Toyobo’s strength
to realize prosperity

TOYOBO REPORT 2023

Toyobo group Integrated Report for the fiscal year ended March 31, 2023

Introduction

TOYOBO REPORT 2023

Value creation story● Corporate philosophy framework “TOYOBO PVVs”

Value creation strategy● Contents

Value creation practiceFoundation for value
creation

1

Reference material● Editorial policy

Toyobo’s Declaration

Toyobo’s strength to realize prosperity
Through the strength of Toyobo (materials + science), we will create the solutions needed bypeople and the earth and will contribute to the realization of a prosperous society.

rincipleision

We systematized the TOYOBO Group

Principle

Visionto reason
Jun-Ri-Soku-Yu Adhering
leads to prosperity

We will continue to create the solutions
needed by people and the earth with ourmaterials and science.

“Jun-Ri”● Do what should be done (positive standpoint)● Don’t do what should not be done (defensive standpoint)“Soku-Yu”

philosophy of “Jun-Ri-Soku-Yu”.

● Adhering to “Jun-Ri” leads to prosperous society while also
realizing self-growth

Values
We welcome change, enjoy change, andcreate change.

The TOYOBO PVVs is the foundation onwhich we actively seek to build a flourshingThis is the founding spirit of our company and is our belief.

society while also growing as a company.

TOYOBO Spirit

9 Commitments

Challenge

Reliability

Collaboration

alues

Think Ahead

CreateAccomplish

Safety First

Customer
Satisfaction

Factual Basis

MutualCommunication

Diversity

ProvidingOpportunities

Introduction

TOYOBO REPORT 2023

Value creation story● Corporate philosophy framework “TOYOBO PVVs”

Value creation strategy● Contents

Value creation practiceFoundation for value
creation2

Reference material● Editorial policy

Contents
Introduction
1

Corporate ​philosophy f​ ramework “TOYOBO PVVs”

2

Contents

3

Editorial policy

01 Value creation story
5

CEO message“I aim for us to be a company that our stakeholders
are proud of, and which grows sustainably.”

212025 Medium-Term
Management Plan

61

Safety and disaster prevention
Quality
Respect for human rights
Human capital
KAERU –Changing our organizational culture–
Partnerships (supply chain)
Partnerships (social contribution)

Transformation to sustainable growth25

Innovation
Vision for creating innovation​Research and development
Intellectual property

29

Toward digital transformation

03

Value creation practiceSociety69

GovernanceOutside Director message
Management teamCorporate governanceRisk management
Compliance05

Reference material

79

Key financial data (FY2013–FY2023)

81

Corporate data

82

External recognition, third-party assurance report

8

Value creation process32

Overview by business

9

The history of Toyobo

33

Films

10

At a glance

36Life Science

11

Financial highlights

39

Environmental and Functional Materials

12

Sustainability highlights

42

Feature: Launch of TOYOBO MC Corporation

Using this report (PDF)

13

Sustainable Vision 2030

44

Functional Textiles and Trading

15

Materiality

Category tabs and navigation buttons at the top of every page
make movement among pages easy. Clicking a link button in the
text will jump to the relevant website or page in this report.

04

Foundation for value creation48

Sustainability management

02

Value creation strategy

19

CFO message

51

Disclosure based on TCFD recommendations“We will respond with agility to businessenvironment changes, and perform cash allocation
to increase corporate value.”55

Environment
Realization of a decarbonized society
Realization of a circular society
Conservation of water resources, conservation of biodiversity,
chemical substances management

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TOYOBO REPORT 2023

Introduction

Value creation story● Corporate philosophy framework “TOYOBO PVVs”

Value creation strategy● Contents

Value creation practiceFoundation for value
creation

Reference material

3● Editorial policy

Editorial policy
Since 2019, Toyobo has issued an Integrated Report that presents both financial information and

About disclosure of information

sustainability information such as environmental, social, and governance (ESG) data.
Under the theme of Toyobo’s strength to realize prosperity, this Integrated Report includes
content focused on our Sustainable Vision 2030 as well as our 2025 Medium-Term Management

TOYOBO REPORT (Integrated Report)

Plan (2025 MTP), formulated from Sustainable Vision 2030 through backcasting. The reportpresents the views of our top management, dialogue concerning the start of a new company, andbusiness overviews by segment, and introduces our products, services, and initiatives throughexamples of CSV to enhance understanding of the Toyobo group’s value creation from multiple
perspectives.

Toyobo’s strength
to realize prosperity

The purpose of this report is to deepen understanding of our group by shareholders, investors, andother stakeholders.

TOYOBO REPORT 2023

Toyobo group Integrated Report for the fiscal year ended March 31, 2023

Organizations subject
to reporting

Reporting period

Unless otherwise stated, this report refers to TOYOBO CO., LTD. (nonconsolidated basis).
Numerical data in financial information is reported on a consolidated
basis.

April 2022–March 2023
(Includes some information dated April 2023 and later)

Investor Relations website

Sustainability website

Here, we bring together investor relations (IR) materials
such as financial results summaries, annual financial
reports, and financial results briefing materials for the
benefit of shareholders and investors. We also present
an overview of the company’s current financial status
and business performance, stock information, an IR
calendar, FAQ, etc.

Here, we present information about the Toyobo group’s
ESG-related initiatives, along with relevant data.

Annual Financial Report

Published

September 2023
Next scheduled publication: September 2024

Reference guidelines,
etc.

● GRI Standards (Japanese version)● VRF “International Integrated Reporting Framework”● Task Force on Climate-related Financial Disclosures (TCFD) “TCFD
Recommendations”● Ministry of the Environment “Environmental Reporting Guidelines” (2018versions)● Ministry of Economy, Trade and Industry “Guidance for Collaborative
Value Creation 2.0”

Prepared in accordance with the requirements of
Paragraph (1), Article 24 of the Financial Instruments
and Exchange Act, the Annual Financial Reportpresents a summary of the company’s current situation,
details of its business areas, the current state of its
facilities, its operational status, its financial statements,
etc.

