Toyoda Gosei Co., Ltd.
Sustainable & Positive Impact
サステナビリティ&ポジティブ・インパクト・
Finance Framework
ファイナンス
フレームワーク
October 2023
2023 年●月

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Contents
1. To Begin ····································································

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2. Issuer Overview··························································

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3. Company Creed / Management Philosophy ····················

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4. Initiatives for Sustainability ··········································

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4-1. Basic Approach to Sustainability Activities ··············

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4-2. Sustainability Management Framework ···················

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4-3. Key Initiatives Relating to Environmental and Social Issues·················································································

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4-4. Corporate Governance ··········································

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5. Sustainable & Positive Impact Finance Framework ·········

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5-1. Definitions ···························································

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5-2. The Framework ····················································

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5-3. Assessment ·························································

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5-4. Transparency ·······················································

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Appendix. About the Impact Radar····································

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1. To Begin
Under the company creed of “Boundless Creativity and Social Contribution,” which shares the spiritof our commitment to sustainability, Toyoda Gosei Co., Ltd. (hereinafter, “Toyoda Gosei” or the“Company”) takes on the mission of fulfilling society’s needs with the leading-edge technologies andproducts we have cultivated and continue to develop in the area of rubber and plastic polymers andcontributing to a sustainable environment and society. To accomplish this mission, we work together
with stakeholders who share our vision to resolve environmental and social issues through businessactivities and create a more abundant global environment for the future.
We have newly introduced our Sustainable & Positive Impact Finance Framework (hereinafter, the“Framework”) to help realize this vision. We will issue bonds and execute borrowings through thisframework to secure financing, aiming for the realization of a sustainable future and sustainablegrowth.

2. Issuer Overview
Toyoda Gosei’s history starts with its establishment as Nagoya Rubber Co., Ltd., a spin-off of therubber research division of Toyota Motor Co., Ltd. in 1949. Afterwards, in 1973, we changed our nameto Toyoda Gosei Co., Ltd. We used the word “Gosei,” which means “synthesis” in Japanese, torepresent our corporate philosophy of creating new things.
Under the company creed of “Boundless Creativity and Social Contribution,” we have provided highperformance and high quality products and services over more than 70 years while working withvarious stakeholders in the areas of development and design, procurement, production, and sales,
leveraging our platform in synthetic rubbers, synthetic plastics, and compounding technology.
Under the slogan of “ONE TEAM, ONE TG,” our group has, and will continue to bring together 62
group companies employing around 40k employees in 16 countries and regions across the globe togive shape to peace of mind and safety, comfort, and decarbonization to enrich mobility and life forcustomers worldwide.
▶Key products3▶World firsts

3. Company Creed / Management Philosophy
Company Creed: Boundless Creativity and Social Contribution
Our creed was based on “Always be studious and creative, striving to stay ahead of the time,” oneof the Five Main Principles of Toyoda, as well as our valued areas of creativity, sociality, and science.
(Five Main Principles of Toyoda)
A written statement of the teachings of Toyota Group founder Sakichi Toyoda, which lives on as the basis forthe current Toyota Group’s creed and corporate motto.

Management Philosophy■Good corporate citizenship We, as a good corporate citizen, contribute to the economy and society
through community based business activities and social action programs.
■Proper business operation We promote business operations with integrity through the establishmentof a system founded on thorough compliance and corporate ethics.
■Sustainable growth We aim to build up the TG Group's collective strength through an open and fairrelationship with suppliers, through a mutually strengthened corporate structure and innovative
management response to change.
■Customer satisfaction We aim to provide products and services with satisfying quality and price in atimely manner, through forward-looking R&D and production engineering.
■Conservation of global environment and resources We aim to conserve the global environment andresources in order to hand down a greener world to our children through every business activity, which
includes cooperation with society and the development of an environment friendly product andmanufacturing process.
■Respect for the individual We aim to establish a vibrant corporate culture through respect forindividuality and the value of enhanced teamwork, based on shared responsibility and mutual trust
between employees and management.

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TG Spirit: Making the Ideas Passed Down Our Own, and Passing Them on to the Younger
Generation
We believe that by sharing this TG Spirit, we can come together as one team regardless ofdifferences in nationality, gender, age, and lifestyle.

4. Initiatives for Sustainability
4-1. Basic Approach to Sustainability Activities
Toyoda Gosei’s corporate creed of “Boundless Creativity and Social Contribution” was formulated
based on the Five Main Principles of Toyoda, and has been passed down from generation to
generation as the basis of Toyoda Gosei’s management.
This thinking is also seen in our sustainability concept of “contributing to resolving environmental
and social issues through our business activities.”
To continue as a company that is trusted and valued by stakeholders and society, we will pursue
management that integrates key sustainability issues with our medium- and long-term businessplan, aiming for the sustainable development of society and sustainable growth of Toyoda Gosei inline with the changes of the times.

■Key examples of products that contribute to resolving environmental andsocial challenges

UV-C high-speed
surface disinfectors
LED products (disinfection devices)

UV-C light units

The application of energy-saving LED technology
also contributes to hygiene by disinfecting air andsurfaces and purifying water

Safety Systems (air bags, more)

FCEV product (hydrogen tank)Contributes globally to decreasing
the number of traffic fatalities

Contributing to a “hydrogen society” forcarbonneutrality
andreducedenvironmental impacts

5■Key Sustainability Issues (Materiality)
With the company creed of “Boundless Creativity and Social Contribution,” we aim to achieve both
economic and social value by contributing to the realization of sustainable societies through thegrowth of our company.
In order to achieve the vision for the company and delivered values stated in our 2030 Business
Plan, we are working on materiality items that are of high importance to us and to which we canmake a particular contribution, from among various social issues informed by social forecasts andthe United Nations Sustainable Development Goals (SDGs), and considering the changing businessenvironment.

6Materiality (Key Sustainability Issues)

Source:Toyoda Gosei Report 2023

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■Relationship with SDGs
When selecting candidates for materiality issues, we refer to social issues, market and social
trends, GRI Standards, SDGs, and materiality of competitors.
These candidates are analyzed and evaluated on the axes of importance for Toyoda Gosei(management philosophy, management resources, synergy with competitive advantages /strengths) and importance for stakeholders (contribution to social issues, promotion of ESG
activities, etc.), and matters to adopt are identified after appraisal of their appropriateness based on
the opinions of outside officers and other members of management, as well as investors.
Based on this process, the most important SDGs areas relating to the Company’s materiality areclarified, reflected in the setting of sustainability KPIs and targets relating to environmental and social
issues as well as global corporate policies aimed at their achievement, and acted on by close to 40k
employees in 62 companies across 16 countries and regions as “ONE TEAM, ONE TG.”

