Introduction

Materiality

DomainⅠ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value creation
Our policy

Material issues relating
to value creation

We know that the sustainable future for tire and automotive parts manufacturers will only be ensured once a society ofsustainable mobility has been created. That’s why we are working to help establish a society of sustainable mobility thatboasts less environmental impact, fewer traffic accidents and efficient transportation. In addition to providing thenecessary elements for promoting sustainability, we believe that using our unique products and services to satisfy thevarious features that people expect from superior mobility life will create added value designed to support a diverse mobile
society, so that is what we intend to do.

These material issues illustrate the unique value that the Toyo Tire Group offers in its dedicated mission tosociety and the value that links directly to the Group’s purpose. We believe that the value we create anddeliver through our business activities must contribute to the building of a society of sustainable mobility.

Material issue01

Help create a society of sustainable mobility

Organizational responsibilities (April 2024)
Spearheaded by our R&D Headquarters, we are working together
with product planning, production management, sales planningand digital transformation (DX) functions and promoting
sustainability-related activities based on various themes that
correlate with the aims of our medium-term business plan.
The Technical Committee oversees the overall implementationof those activities and reports progress to the Sustainability
Committee.

Executive Committee

Sustainability Committee
Technical Committee
R&D Headquarters
Business Headquarters● Product Planning Division
Production Headquarters● Production Management Department
Sales Headquarters● Sales Planning Department
Digital Transformation Headquarters

Story 1: Reducing the environmental impact of mobility

Material issue02

35

Support the enjoyment of mobility for all●

Environmental contribution (CO2 emissions reduction): Reducing tire
rolling resistance, improving EV compatibility, saving resources●

Safety: Maintenance-free products, diagnosis of tire wear●

Ultimate enjoyment of driving andsophisticated features

TOYO TIRE Integrated Report 2024

Reducing vehicles’ CO2 emissions is a challenging issue thatneeds to be addressed throughout the supply chain in order toachieve carbon neutrality by 2050. Although the global shift to
EVs is slowing, EVs will remain an effective means oftransportation to reduce emissions in the medium- to long-term,
and the shift is expected to continue. Despite the backlash, we
believe it is important to systematically and effectively pursue
initiatives to reduce CO2 emissions from vehicles.
At Toyo Tire Corporation, our goal is to help reduce CO2
emissions per tire by 20% by 2030 compared to 2019 levels andour functional organizations collaborate to develop products.
Our R&D function strives to consistently update basic
technology over a medium- to long-term span in anticipation of
automotive industry trends and the level of performance andfunctionality required of tires. While engaging in activities toimprove the precision of material compounding and tire design,
we have established an R&D system that can respond at a highlevel to the fuel efficiency performance and EV requirements ofnext-generation vehicles (reduced rolling resistance, larger
diameter tires, quietness, etc.). Material development is one of theapproaches we use to reduce rolling resistance. We use Nano
Balance Technology, our proprietary platform technology forrubber materials, to facilitate more accurate predictions regarding
specific material properties and optimize material structure, andwe are promoting its use in practical development. Our
engineering and production functions are collaborating to support
product development by, for example, improving processing
methods.
Our product planning function plans model changes (rolling) incooperation with our R&D and sales functions, based on our
medium-term product plan. While keeping a close eye on market
trends, we are incorporating upgraded functions andperformance, including fuel-efficiency, that are compatible with
EVs into the development requirements for our priority (core)products. At the same time, we plan to launch differentiatedproducts for EVs.
Through these activities, we will contribute to the creation ofenvironmental value by implementing business strategies thatappropriately respond to the shift to EVs while continuing to
improve the fuel-efficiency of our products.

TOYO TIRE Integrated Report 2024

36

Introduction

Materiality
DomainⅠ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value creation

Unique aerodynamic simulation technology

Specific examples of improvements in fuel efficiency with each new model release
Developed a fuel-efficient compound using Nano Balance Technology. A new silica dispersing agent was used toreduce rolling resistance and improve wet performance and wear resistance. These features were optimized in highdimensions by distributing the silica more evenly. Furthermore, part of the silica dispersing agent was made using
environmentally friendly and naturally derived sustainable materials.

Rolling resistance reduction rate (INDEX)

s

28%

72

Toyo Tire Corporation indoor drum rolling
resistance testing machine● Tire size:

PROXES Comfort Ⅱs 215/55R17 94V,

100

Released in March 2023 (Japan)

PROXES C1S215/55R17 98W● Rim size: 17X7.0J● Inflation pressure: 210 kPa● Speed: 80 km/h

【Evaluation conditions】
Rolling resistance reduction rate (INDEX)

16%

reduction● Test location:

Toyo Tire Corporation indoor drum rolling
resistance testing machine● Test method: ISO 28580 force method

84● Tire size:

NANOENERGY 3 PLUS 195/65R15 91H,

Released in January 2024 (Japan)

Development of EV tires for pickup trucks & SUVs
In our Sustainability Management Policy, published in 2022, we
set out our unique EV strategy as scenarios for achieving
medium- to long-term value creation.

EV Strategy• Develop technology for electric SUVs and pickups trucks• Develop differentiated products for SUVs and CUVs
according to trends in the North American market

entire vehicle.

● Test location:● Load force: 5.26 KN

NANOENERGY 3 PLUS

* 2 Tires are said to account for approximately 15% of the total aerodynamic drag of an● Test method: ISO 28580 force method

PROXES C1SPROXES CF3

aerodynamic characteristics. Our Mobility Aerodynamics
technology enables us to predict the aerodynamics of an entire
vehicle, taking into account the ground contact, deformation androtation of the tires when driven. We use T-MODE (design support
technology) to design tires that can improve the aerodynamics ofeach vehicle model.

【Evaluation conditions】

reduction

PROXES Comfort

The OPEN COUNTRY A/T III EV was designed using Mobility
Aerodynamics (aerodynamic simulation), our proprietary
technology. The tires feature “AEROWING™” sidewall lug design
to reduce wind drag generated while rotating.
Aerodynamic refers to wind drag generated when driving.
Reducing wind drag contributes to improving fuel efficiency and,in the case of EVs, increases the cruising range per charge.
Analyzing the airflow around the tires while driving andoptimizing the tire profile helps reduce the impact*2 on a vehicle’s

100

PROXES CF3 195/65R15 91H● Rim size: 15X6.0● Inflation pressure: 210 kPa● Load force: 4.82 KN● Speed: 80 km/h

resistance. Wear resistance and durability to handle the instanttorque, rapid acceleration, and additional weight, characteristics
of EVs, are also maintained. The tires also meet therequirements for the snowflake mark*1, which is proof of theirsuitability for use year-round on a wide range of EVs.
* 1 Tires that meet the severe snow-grip requirements stipulated by the United Nations
Economic Commission for Europe (UNECE)

Visualization of air flows around vehicles and tires

Story 2: Ultimate driving enjoyment and a diverse range of mobility-related lifestyles
Toyo Tire Corporation’s unique strategy applies the Company’s
core strengths to developing technologies and commercializing
products that offer exquisite design features and the ultimate
enjoyment of driving, while demonstrating high commitment toenvironmental and safety considerations.
We have established a strong business model in North
America in particular by communicating minute detail to local
dealers in order to engage more deeply with discerning
customers seeking the ultimate driving enjoyment, and bycreating a consistent operation that covers all stages from market
research through production and sales to facilitate speedy
product supply. Our North America sales department leverages
the brand recognition and dealer relationships, which are assetsthat have been cultivated in this way, to gain a quick and firm
grasp of the needs and wants of local customers and the
problems they may be experiencing for internal feedback. The
sales department sometimes cooperates with the technicaldepartment and goes out into the field to gather insights oncustomer preferences so that we can develop differentiatedproducts and fuel a virtuous product-development cycle. The
strongest part of this process lies in the effective communication

between the head office in Japan and the overseas sales
companies that transcends the physical distance between them.
Information on local customer feedback and trends is exchanged
constantly through formal settings and on other various
occasions, and reflected in product planning. The whole process
is underpinned by our fundamental shared values andcommitment to supporting a bountiful range of mobility-related
lifestyles through our products while also maintaining basic tire
performance.
Toyo Tire Corporation also participates in what are consideredsome of the world’s toughest international off-road races, such as
the Dakar Rally and BAJA 1000, and we channel the knowledge
gained through these experiences into product development inorder to sharpen our technology and enhance productperformance. We glean particularly useful information from theDakar Rally’s challenging desert and rocky terrain which we use toimprove durability, a factor leading to product reliability.
Thanks to these continued efforts, our Open Country tirebrand has been able to establish a firm position in North
America’s SUV and pickup truck markets.

