees of Toyota
Industries contact competitors and have been cultivatingawareness among employees for not acting in a mannerthat may possibly constitute a violation of antitrust laws.
Moreover, we have designated a particular month as“Antitrust Law Compliance Month” since fiscal 2016 tocarry out enlightenment activities at relevant departments.
Consolidated subsidiaries in and outside Japan have also
been working to educate and raise awareness of employees
for preventing violations of antitrust laws and competition
laws, such as forming cartels, in accordance with local laws
and regulations.

Early Detection and Prevention of Issues via
Whistle-Blower System
The Toyota Industries Group has in place a whistle-blower
system to report and seek consultation on compliancerelated issues. In Japan as well as key countries in North
America, Europe, Asia, Oceania and South America, weoperate a compliance hotline (external helpline) that allows
employees and other relevant parties to seek advice fromexternal experts on compliance-related matters without
being exposed to negative consequences. In fiscal 2021,
we received 62 reports and inquiries from within Toyota
Industries and from its consolidated subsidiaries in Japan onsuch matters as labor management, working environment
and ethics. After verifying each report and inquiry, we havetaken appropriate action regarding each case. Our responses
have been reviewed and judged appropriate by externallawyers.
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 andprevention of issues and intend to become a “company onwhich society places greater trust.”

Activities in the Toyota Industries Group
Each consolidated subsidiary of the Toyota Industries Group
has set up a compliance committee (in Japan) and appointed
a compliance officer (outside Japan) to lead and promoten Execution rate of Employee Code of Conduct
enlightenment activities by Toyota Industries andconsolidated subsidiaries outside Japan: 100%;
Execution rate of Employee Code of Conduct
enlightenment activities by consolidated subsidiaries
in Japan: 75% (Unable to achieve 100% due to theimpact of COVID-19)

Efforts for Prevention of Bribery and Corruption
To prohibit and prevent bribery, Toyota Industries has
formulated the Global Guidelines for Bribery Prevention(or individual rules in countries high on the Corruption

Compliance Officer Conference in China

43

Company Introduction

Strategies and Businesses

Promotion of ESG Initiatives

Corporate Information

Corporate Governanceautonomous 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 2021, compliance officers from eight bases in
China attended the Compliance Officer Conference held
online. They shared information about compliance activitiesof each company and updates to relevant laws to learn
how to thoroughly implement basic points of complianceand improve response capabilities. After the conference,these bases have been conducting activities in a mutually
coordinated manner.
Main Compliance Officers
EuropeToyota Material Handling Europe AB
Andreas Lundh
United States
Toyota Industries North America, Inc.
Sheena Seger
China
Toyota Industries Management (China) Co., Ltd.
Zhu Lingling

Information Security
Basic Perspective
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.

(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
the structure.

Toyota Material Handling India Pvt. Ltd.

Implementation Structure

Pragya Sharma

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 department

Vanderlande Industries Holding B.V.
Carl Messemaeckers

preventing malware penetration and data leakage causedby cyberattacks.
n 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.

*1: Head of each department*2: A person within the department, appointed by the head

*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

Basic Policies for Information Security

India

Vanderlande Groupof 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.
Through these and other measures, we are increasing thelevels of security and security awareness throughout theGroup.

Organization for Promoting Compliance and Information Security under the CSR Committee

Information Security Managementn Information 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 24 hours aday, 7 days a week. Upon the occurrence of an incident, we
immediately report it to the president and senior management
and share relevant information within Toyota Industries.
We also share threat information with our consolidated
subsidiaries in and outside Japan to swiftly alert eachcompany.
CSR Material Issuen Number of serious incidents occurred: 0n 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 afteraction education more than four times a year per person.
We also send periodic reminders internally using incidents
that have occurred elsewhere as examples.
n Preventing Leakage of Confidential Information
We strive to raise the level of information security byholding workplace meetings and conducting self-checks
regarding our information security practices. In termsof technological measures, we implement a multi-layer
defense that includes encrypting PCs, restricting andmonitoring the copying of files on recording media andPrimary Activity Examples
Activities in fiscal 2021

CSR Committee
Activity reports

Compliance Subcommittee (in charge of compliance)

Approval and instruction

Information Security Subcommittee (in charge of information security)

Europe, North America and China
Regional headquarters
Toyota Industries
Corporation

Consolidated subsidiaries
in Japan

Consolidated subsidiaries
outside Japan
Consolidated subsidiaries outside Japan

44

Toyota Industries Report 2021

• Enhancing security services for consolidated subsidiaries in andoutside Japan• Facilitating tools (measures) to support actions against leakage ofconfidential information• Publishing information security newsletters• More advanced e-mail security training (targeted attacks via e-mailon specific departments and after-action education; four times ayear/person)• Performing a more stringent check on information devices brought
into the plant premises from outside• Providing information security education to on-site plant workers• Providing incident response training• Reinforcing a system of collaboration with consolidated subsidiaries
and with dealers in and outside Japan• Operating a system on a trial basis that automatically detects
unauthorized removal of information off the premises

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
progress of 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 formulated45

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.
Disaster Prevention Structure
Disaster Prevention Response Headquarters(Established in Kariya Plant)

Plant Response
Headquarters
Kariya Plant

Key Facility

e-Lab(information
systems
headquarters)

Obu Plant
Kyowa Plant
Nagakusa Plant &Morioka Works
Takahama Plant
Hekinan Plant
Higashichita Plant
Higashiura Plant
Anjo Plant

Remote Sites
Tokyo Office

Educational Sites

Company
dormitories
Company resort
facilities

Affiliated Companies

Suppliers

Toyota L&F
Customer CenterTokyo
Toyota L&F
CustomerCenter 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
n 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
the company premises, swiftly make decisions anddisseminate these decisions throughout Toyota Industries.
In fiscal 2021, we canceled comprehensive training to46

Toyota Industries Report 2021

Aggregating information within the Company

prevent COVID-19. Instead, we conducted training byfunction, such as aggregating information within Toyota
Industries. As an effort to reinforce our disaster prevention
structure, we also conducted a drill for plant security
staff to use IT tools to distribute information, assuming anighttime earthquake.
n 2. Initial Response Training at Plant Response
Headquarters
In fiscal 2021, as with the Disaster Prevention Response
Headquarters, we avoided large-group training as
much as possible and conducted training for the Plant
Response Headquarters in small groups and by role
to confirm the action of each member. Specifically, themembers aggregated damage information and distributed
information using a simple wireless device. By conducting
training repeatedly, we intend to create a structure underwhich every member understands his or her role andresponds to the situation flexibly.
n 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.
n 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 the damage
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.