4-2. Sustainability Management Framework■Promotion System
We have built a management system to further efforts for the sustainable development of society
and sustainable growth of Toyoda Gosei through business activities based on our corporate creed
and management philosophy. Emphasis is placed on continual dialog with all of our stakeholders,establishment of KPIs and targets to achieve our medium-term business plan, and implementing the
PDCA cycle.

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■Sustainability Meeting (Governance and Risk Management)
In November 2021, Toyoda Gosei established the Sustainability Meeting composed of all Directors andAudit & Supervisory Board Members (including outside Directors and Audit & Supervisory Board
Members), and Headquarters’ Chiefs, and chaired by the President, to pursue balanced initiatives withhigh objectivity and transparency. (Held twice a year in principle)
The agenda of the Sustainability Meeting includes resolutions on KPIs and targets, confirmation of
their achievement / progress, understanding of changes in the external environment, and risks andopportunities related to ESG.
(Outline of Sustainability Meetings)
PurposeTo discuss and decide key action items for sustainability and confirm progress
Frequency Generally meets twice yearly
Chairperson President
All Directors and Audit & Supervisory Board Members (including outside Directors
Members
and Audit & Supervisory Board Members), and Headquarters’ Chiefs
・Make decisions on key action items related to sustainability
Main agenda ・Report status of progress toward key action items and target values
・Make decisions on important external disclosure items■KPIs / Targets
Medium- to long-term KPIs and targets related to environmental and social issues and thesustainable growth of Toyoda Gosei are set based on materiality (key sustainability issues), and theirachievement is promoted through an annual PDCA cycle.

4-3. Key Initiatives Relating to Environmental and Social Issues*Refer to the website for details■Initiatives for the environment
The Toyoda Gosei Group formulated its 1st Environmental Action Plan in 1993 based on its
environmental policy, and since that time has been actively engaging in environmental issues. In
February 2016, we announced our TG 2050 Environmental Challenge, and have set targets to bereached by 2030 as milestones. We have also formulated 5-year action plans, which set activity
items and targets, and are carrying out activities to protect the environment.
Globally, we have placed integrated environmental functions in the regions of the Americas,
China, ASEAN, and India. The Group is also making efforts as a whole with area control in fiveglobal regions, the above four plus Europe/South Africa. We are also pursuing efforts in conjunction
with government agencies, customers and suppliers.

Environmental policy
1. Environmentally friendly corporate activities
We are keenly aware that all stages of our business relate deeply to the environment,from development, production, and sales activities to end-of-life disposal. The Toyoda
Gosei Group, including all internal departments, domestic and international affiliates, and9suppliers, conducts all business activities with concern for the environment incooperation and coordination with customers, government authorities, and others.
2. Good corporate citizenshipAs a good corporate citizen, we participate in, support, and cooperate withenvironmental activities by many groups while also working on environmental activities in
the community and broader society. We also provide education for all employees tosupport them in becoming involved in environmental activities as members of thecommunity and society, and support social contributions and volunteerism.
3. While publicizing information on these activities, we listen to the opinions ofpeople at all levels of society and work to improve our activities wherever we can.

TG 2050 Environmental Challenge – A Greener, Richer World for Our Children
The Toyoda Gosei Group specializes in the field of high polymersーrubber and plastics. Our
symbol is the benzene ring, a hexagonal hydrocarbon structure that is the starting point for polymers.
Borrowing from the six sides of the benzene ring, the TG 2050 Environmental Challenge sets six
challenges to strengthen our environmental efforts with a long-term view to the year 2050. As aroadmap to achieve that, we strengthened our efforts relating to climate change in August 2023,
bringing forward our target year for achieving carbon neutrality (Scope 1 and 2) to 2030 from 2050
and have formulated five-year Environmental Action Plans to guide our efforts.
TG

2050

Challenges)

Environmental

Challenge(Six

Medium- and long-term scenario for achieving the targets of the TG

2050 Environmental Challenge■Toward the Realization of a Mobility Society to Protect People’s Lives
In 1989, Toyoda Gosei began mass production of driver-side airbags, followed by thedevelopment of curtain airbags in 1998, driver-side knee airbags in 2002, rear-collision airbags in
2008, and back seat center airbags in 2009, realizing 360-degree airbag coverage, protecting eventhe sides of occupants and those in the back seats in the event of a collision. Furthermore, theCompany developed pop-up hood actuators in 2012 and pedestrian protection airbags in 2021,

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protecting pedestrians in addition to passengers. It is also actively developing next-generation
technologies such as active safety.
While progress is being made in vehicle safety, traffic fatalities are increasing in regions whichlack airbags and other safety devices due to increased use of automobiles but a delay in theimplementation of traffic infrastructure. Furthermore, traffic fatalities have not been eliminated indeveloped countries, with global fatalities remaining at around 1.35m people per year. We willcontribute to the realization of a safe mobility society through the pursuit of higher performancesafety devices, and their delivery in many regions.

2030 Business Plan: Safety Roadmap■Invigoration of People and Organizations (Corporate Culture and Talent to
Implement the 2030 Business Plan)
Toyoda Gosei understands that embracing change without fear of failure and seizing/creatingchange by taking on challenges are vital for implementing the 2030 Business Plan, so it is launching
initiatives in the areas of corporate culture and talent development.
For corporate culture, we aim to transition to a dynamic polymer-like organization. We will drawout the individuality, vitality, and strengths of each individual and generate creativity and energy
through organic bonding. By then creating similar reactions between teams, groups, divisions, andgroup companies and strengthening our connections to partner companies, suppliers, clients,
customers, and other parties, we will generate even higher creativity and productivity. We cancustomize our structure to flexibly adapt to environmental changes and create new value. This is our
vision for a “polymer-like” organization. To form the basis for this corporate culture, we will support
employee wellbeing through self-fulfillment made possible by the establishment of safe spaces, astageupon which each person can shine, and attention on developing each individual.