Based on these scenarios and our medium-term productplan, we developed the OPEN COUNTRY A/T III EV tire for pickup
trucks and SUVs, which we launched in the North American
market in February 2024.
Taking advantage of the features of the OPEN COUNTRY
A/T III, which has been well received in Japan and the North
America, the EV tires offer both a powerful off-road driving
experience and on-road maneuverability and comfort, as well as
an improved cruising range thanks to their reduced rolling

37

TOYO TIRE Integrated Report 2024

TOYO TIRE Integrated Report 2024

38

Introduction

Materiality
DomainⅠ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Value creation

Open Country for diverse driving experiences andlifestyles
Toyo Tire Corporation is pursuing its own marketing activities
centered around the Open Country brand and building new
fanbases in other markets outside of North America as well.
As part of our strategy, we focused on the possibility thatexcellently designed tires can transcend the narrowest conceptsof mobility and earn a place in people’s daily lives as a lifestylefacilitator that can foster a particular worldview and culture. In
some part of Asia, our sales department works together with local
distributors on promotions that effectively employ social media tohighlight the design features of our tires to car users who like tocamp outdoors.
In Japan, we advertise through means other than automobile
magazines, such as outdoor, fishing and fashion related media, toreach car owners who are not particularly interested in tires andencourage them to choose their tires to suit their individual
lifestyles. Our unique approach to the pursuit of ultimate driving
enjoyment is to foster a set of values that inspires customers tochange their tires not because they are worn out as consumables
but because they want to replace their current tires for a more
appealing luxury product. These marketing activities have helped
fuel a growing awareness of the Open Country brand in Japan,
especially among users who seek highly customized products.
Going forward, we intend to use test-drive meets for tire users topromote awareness of the Open Country brand and its essential
pursuit of “functional beauty” that embodies reliable performance.

Story 3: Providing safety for evolving mobility in a changing society
As society changes and mobility technology advances with a wider use of IT and data and development of autonomous vehicles, we are
beginning to see how the mobility landscape is reshaping. We are committed to developing technologies, products and services to provide
safety that meets the needs of the evolving mobility environment.

Supporting safe driving(providing data to ensure driver safety)
Tires are the only components of a vehicle that actually come into
contact with the road surface, and we are developing sensing
technology that can collect various types of information from tires.
The concept we are working to take forward is to create new
added value by turning tires into data acquisition devices. Using
this technology, we developed a software application thatprocesses data inputs from sensors attached to tires to derive thelimits of the required tire performance, uses them to determine
whether the tire force*3 of the running tires is within theperformance range required for the road conditions, and provides
real-time display. We are currently working to improve sensing
accuracy by taking measurements of road surfaces under a rangeof conditions and proving the concept by testing the application
on driving tracks. We will continue developing these technologies
to serve as a part of safety systems required for autonomous
driving.

Maintenance-free airless tires
A likely effect of changes such as self-service gas stations, homecharging of EVs and wider adoption of car sharing is that there
will be fewer opportunities for drivers to get tires serviced byexperts. Also, cars need to be lighter in order to save energy andresources, and tire manufacturers face the challenge of providing
safety in the next generation of mobility without the need to carrya spare tire. We are tackling this challenge by developing airlesstires designed to provide maintenance-free, spare-free solutions.
Our “noair” airless concept tire achieves the level of durability
and maneuverability close to that of pneumatic tires and can be
fitted on passenger vehicles for driving. As part of the path tocommercialization, we are currently trialing the noair tires on
last-mile delivery vehicles. We are paying close attention to thelegislative and regulatory direction regarding the use of airless tires
on public roads while continuing our development work, taking
into consideration potential use cases such as tires for future
mobility vehicles and as a recycling solution.

* 3 Tire force is a term we use to describe the real-life tire performance, as estimatedfrom data inputs from the tire such as air pressure, temperature, identified roadsurface condition, load, wear, and any anomalies detected.

TOPIC

Open Country R/T receives Minkara PARTS OF THE YEAR 2023
Hall of Fame Award (SUV/4X4 tire category)

Operated by LY Corporation, Minkara (short for “Everyone’s Car Life” in Japanese)is one of Japan’s largest specialist automobile social media platforms where carlovers post and discuss various car-related topics.
Minkara aggregates the number of parts user reviews and the scores, andranks parts with the highest support in its PARTS OF THE YEAR survey
announced twice a year in the middle and the end of the year. The Open Country
R/T tire received the PARTS OF THE YEAR 2023 Hall of Fame Award* (SUV/4X4tire category) for the second consecutive year. Users particularly appreciated thetire’s high performance and unique design made for comfortable driving not only
on ordinary roads but also off-road on dirt tracks. Our Open Country A/T EX tirewon third place in the same category.
We never forget that we are a brand that is nurtured by its users anddeveloped together with users, and we remain committed to further increasing thequality of our brand going forward.

4th generation: 2007-

5th generation: 2009

X spoke

1st – 3rd generation: 2006Early type

Pantograph

Giving form
to ideas

Improved
durability

Oval spoke

Y spoke

Reducednoise

6th generation: 2017-

Improved rolling
resistance

Reduced noise
Improved comfort

Airless tire development over the years

Taking road surface measurements using mounted sensors* This award is presented for parts that have garnered unwavering support in PARTS OF THE YEAR rankingsover the past several years.

Application displaying visualization of tire force in a run

39

TOYO TIRE Integrated Report 2024

Golf cart using “noair” tires

TOYO TIRE Integrated Report 2024

40

Introduction

Materiality

DomainⅡ Foundation for value creation

Material issues that
underpin value creation
These material issues are recognized as an important foundation that supports the creation of unique value.
Our focus is to continue to create value that delights our customers and society at large through the offeringof unique products and services. To do that, we need to constantly strengthen the foundation for propellingand promoting the value creation and achieving sustainable development for the Toyo Tire Group.

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Human resource base
Our policy
As part of our efforts to build a management foundation to support sustainable growth, we stipulated the development of aframework in the Medium-Term ’21 Plan that would enable diverse human resources to work together organically and play
an active role based on enthusiastic job satisfaction, as well as a training system that upholds individuality, quality and ability.
We conduct flat evaluations based on ability, aptitude and performance, and develop human resource base designed toensure the best mix of human resources to enable diverse talent, regardless of their nationality, gender, age, background orother factors, to grow and flourish, and to get the right people into the right jobs. In terms of human capital investment, we
inject resources into various initiatives with a view to developing talent, promoting diversity and creating healthy working
environments. We aim to help create value through our business by, for example, investing in systems that promote theplanned development of business managers and professional talent in each organizational function, investing in the buildingof office environments and human resource systems that make diverse employees feel comfortable, and creating working
arrangements and tools that help improve employee performance and communication.

Organizational responsibilities (April 2024)
Material issue

03

Material issue

04

Support diverse talent with motivating challenges
and job satisfaction●

Demonstrating ability and fostering motivation (developing talent)●

Securing diverse human resources (promoting diversity)●

Creating healthy working environments (reforming working styles)

Continue innovating next-generation mobility
technology●

41

Enhancing the development of materials and platform technologies forour products for a society of next-generation mobility●

Creating recycling technologies for products and raw materials●

Innovating low-impact alternatives to substances of concern

TOYO TIRE Integrated Report 2024

The Organization & Personnel Committee, which is under thejurisdiction of Executive Committee, discusses and determines
policies and important measures for strengthening the Group’s
human resource base, and the Corporate Headquarters is directly
responsible for supervising the measure execution of thesepolicies. The areas of activity relating to human resources that are
entrusted to the Sustainability Committee are also based on thesepolicies, and the committee will consult with the Organization &Personnel Committee when necessary.