Sustainability
ESG performance data

Sustainability ReportCompiled in November each year, this is a PDF version
of sustainability-related information posted on thecompany’s website.

FACT BOOK

Corporate Governance Report

The FACT BOOK presents 11 years’ worth of key
financial data and five years' worth of non-financial data
for the company as a whole and for individual segments.

This report presents information about the Toyobo
group’s approaches and systems, in accordance withJapan’s Corporate Governance Code.

Financial information

Sustainability information

01

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Value creation story05

CEO message

11

Financial highlights

08

Value creation process

12

Sustainability highlights

09

The history of Toyobo

13

Sustainable Vision 2030

10

At a glance

15

Materiality

Reference material● Materiality

4

TOYOBO REPORT 2023

Introduction● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Reference material

5● Materiality

CEOmessage
Ikuo Takeuchi
President & Representative Director
CEO & Co-COO

I aim for us to be a company
that our stakeholders are proudof, and which grows sustainably

Management approach“People First.” Individuals’ sense of personal involvement
will be the force driving transformation
My vision of ideal Toyobo is a company that gains trust form society.
I want our corporate group to be one that all of our stakeholders—
employees, customers, business partners, shareholders, andothers—can view with pride. The message of our corporate
philosophy “Jun-Ri-Soku-Yu” (adhering to reason leads toprosperity) is “Do what we should do to contribute to the prosperityof society. Society will continue to advance as a result.” That is thetrue “realization of sustainable growth” that I seek.
In May 2022, the 140th anniversary of our group’s founding,
we announced Sustainable Vision 2030. Within this, we revealed
our vision for the future: “We will continue to create the solutions
needed by people and the earth with materials and science*.” For
us to achieve this, it is vital that we first contribute to resolving social
issues through our business. Moreover, if we are to contributeto society sustainably, we ourselves must be sustainable andresilient. We are working to build a solid foundation for our corporate
activities, incorporating safe and secure workplaces, a quality
assurance system, and compliance. We have drawn up a growth* We aim to go beyond mere manufacturing, providing materials, to create science, in other words,
new value through ingenuity and ideas. We aim to be a group that realizes unique benefits, provides
solutions, by combining materials and science.

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Reference material

6● Materiality

CEO message
strategy under which three businesses — film, life science, andenvironmental and functional materials —that contribute to resolvingsocial issues are deployed atop this foundation.
What is important in this is that it is people, and the teams
and organizations in which people connect, that will carry out
the transformation aimed at realizing our long-term vision. Since
becoming president, I have repeatedly put forth the message“People First.” Every employee tackling problems and work with asense of personal involvement—that will be the force that drives
transformation. Since the second half of fiscal 2023, I have again
been making site visits in Japan and overseas. I make visits
intending to encourage employees, but I’m the one who getsenergized instead. It provides opportunities for me to boost myresolve as the CEO.
I was particularly impressed by a visit to Toyobo Indorama
Advanced Fibers Co., Ltd., the joint venture that we launchedlast year with the Indorama group in Thailand. At the airbag yarn
manufacturing company, located in Rayong province about threehours from Bangkok, over 10 Toyobo engineers built and launcheda factory over the course of two years in an unfamiliar environment
different from Japan where they were accustomed to living. I felt
great pride seeing the engineers accomplish this huge job. I also
visited the Otsu Pharmaceuticals Plant, which is working to rebuild
its quality assurance system, and the Toyama Production Center,
which is consolidating manufacturing bases in the textile business.
However difficult the situation, we earnestly tackle whatever needs
to be done. Seeing colleagues taking action with a strong sense of
mission, I felt anew that this is the true strength of Toyobo.

Toward the realization of Sustainable Vision 2030

Coming changes in the business environment are afantastic opportunity.
Our technologies, products, and services will have roles
to play
It has been about a year since we released our vision. Giving shape
to the group’s vision in the form of Sustainable Vision 2030, with the2025 Medium-Term Management Plan (2025 MTP) as a waypoint,
has brought about great change in our executives and employees.

First, it has enabled us to engage in work on a foundation of
having shared our vision and our action plan for realizing it. As an
example, when setting themes for development, our Innovation
Division (business development) has gained a strong awareness ofquestioning how a given theme corresponds to which vision, andhow and to what it makes contributions. In addition, leaders andexecutives of our divisions talk increasingly about visions for theirdepartments and plants in their own words, based on our overall
vision. They then extend this to their workplace action plans and trackprogress. By holding visions for their own divisions, connected to ouroverall vision, every individual at every worksite is able to maintain anawareness of the meaning of their work and of their future.
At the start of Sustainable Vision 2030, I declared that we will
make a shift from survival-oriented thinking to a sustainable growthorientation. The survival-oriented thinking that seeks short-term
outcomes and profits for today and tomorrow became too strong
during the period of structural reform that spanned the past 20
years, raising the issue that long-term perspectives and actions
may have been insufficient. In response to this, there are increasing
moves by leaders in divisions to not merely respond to current
issues but to also think ahead toward 2030 and beyond.
We are now at a historical turning point. Looking toward the futurebusiness environment, I sense greater change than we had expected
when we were formulating Sustainable Vision 2030. For example,
our cost structure has undergone enormous change from that of adecade ago. Our group’s raw materials and fuel costs have increasedby ¥28 billion over the past two years. The price hike is greater than
our average operating profit for the past five years. The movement
to achieve carbon neutrality has also entered the stage in which
effectiveness is scrutinized. A large number of institutional investors
are requesting that we address ESG and sustainability issues
involving human capital and governance, as well as environmental
issues.
In Sustainable Vision 2030, we set out conventional financial
indicators as management goals, as well as sustainability indicatorssuch as zero serious accidents, enhancement of employee
engagement, and reduction of greenhouse gases (GHGs).
I recognize that these sustainability initiatives form a foundation forachieving our financial targets, and that we need to carry them out
in a manner integrated with our business activities.
Such changes in the business environment include aspects