11At the same time, we will aim to develop talent capable of questioning our value to society and thesignificance of TG, and executing business strategically. To accomplish this, we will pursue efforts
such as securing diverse talent and reviewing our business portfolio.

(Aiming for a talent strategy aligned with business plans)
Toyoda Gosei positions “Promote diversification in employment / respect human rights” as amateriality item (key issue), and has set “promoting development of human resources,” “active
participation of a diverse workforce,” and “creation of a pleasant corporate culture” as pillars of ourtalent development strategy. We are also pursuing initiatives to promote problem-solving methods
and the PDCA cycle as a basis for work, the provision of opportunities to learn specialized
knowledge on technology, materials, and other matters, creation of workplaces where people withdiverse values, including women and the disabled, can shine, and efforts to improve engagement, inwhich the Company’s vision aligns with employees’ fulfillment through work and a real sense of
growth.
However, Toyoda Gosei’s talent strategy was reviewed in light of human capital management,
which is increasingly seen as a significant contributor to enterprise value, and our previous
personnel strategy was found to be based on a recognition of issues from the perspective of
conventional HR functions (see the next page for details). In FY2023, we are enhancing thealignment with management strategy, and based on a new strategy, promoting new initiatives in
addition to existing efforts.

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■Initiatives for sustainability over the entire supply chain
Toyoda Gosei has created the Supplier Sustainability Guidelines (Version2) to promote understanding, implementation, and practices forsustainability among suppliers.
These Guidelines stipulate items relating to human rights and labor,
environment, compliance, and more, requiring compliance in environmental
aspects (e.g. water use, biodiversity) in addition to social aspects (e.g. childlabor, forced labor, discrimination, equal opportunities, reduction of long
working hours, and minimum wages).
In relation to the environment, the Green Procurement Guidelines
demand reduction of CO2, recycling of waste and resource circularity, andcontrol of chemical substances. Furthermore, as a measure against conflictminerals, the Guidelines demand responsible resource and material
procurement by suppliers as well as annual surveys relating to conflictminerals with the cooperation of suppliers.
As described above, we are taking the necessary measures forsustainable growth across the supply chain, in line with the changing social
situation.

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4-4. Corporate Governance(1) Basic philosophy
Under a management philosophy embodying our company creed, we aim to be a global company
trusted by all stakeholders, including society, shareholders, customers, suppliers, and employees,
capable of responding quickly and flexibly to significant environmental changes, and providing
peace of mind, safety, and comfort to customers around the world.
We view the enhancement and strengthening of corporate governance with the aim of ensuringsound and efficient corporate management to be crucial in achieving sustainable growth. Based on
this, we are building and maintaining fair and transparent management systems and organizational
systems that can respond precisely to environmental changes.
Additionally, Toyoda Gosei pursues consummate corporate governance by voluntarily
implementing a range of policies in accord with the letter and spirit of the ideals and principles inJapan’s Corporate Governance Code, formulated and revised in June 2021 by the Financial
Services Agency and the Tokyo Stock Exchange.

(2) Corporate governance system(a) Overview of the corporate governance system, and reason for its implementation
Toyoda Gosei has adopted an audit and supervisory board system and set up the shareholders’meeting, Board of Directors, Audit & Supervisory Board, and accounting auditors as statutory
entities. We have also put in place internal auditors and other internal control systems includinginternal audits. The Board of Directors consists of eight directors and holds regular monthly
meetings (extraordinary meetings held as needed), where matters prescribed by law or in the
Articles of Incorporation and important matters related to corporate management are reported,discussed, and resolved, with follow-up reports and discussions, etc. as needed to ensure theappropriate execution of management strategy from diverse perspectives. In recent years,
discussions have grown more active, seeking to enhance the internal control and risk management
systems and achieve sustainable growth in the midst of a chaotic business environment marked bygeopolitical unrest, worsening environmental issues, a pandemic, and more.
A system of corporate officers is used to speed up decision-making and business execution. In
addition, a chief officer system was introduced in June 2023, delegating a portion of the President’s
authority and responsibilities to enable global management of key functions across business units
and regions, and speed up management to realize strategic business operation. For importantbusiness matters, division chief meetings and management meetings are held monthly. Functional
meetings and committee meetings relevant to key areas such as technology, costs, and personnel
are also held as needed to ensure appropriate management decisions. Furthermore, a companywide Sustainability Meeting (convened twice per year) was established in FY2021 to accelerate
efforts toward sustainability, composed of all Directors and Audit & Supervisory Board Members(including outside Directors and Audit & Supervisory Board Members), chief officers andHeadquarters’ Chiefs, and chaired by the President.

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The Audit & Supervisory Board consists of five members and holds regular meetings. Members
also attend important meetings such as Board of Directors’ meetings and audit each department
and subsidiary, through which they fulfill their function of auditing corporate management. Together
with the auditing functions of accounting auditors, who are external auditors, they ensure an
independent and fair auditing system.
The Company adopts the current system because audit, supervisory, and execution functions arewell coordinated with each other under this structure, with legality and efficiency of the Company's
decision-making and business execution sufficiently ensured.
Also, in order to strengthen the supervisory function of the Board of Directors and to increase theobjectivity and transparency of the decision-making process, we have established the Executive
Appointment Committee and Executive Compensation Committee under the Board of Directors as
non-mandatory advisory committees, each comprising a majority of outside directors, including thechairperson.
(2) Status of the internal control system and risk management system
In accordance with the provisions of Japan’s Companies Act, Toyoda Gosei has formulated a
Basic Policy on Establishing Internal Controls. Under this policy, we are striving to ensure
appropriate operations by establishing internal control systems, which help us deliberate importantmatters, monitor execution of operations, and handle internal audits, compliance and risk
management. Every year, the Board of Directors checks the status of establishment and operationof internal controls in an ongoing initiative to improve and reinforce themToyoda Gosei has also set up an Internal Control Committee (hereinafter, the “Committee”)
chaired by the President to establish business ethics, ensure compliance, and mitigate risk.
In terms of business ethics and compliance, the Committee seeks to ensure legal compliance andestablish business ethics in all business activities. In addition, the Toyoda Gosei Group Charter for
Business Ethics, a shared guideline for compliance, has been instituted as a code of conduct for
employees and for Toyoda Gosei to fulfil its corporate social responsibility, and by expanding it
throughout the group, the Company is focused on promoting sincere business activities.
Furthermore, we have set up an internal compliance desk where employees can report illicit
activities and violations of business ethics, and an external compliance desk where legal counsel
can be reached, establishing a framework for prompt response to problems in order to improve thecompany’s ability to resolve compliance issues.
The Committee also acts as part of a risk management framework, identifying key risks,
formulating countermeasures, and more. Risk management in individual areas such as safety,
quality, and environment, is conducted appropriately based on rules and guidelines formulated by
the department in charge, with their operation status evaluated as needed. Toyoda Gosei has also
formulated a Crisis Management Guide compiling basic matters relating to risks in areas such as
safety, quality, and environment, and stating preventative measures for anticipated risks as well as
measures for appropriate and quick responses in the case that a risk manifests.