Executive Committee

Organization & Personnel Committee
Consults

Sustainability Committee
Corporate Headquarters● Corporate Infrastructure Division
Human Resources and General Affairs
Department of each site or Group company

Demonstrating ability and fostering motivation (developing talent)
In 2021, we launched a new human resource evaluation system to definea clearer picture of the type of talent required to support sustainablegrowth for the Toyo Tire Group, to clarify company expectations forindividual roles at different levels, and to better motivate talent to achieve
results and pursue personal growth. We are building an integrated
system by promoting well-balanced evaluations with an emphasis on
dialogue, raising remuneration levels, and introducing training programs
that help improve individual capabilities. In April 2023, we clarified our
expectations regarding the ideal human resources profile and expectedroles at our production sites. By conducting employee evaluations andadjusting their treatment based on such expectations, we aim to motivate
employees to perform at a higher level and achieve better results. We
also conduct career-building interviews with each employee andformulate human resource development plans to promote the active
participation of all employees.
Having positioned talent development as the cornerstone of this new
system, we have been focusing on training and development since 2022.
We have added new mandatory training programs on conceptual points
designed to help employees fulfill their expected roles and correctly follow
company philosophy at each level, or to help our employees acquire vital
basic knowledge on digital transformation (DX), ESG, or other subjects.
We have also updated our training for divisional general managers andgeneral managers to help them acquire the necessary qualities and skills
for developing effective management perspectives, managing their own
personal transformations, and displaying leadership on medium- tolong-term issues. Furthermore, as part of our drive to train moremanagement candidates, we are also promoting cross-border training atpartner universities and other planned personnel transfers including

overseas transfer, to help build a firm pool of human resources. Periodic
employee surveys have confirmed that these new personnel evaluation
systems and other relevant measures have indeed helped motivate
employees in the way we expected.

Training held in FY2023 (Toyo Tire Corporation)
By level
Name

Hours to No. ofcomplete participants

Eligibility
New recruits with university degree
or higher
Second-year employees with
university degree or higher

93

27

8

27

Instructor training

Instructors

7.5

24

Training for senior-level
administrative staff

Newly appointed senior-level
administrative staff

11

29

New assistant manager training

New assistant managers

New manager training

New managers

43
36
6

New recruit training
Follow-up training

New general manager training

New general managers

16
16
17.5

New section leader/assistantsupervisor/assistant manager
training

New section leaders/assistantsupervisors/assistant managers

14

34

Evaluator training

Primary evaluators and above

4.5

59

Selective training
Name

Eligibility

Selective training Ⅰ

Selected employees

Selective training Ⅱ

Selected employees

Pre-assignment training(Face to face)Pre-assignment training（e-learning）

Employees being
assigned overseas
Employees being
assigned overseas
Employees being
assigned overseas

Language training

Hours to complete No. of participants
40
48

5
5

3.5

5

6

3

48.6

9

TOYO TIRE Integrated Report 2024

42

Introduction

Materiality
Domain Ⅱ

VisionStrategy

Materiality

Close-up

Governance

Data

Foundation for value creation

Securing diverse human resources (promoting diversity)
Fostering a culture of mutual respect among diverse humanresources and establishing a culture of cooperation andcollaboration are both important for creating unique Toyo Tire
value.
We work together with universities when recruiting new
graduates to ensure we secure diverse human resources, opening
our doors to foreign students studying at Japanese universities
and Japanese students studying at overseas universities, andactively approaching doctoral degree holders. At the same time,
we are actively employing mid-career talent with experience atother companies, who can play an important role in supportingthe company’s growth stage. Meanwhile, we are rehiring humanresources who have turned 60 and are creating mechanisms tofacilitate the active participation of people with disabilities. We
have also built a job evaluation structure that can respond flexibly
to diverse employees’ job and career preferences in both
specified and general employment. In spring 2024, we introduced
evaluation standards that would enable us to treat both humanresources with outstanding management skills or the power todrive management strategy and personnel with specialist
technological expertise or specific skills who have reachedretirement age in the same way as we treat our current managers
and employees under the age of 60. This move was designed to
improve motivation among elder employees and encourage thenurturing of future successors. We expect these new structuresand standards to have a positive internal impact and help
invigorate our organization.
In the five years leading up to 2020, we doubled thepercentage of women at the assistant manager level from 2.03%
to 4.65%. Now, we have set a new goal of raising the ratio of
female assistant managers promoted to manager level or higher
compared to the similar ratio for men to between 80% and 120%in the five years from 2021 to 2025. (End 2020: 70%, three-year
average for 2021 to 2023: 75%).
As part of our quest to empower women, we hosted an eventin March 2023 for general managers and above and female
employees which featured lectures by external experts and apanel discussion. Female employees exchanged opinions inworkshops on any issues they have regarding the Company’s
current policies and work styles, and the Human Resources
Department used that feedback to help compile more effective
future measures. In November 2023, as part of our aim to nurturea corporate culture that embraces diversity more earnestly andfosters innovation, we conducted training sessions on
unconscious bias for executives, where they deepen theirunderstanding through case studies. We are also seeking to
expand our repertoire of e-learning resources and theme-based
training sessions on D&I issues such as LGBT, empowering
women and harassment.
While the Group has a uniform compensation system for men
and women with the same job qualifications and the same level of
responsibility, our analysis shows that the differing ratios of men
and women in management positions affect wage performance.
We will actively promote the development and promotion of
female employees to enable us to ultimately eliminate wage
disparities.

Employee diversity(Toyo Tire Corporation, full-time employees)

Number of employees (Nonconsolidated)
Outside Japan(people)14,00013,132

3,672 (-0.5% y/y)

Total

Under 30
30-50Over 50

By ageBy gender*1

18.0%
60.7%
21.3%

10,500People with disabilities

64 / 2.51% (As of the end of January 2024)

Employees from countries
other than Japan*2

14

Total management
personnel*3867

12,426

7,023

3,500
0

11,524

11,744

Employees
10,500 from countries
6,455
0.6% (-0.1
pt y/y)6,052*2 inother than Japan7,023
5,705
7,000
management

11,267by gender: Refers to data based on the sex assigned at birth. We do not have
*1 Data3,500
6,109
5,971
5,819
5,606
quantitative data on
gender identity
becauseit is difficult5,692
to obtain, but
we aim to

6,455

11,524
5,705

11,744
6,052

create workplaces where all employees can take an equal active part.
0

from countries
other thanJapan: Refers
to data on
foreign (FY)*2 Data on employees2019
2020
2021
2022
2023
nationals as defined in the Nationality Act of Japan.
*3 Including assistant managers

5,661

5,692

5,606

2019

2020

2021

2022

2023

2.5

(FY)

（%）

10.0

6.6

6.7

6.7

6.9

7.2

4.8

5.0

5.6

5.7

6.2

TOYO TIRE Integrated Report 2024

FY2023

Number of
employees

Utilization
rate

Number of
employees

Utilization
rate

Number of
employees

Utilization
rate

Number of
employees

7.9%

10

16.9%

22

35.4%

34

50.5%

51

(6)
100%

10

(7)
100%

3

(12)
100%

7

(38)
100%

12

2019

2020

2021

2022

2023

0

4.8

2019

6.7

6.7

6.9

7.2

6.2
It is importantthat our employees
should feel proud of what they
5.7
5.6
do and are motivated to create value. We have been conducting abi-annual employee awareness survey since 2021 to capture aorganizational
culture. The survey results and2020 snapshot
2021 of our
2022
2023
(FY)
detailed analysis are shared with the Executive Committee andfeedback is provided to each department. Our efforts to create
and implement improvement action plans based on deepreflection are starting to bear fruit as the cycle takes hold. Eachdepartment is encouraged to implement autonomous andproactive initiatives based on their individual strengths and5.0

weaknesses. The Human Resources Department regularly
monitors the progress of each department, and incorporates
common issues into the development of company-wide policies
and system reviews. The 2023 survey pinpointed issues relating
to shift workload in the production department so we set up a
project to promote improvements together with labor andmanagement. Linking our philosophy, systems, events, andcommunication will enable us to form a unique culture andincrease employee job satisfaction.