that place increased burdens on us, but I view them positively asopportunities for the growth of our company. As an example, toaddress the issue of shifting away from plastics, our company has
been an early adopter of recycled resin within our industry. We
already possess or are developing related technologies including
volume reduction of about 30% in conventional films, plastic madefrom 100% biomass, and chemical recycling. By providing film
products created through these technologies, we will contributeto resolving issues that surround plastics. We also anticipate
that, with the launch of the new TOYOBO MC Corporation,
the technologies for water and air purification, separation,
and adsorption that we have built up for over 30 years will see
increased opportunities for widespread use in Japan and overseas.
Our human-related technologies will also be able to contribute
more and more to enhancing quality of life for people worldwide,in areas including infectious disease prevention, diagnostic drugs,
and medical membranes.
The products and services that our group provides areindispensable to safety, security, and comfortable living for the
public. I am confident that by expanding and creating products andservices imbued with value that only Toyobo can provide, we will beable to make even further contributions to solving social issues.

Progress during the first year of the 2025 MTP

Steady execution of our “four years to rebuild and prepare”
action planIn fiscal 2023, the first year of the 2025 MTP, earnings fell significantly
for reasons including sudden changes in the business environment.
Our top priorities are first to regain our earnings capability (profitability)
and to return to or exceed our normal earnings level, with operating
profit of ¥20 billion or more by fiscal 2025.
We are generally making progress as planned in the fourmeasures contained in the 2025 MTP.
The first of these is “thorough safety, disaster prevention, andquality assurance,” which we view as the most important issue.
Acting under a strong determination to never again allow a major fireincident, our company as a whole is steadily executing our masterplan for safety and disaster prevention, doing so through the 2025

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights

Reference material● Sustainable Vision 2030

7

● Materiality

CEO message
MTP as well. We have made large investments in fire detection andcontainment, and have considerably enhanced our level of disasterprevention in physical terms. However, we recognize that we still
have a way to go in terms of safety culture, that is, in people’s
awareness of safety and disaster prevention. We are enhancing
training and workplace dialogue to enable a sense of personal
involvement in safety.
Regarding the second measure in our plan, “reorganization of
the business portfolio,” we have divided our businesses into four
strata along the dual axes of profitability and growth potential basedon capital costs, and are advancing business operations according
to the positioning of each. We are actively investing in our film
business and life science business, which we have positioned for“growth expansion”. In our environmental and functional materials
business, positioned until now for “stable earnings,” we launched
TOYOBO MC Corporation as a joint venture with Mitsubishi
Corporation in April 2023 to create a third pillar. Looking ahead,
we will tackle growth expansion in areas including those related toenvironmental solutions and electric vehicles (EVs). At the sametime, in businesses facing profitability issues and positioned as“requiring improvement,” we are executing factory consolidationand earnings improvement measures in line with the master plan forreform that we have formulated.
With regard to the third measure of our plan, “preparations
for the future,” we are making preparations for the creation of
innovation, the promotion of digital transformation, and therealization of carbon neutrality.
For the creation of innovation, we formulated our Innovation
Creation Vision last year with an eye toward the future beyond 2030.
By combining our strengths in polymer technology and biomedical
technology, we will accelerate innovation in three areas of solutions: ​New Circular Plastics, Environmentally Active Clean, and Well-Being(see p.25).
As an initiative aimed at carbon neutrality, last year we obtained
certification from the Science Based Targets initiative for theconsistency of our group’s 2030 GHG emission reduction targets
with the level required by the Paris Agreement. We will steadily carryout actions including the introduction of energy conversion, energy
conservation, and renewable energy, following the roadmap we havelaid out. We also intend to put the internal carbon pricing system that we
introduced in April 2022 into full operation and accelerate investmentsthat will contribute to GHG emission reduction, with plans to utilize
these in the examination of business portfolio reform as well (see p.55).
The fourth measure in our plan is “rebuilding the foundation.”
This foundation is a necessity for carrying out the three measures
noted above. While advancing development of our business
infrastructure through the renewal of aging facilities and systems
including information system, we are also making efforts toward
human resource development and organizational culture reform.
Operating under our conviction that it is people and teams ofpeople who will shoulder corporate reform, we will build humanresources management mechanisms that allow all employees toexperience growth and play active roles with pride and motivation.
More specifically, pressing issues that lie before us include
promoting the selection and development of the next generation ofmanagement candidates and the training of workplace leaders to
support manufacturing, as well as increasing the number of womenleaders who advance to executive positions. We have also developed
optimal personnel placement mechanisms, education systems, andprograms to enable diverse ways of working so that all employees
can achieve personal development within the company (see p.64).

Launch of TOYOBO MC Corporation

A turning point for our group. Tackling growth by changing
our ideas and actions
The establishment of TOYOBO MC Corporation is a major projectto which we apportioned a quarter of the sales of Toyobo. We view
it as a large investment in growth. Our primary aim is to develop
new markets and achieve growth by combining the cutting-edge
technologies and products of Toyobo with the strengths of Mitsubishi
Corporation. At the same time, considering anticipated futurechanges in the business environment, behind the establishmentof the new company was also a powerful sense of crisis over thedifficulty of maintaining our status quo through business as usual.
By changing the conventional ideas of Toyobo and our ways
of working while adding different ideas, we will make ourselvescapable of taking on great opportunities for growth. Toward that
end, we selected a partner that could be seen as an unorthodox
choice for our company. I expect to see innovation result from thiscombination of differences. In terms of approach to seizing business
opportunities, ability to execute, and speed, Mitsubishi Corporation
has strengths that we do not. By pairing our cutting-edge products
and technologies with Mitsubishi Corporation’s global management
capabilities and its domestic and overseas networks, we will execute
growth measures using inorganic and other methods.