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In addition to business ethics, compliance, and risk management, the Committee checks thestatus of internal audits and promotes efforts to prevent illicit activity and risk.

■Principal risk management activities(1) PLANFirst, each division of Toyoda Gosei, as well as group companies, identify and visualize risks
surrounding the Toyoda Gosei Group based on legal amendments and changes in the businessenvironment (risk assessment). Next, hearings are held with officers, etc. to identify risks frommanagement and future-oriented perspectives. Following these processes, key risks for the groupare identified based on their likelihood, degree of impact, and other aspects.
Finally, countermeasures to key risks are formulated by the responsible divisions to reduce
likelihood and impact.
(2) DO, (3) CHECKThe responsible divisions execute countermeasures, confirm the status, and report to theCommittee.
(4) ACTION
Depending on the status of countermeasures, activities are improved, revisions made, and more
effective countermeasures employed.
Principal risk management activities

5. Sustainable & Positive Impact Finance Framework
The Sustainable & Positive Impact Finance Framework (hereinafter, the “Framework”) defines thefollowing four principles pursuant to the UNEP FI “Principles for Positive Impact Finance (PIF)” (2017),
International Capital Market Association (ICMA) “Green Bond Principles (GBP)” (2021), “Social Bond
Principles (SBP)” (2021), and “Sustainability Bond Guidelines (SBG)” (2021), Ministry of theEnvironment “Green Bond Guidelines” (2022), Financial Services Agency “Social Bond Guidelines”(2021), and “Green Loan Principles” (2023) and “Social Loan Principles” (2023) as stipulated by Loan
Market Association (LMA), Asia Pacific Loan Market Association (APLMA), and Loan Syndications andTrading Association (LSTA).
1.

Definition

2.

Frameworks

3.

Assessment

4.

Transparency

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Below is a comparison of a Sustainable Financing Framework pursuant to ICMA principles, and the
Framework.
Sustainable Financing Framework pursuant The Framework, aligned with ICMA and PIF
to ICMA principles
principles
1. Definition■ Intended positive contribution■ Relationship with SDGs
■ Definition of output, outcome, and impact
1. Uses of financed funds

2. Frameworks■ Target projects■ Definition of Sustainable & Positive Impact
Finance■ Eligibility of projects contributing todesignated environmental targets orresolution of social issues■ Uses of funds by category■ Target persons for social projects■ Comprehensive analysis by Impact Radarand Life-cycle Assessment (LCA)■ New investments / refinancing (including
lookback period)■ Method for selecting eligible projects for
Sustainable & Positive Impact Financing

2. Project appraisal and selection process■ Method for fund management■ Internal project selection flow
■ Involvement of management and ESGrelated departments■ Response to negative impact
3. Control of financing■ Method and responsible parties for fundmanagement■ Frequency of management operations■ Management of un-allocated funds
4. Reporting

3. Assessment■ Frequency and location of disclosures■ Assessment indices (KPIs) to measurepositive impact by use of funds■ Status of fund allocation

4. Transparency■ Expected impact■ Disclosure of reporting■ Disclosure of second party opinion■ Disclosure of framework documents andfuture updates■ Location of disclosures-

5-1. Definition
Principles for Positive Impact Finance 1: Definition
Positive Impact Finance is that which serves to finance Positive Impact Business. It is thatwhich serves to deliver a positive contribution to one or more of the three pillars ofsustainable development (economic, environmental and social), once any potential negative
impacts to any of the pillars have been duly identified and mitigated. By virtue of this holistic
appraisal of sustainability issues, Positive Impact Finance constitutes a direct response to thechallenge of financing the Sustainable Development Goals (SDGs).

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■Positive contribution
Based on our creed of “Boundless Creativity and Social Contribution” we aim to achieve growththrough the resolution of social issues and attain a balance between social value and economic
value. To accomplish this, we have stipulated an appropriate governance framework, based uponwhich we aim to resolve global issues shown in SDGs and take actions in the area of ESG(environment, social, governance), proactively meeting the expectations of all our global
stakeholders, from customers, shareholders, and investors to employees, suppliers, local
communities, and more.
In our “2030 Business Plan” medium to long-term management plan, we stipulated “Safety” torealize a mobility society protecting people’s lives, “Comfort” for spaces meeting diverse value, and“Decarbonization” to leave a richer world for the future as social values based on the vision of“Pursuing the possibilities of polymers, we will contribute to a future of better mobility and living” Therelationship between the vision and delivered values stipulated in the medium to long-term
management plan and materiality items is as follows.

2030 Business Plan: Relationship between delivered value and materiality items
As stated later, we believe that promoting initiatives for specific materiality items results inmanaging the positive and negative impacts on the three SDGs pillars (economy, society, andenvironment). When formulating the Framework, we used the Impact Radar (for details, refer to the
Appendix at the end of the document), the holistic impact analysis tool provided by UNEP FI, toconfirm whether the impact of business activities on the three SDGs areas in the promotion of
initiatives for our materiality items would be positive or negative. The Framework uses this impact
analysis in the process for selecting projects in which to allocate funds, in the aim of managing
intended impact (materiality management).

■Relationship with SDGs
In our process of identifying materiality items, we choose candidates based on social issues,
market/social trends, GRI standards, SDGs, materiality items of other companies, and more. *Fordetails, refer to page 5

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■Definition of output, outcome, and impact
Toyoda Gosei plans to draft annual impact reports until the redemption of sustainable & impact
finance, and disclose them on its website and within integrated reports.
The five-step process, logic model, shows the logical cause and effect relationship of input -->activity (business model) --> output --> outcome --> impact, and is known as one tool to evaluate
impact. In addition to a model framework in line with the PIF principles, according to the UN “SDG
Compass” and WBCSD “Measuring Socio-economic Impact Guide for Business,” the further
downstream in the logic model, the more difficult it becomes to gather accurate data, so if it isdifficult to collect accurate data on impact, output and outcome are accepted and encouraged asalternative indicators. Thus, we define output, outcome, and impact as follows when drafting impact
reports.