Joint human resource development program with Doshisha University(FY)

Creating healthy working environments (reforming working styles)
We believe that our unique work styles and working environments
maximize the capabilities and vitality of diverse human resourcesand organizations. Following the transition to class V for the novel
coronavirus in 2023, we decided to use internal transformation to

FY2022

Employee opinion survey
6.6

5.0

the ratio of female employees
women promoted to section manager or higher

0

FY2021

Utilization
rate(No. of employees taking over
one week’s leave)

7.5

5,819

2.5

Male employees

10.0

11,2675,971

5.0

FY2020Female employees

6,109

7.5

5,661

Childcare leave utilization update（%）

12,426

volunteer activities, hospital visits, hospitalization, pregnancy,
infertility treatment, or other reasons. Meanwhile, following
labor-management consultations, our administrative and technicalbases have designated several promotional days a year forencouraging employees to take their annual leave and achieve a
better work-life balance. At the same time, we encourage
employees at production sites to systematically take annual paid
leave in line with the annual production plan. In fiscal 2023, theannual leave utilization rate stood at 64.8%, an increase of sevenpoints over the past three years.
We achieved the targets set out in the action plan formulated
based on Japan’s Act on Advancement of Measures to Support
Raising Next-Generation Children, and received Kurumin
certification from the Minister of Health, Labour and Welfare in
2020. That action plan was subsequently updated in 2024 to help
expand our childcare support systems and improve working
environments. The revision is designed to boost childcare leave
utilization rates to 100% for both men and women by, forinstance, offering paid parental leave to care for a sick child andpossibly expanding the number of eligible paid childcare leavedays.

the ratio of female employees
women promoted to section manager or higher

the ratio of female employees / women promoted tosection manager or higher*3 (Nonconsolidated)
93.8% (-0.5 pts y/y)
6.2% (+0.5 pts y/y)autonomously and independently. We introduced various work
styles with remote work options and renovated our head office
work spaces to satisfy various needs for cooperative, harmonious
or concentrated working environments. Over 90% of employees
who responded to our survey said they were satisfied with the
expansion of work style options and the ability to work freely andautonomously.
Regarding the need to help employees achieve a goodwork-life balance, we seek to improve our understanding of any
changes in our employees' lives caused by different life eventsand to provide ways to help them achieve a healthy work-lifebalance. We have set up various systems that allow employees tofulfill their childcare and nursing care responsibilities, such asmechanisms for taking leave that enable employees toconcentrate on raising children up to two years of age and carefor family members (for families requiring nursing care within thesecond degree of kinship, up to one year). We have also worked
hard to establish systems and nurture a workplace environmentthat are more conducive to men taking childcare leave. In
addition, we have established a system that allows employees toreinstate and use annual paid leave that expired from two years
ago in the event of an injury or illness, childcare or nursing care,

In Japan

7,000

Male
92.8% (-0.3 pts y/y)Female 7.2% (+0.3 pts y/y)

In Japan
Outside Japan
Management
by gender*1 Male(people)Female14,00013,132

43

Top Message

invigorate the Company and drive growth. We did that byenabling employees to flexibly select the work style and theworkplace that best suited them and by creating working
environments that encouraged all employees to tackle their work

In March 2024, we signed a five-year comprehensive partnershipagreement with Doshisha University. The partnership seeks topromote the use of mutual high value-added resources to foster
human resources who can contribute to society and realize
beneficial technologies.
We will promote multi-layered collaboration on multiple
different research themes, develop future technical leaders andaccelerate the implementation of innovative technologies that are

useful to society. We intend to make the most of the learning
opportunities and venues for recurrent employee education thatthe university offers to nurture corporate engineers throughindustry-academia collaboration. At the same time, we will work
together with the university career center to offer businessfocused career advice to students and help them learn how tochoose their future independently and develop their work
attitudes.

TOYO TIRE Integrated Report 2024

44

Introduction

Materiality
Domain領域ⅡⅡTop Message

VisionStrategy

Materiality

Close-up

Governance

Data

Foundation for value creation
価値創出を支える基盤

Platform technologies

TOPIC

Our policy
The Toyo Tire Group believes that the value we provide through our products and services must support the evolution ofmobility required for a new age. We will continue to challenge technological innovation to help build a society that exists inharmony with the environment and supports safe driving.

Organizational responsibilities (April 2024)
R&D Headquarters is responsible for promoting initiatives in this area. The Technical Committee oversees all initiatives and reports progressto the Sustainability Committee.

Developing concept tires made from 90% sustainable
raw materials

In January 2024, the Toyo Tire Corporation developed a concept tire made from 90%
sustainable raw materials. That represents a dramatic increase compared to the previous
highest ratio of sustainable raw materials in our tires of 50%*1.
The concept tire was made from approximately 60% renewable raw materials, including
biomass-derived butadiene rubber, biomass-derived styrene butadiene rubber, rice husk ash
silica, plant-based oil, and biomass-derived polyester fiber, and roughly 30% recycled raw
materials, including the butadiene rubber derived from CO2 that we successfully developed
together with the University of Toyama, rCB, recycled bead wire and recycled steel cord.
Another impressive feature of the tire is its ability to minimize the rolling resistanceco-efficient, which greatly helps reduce GHG emissions throughout the tire lifecycle andimproves the cruise range of EVs. It achieved AAA-equivalent fuel efficiency, the highest levelof rolling resistance in the tire labeling system*2.
Going forward, we will continue to perfect this tire’s technological innovation and press
for early commercialization as a product that can help realize an era of sustainable mobility.

*1 Ratio of sustainable raw materials used in the OPEN COUNTRY M/T-R tire supplied and installed in vehicles
participating in Dakar Rally 2024

Expanding the use of sustainable raw materials*2 A voluntary industry standard established by the Japan Automobile Tyre Manufacturers Association, Inc.: JATMA. Tires

We believe it is our mission as a manufacturing company to help
promote the transition from a society that consumes resources toa society that circulates resources. We conduct research anddevelopment with the aim of increasing the ratio*1 of sustainable
raw materials*2 used in our products to 40% by 2030, and 100%by 2050. That ratio reached 26% at the end of 2023.
By 2025, the Group plans to gradually introduce products
made from recycled raw materials, such as recycled rubber madefrom used tires and recovered carbon black (rCB). Furthermore,
we are developing technologies to increase the use of renewable

Recyclable
rCB
Recycled steel cord
Recycled bead wire

Biomass-derived synthetic rubber
Plant-derived oil
Rice husk ash silica

the end of each year.

*2 Toyo Tire Corporation defines sustainable raw materials as recycled raw materials
and renewable raw materials.

Efforts to reduce TRWP

（％）
100

100

80

％

60
40

0

26

26

26

2021

2022

2023

％

％

％

40
％

2030 target

2050 target

Tire and road wear particles (TRWP) are dust produced by friction
between the tire and the road surface that is a mixture of tire tread
and road paving materials. Since the dust is discharged into theatmosphere, tire manufacturers view the need to reduce TRWP
as a key issue. Any wear on tires does impact safety, comfort andfuel efficiency, so we are always striving to improve wear
resistance through materials development and improved tread
design. For example, we successfully improved wear resistanceby designing an optimal compound polymer nanocomposite(rubber with highly uniform carbon black dispersion). This wasachieved through advanced nanofabrication using Nano BalanceTechnology, our fundamental material design technology.
We also actively participate in industry groups, the Tire
Industry Project (TIP)*3 and JATMA, to conduct research andstudy ways to mitigate the impact of TRWP since there are still
many things about TRWP that have yet to be determined. We willcontinue to contribute to the industry’s efforts in this area, while
also using any knowledge we acquire though these industry-wide
activities to improve our own initiatives on reducing TRWP.

*3 One of the sector projects of the World Business Council for Sustainable Development (WBCSD)

Promote research and development of sustainable raw materials,

aiming for 40% ratio of sustainable raw materials per productby 2030 and 100% by 2050
(based on the weight of those materials in products at the end of each year)

Toyo Tire’s conventional NCP compound(nanofabrication)

Wear-resistant NCP compound(nanofabrication + nano material design)
Highly active wear-resistant carbon

Wear-resistantpolymers

Improved wear resistanceIntellectual property
We pursue technological innovation and product development
designed to realize an environmentally friendly society and an eraof safe mobility. However, we believe that the new technologies
and products we create through these initiatives only truly acquiresocial value when they are delivered into the hands of ourcustomers and put to use. We acquire the intellectual property
rights that underpin the technical support required to enable the45

TOYO TIRE Integrated Report 2024

The concept tire was exhibited at theTOKYO AUTO SALON 2024 as areference
The sidewall design is in the motif of“sustainable” and “electric”*1 The ratio is based on the weight of sustainable raw materials used in products at

Ratio of sustainable raw materials: targets and actual results

20

Renewable

raw materials, such as synthetic rubber made from biopolymer
biomass (biomass-derived butadiene rubber and biomass-derived
styrene butadiene rubber). This would lead to a reduction in theamount of petroleum-derived raw materials used, which have alarge impact on climate change, and help reduce GHG emissions
over the tire lifecycle.

that meet certain values on both rolling resistance and wet-grip performance are defined as “fuel-efficient tires.” Thesystem encourages a clear labeling method (display method) that ensures consumers receive the appropriate
information.

performance bysafe use of the products that result from our research anddevelopment into recycled raw materials, renewable raw
materials, fuel-efficient rubber compounds and other areas. We
believe that these ongoing intellectual property initiatives will help
create value for the future era of mobility, and also secure our own
presence in that arena.