Message to our stakeholders

Carrying out the four measures of the 2025 MTP to enhance
our corporate value (economic value x social value)
I define corporate value as the product of economic value (earning
power) times social value (trust by stakeholders). This means
naturally that no corporate value can exist without the trust ofsociety, or without the power to earn. Our group aims to be acompany that contributes to the sustainability of society while itself
continuing to grow sustainably.
My mission is to sustainably enhance our corporate value throughbusiness activities aimed at realizing our corporate philosophy. The
key to doing so will be carrying out the four measures stated in the2025 MTP. By enhancing asset efficiency and achieving growththrough portfolio reform and by further enhancing people’s trust in
our company, we will transform into a corporate group in which our
stakeholders can take pride.
I ask our stakeholders for their continued understanding andsupport for our group.

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Reference material

8● Materiality

Value creation process
Business model

InputsBusiness that realizes Corporate Philosophy
Framework PVVs and Sustainable Vision 2030

Financial capital
Consolidated total assets ¥588.9 bn.
Cash flows from operating activities¥7.8 bn.

Social issues to be solved throughToyobo’s strength; materials and science

Digitaltransformation

Manufacturing capital
Production sites
Capital investment

Outputs
Business segments
through FY2023

Business segmentsfrom FY2024

Films andFunctional Materials

Films

Packaging films
Industrial films

22 sites¥42.7 bn.

Outcomes

p.33

Packaging films

Employee well-being andhuman rights in the supply chain
A healthy lifestyle andhealth care
Smart communities
and comfortable spaces

Industrial films

Functional materials

Life Sciencep.36

MobilityIntellectual capital
Major research anddevelopment sites
R&D Expenses

Engineering plastics

Innovation

3 sites¥14.1 bn.

Airbags fabrics●

Human capital
Number of employees
10,885
Ratio of women managers
4.7％
Number of employees engaged
in R&D
529●●

Biotechnology
Medical materials
Pharmaceuticals

Environmental andFunctional Materials

A marketing approach that views people and the earth as
the end customers

Lifestyle andEnvironment(mainly TOYOBO MC Corporation)

Science-based innovation through original refinements
and ideas grounded in materials and science

Environmental solutions

Functional materials

Co-creation of value through open innovation, etc. withdiverse partners

p.39

Nonwoven materials

Engineering plastics

High-performance fibers

Environmental solutions

TextilesNonwoven materials
High-performance fibers

Social capital
Strong relationships with customers
and suppliers
Collaborations with other companies
and universities
Participation in various initiatives

Natural capital

Materiality
Area of contributing to thesolving of social issues
through business
Area of human capital

Energy consumption
2,937GWh
Sales ratio of eco-conscious
products
35.2％

Life Science

p.15
Area of environment
and manufacturing

Globalenvironmental
conservation

Poverty andhungerp.44

Airbags

Pharmaceuticals

TextilesA decarbonized andcircular society
Clean water areas, air,and soil, and the preservationof biodiversity

Real estate andother business
Human rights
and healthContributing to solvingsocial issues withawareness of the earth
as a whole

Functional Textiles
and Trading

Medical materials

Area of business bases

Societal demands and issues
Climate change

Biotechnology

Contributing to solvingsocial issues with people
at the center

Real estate andother businessIntroduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Foundation for value
creation

Value creation practice● Financial and sustainability highlights

9Reference material● Sustainable Vision 2030

● Materiality

FY2023 results
Net sales (¥ mn)*

The history of Toyobo

399,921Since our founding, the Toyobo group has
undertaken technological innovation with asensitivity to changes in the times, which has yielded
fruit in the form of our four core technologies.
Acting through businesses that leverage thesetechnologies, we create products that meet the
expectations of society and contribute to therealization of a sustainable society as we growour business.

Operating profit (¥ mn)

10,063Operating profit margin

1880

1920

1960

1970

1980

1st transformation period

2nd transformation period

Acquisition anddevelopment ofpolymer technology

Subdivision of technology

For comfortable apparel
Development into a highperformance textile
manufacturer, movingfrom cotton and wool tosynthetic fibers

Making use of
seawater
Provision of membranes
used in seawater
desalination equipment

2010

1956

1970

1979

Started synthetic fiber
business,
beginning with acrylic fiber.
Adopted polyester fiber
technology in 1962

Started plastics
business based on
our synthetic fiber
business and polymer
technologies

Started commercial sales ofseawater desalination modules
in the functional membranebusiness. Later also beganprovision of membranes forhemodialysis

From “creating” to “providing solutions”
Four core technologies

Reducing damage
from traffic
accidents

Provision of optimal
materials for use in
airbags that protect
passengers

1963

Osakabo and Mie
Boseki merged.
Established
ToyoboStarted film business.
Subsequently
solidified our footing
as a comprehensive
manufacturer ofpackaging films

For clean air

Development andprovision of equipment
to efficiently absorb
and detach VOCs andreuse recovered VOCs

Reducing food loss
and waste

Contributing to the
reduction of waste
food by providing filmthat extends shelf life

Achievement of waste
liquid treatment thatbreaks down andeliminates sugars using
yeast

1972
Entered into the diagnostic
drugs and raw materials
business, with yeast
research in the pulp
business as the foundation.
Later entered into thediagnostic drug market

Proposal of wide-ranging
technologies for thedesign, polymerization,and molding of polymer
primary structures. Core
technologies of Toyobo
Biomedical technology

Proposal of medical
materials created throughhigh-level application of
biotechnology and polymer
technology developed from
effluent treatment