OutputOutcome

Impact

The product, service, or the

The direct impact of the

The short, medium, and long-

direct of activity

product, service, or activity

term impact of the product,on stakeholders

service, or activity on society,the environment, or the
economyOutcome and output will be used as alternative indicators in impact reports when it would be
difficult to measure or quantify impact. In this event, the relationship between output, outcome, andimpact will be clearly stated.

5-2. Frameworks
Principles for Positive Impact Finance 2: Frameworks
To promote the delivery of Positive Impact Finance, entities (financial or non financial) needadequate processes, methodologies, and tools, to identify and monitor the positive impact of
the activities, projects, programmes, and/or entities to be financed or invested in.

■Definition of sustainable & positive impact finance
Sustainable & positive impact finance is defined as the corporate bonds issued and loans
executed in line with the Framework.
An amount equivalent to the total financing pursuant to the Framework will be allocated to new orexisting eligible projects. In the case of allocation to existing projects, targets are projects launchedduring the 24-month period before the financing, and which will start within 36 months of thefinancing date or which have had eligibility confirmed.

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■Uses of funds by category
Sustainable & positive impact financing can be executed depending on the category of theallocate project. Projects will be designated as eligible for sustainable & positive impact finance after
a holistic consideration of Toyoda Gosei’s efforts to reduce negative impacts and expand positive
impacts with regards to its materiality items. In addition, the following labels can be applied in thecase that the project belongs to a relevant category as per the ICMA’s Green Bond Principles /Social Bond Principles / Sustainability Bond Guidelines or other guidelines.
 Social finance:
If financed funds are allocated solely to eligible projects categorized as eligible social projects
 Green finance:
If financed funds are allocated solely to eligible projects categorized as eligible green projects
 Sustainable finance:
If financed funds are allocated to eligible projects categorized as both eligible social projects
and eligible green projects■Holistic approach by Impact Radar and Life-cycle Assessment (LCA)
UNEP FI, based on International Standard Industrial Classification (ISIC), analyzes issues, etc. ineach industry. It illustrates how each industry is expected to impact the 12 "impact areas" and 34"impact topics" of the Impact Radar, showing expected positive and negative impacts. By promoting
initiatives related to specific materiality items, we will appropriately manage positive and negative
impacts.
This time, in the selection of target projects based on a holistic analysis of our initiatives, we used
the Impact Radar results for ICE vehicles (upper table on the next page) and electric vehicles (lower
table on the next page) of the automobile component manufacturing industry in which Toyoda Gosei
is operating.

In light of the significant transformation occurring in the automotive industry, "Respond to thetransformation of automobiles" has been identified as one of the materiality items. We areaccelerating a shift in supply from ICE to electric vehicle components leading up to 2030, and the
Impact Radar confirmed that electrification would appropriately manage the negative impacts to“Cimate stability”, ”Air”, and “Health & safety” stemming from GHG emissions (contribution to
decarbonization). Furthermore, safety devices are an issue in responding to the “Transformation of
automobiles,” and we are working to develop high performance safety devices and next-generation
safety technology as stated in “4.3 Key Initiatives to Resolve Environmental and Social Issues.”
Initiatives for the materiality item of “achieve a safer and more comfortable mobility society by
reducing the number of traffic fatalities” is important for expanding the positive impact (“Safety”,”
Comfort”) on ”Mobility” in the Impact Radar.

20Impact Radar for manufacturing of ICE components and peripheral products

Impact Radar for manufacturing of EV components and peripheral products

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The transition from ICE to electric vehicles will entail a structural transformation of the automobile
industry, and our materiality item of “respond to the transformation of automobiles” may sometimes
create a negative effect. For example, the positive impact of “Flourishing MSMEs” on the Impact
Radar for ICE components and accessories is not present in that for EV components andaccessories. We will counter this negative impact in a new form with our materiality item of “Create
new businesses that utilize core technologies” and work to create new value by utilizing connections
with players in the supply chain expanding with electrification. Currently, efforts to resolve
environmental issues such as climate change and biodiversity have gained recognition as “JustTransition,” a concept of aiming for transition to a sustainable society that is fair and equal for all
stakeholders, but in addition to Just Transition, our efforts are aiming to create new value.
Based on this impact analysis, the Framework focuses on funding projects related to “Respond to
the transformation of automobiles,” “Achieve a safer and more comfortable mobility society by
reducing the number of traffic fatalities,” and “Create new businesses that utilize core technologies”.
Through this approach, we can explicitly communicate to investors the intended impacts (suchas "Safety", "Comfort" and "Decarbonization") outlined in our 2030 Business Plan and oursustainability strategy.
In holistic impact analysis, it is necessary to take an approach that involves extracting andidentifying impacts by overviewing the value chain. When considering the perspective of life-cycle
assessment (LCA), greenhouse gas emissions in the Tank to Wheel stage account for around 70%of the value for the overall ICE vehicle life-cycle, so we believe that electrification in an effective
short and medium term solution for mobility that does not emit greenhouse gases during driving.
However, Vehicle Production accounts for around 60% of greenhouse gas emissions in theelectric vehicle life-cycle, so for these vehicles, the method of manufacturing will be subject toheightened scrutiny.

Current regulations only focus on“Tank to Wheel” CO2 emissions in
the vehicle life-cycle

Breakdown of CO2 emissions in the vehicle life-cycle

ICE vehicle

Electric vehicle

ICE and electric vehicle life-cycle CO2 emissions (source: Nomura Securities)

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Efforts to reduce CO2 emissions across the value chain (source: Toyoda Gosei)
Since we believe that decarbonization in manufacturing and reduction of environmental load are
key to significantly reducing negative impact over the entire life-cycle, our materiality items include“Contribute to decarbonized societies by reducing emissions of CO 2 and other greenhouse gases”
and “Contribute to circular societies by reducing waste and water risks”.” Refer to our website fordetails on our environmental initiatives such as reduction of environmental load across the value
chain, creation of a circular society, and environmental management including supply chains,relating to these materiality items.
Furthermore, in order to promote materiality initiatives, it is essential to enhance the foundationof management through human resource development and the advancement of corporate
governance. For this reason, the Framework includes projects related to “Coexist with local
communities,” “Promote diversification in employment / Respect human rights,” “Corporate
governance as a company of integrity,” and “Thorough compliance” as eligible targets.
In this way, we pursue both social and economic value through a process of selecting andpromoting projects related to 5 materiality items for business activities to create the three delivered
values of “Safety”, “Comfort”, and “Decarbonization”, and the 4 materiality items for the
management base to support these business activities, based on the holistic approach thatconsiders the Impact Radar and the supply chain.