NaturalrubberNatural rubber

Uses NCP technology to achieve a high carbon
dispersion in natural rubber
Helps reduce energy consumption during operation(Used wear-resistant polymer and highly active wear-resistant carbon)

Designed compound with excellent wear resistance
Boasts both low energy consumption and improved
wear resistance21%*

compared to the conventional
M125ZB low-maintenanceribbed tire*Source: Toyo Tire Corporation

image

TOYO TIRE Integrated Report 2024

46

Introduction

Materiality

Domain Ⅲ

Risk management

Material issues relating
to risk management
There are various social responsibilities that we must fulfill as a company and that form the premiseof our business management. These material issues epitomize the solid foundation required to

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Decarbonization
Our policy
The impact of climate change is becoming increasingly severe and society’s demands regarding mobility are increasing all thetime. The mobility business lies at the very heart of the Toyo Tire Group operation and, as such, we recognize that addressing
climate change is the most important issue, and one which has the power to greatly influence our growth. For that reason, weare committed to reducing greenhouse gas (GHG) emissions and expanding the use of clean energy in order to achieve thelong-term goals set forth in the Paris Agreement. We also support the Task Force on Climate-related Financial Disclosures(TCFD) recommendations and strive to disclose information based on the TCFD framework in order to stimulate dialogue,
engage stakeholders and promote climate change initiatives.

ensure a sound and healthy environment and enable us to create our own unique value.

Organizational responsibilities (April 2024)

Material issue

05

Pursue decarbonization in all corporate activities●

Responding to climate change risks and opportunities (TCFD)●

Reducing greenhouse gas emissions●

Increasing use of clean energy

The Toyo Tire Sustainability Committee is chaired by the president andmeets four times a year. The committee reports, deliberates and makes
decisions on how to respond to climate-related and other sustainability
issues, and what progress is being made. The Decarbonization Task
Force, which sits under the Sustainability Committee, discusses climaterelated activity plans, targets and KPIs, and the Sustainability Committee
regularly confirms and monitors the status of those activities.
Any climate-related matters that have been debated and approved in
the Sustainability Committee are then reported to or debated in the
Executive Committee and reflected in the formulation or review of ourannual and medium-term business plans. The developments are reported
to the Board of Directors in a timely and appropriate fashion.

Board of Directors
Executive Committee
Sustainability Committee
Decarbonization Task Force
LeaderOfficer in charge of Quality Assurance,
Environment & Safety Headquarters
Participants from R&D, Business, Production

Members and Sales Headquarters
SupportESG Promotion Department, Corporate
Strategy Division, Corporate Administration
Division, Digital Transformation
Headquarters

Climate change risks and opportunities
Material issue

06

Promote supply chain sustainability●

Procuring sustainable natural rubber●

Implementing supplier management and responding to conflict minerals risks●

Promoting efficient logistics

We conducted scenario analysis to ascertain the impact of climate change on the Group’s business activities.

Scenario analysis process
1. Select scenarios touse and understandthe outlook of eachscenario

2. Investigate risks
and opportunities ineach scenario

3. Assess thesignificance of eachrisk and opportunity,
and identify those ofhigh significance4. Calculate the financial
impact of risks expected
to have a large mediumto long-term impact andexplore possible
countermeasures

1. Select scenarios to use and understand the outlook of each scenario
We assessed the impact of risks and opportunities in a baseline scenario (3-4°C scenario) and a transition scenario (1.5°C scenario).
Material issue

07

47

Ensure the fundamentals of manufacturing:
quality and safety●

Improving quality and increasing customer satisfaction●

Promoting improved awareness of tire safety

TOYO TIRE Integrated Report 2024

Baseline scenario(Scenario outlook)• No new political policies or stronger regulations other than what iscurrently envisioned• GHG emissions increase in some areas following economic growth• Extreme heat, heavy rainfall and other natural disasters intensify as
temperatures rise
(Main scenarios referenced)• IEA Stated Polices Scenario (STEPS)• IPCC SSP5-8.5

Transition scenario(Scenario outlook)• New policies and stronger regulations are enacted to curb climatechange• Global GHG emissions decline to net zero by 2050
• Climate change causes sea level rises and changes in weather patterns,
but they remain below those in the baseline scenario(Main scenarios referenced)• IEA Sustainable Development Scenario (SDS)• IEA Net Zero Emission Scenario by 2050 case (NZE)• IPCC SSP1-2.6

TOYO TIRE Integrated Report 2024

48

Introduction

Materiality
Domain領域 ⅢⅢ

We identified climate-related risks and opportunities for each scenario and evaluated the significance of risks and opportunities based on theprobability of certain events occurring that could prove to be pertinent factors in each risk and opportunity and the degree of impact on the
expected costs and other factors in our business. Based on the results, we started to calculate the financial impact of risks that are
expected to be significant over the medium to long term, and explore possible countermeasures.

Highly significant risks
Climate-related
eventsScenarioType

Baseline

Chronic Changes inclimate patterns

Impact on business

Strategy

Materiality

Close-up

Governance

Data

PolicyClimate-related events/
financial impact on
business
Introduction of carbon
pricing
Introducing carbon pricing
will boost the cost of CO2
emissions.

• Compromised infrastructure networks• Decreased sales and profits (overall business Medium toslowdown)highFrequent andsevere heavy
rainfall• Transport network disruption, loss of• Decreased sales, worsened profits (revision

Increase andintensification oftropical cyclones• Marine transport delays, accidents• Increased transport costs• Inventory/product damage

Introduction ofcarbon pricing• Increased service prices as costs are passed • Increased distribution costson• Increased costs of R&D and equipment
investment (shift to low-carbon products)• Introduction of carbon border tax• Introduction of environmental taxes to• Worsened profits (tariffs)
auto-related exports• Increased costs for purchasing carbon

commuting options• Flooding of natural rubber plantationsof production plans)• Increased raw material prices (natural rubber)• Fewer rubber plantations due to poor
profitability

decreased natural rubber production

Medium tohighApprox. 0.7 to
9.7 billion yen(Medium-term: 2030)

TOYO TIRE Integrated Report 2024

Calculation method(Minimum)
Volume of natural rubber procurement × Increase innatural rubber prices• The estimated volume of natural rubber
procurement for 2030 is calculated on past trends• The increase in natural rubber prices is calculated
by averaging out the price increase in past monthsof high flooding across the whole year
(Maximum)
Increase in natural rubber procurement cost ×
Percentage increase in natural rubber procurement
volume• The increase in natural rubber procurement cost is
set at the same level as the increase inprocurement cost in years when large-scale
flooding occurred• The percentage increase in natural rubber
procurement volume is the estimated percentage
increase in procurement volume between the year
when large-scale flooding occurred through to theyear 2030• The Toyo Tire Group will continue toreduce CO2 emissions throughefficient energy use in our products
and business activities inside andoutside the organization• Help reduce CO2 emissions bypromoting the procurement of
renewable energy at production sites
using internal carbon pricing (ICP), as
well as fuel conversion and equipment
upgradesCO2 emissions × Carbon tax• CO2 emissions are the company’s target forCO2 emissions in 2030

• The carbon tax is the 2030 carbon tax fordeveloped countries designed to help achieve
the 2050 net zero emissions target announced
by the IEA

Highly significant opportunities
ScenarioType

Transition

MarketMedium tohighChanges in
economy andsocietyCountermeasures• Reduce the amount of natural

rubber used in each tire by seeking
to reduce tire weight while also
paying due attention to reducing
rolling resistance• Continue efforts to increase theusage of sustainable raw materials
and reduce consumption of natural
rubber by gradually introducing
products made from recycled raw
materials such as recycled rubberfrom used tires• Achieve stable natural rubber
procurement by encouraging theentire supply chain to build
solutions to issues faced by natural
rubber production sites(deforestation, infringement of local
residents’ rights)

EnergyImpact on business

Main financial impact

Greater ecoconscious
behavior bystakeholders• Acquisition of new business partners

Expansion of
low-carbon
product market• Greater demand for products to go low

Products/ Increased
services environmental
awareness incustomers

1. Impact of changing climate patterns on the procurement of natural rubber [risk]
Impact amount/impact timing

Shortfall in CO2 reduction target × Carbon tax• The shortfall in CO2 reduction targets is the

Medium tohighMedium tohigh• Increased raw material prices due toCountermeasuresvolume outstanding supposing the Company’s
targeted CO2 volume reduction in 2030 is lower
than expected by 10%• The carbon tax is the 2030 carbon tax fordeveloped countries designed to help achieve
the 2050 net zero emissions target announced
by the IEA• The percentage increase in natural rubber
procurement volume is the estimatedpercentage increase in procurement volume
between the year when large-scale flooding
occurred through to the year 2030

highproduction)• Inventory/product damage (flood damage)〈Financial impact and countermeasures〉

Changes in climate patterns
Changing climate patterns
will generate changes in theareas in which natural
rubber plants can grow, adeterioration in quality andother issues, all of which
could increase the cost ofnatural rubber procurement.