Enhancement of QOL
for dialysis patients

Environmental
technologies

Provision of
membranes withoutstanding filtration
performance for
artificial kidneys

Integration of filtration
technologies andabsorption/desorption
technologies, and proposalof air (vapor) and water(liquid) purification

Yeast andculturing
Preventing
environmental pollution

Solving the five social
issuesPolymer technology

Synthetic
fiber

1914

2020

3rd transformation period

Provision of films
with outstanding
water resistance anddurability for monitor
screens

Established Osaka Boseki.
Began a spinning businessin a large-scale plant,
as Japan’s first privatecompany organization

Chemical
fiber

2000

Enhancement ofdigital environments

1882

Spinning
and weavingof natural
fibers1990

2.5%* Consolidated net sales and operating profit (margin)
from FY2000 onward

2020
Developed and marketeda SARS-CoV-2 detection
kit capable of detection
and measurement as
quickly as 60 minutes
from sampling

Employee well-being andhuman rights in the supply
chain

A healthy lifestyle andhealth care

Smart communities
and comfortable spaces

A decarbonized andcircular society

Analysis and simulation
technologies

Foundation for computing
science and years ofaccumulated analysis andevaluation

Clean water areas, air, andsoil, and the preservationof biodiversity

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights

10Reference material● Sustainable Vision 2030

● Materiality

At a glance
Toyobo group applies the four core technologies it has developed over many years‒polymer technology, biomedical technology, environmental technology, and analysis and simulation technology‒
to materials and products in varied fields that solve problems facing people and the earth.
We do so in four segments: Films, Life Science, Environmental and Functional Materials, and Functional Textiles and Trading.
Company-wide(shared)Net sales by segment

Net sales in FY2023

399.9

s in FY2023 ¥99.9

Contributing
to reduction ofbn.
environmental impact and to acircular society

Contributing to reduction ofenvironmental impact and to acircular society

Contributing to cleaner water, air,and soil through our proprietary
technology

Through industrial films and packaging films,
we provide products that contribute to aContributing to cleaner water, air,circular society and the reduction of plastics.

We provide unique membrane and filter
technologies and high-performancematerials that make effective use of waterand other resources and that reduce
environmental impacts.

and soil through our proprietary
technology

Through industrial films and packaging films,
we provide products that contribute to acircular society and the reduction of plastics.

bn.

Life ScienceFilms

146.1 bn.

¥

Life ScienceFilms

146.1 bn.

38.1 bn.

¥¥

We provide unique membrane and filter
technologies and high-performancematerials that make effective use of waterand other resources and that reduce
Environmental andenvironmental impacts.

38.1 bn.

¥

Environmental andFunctional Materials

110.8 bn.

¥

Functional Materials

110.8 bn.

¥

Functional Textiles
and Trading

92.4 bn.

¥

Real estate andother business

Functional Textiles
and Trading

92.4 bn.

¥

12.6 bn.

¥

12.6 bn.

(¥ bn)
Segment
Films
Life Science
Environmental
and Functional
Materials
Functional
Textiles andTtrading
Real estate andother businessElimination& Corporate/company-wide
Total

Contributing to the advancement of
Net sales
medical care and to the enhancement of
146.1
Contributing1.6
to the advancement of QOL for patientsContributing
to comfortable living
through biotechnology
medicalcare9.2and to the enhancementof membrane throughtextile technology and to38.1
andtechnology
QOL for patients through biotechnology
the reduction of environmental
With biotechnology and membrane technology as
110.8
4 technology
and membrane
impacts
our core technologies, we provide artificial kidney

With biotechnology and membrane technology as
From airbag fabrics to textile andhollow fiber with outstanding
biocompatibility andour core technologies, we provide artificial kidney
eco-conscious materials, we contribute
92.4
-2.5
products
that scenarios
contribute
hollow fiber with outstanding biocompatibilityotherand high value-added
to all kindsof lifestylethroughto the enhancementproductsof QOLwith
for patientsand to theatother high value-added products that contributetextile technologies
to12.6the enhancement
thetheir core.
of medicalcare.
2.2 of QOL for patients and toadvancement
advancement of medical care.
-

-4.5

399.9

10.1

Contributing to comfortable living
through textile technology and to
the reduction of environmental
impacts
From airbag fabrics to textile andeco-conscious materials, we contributeto all kinds of lifestyle scenarios throughproducts with textile technologies attheir core.

* Indicated net sales and operating profit are figures for the consolidated fiscal year ended March 31, 2023, reorganized into post-change segments. Post-change segment results have not been audited by the Accounting Auditor.
* Number of employees is shown for pre-change segments for the consolidated fiscal year ended March 31, 2023.

Click here for details of changes to segments

576

Company-wide(shared)Real estate andother business

716

576

Real estate andother business

716

Films andFunctional
Materials

Real estate andother business¥

OperatingprofitNumber of employees by segment

2,580Life Science

1,364

10,885

Life Science

1,364

Mobility

806

Life
Lifestyle and Environment

4,843

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Foundation for value
creation

Value creation practice● Financial and sustainability highlights

11

Reference material● Sustainable Vision 2030

● Materiality

Financial highlights
Net sales / Overseas sales ratio

Net sales

Operating profit / Operating profit margin
Operating profit

Overseas sales ratio

(¥bn)

399.9

(%)

Profit (loss) attributable to owners of parent / EPS
Profit (loss) attributable to owners of parent
EPS

Operating profit margin

(¥bn)

(¥bn)

(yen)

(¥bn)

15.0

250

300.0

5.8 6.00

200

250.0

5.00

150

200.0

229.4 4.00
189.6

100

150.0

3.4

3.00

50

100.0

194.9
191.2

2.00

0

50.0

36.8 35.0

35.0

30.0

30.0

25.0

25.0

200.0

20.0

20.0

4.0

150.0

15.0

15.0

3.0

100.0

10.0

10.0

50.0

5.0

5.0

350.0

34.3

300.0
250.0

0

2014

2016

2018

2020

0.0

2022 2023 (FY)

0

7.6

7.0

5.0

2.5
10.1

2016

2018

2020

0.0

2022 2023 (FY)In fiscal 2023, sales prices increased in the film and other businesses in
response to rising raw material and fuel prices, and sales of VOC recovery
equipment and exchange elements remained strong in the environmental
solutions business. As a result, net sales increased by 6.4% from theprevious fiscal year to ¥399.9 billion. The overseas sales ratio reached36.8% due to sales growth in China, Southeast Asia, and other regions, aswell as the impact of the weak yen.