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Materiality: Respond to the transformation of automobiles
Related impact areas and topics

Most crucial fields in
SDGs

Reduction of negative impacts: Health and safety, climate stability, water, airExpansion of positive impacts: mobility
ICMA business category
Green finance > clean transportation
Eligibility criteria and business examples[Eligibility criteria]
R&D of products for zero emission vehicles (BEVs/FCEVs), R&D of products and parts required forthe wider use for zero emission vehicles (BEVs/FCEVs), and expenditures for capital investments in
manufacturing such products[Business examples]✓ Cooling pipes for BEVs
✓ Battery packs in different shapes✓ Charge port door
✓ Hydrogen tanks✓ Interior/exterior products unique to BEVs
✓ Introduction and construction of development
facilities/locations for products for BEVs/FCEVs

Materiality: Achieve a safer and more comfortable mobility society by reducing the number oftraffic fatalities
Related impact areas and topics
Most crucial fields in
SDGs
Expansion of positive impacts: mobility
ICMA business category
Social finance > affordable basic infrastructure
Eligibility criteria and business examples[Eligibility criteria]
R&D of safety system products that protect drivers and passengers and pedestrians in the event oftraffic accidents, with the ultimate aim of zero fatalities; R&D of preventive safety systems to improvesafety level of vehicles; expenditures for various types of capex for manufacturing[Business examples]✓ Airbags for drivers and passengers✓ Airbags for pedestrians and cyclists✓ Safety jackets for scooters✓ Pop up engine hood actuator✓ Wrap airbag (safety belt comprises anintegrated airbag)✓ Steering wheel with grip sensors✓ Millimeter wave radar compatible BEV front
panels✓ Millimeter wave radar compatible emblem/grill✓ Introduction and construction of facilities andplants for the development of safety systems inregions where road safety initiatives arerecognized as a social issue and public andprivate measures are taken[Target population]
Drivers, passengers, pedestrians and more (all people including vulnerable road users such as theelderly, pregnant women, children, and people with physical disabilities)

24Materiality: Contribute to a decarbonized society by reducing emissions of CO2 andgreenhouse gases
Related impact areas and topics
Most crucial fields in
SDGs
Reduction of negative impacts: health and safety, atmospheric stability, air,resource intensity
ICMA business category
Green finance > environmental efficiency, circular economy adapted products,
production technologies and processes
Green finance > renewable energy
Eligibility criteria and business examples[Eligibility criteria]
Development of materials and process innovations to reduce CO2 emissions and waste throughout
the life cycle of products, technologies to realize 100% recycling, R&D of products , and expendituresfor various related capital investments[Business examples]✓ Development and use of recycled/biomass✓ Recycling of rubber materials throughmaterials to shift materials from petroleumdesulfurization and regeneration
derived to naturally derived ones
✓ Establishment of renewable energy facilities✓ Development of energy-saving technologies for(for solar, wind power, etc.)
painting, printing, and surface engineering✓ Introduction of facilities to enable effective use✓ Development of waste recycling technologies
of renewable energy(end-of-life vehicles (ELVs), etc.)✓ Purchase of electricity produced by renewableenergy sources✓ Purchase of environmental value

Materiality: Contribute to a circular society by reducing waste and water risks
Related impact areas and topics

Most crucial fields in
SDGs

Reduction of negative impacts: water, waterbodies, waste
ICMA business category
Green finance > prevention and control of water contamination
Green finance > sustainable water resources and wastewater management
Eligibility criteria and business examples[Eligibility criteria]
Expenditures to realize a circular society by effectively utilizing limited resources with the aim ofminimizing emissions and water risks[Business examples]✓ Measures to prevent defects and improveyields at manufacturing sites✓ Reduction of emissions and recycling ofmaterials with the support of thematerial/production engineering divisions,where all of the company’s work starts✓ Waste reduction through careful and thoroughwaste segregation✓ Development and introduction of facilities in all
countries and regions where the company
operates, to manage water risks

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Materiality: Create new businesses that utilize core technologies
Related impact areas and topics

Most crucial fields in
SDGs

Reduction of negative impacts: wages
Expansion of positive impacts: thriving micro-, small and medium-sizedcompanies, employment, wages
ICMA business category
Social finance> socioeconomic advancement and empowerment
Eligibility criteria and business examples[Eligibility criteria]
Financing and investment in companies engaged in activities and initiatives to bridge the gap
between the extension of existing businesses and new businesses that bring sustainable growth,aiming to realize the continued prosperity of existing supply chains and the creation of new value as
the industrial structure of the automotive sector undergoes transformative change[Business examples]✓ Investment in areas not limited to auto parts, for example in startups in fields such as healthcare
and energy, for earlier commercialization of products/services delivering new value for society✓ Investment in companies that are engaged in areas highly synergistic with our core technologies(automotive technologies including resin, rubber, air bags, and hydrogen tanks, as well as GaN
semiconductors used in blue LEDs and other applications)[Target population]
Consumers who benefit from our creation of new value, including at existing supply chain partners
and startups
Materiality: Coexist with local communities, promote diversification in employment and respectfor human rights
Related impact areas and topics
Most crucial fields in
SDGs
Reduction of negative impacts: wages, social protection
Expansion of positive impacts: employment, wages
ICMA business category
Social finance> socioeconomic advancement and empowerment
Eligibility criteria and business examples[Eligibility criteria]
Investments and related expenses to nurture workplaces where employees can demonstrate theirabilities, aiming to promote active participation of a diverse workforce[Business examples]✓ Appointment of local executives at ouroverseas operations✓ Ensuring safe and pleasant workplaceenvironments for people with disabilities✓ Empowerment of women✓ Continuing roles for senior employees✓ Training costs relating to skill development ofrelevant employees[Target population]
Overseas executive candidates, people with disabilities, women, the elderly, and employees invarious types of minority groups