Approx. 0.5 billion yen(Medium-term: 2030)

Approx. 5.7 billion yen(Medium-term: 2030)

credits

Climate-related events/
financial impact on
business

Calculation method(decreased tire production)

Increase in
extreme weather

Market/ Increased raw
reputation material costs

Impact amount/impact timing

SignificanceMedium to• Increased R&D costs (heat-resistant tires)high• Decreased sales (winter tires)
Increasedrawmaterial
prices(naturalrubber)•• Decreased sales (reduced or suspended tire Medium to

Sea level rises

2. Carbon pricing mechanisms [risk]• Migration of natural rubber tree crop zone, • Increased raw material prices (natural rubber)
decline in quality• Increased R&D costs (alternative raw
Medium tomaterials)• Energy supply system instability
highIncreased
demand
for
crude
oil,
naturalgas,
Decreasedsales,
worsened
profits
•
•
etc.

Acute

Main financial impact• Deterioration of roads• Reduced areas of snowfall• Reduced natural rubber harvests• Compromised ports and warehouses

Temperature
rises

49

VisionRisk management
リスクマネジメント

2. Investigate risks and opportunities, 3. Assess significance, and 4. Calculate the financial impact of material risks
and explore countermeasures

Transition

Top Message

through focus on the environment• Increased added value of eco-conscious
products
carbonSignificance• Increased sales and profits (acquisition of
new business partners, increased added
value)• Increased sales and profits (increased added
value)HighHigh• Development and sales of products with low • Increased sales and profits (increased share,
environmental impact

increased added value)

Growth of EVs/
next-generation
vehicles• Greater demand for EV tires, early-stage

Skyrocketing coaland oil prices• Expansion of EV market

development and sales

High• Increased sales and profits (increased added Medium tovalue)high• Increased sales and profits (sales of EV tires)

High

Climate-related metrics• Greenhouse gas (GHG) emissions (Scope 1, 2, 3)→2019-2023 results• GHG emissions intensity→2019-2023 results• Introduction of an internal carbon pricing system
Used to evaluate decarbonization-related projects and otherinvestment initiatives.
Following a trial operation in fiscal 2023, the system wasofficially launched in fiscal 2024 with a set carbon price* of
10,000 yen/ton.
* The appropriateness of the carbon price will be assessed each year and revised if
necessary.

TOYO TIRE Integrated Report 2024

50

Introduction

Materiality
Domain Ⅲ

VisionStrategy

Materiality

Close-up

Governance

Data

Risk management

Climate-related targets

upgrading fuel efficiency performance each time we change atire model. As of 2023, emissions from PCR had been reduced
due to reduced rolling resistance by 1.5%*1 compared to 2019,
which is a reduction of 94.8 thousand tons-CO2e.

• GHG emissions reduction targets* Decided by the Sustainability Committee in November 2021 and approved by the Executive Committee in December 2021
* Announced on February 15, 2022

* 1 Calculation method: The weighted average RRC for each business year is

calculated from PCR sales and the RRC for each product, and CO2 emissions are
estimated based on JATMA’s Tyre LCCO2 Calculation Guidelines Ver. 3.0.1.

Scope1, 2

GHG emissions: Reduce GHG emission by 46% by 2030 compared to 2019 and aim to achieve carbon neutrality by 2050.

Scope3

GHG emission per unit: Aim to help reduce GHG emissions per tire in 2030 by 20% compared to 2019.

Energy consumed
Energy intensity (right scale)
Energy consumed
Energy intensity is the total amount of energy used within
the organization divided by total sales.
(GJ/millions of yen)(thousand GJ)
8,000.024
7,370.8 7,686.9
7,346.1

One of our milestones is to aim to reduce Scope 1, 2 GHG emissions by 25% by 2025 compared to fiscal 2019

Reducing greenhouse gas (GHG) emissions

6,777.4

6,000.0

Greenhouse gas emissions are seen as a major cause of climatechange so the Toyo Tire Group is working to reduce GHG
emissions through its products and business activities insideand outside the organization.

Scope 1, 2 initiatives
The amount of energy consumed increases in line with increases
in production volume. However, as a means of addressing
Scope 1, 2 emissions, we are seeking to reduce energy
consumption at our production bases by repairing process
pipelines and introducing highly efficient equipment to improveenergy efficiency, and also by encouraging automation andimproving the usage of air-conditioning and lighting. In addition,
we are switching to fuels that emit lower greenhouse gases. We
have reduced CO2 emissions from the Sendai Plant by 500 tons
a year in 2023 by strengthening the insulation of the plant’svulcanizers and pipelines and thereby reducing energy
consumption. Furthermore, we converted the boilers at the
Kuwana Plant to natural gas, reducing CO2 emissions by 1,400
tons. By introducing nitrogen vulcanization and installinginverters on vacuum pumps at tire manufacturing subsidiaries in
China, we have reduced CO2 emissions by 1,600 tons annually.
Meanwhile, our plants in Japan are promoting the use ofelectric forklifts. Purchased electricity at our Japanese plants isbeing replaced by electricity derived from renewable sources in,and the electrification of 17 forklifts in 2023 helped reduce CO2
emissions by 400 tons.

Expanding the use of clean energy
From the second half of 2022, the Toyo Tire Group began
switching electricity purchased primarily at production sites topower derived from renewable sources. By the end of 2023,
100% of the electricity purchased at the Sendai Plant, theKuwana Plant and our tire plant in the United States had been
converted to renewables, along with our administrative andtechnical bases in Japan. We will systematically promote efforts
to achieve a global 90% renewable energy usage ratio by 2030.
That ratio stood at 71.14% at the end of 2023.
We are also actively introducing photovoltaic (PV) power
generation systems for in-house use. The largest PV power
generation system in Serbia (power generation capacity: 8.4 MW)

51

Top Message

TOYO TIRE Integrated Report 2024

was installed on the premises of our Serbia Factory, which
launched operations in 2022. The system’s annual generation of
10,150 MWh of electricity is helping reduce CO2 emission by
7,100 tons a year. By the end of 2023, a large-scale PV power
generation system with a generating capacity of 14.0 MW
installed on a 96,000 square meter rooftop space in our tire plantin Malaysia was fully operational. The system is expected togenerate 19,000MWh and reduce CO2 emissions byapproximately 12,000 tons per year.
Meanwhile in Japan, at the end of 2023, we introduced asolar power generation system at our Corporate Technology
Center. The system generates approximately 419 MWh eachyear, which is more than any other system at any other base inJapan, and is equivalent to approximately 12% of the electricity
used at the Center. The system is expected to reduce CO2
emissions by approximately 128 tons per year.

