Progress of Measures to Prevent Recurrence of Seismic
Isolation/Mitigation Oil Damper Problems
Following the announcement on the KYB website entitled “Investigation into the causes of nonconforming acts in the inspection process, etc.
for seismic isolation/mitigation oil dampers for buildings manufactured by KYB Corporation and its subsidiary, and measures to prevent theirrecurrence” dated February 13, 2019, we have been taking preventive measures and working to restore trust.
As of June 30, 2020, approximately 70% of the measures to prevent recurrence have been addressed, and we are continuing our efforts tocomplete unfinished measures.
On its website, KYB periodically posts reports of its progress in preventing the recurrence ofimproper acts and measures to identify and address such acts.

https://www.kyb.co.jp/company/progress/index.html (Japanese only)

Progress of Measures to Prevent Recurrence (As of June 30, 2020)

Establish compliancemanagement

Foster strict
compliance awarenessand reform thecorporate culture
Change the mindset of all
officers and employees

Establish a balanced
business operation system

Evaluate businessfeasibility, and revise
business operations,information-sharingsystems and othermatter

Ensure personnel
are rotatedCollect information andestablish a feedback
system

Implement inspection
systems

Improve inspection
systems and methods

Implement preventive
measures against
fraudulent operation ofinspection machines

Enhance internal quality
inspection system

Strengthen internal
audit and control
systems
Tighten the subsidiarymanagement system* Kayaba System Machinery Co., Ltd.

20KYB Group Report 2020

Establish compliance awareness at KYB Corporation and KSM*

Completed

Foster compliance awareness throughout the Group

Completed

Revise the Corporate Guiding Principles and other guidelines

Completed

Emphasize the importance of compliance regularly

Completed

Implement personnel evaluations and related measures

Completed

Conduct education and training to raise awareness of social responsibility

In progress

Conduct education that incorporates numerous case studies and best practices from other companies

Completed

Conduct education on laws and regulations specific to businesses and products

In progress

Make education regarding quality mandatory

Completed

Ensure appropriate business management at KSM

In progress

Review how decisions to accept orders are made at KSM

Completed

Develop business systems

Completed

Revise use of mass-production evaluation procedures for individual and small-batch products

Completed

Nurture successors and increase the transparency of operations by sharing expertise/know-how in
the Company through effective job rotation.

In progress

Ensure thorough documentation of meetings, reports and instructions at KSM

Completed

Ensure that internal regulations are applied in the event of an emergency

Completed

Review the internal whistleblowing system to improve its effectivenessCompleted

Clarify the actions to be taken when quality misconduct is detected

In progress

Create a mechanism for extracting information

Completed

Strengthen the independence of quality assurance

In progress

Improve methods for onsite oil damper inspections with the customer present

In progress

Review inspection manual

In progress

Tighten internal procedures for changing the software of oil damper inspection machines

Completed

Regularly monitor the software of oil damper inspection machines

Completed

Automatically record inspection results without human involvement

In progress

Automate inspection processes

In progress

Tighten controls on access to oil damper inspection machines

In progress

Ensure traceability of performance test data

In progress

Perform audits that consider quality misconduct

Completed

Perform audits that effectively verify inspection data

In progress

Institute audits by KYB Corporation

Completed

Leverage the support of experts

Completed

Strengthen systems for sharing information and collaborating among Group companies

Completed

Review management systems for Group companies

In progress

Analyze and monitor Group companies’ business risks

In progress

Reorganize Group companies

In progressStakeholder Communications

Basic Policy
Our Corporate Spirit states, “By serving technologies and productsthat make people’s lives safe and comfortable, KYB group dedicatesto the society.” To fulfill this we must comply with the following:
1. We shall follow all rules and face all issues with honesty.
2. We shall build a corporate culture full of vitality, and holdhigh goals.
3. We shall value sincerity, cherish nature, and care for theenvironment.
4. We shall constantly pursue creativity to contribute to theprosperity of customers, shareholders, suppliers and society.

In this spirit, we will deepen our dialogue with all stakeholders
and help them gain a better understanding of our company.
Through dialogue, we will clarify the issues we should address andsolve them one by one, thus earning the trust and meeting theexpectations of stakeholders.
In addition, as we strive to become a better company we willcontribute to the development of a sustainable society through thecreation of products that are friendly to people and the Earth, basedon the technological capabilities that we have enhanced throughceaseless, creative and innovative research and development.

Current Status of Stakeholder Communications
Engagement Policy

Customers(Manufacturers and end users)
Provide quality products and services
that satisfy customers at the right timeand price to earn the trust of society.

Impact on Business Activities

Collect information on
customer needs andimprove customersatisfaction

Shareholders
Disclose business details, management
policies, business forecasts and results
to shareholders in a timely andappropriate manner.

Increase corporate value
through dialogue

Business Partners
Respect our suppliers as valuablebusiness partners, and build
relationships of prosperity and trust.

Employees
Contribute to the sustainable developmentof companies and the creation of aprosperous society, which are common
interests for labor and management.

Strengthen relationships
based on mutual trust

Strengthening labor
management relations/Improve employee
motivation

Local Communities
Contribute to the development of local
communities through active engagement,
and by energetically participating involunteer activities, local events, andother activities.