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Materiality: Corporate governance as a company of integrity, thorough compliance
Related impact areas and topics
Most crucial fields
in SDGs
Reduction of negative impacts: social protection
Expansion of positive impacts: employment, wages
Eligibility criteria and business examples[Eligibility criteria]
Expenditures related to thorough compliance by our group employees to conduct business activities
appropriately, maintaining high ethical standards[Business examples]✓ Expenditures related to establish, operate andmanage consultation desks for compliancematters globally✓ Expenditures for holding training forcompliance matters and internal control[Target population]
All employees working in our group■Process for selecting eligible projects in accordance with the Principles for
Positive Impact Financing
The Finance & Accounting Division will select the projects to be funded from the proceeds of thisSustainable & Positive Impact Finance, based on their contribution to the three values of safety,
comfort, and decarbonization, and considering their compliance with eligibility criteria. Finalapproval of candidate projects will be determined in consideration of consistency with thecompany’s management philosophy and basic philosophy on sustainability, based on the approval
process established by the company.
For all eligible candidate projects, we will confirm that the following measures are taken to reduce
environmental and social risks.
 Compliance with environment-related laws and regulations as required by the national or local
governments where projects are located, and implementation of environmental impact surveys
as required Full explanation to local communities prior to launch of projects
 Ensuring safety of projects in accordance with our safety management system
 Procurement of materials, prevention of environmental pollution, and efforts for improved work
environments and observance of human rights in accordance with our basic philosophy andpolicies for environmental conservation activities and policies on procurement, etc.

27

■Management of proceeds
The Finance & Accounting Division intends to allocate to eligible projects and manage theproceeds of the Sustainable & Positive Impact Finance. The Finance & Accounting Division will use
an internal accounting system to track and manage the proceeds of green, social and sustainablefinance under this Framework on a quarterly basis until redemption so that an amount equivalent to
the proceeds is allocated to eligible projects. The internal accounting system will track and manage
the status of allocation for each eligible project.
Until the proceeds of Sustainable & Positive Impact Finance are allocated to eligible projects, or if
there are not enough eligible projects, the non-allocated proceeds will be invested in cash or cash
equivalents, with a plan to complete allocation within about two years from financing.

5-3. Assessment
Principles for Positive Impact Finance, Principle 4: Assessment
The assessment of Positive Impact Finance delivered by entities (financial or non-financial)should be based on the actual impacts achieved.

■KPIs to measure positive impacts of use of proceeds
The company will work to disclose its progress in achieving the intended positive impacts with therelevant KPIs for the following items relating to the social and environmental impacts of eligible
projects:
We believe that global environmental conservation is very important. Regarding environmental
impact, we will disclose not only KPIs relating to reduction of environmental impact for each eligible
project, but also overall KPIs of the issuer, such as GHG emissions in its entire supply chain(Scope1, 2, 3), as KPIs for our comprehensive efforts toward a decarbonized society. However,some KPIs may be set within the extent of disclosable information due to confidentiality or secrecy
considerations.
For social finance projects, we will categorize our products, services, etc. according to definitionsof output, outcome, and impact as described in "5-1. Definitions." Outcomes and outputs will be
used as alternative indicators in impact reports where it is difficult to measure or quantify impact. In
this event, the relationships between output, outcome, and impact will be clearly stated.
Initiatives to develop human capital constitute an important theme for our sustainable growth, andwe intend to leverage the different values and new perspectives of people from diverse
backgrounds to bring growth and enhanced value to the company. We believe that we can achievesustainability as a company through demographic diversity—by employing people without
discrimination, regardless of natural attributes such as gender, nationality, race, and disability—andthrough cognitive diversity—recognizing diversity in ways of thinking and values—and creating anenvironment where everyone can play an active role and deliver new value to society. In our effort toachieve diversity and inclusion in the ICMA category of social finance, we have clearly defined28

“achievement of cognitive diversity” as an outcome we want to achieve in the process of working
toward our medium- to long-term goal of “achieving a society in which all people can accept eachother's diversity and live as who they are in an atmosphere of inclusivity,” and have set initiatives
and outputs to achieve this cognitive diversity.
Other reporting items relating to social finance projects are also being considered based on thedefined frameworks for output, outcome, and impact.
For borrowings, we will set target KPIs appropriate to the assessment criteria for monitoringachievement that we announced at the time of financing.
Items to measure environmental impacts across the entire supply chain of Toyoda Gosei Group✓ CO2 emissions across Toyoda Gosei Group (Scope 1, 2, 3)
Materiality: Respond to the transformation of automobiles
Related impact areas and topics

Most crucial fields in
SDGs

Reduction of negative impacts: health and safety, atmospheric stability, water,
and air
Expansion of positive impacts: mobility
ICMA business category
Green finance > clean transportation
Examples of reporting items✓ Outline of technologies and products✓ R&D:✓ Sales ratio of BEV-related products*➢ Outline of research and development
programs and their progress*Sales ratio of BEV-related products ＝ Sales of BEV automotive➢ Outline of R&D target projects andparts ÷ total sales
explanation of the projected effects(intended usage, products, etc.)
Materiality: Achieve a safer and more comfortable mobility society by reducing the number oftraffic fatalities
Related impact areas and topics
Most crucial fields in
SDGs
Expansion of positive impacts: mobility
ICMA business category
Social finance > affordable basic infrastructure
Examples of reporting items
Outputs
Outcomes
Impacts✓ Outline of safety system✓ Creation of opportunities to✓ Achievement of a safe andrelated products
avoid fatal accidents
sound automobile society✓ R&D: outline of research and(measured by number ofdevelopment programs
airbags manufactured)✓ Number of airbags✓ R&D: progress of research
manufactured
and development programsand the projected effects