19.5

18

19.7

17.8

4,000.0

6

0

0

2020

2021

Scope 3 initiatives
The Toyo Tire Group aims to contribute to a 20% reduction in
Scope 3 GHG emissions per tire by 2030 compared to 2019. A
calculation of GHG emissions throughout the Group’s value
chain based on the Japan Automobile Tyre Manufacturers
Association’s (JATMA) Tyre LCCO2 Calculation Guidelines Ver.
3.0.1 revealed that emissions from the Category 11 product use
phase account for at least 80% of overall GHG emitted.
According to the guidelines, fuel-efficient tires can reduce CO2
emissions during use (during vehicle driving) by 95.4 kg CO2e
per tire for passenger car radial (PCR) and 879.0 kg CO2e pertire for truck and bus radial (TBR) compared to standard tires.
Our technical division is working to develop technologies toenhance fuel efficiency of tires by reducing their rolling resistanceand weight. Over the medium to long term, the Group isplanning to enlist the help of the Product Planning Division in

2022

2023 (FY)

2022

2023

Total Scope1 GHG emissions

268.2

265.3

274.5

Total Scope2 GHG emissions(location-based)

284.4

253.6

280.5

Total Scope2 GHG emissions(market-based)

−

−

105.8

Consumption of fuel from
non-renewable energy

4,735.7

Purchased electricity consumption

1,944.2

Consumption of purchased
electricity from renewable energy
sources, consumption equivalent
to procurement of non-fossil
certificates

GHG emissions (Scope 1)

2022
5,130.8
1,923.5

GHG emissions (Scope 2)
GHG emissions intensity (right scale)Emissions intensity is total volume from Scopes 1, 2 divided by total sales.
Scope2 is calculated on a location-based method until 2022 and on
a market-based method from 2023.

2023
5,302.7
2,027.6

0.0

114.2

1,442.5

0.00%

5.94%

71.14%(t-CO2/millions of yen)(thousand t-CO2e)

4

800.0

(thousand GJ)

2021

Purchased steam consumption

2021

600.0

Energy consumed by source

Consumption of fuel from renewableenergy sources (photovoltaics)
Corporate Technology Center(thousand t-CO2e)

12

13.9

2,000.0

Percentage of purchased electricity
with a renewable energy certificate

Tire plant in Malaysia【Scope1, 2】

6,992.9

14.8

2019

Greenhouse Gas (GHG) emissions

400.0
200.0
0

590.9
296.3

535.5

552.6

263.9

268.2

1.57

265.3

380.3

2

274.5

1.40

1.56

3

518.9

1.04

294.6

271.6

284.4

253.6

0.69
105.8

2019

2020

2021

2022

2023

(FY)

1
0

Energy consumption and GHG emissions are third-party verified data.

SBTi*2 initiatives
0.8

0.7

41.1

312.2

315.8

315.4

In May 2024, Toyo Tire Corporation submitted a letter ofcommitment to SBTi stating its intention to seek SBT
certification. We have already set targets for reducing GHG
emissions as the Toyo Tire Group and are currently working toachieve them. We will now strengthen our efforts across theentire supply chain by setting GHG reduction targets for theperiods five to 10 years ahead, that comply with the levels
required by the Paris Agreement*3.
* 2 SBTi: The Science Based Targets Initiative is designed to achieve a goal of limiting
any rise in average global temperatures to 1.5°C.

* 3 Paris Agreement: An international agreement formed at the Conference of theParties to the United Nations Framework Convention on Climate Change held inParis in 2015. The long-term goal of this agreement is to keep any rise in average
global temperatures to well below 2°C compared to pre-industrial levels, and strive
to limit that increase to 1.5°C.

TOYO TIRE Integrated Report 2024

52

Introduction

Materiality
Domain Ⅲ

Top Message

VisionStrategy

Close-up

Governance

Data

Risk management

Supply chain

Supplier management
Using guidelines to engage suppliers

Our policy
The Toyo Tire Group has established the Toyo Tire Group Basic Purchasing Policies and seeks to secure appropriate
product quality and price through fair transactions.
We also formulated the Toyo Tire Group CSR Procurement Guidelines and the Sustainable Natural Rubber Procurement
Policy. We work with our suppliers to further promote sustainable procurement that aims to mitigate, prevent and minimize
the negative impact of our corporate activities on the environment and society and to improve our corporate value andcompetitiveness.
We also support sustainable logistics by improving the productivity and efficiency of truck transportation and ensuring
safe cargo handling operations.

Organizational responsibilities (April 2024)
We established the Supply Chain Task Force under the jurisdictionof the Sustainability Committee to discuss activity themes, targets
and KPIs in relation to ESG issues in the supply chain. The
Sustainability Committee regularly confirms and monitors thestatus of these activities.

Executive Committee
Sustainability Committee
Sustainable Supply Chain Task Force
LeaderVice President of Business Headquarters

Members

Procurement Division, Environment & Safety
Division, Quality Assurance Division, SCM
Division

SupportESG Promotion Department, Compliance &Legal Division

Procuring sustainable natural rubber
The securing of a stable natural rubber supply into the future is an
important management issue for a business group like ours thatuses natural rubber as the main raw material. The natural rubber
industry is facing issues relating to deforestation at production
sites and the infringement of local residents’ rights. We recognize
the importance of striving to solve these problems across theentire supply chain from production through consumption.

International cooperation for building a sustainablesupply chain
Toyo Tire Corporation is a member of the Global Platform for
Sustainable Natural Rubber (GPSNR)* launched in 2018 under
the leadership of the Tire Industry Project (TIP), which is part of
the World Business Council for Sustainable Development(WBCSD). As a member, we participate in discussions designed
to solve relevant issues. We are working to prevent deforestation,conserve biodiversity and water resources, uphold human rights
and support local communities, improve the productivity of natural
rubber and make our supply chain more transparent. We also
exchange information with the civil society sector, which includes
NGOs and other groupings that have specialized knowledge ofenvironmental and social issues at natural rubber production
sites.
Our aim going forward is to continue to cooperate withinternational initiatives and stakeholders and to build a sustainable
natural rubber supply chain across our whole value chain.

53

Materiality

TOYO TIRE Integrated Report 2024

We have formulated the Toyo Tire Group CSR Procurement
Guidelines and request suppliers to pursue activities inaccordance with these guidelines to help address environmental
and social issues across our entire supply chain. We also appeal
to our suppliers to help convey the purpose and nature of theseguidelines further up the supply chain. The guidelines arereviewed whenever there is change in social demands or thebusiness environment. The guidelines have been published inJapanese, English and Chinese.
To ensure the fair and objective assessment of supply chain
risks, we formed a contract with EcoVadis, a third-party
organization that conducts CSR assessments, and commissioned
sustainability assessments of our suppliers from an environmental
and social perspective from 2022. By the end of 2025, we aim tohave fully audited suppliers accounting for 95% or more of thetotal transaction value of our tire-related raw materials. At the endof 2023, we had finished evaluating suppliers that account for
approximately 70% of that total transaction value, including
natural rubber suppliers.
Going forward, we will promote engagement with suppliers
based on the results of the EcoVadis assessments and work
together to solve supply chain issues.

Fair and transparent transactions
We declared our commitment to free competition and fair tradingin each market in the Toyo Tire Group Code of Conduct. We
conduct our activities in compliance with antimonopoly andsubcontracting law, pursue fair procurement activities, comply
with import and export-related laws and regulations, and ensure
appropriate labeling and product explanations.
For instance, the Group seeks to ensure business activities
are based on fair and free competition by establishing purchasing
regulations that stipulate the thorough implementation of fair andnon-discriminatory business dealings and prohibit thedevelopment of personal interests with suppliers. At Toyo Tire
Corporation, we have established anti-cartel regulations toprevent cartels and bid-rigging activities. In addition, we
continuously perform self-inspections regarding compliance with
subcontracting law and implement e-learning programs on thelaw.

Responding to conflict minerals risks
Conflict minerals response* A platform that seeks to transcend industrial boundaries and ensure that theWith regard to our decarbonization initiatives, we have beensurveying existing suppliers since 2021 and are tackling any
issues that emerge to help reduce the environmental impact ofour supply chain activities.

In Europe and the United States, manufacturers are legallyobliged to conduct due diligence when purchasing conflictminerals (tin, tantalum, tungsten and gold) and cobalt mined inconflict and high risk areas in light of the fact that the money fromsuch purchases may be used to fund local armed groups andpromote corrupt practices, such as human rights infringements,
bribery and money laundering. When procuring minerals and raw

materials mined and manufactured in such areas, the Group’s
policy is to ensure those materials are not linked to human rights
violations, environmental destruction, conflict, or corruption, and
we enlist the cooperation of suppliers to trace back to thesmelters and confirm that the raw materials purchased by theGroup are not linked to any such inhumane acts. We would
request remediation through our suppliers if any such concerns
were to emerge.

production and use of the world’s natural rubber is carried out in a way that is more
conscious of the natural environment and social issues.