In fiscal 2023, soaring prices of raw materials and fuel affected the film,
engineering plastics, non-woven material, and other businesses. Industrial
films were affected by the decline in demand for products including moldreleasing films for MLCC, while costs for new equipment startup increasedin packaging films. As a result, operating profit decreased by 64.6% fromthe previous fiscal year to ¥10.1 billion.

Capital expenditure / Depreciation and amortization

Cash flow

Capital expenditures

40.0

40.0

20.0

19.0

17.1

0

2016

2018

2020

2022 2023 (FY)In fiscal 2023, capital expenditure increased by ¥9.1 billion from thepreceding fiscal year to ¥42.7 billion. Depreciation and amortization
was ¥19 billion as a result of investment in production facilities for moldreleasing films for MLCC and renewal work on bio-plants and the ResearchCenter.

2020-50

2022 2023 (FY)

0

2014

2016

2018

2020

1.21 1.00
0.00

2022 2023 (FY)Interest-bearing debt at the end of fiscal 2023 increased by ¥38.2 billion
from the fiscal previous year to ¥229.4 billion, due to financing throughborrowing for capital expenditures. Conversely, shareholders’ equity
decreased by ¥5.3 billion from the previous fiscal year to ¥189.6 billion,
resulting in a D/E ratio of 1.21. The net debt/EBITDA ratio was 5.8 due to anincrease in interest-bearing debt and decrease in EBITDA.

ROA / ROE / ROIC / EBITDA

Cash dividends per share / Total return ratio

-40.0

ROE

ROIC

Cash dividends per share

EBITDA
(%)

10.0

48.5

5.5 29.1 6.0
5.1

-24.6

2016

2018

2020

2022 2023

2.0

1.7

-36.0

2014

4.0
1.7

10.0

-28.2

8.0

6.8

20.0

-20.0

2014

2018

-7.5

-30.0
0

2016

30.0

7.8

-10.0
10.0

2014

0.98

In fiscal 2023, Toyobo recorded ¥5.6 billion in insurance claim income
received related to the fire at the Inuyama Plant and ¥2.9 billion from thesale of investment securities. However, the company recorded impairment
losses of ¥9.8 billion related to assets scheduled for discontinuation andbusiness assets in the nonwoven materials and other businesses, which, in
addition to an operating loss, resulted in a loss attributable to owners of theparent of ¥0.7 billion.

40.0

10.0
20.1

-3.0

-0.7

Total return ratio

(yen)

(%)

90.0

45
40

40

20.0

30.0

0

50.0

30.0

33.6

3.0

(¥bn)

50.0
42.7

6.0

ROA

Free cash flow

(¥bn)

50.0

9.0

* Fiscal 2018: 10-for-1 reverse stock split of common stock. Fiscal 2019: ¥13.8
billion in losses due to fires. Fiscal 2021: ¥7.8 billion in impairment losses in theacrylic fiber business.

Cash flows from operating activities
Cash flows from investing activities

Depreciation and amortization

(¥bn)

144.8

2.0
1.0

2014

(times)

12.9
12.0

6.0

28.4

Shareholders’ equity
Net debt / EBITDA ratio

8.0

40.0

375.7

Interest-bearing debt
D/E ratio

(%)

40.0

400.0

Interest-bearing debt / Shareholders’ equity /Debt-to-equity ratio (D/E ratio) / Net debt / EBITDA ratio(FY)

In fiscal 2023, cash flows from operating activities recorded an inflowof ¥7.8 billion owing to factors such as an increase in funds due todepreciation and amortization and a decrease in funds due to an increasein operating capital. Cash flows from investing activities recorded an
outflow of ¥36 billion, owing to factors including the purchase of tangible
and intangible assets. As a result, free cash flow recorded an outflow of¥28.2 billion, a decrease of ¥20.7 billion from the previous fiscal year.

0

2014

2016

2018

2020

2022 2023 (FY)ROA and ROIC were both 1.7% due to a decrease in operating profit. ROE
was -0.3% due to a loss attributable to owners of parent. EBITDA was ¥29.1
billion due to a decrease in operating profit and a decrease in depreciation
and amortization.

80.0

35

70.0

30

60.0

25

50.0

20

40.0
30.0

15
27.6

10
5

0.0

40

0

20.0
10.0

2014

2016

2018

2020

0.0

2022 2023 (FY)Fiscal 2023 yielded a net loss for the year, but the company focused onshareholder returns and set a dividend of 40 yen per share.

* Toyobo conducted a 10-for-1 reverse stock split of common stock on October 1,
2017.