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Materiality: Contribute to a decarbonized society by reducing emissions of CO2 andgreenhouse gases
Related impact areas and topics
Most crucial fields in
SDGs
Reduction of negative impacts: health and safety, atmospheric stability, air,resource intensity
ICMA business category
Green finance > environmental efficiency, circular economy adapted products,
production technologies and processes
Green finance > renewable energy
Examples of reporting items✓ The technologies, facilities, processes, and products ✓ R&D:
introduced and their effects➢ Outline of research and development✓ The reduction of CO2 emissions brought about by
programs and their progress
the introduction of technologies, facilities,➢ Outline of R&D target projects andprocesses, and products
explanation of the projected effects✓ Ratio of renewable electricity used (incl. green(intended usage, products, etc.)
energy and green certificates)
Materiality: Contribute to a circular society by reducing waste and water risks
Related impact areas and topics
Most crucial fields in
SDGs
Reduction of negative impacts: water, waterbodies, waste
ICMA business category
Green finance > prevention and control of water contamination
Green finance > sustainable water resources and wastewater management
Examples of reporting items✓ Outline of facilities introduced and initiatives taken and their effects✓ The amount of waste reduced✓ The amount of water used and water used per unit of sales
Materiality: Create new businesses that utilize core technologies
Related impact areas and topics

Most crucial fields in
SDGs

Reduction of negative impacts: wages
Expansion of positive impacts: thriving micro-, small and medium-sizedcompanies, employment, wages
ICMA business category
Social finance> socioeconomic advancement and empowerment
Examples of reporting items
Outputs
Outcomes
Impacts✓ Investment amount (fund✓ Number of entrepreneurs✓ Innovations brought into thesize)
who have benefitted fromworld (number of businesses✓ Corporate venture capital
investments
successfully commercialized)(CVC) initiatives✓ Status of services achieved✓ Benefits brought about by
through investments
innovation(mobility, healthcare, smart
homes, energy)

30Materiality: Coexist with local communities, promote diversification in employment and respectfor human rights
Related impact areas and topics
Most crucial fields in
SDGs
Reduction of negative impacts: wages, social protection
Expansion of positive impacts: employment, wages
ICMA business category
Social finance> socioeconomic advancement and empowerment
Examples of reporting items
Outputs
Outcomes
Impacts✓ Number of people with
✓ Initiatives to achieve✓ Realization of a society
disabilities employedcognitive diversity in thewhere all people recognize✓ Proportion of women in
workplace (HR strategies)
each other's diverse
managerial positions
characteristics and the✓ Implementation status ofpotential of their individuality
development programs forfemale employees✓ Implementation status ofdevelopment programs forsenior employees✓ Ratio of local executives**Local executives ＝ Vice president or
higher position in overseas groupcompanies

Materiality: Corporate governance and compliance as a company of integrity
Related impact areas and topics
Most crucial fields
in SDGs
Reduction of negative impacts: social protection
Expansion of positive impacts: employment, wages
Examples of reporting items
Outputs✓ Status of initiatives to enhance help desks forcompliance matters✓ Status of initiatives for training on compliancematters and internal control

Outcome/impact✓ Achieve zero serious violations of laws
and regulations31

5-4. Transparency
Principles for Positive Impact Financing, Principle 3: Transparency
Entities (financial or non-financial) providing Positive Impact Finance should provide
transparency and disclosure on: The activities, projects, programs, and/or entities financed considered Positive Impact, andthe intended positive impacts thereof (as per 5-1);
 The processes they have in place to determine eligibility, and to monitor and to verify
impacts (as per 5-2);
 The impacts achieved (as per 5-3)

■Reporting
We will report on the company website the allocation status to eligible projects and the social andenvironmental impacts brought about by eligible projects annually until the redemption or full
repayment of financed proceeds. If financed by loans, we also have an option to report directly tothe providers of the loans and other related parties. We plan to make the first report within one year
from implementation of the Sustainable & Positive Impact Finance[Information to be reported] Total amount allocated to eligible projects from the proceeds of financing
 The balance of allocated proceeds and unallocated proceeds by category of eligible business Ratio of new financing and refinancing
 KPIs to measure positive impacts
 If there is a significant change in the funding situation after allocation of the proceeds, we will
disclose items related to allocation of proceeds in a timely manner■Reporting of second party opinions
We obtain second party opinions (“SPOs”) on the credibility of this Framework in terms ofenvironmental and social impact and compliance with the following principles and guidelines from
Rating and Investment Information, Inc. (R&I) and disclose them on the company website:“Principles for Positive Impact Finance (PIF)”

International Capital Market Association (ICMA) “Green Bond Principles”

ICMA “Social Bond Principles”

ICMA “Sustainability Bond Guidelines”

Ministry of the Environment “Green Bond Guidelines”

Financial Services Agency “Social Bond Guidelines”

“Green Loan Principles” as stipulated by Loan Market Association (LMA), Asia Pacific Loan
Market Association (APLMA), and Loan Syndications and Trading Association (LSTA)“Social Loan Principles” as stipulated by LMA, APLMA, and LSTA

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■Publication of the Framework and future updates
The Sustainable & Positive Impact Finance Framework is available on our company website. If
we change the scope of application for the Framework, we will provide details in the latest
Sustainable & Positive Impact Finance Framework and also announce them on the company
website.

■Disclosures
All disclosures in accordance with article 5-4 of the Framework are available on the company
website.

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Appendix. Impact Radar
In light of the importance of comprehensive impact analysis to gauge the sustainability of ourcompany and society, we use the Impact Radar to select target eligible projects for funding under the
Framework. In 2017, the Principles for Positive Impact Finance were developed by the UN
Environment Program (UNEP) and the UNEP Finance Initiative (UNEP FI), a broad coalition of over
200 financial institutions working closely in an effort to fill the financing gaps for achievement of thesustainable development goals, aiming to promote business models and investments with greatersocial and environmentally positive impacts. The PIF Principles are applicable across all categories offinancial instruments, including loans, bonds, equity, and mezzanine, in order to create business
opportunities and business models focusing on SDGs. In 2018, the year following formulation of the
PIF Principles, UNEP FI started to offer the Impact Radar as a resource to comprehensively assess
the level of contribution (impact) toward the Sustainable Development Goals (SDGs). (Revised in July2022)
The Impact Radar shown in the figure below is a compilation of 12 impact areas and 34 impact
topics across the three pillars of the SDGs: social (impact on individuals), environmental (impacts on
the natural environment), and economic (impacts on societies and economies). The Impact Radar is afoundation resource in UNEP FI’s Holistic Impact Analysis Tools, which enables companies to consider
and identify the positive and negative impacts of their business and initiatives on the SDGs.

Source: Ministry of the Environment, UNEP FI revised version of the Impact Radar

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