Promoting sustainable procurement
Following the guidance provided by GPSNR encouraging tire
manufacturers to incorporate the platform’s Principles of
Sustainable Natural Rubber into their business activities, we
conducted a thorough review of the items related to natural
rubber procurement that were determined as part of our CSR
Procurement Guidelines. Then, from 2021, we strengthened oursystem based on the separate Sustainable Natural Rubber
Procurement Policy. That policy is designed to improve theeffectiveness of initiatives relating to healthy ecosystems, humanrights, communities and other issues. Currently, in addition toconveying this policy to suppliers and asking for their cooperation,
we are promoting activities that ensure traceability and protect theenvironment in accordance with the medium- to long-term action
plan stipulated by our Supply Chain Task Force. In 2023, we
made a donation to an international environmental organization to
help protect forests. We have also set up a dedicated contact
point specifically for the natural rubber supply chain. We received
no reports in 2023.

Efficient logistics
As the shortage of truck drivers grows ever more serious in
Japan, the Ministry of Land, Infrastructure, Transport and Tourism
is developing initiatives to improve the productivity and efficiencyof truck transportation and create more comfortable working
environments.
To promote efficient logistics, Toyo Tire Corporation is
instigating a modal shift to ships and national railways for the
long-distance transportation of goods in Japan dispatched fromour factories. We have already shifted over 50% of transportation
to these new modes, and, ten years from now, we aim to have
reduced long-distance truck transportation to roughly half of 2022
levels. Furthermore, ensuring safer and more efficient cargohandling operations will not only reduce the burden on drivers, butwill also fuel economic growth and create higher levels of job
satisfaction.

Specific initiatives• Introduced and expanded large container transportation by

Japan Freight Railway Company for shipments from Sendai
Logistics Center and Kuwana Logistics Center, and introduced
coastal vessel transportation using shipping containers from the
Kuwana Logistics Center• Installed safety fences in warehouses at our Sendai and
Kuwana Logistics Centers following a risk assessment (toprevent tire racks from toppling or items from falling in the eventof an earthquake)• Installed monitoring cameras at logistics centers in each plantand distribution centers in Japan to ensure safe operation;
installed monitoring cameras to ensure safe forklift operation

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Introduction

Materiality
Domain領域 ⅢⅢ

Top Message

VisionStrategy

Materiality

Close-up

Governance

Data

Risk management
リスクマネジメント

Quality

Increasing customer satisfaction
Improving quality and customer satisfaction

Our policy
Our principle for manufacturing is to provide high-quality and safe products and services that are useful to society, and westate our basic policy for product quality and code of conduct in the Toyo Tire Group Global Product Safety Policy. The
policy clearly states that product safety and global environmental protection must be taken into consideration throughout
the value chain, from the product planning, development and design stages to production, sales, use and after-use.
We operate a quality management system based on IATF 16949 (or ISO 9001 at some production sites) predominantly
at our production bases, and take measures against risk.
—ISO 9001 certification (as of the end of March 2024)
Production bases: 13 sites (3 Toyo Tire Corporation sites*, 10 affiliated company sites)
Sales bases (affiliated companies): 2 sites* The Kuwana Plant has independently acquired certification at two sites: its tire production plant and automobile parts plant.

—IATF 16949 certification (as of the end of March 2024)
Production bases: 9 sites (3 Toyo Tire Corporation sites, 6 affiliated company sites)

As a manufacturer, we understand that our products and services
link us to both our customers and society, and we are working to
improve quality throughout the entire value chain. Our production
bases are constantly searching for ways to maintain and improve
product quality while our technical service departments
continuously investigate product satisfaction levels in the market
and relay customer requests as feedback to our design andproduction bases. Our Customer Relations Department analyzes
the opinions and inquiries received from customers on a day-today basis and makes recommendations to the relevant
departments in order to improve our products and services. Other
workplaces also strive to provide services and improve the qualityof our operations from a customer perspective. Such activities
reflect the spirit of our Company Philosophy of continuously
improving our products and creating value for everyone who wework with.

For more than 50 years, the Group has continuously held
quality control (QC) circle activities to proactively raise quality
control standards using employee insight from the frontlines. QC
circle activities began at production sites and have now spread tosales divisions, with about 300 circles currently running within theGroup. In each circle, members pool their experience andknowledge in order to solve problems, and work to improve
quality by grasping the current conditions, setting goals,
developing action plans, and analyzing issues. Each year, we run
a Toyo Tire QC Circle Convention, at which circle representatives
from Japan and overseas come together to learn from each otherby giving presentations on not only quality improvement initiatives
but also their day-to-day efforts to eliminate workplace waste andloss. Moving forward, we will continue supporting QC circle
activities to further improve worksite autonomy and customer
satisfaction.

Visualizing manufacturing quality using manufacturing execution systems (MES)
Organizational responsibilities (April 2024)
Quality Assurance, Environment & Safety Headquarters is
responsible for promoting initiatives in this area, and reports
progress to the Sustainability Committee.

Executive Committee

Sustainability Committee
Quality Assurance Committee
Quality Assurance, Environment & Safety
Headquarters● Quality Assurance Division
Quality assurance departments ofmanufacturing subsidiaries
R&D Headquarters● Technology Development Division
Sales Headquarters● Americas Business Development Division● Original Equipment Sales Division● Europe, Africa & Middle East Sales Division● Asia & Oceania Sales Division

throughout the Group to ensure we comply with the increasingly
complex quality-related regulations in each country.
Our tire and automotive parts businesses each hold annual
Global Quality Management Committee (Global QMC) meetings,
bringing together quality assurance managers and relevant
representatives from manufacturing bases worldwide to share anddiscuss each site’s initiatives related to product quality,
improvement of quality assurance systems for production, andquality-related demand of our business partners.
In addition, at the four tire
testing and evaluation sites in Japan,
we test our tires in compliance with
ISO/IEC 17025 (general
requirements for the competence oftesting and calibration laboratories)
since our initial certification in 2013,and have been working to improve
test accuracy and reliability tocontinue conducting tests inaccordance with standard
requirements.

Group sales companies

Example Efforts to Meet Quality Standards

Improving product quality
Meeting the quality standards of each country
In the face of factors such as greater climate change risks,many countries are rapidly introducing new regulations related
to the environmental performance and quality of vehicles topromote higher fuel efficiency and reduce the CO2 emissions.
We are working to strengthen our response to quality standards• Collecting information locally• Making recommendations by participating in industry
groups• Exchanging opinions with regulatory institutions• Sharing information on the latest legal and regulatory
trends• Giving presentations on legal and regulatory matters

The Toyo Tire Group aims to build a quality assurance system thatcan predict and prevent issues from occurring in the
manufacturing process. We have introduced automatic measuring
instruments into the tire manufacturing process, and arelaunching a system that digitally collects and visualizes qualityand production-related information from production equipment.
This will ensure quality in each manufacturing process, and makeit possible to analyze and monitor collected data to detectchanges in process trends. At the Serbia Factory, MES will be put
into operation in the second half of 2024 and expanded to thequality area. Analyzing the results, we are working to introduce
MES at other production bases, as well as foster data-centrictalent and corporate culture.

Improving service quality at sales companies
The Group’s tire sales subsidiaries are striving to improve the job
skills of tire technicians and the level of service provided by sales
associates and front office staff. Sales companies provide jobspecific training to sales associates and front office staff to equipthem with the awareness required to convey product value tocustomers clearly and correctly on a day-to-day basis and todevelop the skills required for their respective roles.
We also hold a Truck and Bus Tire Servicing Contest fortechnicians, at which technicians selected from all over Japan
compete with each other to demonstrate their skills. The primary

goal of the contest is to improve the skills and service level oftechnicians responsible for exchanging tires, performing
inspections, and providing after-sales services. This contest
illustrates to staff how their own
jobs contribute to the safety of
our customers, which in turn
fosters a sense of duty andmotivation toward their work.

Tire safety awareness activities
We believe that one of our most important duties is to help drivers
learn how to use tires appropriately. Using our proprietary driving
simulator, we offer a workshop for driver to experience thedifference between worn and new tires when breaking on wet
roads or getting a puncture, and maneuverability under different
tire pressures. During the 2023 spring and autumn National Traffic
Safety Campaigns, we ran a workshop in collaboration with thepolice station nearest the venue. Approximately 4,200 people

have taken part in the workshop over the five-year period startingin 2019. We confirmed the effectiveness of the workshop with
97% of post-workshop
questionnaire respondents
indicating that their awareness oftire safety has increased.

A participant using the driving
simulator

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