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Foundation for value
creation

Value creation practice● Financial and sustainability highlights

12

Reference material● Sustainable Vision 2030

● Materiality

Sustainability highlights
GHG emissions / Reduction rate vs. FY2014

Scope 1

Scope 2Childcare leave utilization

Reduction rate vs. FY2014

Women
Men
Utilization by women(thousand t-CO2)

1,200

(%)

30.0

28.1
25.7

25.5

25.6

174

184

183

180
150

182

800

30

20.0

600

15.0

400

10.0

699

718

720

100.0

2022

2023

60.0

58

98

1
24

1.1

2019

0

27

30

32

39

2020

2021

2022

2023

40.0

(%)

7.0
6.0

25

4.7

20

4.0

3.7

15

2.1

2.4

5.0

3.0

3.1

10

2.0

20.0

5

1.0

0

0

(FY)

12

14

19

25

31

2019

2020

2021

2022

2023

0

(FY)

In fiscal 2023, there were 31 women managers (4.7%). We have set a 5.0% or
higher ratio of women managers in fiscal 2026 as a KPI, a target toward which theentire company is working.
Aggregation scope: T OYOBO CO., LTD., TOYOBO STC CO., LTD.,TOYOBO INFORMATION SYSTEM CREATE CO., LTD.

R&D expenses

Frequency rate of workplace accidents resulting in lost
workdays (rate of accidents resulting in lost workday injuries
per one million hours worked)

R&D expenses

Ratio of R&D expenses to net sales

3.8

3.7

11.0

4.0

1.2

3.0

0.9

2.0

0.6

Manufacturing industry average
1.31

1.20

1.21

1.25

3.5

11.7

12.7

13.8

14.1

4.0

1.0

2019

1.20

3.4

12.0

0

Our group
(%)

(FY)

Toyobo group has set a goal of achieving carbon neutrality, with effective net zero GHG emissions, by fiscal 2051. In May 2022,
we announced the raising of our fiscal 2031 target to “46% or more reduction in GHG emissions compared to fiscal 2014.” In fiscal
2023, GHG emissions fell below the level of the previous fiscal year through the promotion of energy-saving activities and production
efficiency improvement measures, despite a 6.4% increase in net sales.
Aggregation scope: Consolidated

100.0

30

Ratio of women managers

The company seeks to increase utilization of childcare leave by men who havetaken little childcare leave, through provision of information on childcare leave andencouragement from superiors. As a result, the number of men taking childcare
leave has increased significantly since fiscal 2020. We will continue working tomaintain our childcare leave utilization target of 80% in fiscal 2026.
Aggregation scope: T OYOBO CO., LTD., TOYOBO STC CO., LTD.,TOYOBO INFORMATION SYSTEM CREATE CO., LTD.

8.0

2021

69

35

80.0

46.3
50

120.0

104.3

64.4

16.0

5.0

2020

100.0

(¥bn)

712
712

200

2019

100.0
80.0

3.3

0

100.0

100.0

60

0

709

(%)

90

25.0

Number of women managers

Utilization by men

120

26.4

1,000

196

Ratio of women managers

2020

2021

2022

2023

0

(FY)

We are strengthening our R&D activities in order to generate new value andachieve sustainable growth.
Our 2025 Medium-Term Management Plan incorporates strategic investment in
R&D, including intellectual property. R&D expenses in fiscal 2023 amounted to¥14.1 billion. The ratio of R&D expenses to net sales was 3.5%.
Aggregation scope: Consolidated

0.3

0

0.70

0.74

0.42

0.55

2021

2022

0.31

2018

2019

2020

(year)

Toyobo group is working to achieve zero accidents in accordance with the
TOYOBO Group Basic Policy on Health & Safety. In 2022, the frequency rate ofworkplace accidents resulting in lost workdays was 0.55, inclusive of partnercompanies at the same business site.
Aggregation scope: T OYOBO CO., LTD. and domestic consolidated subsidiaries

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Reference material

13● Materiality

Sustainable Vision 2030
Announced in May 2022, Sustainable Vision 2030 envisions changes in the future business environment and grounds itself in our corporate philosophy of “Jun-Ri-SokuYu” (adhering to reason leads to prosperity). It sets out sustainability indicators and action plans from the perspective of “the Three Ps” (People, Planet, Prosperity) andfrom our vision of “We will continue to create the solutions needed by people and the earth with materials and science.” Our goals are to be a sustainable company that
contributes to sustainability and to shift our corporate culture toward a sustainable growth orientation. We will advance an upward spiral of the realization of a prosperous
and secure society and the enhancement of our corporate value.
Social change and trends in 2030
● Standardization in handling safety, human rights and social justice issues● Demographic changes, humancentric innovation, accelerated urbanization● Increased and diversified needs concerning access to medical care/health promotion● Decarbonization, resource circulation, limited natural resources

Social issues to be solved through contribution and goals for the future
Five social issues / Goals for the future

Employee well-being and human rights in the supply chain● People First: Employee safety, company pride, and rewarding work
● Respect for human rights across the entire supply chain

PeopleA healthy lifestyle and health care
● Contributing to the field of epidemiology● Contributing to improve quality of life

Smart communities and comfortable spaces● Contributing to the realization of a humancentric digital society● Creating of comfortable spaces

A decarbonized and circular society● Contributing to carbon neutrality● Establishing an ecosystems for circulating resources

PlanetClean water areas, air, and soil,
and the preservation of biodiversity● Improving the environment through solutions● Food loss reduction and sustainable foodSustainability targets for fiscal 2031
● Zero industrial accidents in workplaces● Certification as a “Top 500 Company” for Outstanding Health and Productivity Management by FY2026● Employee engagement score: 70% or more
● Respectfor human rights across the entire supply chain● Expanding and improving educational and training systems for employees●N umber of tests conducted by the provision of infectious disease diagnostics, etc.: 10 million
per year● Number of dialysis patients provided with Toyobo dialysis membranes: 250,000● Share in the market of raw materials for biochemical and other tests: 30%● Number of patients provided with Toyobo regenerative inducers: 100,000 per year
● Proliferation and expanded sales of 3D network-structured fiber materials in the medical and nursing
care fields●S ales of product groups supporting DX: 1.5-fold increase over FY2021● Cumulative sales of car cabin air filters: 1.2 million units● Creation of a comfortable space inside electric vehicles through sound and heat management
Decarbonized society● Ratio of GHG emissions reduction in Scope 1 and 2: 46% or more compared with FY2014
Net zero in FY2051
Avoided emissions > Amount of GHG emissions throughout the entire value chain● Entry into new solution fields
Osmotic power generation, offshore cables and insulating resin for wind power generation, adhesive sheets for cells used infuel cell vehicles, electrode materials for large storage batteries, hydrogen-related materials, etc.
Circular society● A chieve final disposal rate from business activities: Less than 1%●R atio of green films: 60％%
● J oin resource circulation ecosystem (R PLUS JAPAN)● A ir volume treated by the volatile organic compound recovery equipment: 7 billion Nm3 per year●D esalination of sea water using membranes: Equivalent to the volume of tap water for 10 million people●S ales volume of highly functional films that contribute to reducing food loss: Fourfold increase over FY2021● Entry into sustainable food field