ApproachFrequency

Details

Answer phone inquiries

As needed

Phone call or e-mail form

Communicate via theCompany website

As needed

Company information and business announcements

KYB Technical Review

Twice a year

Introduction of technologies and products

KYB Group Report

Once a year

Disclosure of financial and non-financial information

KYB Museum

As needed

Museum displaying KYB products and other materials

General Meeting ofShareholders

Once a year

Business report that includes consolidated financialstatements, financial statements, report on audit results,
deliberation and resolution of matters to be resolved

Reports (AnnualSecurities Report, FlashReport, etc.)

Once a year
or moreReport to shareholders

Plant tours forshareholders

Once a year

Promote dialogue through plant tours

Procurement policy
information meetings

As needed

Policy sharing

Regular visits

As needed

Various meetings

Labor-management
meetings

Several times
a yearVarious meetings between labor and management

President’s messages

Twice a year
or moreNew Year convocation and speech

Employee SatisfactionSurvey

Once a year

Questionnaire survey

Internal newsletter

Once a monthCommunication via internal newsletter

Invitations to KYB
eventsAs needed

Events held at each plantParticipation in local
community events

As needed

Interaction with community residents

Coexist with local
communities

KYB Group Report 2020

21

FY2019 Highlights
Contributing to the Development of Chair Skis and Sports for People with Disabilities
KYB first became involved in the development and improvementof shock absorbers for chair skis in the early 1990s. Before that,Japanese-made chair skis used commercially available motorcycle
shock absorbers, which the skiers tuned themselves. Because ofthe similar configuration, we received an order. Thereafter, adevelopment project in 1998 related to supporting alpine skiing
competitions led us to work together more closely with thePara-Alpine National Ski Team of the Japan Para-Ski Federationon the development of a shock absorber specifically for chairskis. The team won a gold medal at the Nagano Olympic Gamesin 1998, and in 2015 we stepped up our support for chair skis aspart of our social contribution activities by becoming a sponsorof the Federation. In addition to product development, we
provide technical support for team camps and competitions heldin various countries. Product development depends onunderstanding the skiers’ impressions of the product andconverting that feedback into numerical values to be reflected in
product settings. Engineers therefore regularly conduct
development by talking directly with athletes and teams, andthese activities also play an important role in engineer training. In
recent years, chair skis have advanced in tandem withimprovements in the level of competition and skiers’ abilities,
requiring precise adjustments in accordance with conditions.
Based on the product development and technical support
know-how we have cultivated with motorcycle shock absorbers,
we will continue to work with athletes to develop and improvehigh-performance products as we contribute to the developmentof sports for people with disabilities.

Shock absorbers for chair skis

Technical support for skiers

Takeshi Suzuki Wins Asian Cup Gold Medals
Para-skier Takeshi Suzuki joined KYB in 2015 andremains active in competitions around the world.
He is also a skier chosen by the Japan Para-Ski
Federation to compete in Paralympic games. During
FY2019, he won bronze medals at the first slalom inItaly and first and second slaloms in Slovenia as partof the World Para Alpine Skiing World Cup held inJanuary 2020. He also won gold medals for the first
giant slalom and the first slalom at the World Para
Alpine Skiing Asian Cup held in Nagano Prefecture,
Japan in February 2020.

Takeshi Suzuki at
the Asian Cup

Parent-Child Event Held
We held our first parent-child event at five factories
in Japan, where participants worked on making
syringe-operated excavators. A maximum of 20
families were allowed to attend, and through theevent children learned about the mysteries ofhydraulics as they deepened family ties by getting
to know the company where their parents work.
The many comments on post-participationquestionnaires ranged from “They looked coolat work” and “The big factory was great” to “Ienjoyed learning about Pascal’s law.”

22

KYB Group Report 2020

Asian Cup awards ceremony

Stakeholder Communications

Factory Tour for Elementary School Students
We invited 68 children from Seki City Shimouchi Elementary School in October
2019 and 104 children from the Gifu University Faculty of Education AffiliatedElementary School in November 2019 to tour the KYB Gifu North Plant. On
tour days, we provided an overview of KYB and its products throughstorytelling with pictures, showed students
actual production lines and a safety
awareness training facility, and presented
KYB’s environmental efforts. After thetour, the students asked many questions,creating a fun opportunity for everyone
to get to know one another better.

Exhibit at the Industrial Fair in Kani 2019
The Industrial Fair in Kani 2019 was held in October 2019. The fair aims torevitalize the local economy, and in 2019 many visitors flocked to the Taiga
Drama (historical drama) exhibit associated with the start of broadcast of theNHK taiga drama Kirin ga Kuru. KYB was highly regarded for its shock
absorber display and for providing visitors with a hands-on experience of theprinciple of hydraulics through operation of a syringe excavator, as well as for
accepting high school students as volunteers to gain corporate experience.

Marché to Support Areas Afflicted by the Great East Japan Earthquake
Following an event at the head office, we held exhibitions of local products from the Tohoku area at the Sagami and Kumagaya plants.
The Sagami Plant cafeteria also provided about 300 Tohoku-style meals. We will continue to support reconstruction so that memoriesof the earthquake never fade.

Letter of Appreciation from the Tokyo Metropolitan Government Community Chest
In February 2020, we received a letter of appreciation from the Tokyo Metropolitan Government
Community Chest (Central Community Chest of Japan) for KYB’s fundraising activities spanningmore than 20 years. We will continue our support for social welfare projects.

KYB Group Report 202023