PAGETOKYO ELECTRON ANNUAL REPORT 201614CONTENTS

To Our Stakeholders

Medium-term Management PlanInterview with the CEO

Business Overview

Message from the Chairman of the Board

Corporate Governance

Review of Operations
and Business Outlook

CSR Operations

Sustainability

Financial Section

Corporate Data

Directors, Audit & Supervisory Board Members and Executive Officers

CSR Operations
Corporate Philosophy

We strive to contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support.

Through business activities

Improvement ofcorporate value

Creation of new value

Advancement ofdream-inspiringsociety

Sustainable operations

Contribution to the solution of social problems

Material issues

Tokyo Electron considers CSR to be the embodiment of its
Corporate Philosophy, which has been ﬁrmly upheld since
the Company’s founding. Tokyo Electron pursues sustainable operations from the viewpoints of corporate governance, legal and regulatory compliance and business ethics
while creating new value through its products and services.
Based on these efforts, the Company implements CSR
activities to help solve social problems. Tokyo Electron willcontinue to pursue CSR activities to build stakeholder trust,
improve corporate value and promote the growth of a sustainable and dream-inspiring society.

Stakeholder Communication

CSR Promotion Framework
CorporatePhilosophy
ManagementPolicies

CSR Policy
TEL Values

issues and promote improvement. Starting in ﬁscal 2017,
the Company semiannually convenes the CSR ManagementCouncil, comprising CEO, corporate directors, and division
general managers. At the same time, the CSR Promotion
Committee has been reorganized into the CSR Global
Promotion Committee to further enhance CSR activities atthe global level.

Through the end of ﬁscal 2016, Tokyo Electron semiannuallyconvened a CSR Promotion Committee, consisting of theChief CSR Promotion Director, CSR Promotion Executive
Officer, and the heads of related departments. TheCommittee discussed CSR, set goals, and checked the progress of ongoing action plans. Tokyo Electron held Monthly
CSR Meeting to share information about departmental CSR

Business activities are based on good communication withstakeholders and society at large. That is why Tokyo Electron
considers building stakeholder trust essential to its operations. Accordingly, the Company discloses information on theprogress of its initiatives and future direction of its businessin a fair and timely manner through regular brieﬁngs and its
corporate website. In addition, Tokyo Electron interacts withstakeholders on many occasions and through various contact points. This helps us accurately understand their viewsand expectations, and allows the Company to quickly reevaluate and adjust its course of business as appropriate.

Through these efforts, TEL is reducing the latent impact
of social and environmental issues on its business while
seeking to improve its competitiveness and market position
to maintain sustainable business operations.

Participation in International CSR Initiatives
Tokyo Electron performs CSR activities in line with global
standards and operates its businesses in a socially responsible manner throughout its supply chains. To address CSR
challenges from an even broader perspective, TEL is actively
engaged with global CSR initiatives, including the UN Global
Compact and the EICC, an electronic industry CSR alliance.

Stakeholder Communication

CSR Policy
Tokyo Electron has developed a CSR Policy that outlines the principles and values that form the foundation of its CSR activities.

Tokyo Electron’s key stakeholders
1Corporate Activities

Tokyo Electron provides safe, high-quality products and services to customers around the world and works
toward the enrichment of society.

Divisions in charge

Key communication methods

Shareholders/investors

Management, IREarnings announcement (quarterly), medium-term management plan
brieﬁng, interviews, factory tours

Tokyo Electron acts in compliance with the laws and regulations of the countries in which it operates,
observes international regulations and acts in accordance with strict business ethics. We do not engage inany conduct that impedes fair and open market competition.

Customers

Sales, R&D, Marketing

Interviews, executive meetings, customer satisfaction survey (annual),Technology Conference

Respect for IndividualsTokyo Electron respects the character and individuality of each person. We value the diversity of employees,
share a strong sense of mission, and promote the development of a vibrant work environment.

Suppliers

Procurement, Materials

Production Update Brieﬁng (semiannual), Partners Day (annual), STQA*audit, interviews

4The Environment

Tokyo Electron seeks to achieve harmony with the global environment. By developing and providing ecofriendly products, we strive to reduce our own impact on the environment and help our customers reduce
theirs as well.

5Communication
with Stakeholders

6Social Contribution

23

Business Ethics* Supplier Total Quality Assessment

Employees

Management, HR

Employee meetings, Technology Conference, interviews, global engagement survey (annual)Tokyo Electron discloses information in a fair, impartial and timely manner; strives to engage in two-way
communications; and works to meet stakeholder expectations.

Local communities

Local management teams

Factory tours, participation in local activities, visits to/interviews withlocal authorities, social contribution activities

As a good corporate citizen, Tokyo Electron promotes the development of local communities and the betterment of society worldwide.

Governments/associations

Local management teams

Legal and regulatory compliance/notiﬁcation/monitoring/advocacy,industry group activities, alliances with external organizations

PAGETOKYO ELECTRON ANNUAL REPORT 201615CONTENTS

To Our Stakeholders

Medium-term Management PlanInterview with the CEO

Business Overview

Message from the Chairman of the Board

Corporate Governance

CSR Operations

Review of Operations
and Business Outlook

Sustainability

Financial Section

Corporate DataDirectors, Audit & Supervisory Board Members and Executive Officers

CSR Operations
Identifying Material Issues

Promoting Dialog with Investors

Based on the expectations and requests communicated bystakeholders and on the social and environmental challenges surrounding the sustainability of its businesses,

Tokyo Electron has identiﬁed issues that are material to themedium- and long-term improvement of its corporate
value. Accordingly, CSR goals have been set to addressthese issues.

Fiscal 2017 CSR Goals
For the ﬁscal year ending March 2017, Tokyo Electron has set 16 goals related to 5 material issues and is working to achieve them.
Material issues

Enhancing productcompetitiveness

Reinforcing responsiveness tocustomers

ThemesGoals

Innovation

Maintain development costs at the ﬁscal 2016 level.

Environmental contribution ofproductsContinue initiatives to reduce per-wafer consumption of energy and purewater by 10% by ﬁscal 2019 (as compared with ﬁscal 2014).

Customer satisfaction

Get 3 points or more on a 4.0 scale for every item in the customer satisfaction survey.

Quality

Implement PDCA training and disseminate the TEL6-Step model (8Dproblem solving method).

Information security

Ensure all target employees take a training course in information security.

Improve proﬁtability

See Medium-term Management Plan on page 5 for details.

Streamline operations

Keep the number of TPM programs at the ﬁscal 2016 level.

Create an invigorating workplace

Provide a work environment that supports continuous growth while ensuring performance-responsive, scrupulously fair treatment of employees.

Social contribution

Maintain the number of social contribution programs at the ﬁscal 2016 level.

Corporate governanceImprove the operation of the Board of Directors through annual effectiveness evaluations.

Compliance and ethics

Ensure all employees take training courses in business ethics and compliance.

Business continuity
management

Provide business continuity plan (BCP) training at principal manufacturing
sites and headquarters, revise the BCP manual and implement safety conﬁrmation system training (all to be performed annually).

Strengthening earnings power

Maximizing dreams and drive

Establishing sustainable
operations

SafetyEnvironmental management

TCIR*: Less than 0.5.
* Total Case Incident Rate (the number of workplace injuries per 200,000 work hours)• Reduce energy consumption by 1% on a per-unit basis* from the ﬁscal
2016 level.
• Maintain water consumption at the ﬁscal 2012 level (on a per-unit basis).
* Energy consumption (environmental burden) divided by values closely associated withenergy consumption, such as production volume, number of employees or total ﬂoor area.

Reinforce supply chain management through supply chain CSR assessment*.
Supply chain management* Targeted at high-ranking suppliers whose aggregate business with Tokyo Electron
accounts for 80% of its procurement.

Basic StanceTokyo Electron endeavors to provide opportunities for constructive dialog with growing numbers of investors aroundthe world to contribute to the Company’s sustainablegrowth and increase corporate value over the medium andlong term. Furthermore, to the extent that this is reasonable and possible, Tokyo Electron places emphasis on having the CEO and representative directors engage in direct
dialog with investors.
IR Activities
Striving to maintain dialog with investors, Tokyo Electron
appoints an executive officer in charge of IR and maintains
a dedicated Investor Relations Department under the directcontrol of the CEO.
Tokyo Electron holds earnings release conferences andmedium-term management plan brieﬁngs for securities
analysts and institutional investors with such speakers as
the CEO and the executive officer in charge of accounting.
The Group also participates in IR conferences in and outside
Japan, at which the executive officer in charge of IR speaks,
and holds individual meetings.
The spokespersons for the IR Department hold individual
meetings with investors and periodically relay the opinionsof investors at these events to the CEO and the executive
officer in charge of IR so that feedback can be of use inmanagement.

Shareholders’ Meeting
Tokyo Electron mails a Notice of Annual General Meeting ofShareholders to shareholders more than three weeks inadvance of the meeting as one of its measures to vitalize
these meetings and to promote smooth and efficient voting. It also sets the date of the Company’s meeting to avoid
days on which many such meetings are concentrated.
In addition, shareholders are free to cast their votes via
the internet, and Tokyo Electron participates in the webbased voting platform for institutional investors operated
by ICJ, Inc.
To supplement the above shareholder meeting-related
initiatives, Tokyo Electron’s website carries the notices, resolutions, voting results and presentation materials of shareholders’ meetings.
For more details, please refer to the Tokyo Electron
Corporate Governance Guidelines, published in December
2015.
http://www.tel.com/ir/policy/cg/document/index_02.pdf

Constituent of theFTSE4Good Global Index

Tokyo Electron has been a constituent of the FTSE4Good Global Index
since September 2003. The FTSE4Good Global Index is a social
responsibility investment (SRI) index provided by the FTSE Group,a world-leading index firm wholly owned by the London Stock Exchange.