Where we’d like to be by 2030
Prosperity

Advance an upward spiral of the realization of a prosperous and secure society and the enhancement of our corporate valueIntroduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Reference material

14● Materiality

Sustainable Vision 2030

Fiscal 2023 initiatives that contribute to solving the five social issues
Innovation

Employee well-being and human rights in the supply chain

A decarbonized and circular society

Renewal of the Research Center to strengthen
R&D functionsFirst “Top 500 Company” certification underthe 2023 Health & Productivity Management
Outstanding Organizations Recognition Program

New film production facility and start ofmass production

To accelerate the creation of innovation that contributes tosolving social issues while utilizing and integrating the four coretechnologies​—polymer,​biomedical​, environmental,​and analysis
and simulation technologies​— that Toyobo has developed and tostrengthen our R&D functions, we will undertake a major renewalof the Research Center, our hub for R&D in Otsu, Shiga Prefecture.
As the first phase in the work, in January 2023 we completed the
Pilot Plant Building that will engage indevelopment and testing of prototypes
aimed at the practical applicationof new products and technologies,
centered on high-performance films.

In March 2023, Toyobo received its first certification as a “Top500 Company” (large enterprise category), a certification given
to outstanding organizations in the 2023 Certified Health &Productivity Management Outstanding Organization Recognition
Program conducted jointly by the Ministry of Economy, Trade andIndustry and the Nippon Kenko Kaigi (Japan Health Council).

Other examples of a decarbonized and circular society
A healthy lifestyle and health care

Strengthening of development and production
structure for PCR test reagents and genetic
diagnostics raw materials

Innovation

Conclusion of comprehensive partnershipagreement with Kobe University, and public
implementation of joint research outcomesOn April 11, 2022, Kobe University and Toyobo signed an“Agreement on the Promotion of Comprehensive Industry-Academia
Collaboration” with the aim of advancing research and technology
and contributing to society. Following exchanges of human resource
and joint research that includes the development of energy-savingseawater desalination technology using forward osmosis (FO)membranes, the parties have now agreed to further strengthen theirpartnership. From here on out, the parties will accelerate the public
implementation of research outcomes by advancing joint research
primarily in the environment field, such as membrane technologythat contributes to carbon neutrality, and in the life science field,
which leads to enhancement of quality of life (QOL), while also
studying measures to contribute to more active human resources
exchanges and to human resource development.
Conclusion of comprehensive partnership agreement with
Kobe University

Our Inuyama Plant (Inuyama, Aichi Prefecture) built a new facility
to produce biaxially-oriented polypropylene (OPP) films for foodpackaging and industrial materials and began mass production ofsome brands in February 2023. In the facility, we have introduced
state-of-the-art film-making machinery that reflects our many yearsof know-how in the film business, and are strengthening our supply
structure for environmentally conscious film products. We will ramp
up production of brands in turn at later dates.

We will invest approximately ¥6.5 billion in the Tsuruga Biochemicals
Plant (Tsuruga, Fukui Prefecture) and establish a new facility to
manufacture PCR test reagents used in genetic testing and raw
materials for genetic diagnostic such as enzymes and antibodies.
Construction is set to begin in March 2023, followed by operation in
November 2024.

Smart communities and comfortable spaces

BREATHAIR� adoption by
Nishikyushu Shinkansen “Kamome”
On September 23, 2022, Toyobo’s BREATHAIR® 3D networkstructured fiber materials, which features light weight, highresilience, outstanding durability, and breathability, was adopted
for use in all non-reserved seats of the Nishikyushu Shinkansen“Kamome” train newly operated by Kyushu Railway Company.
BREATHAIR� adopted by Nishikyushu Shinkansen “Kamome”*Names followed by the � symbol or by “TM” are registered trademarks or pending trademarks respectively in Japan of TOYOBO CO., LTD.

Acquisition of SBT initiative certification for greenhousegas emission reduction targets
Issuance of sustainability-linked bonds

Clean water areas, air, and soil, and the preservation of biodiversity

Cooperation with the “Lake Biwa 100-Point Survey”
Acceleration of initiatives to preserve biodiversity
The Research Center, Toyobo’s R&D base in Shiga Prefecture, hasbeen involved in activities to preserve biodiversity at Lake Biwa.
Since fiscal 2023, it has accelerated its efforts through cooperation
with the “Lake Biwa 100-Point Survey” conducted by the Center for
Biodiversity Science of Ryukoku University. The Research Center
will take part in the yearly sampling work conducted by voluntaryorganizations and local companies, while independently performing
regular sampling of Lake Biwa water at the company premises andcooperating with the collection of data over time.

Acceleration of initiatives to preserve biodiversity at Lake Biwa

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights

Reference material● Sustainable Vision 2030

15

● Materiality

Materiality

Materiality

To meet the demands and expectations of our stakeholders and realize our aim to be “a group that continues
to create the solutions needed by people and the earth,” Toyobo group identifies material issues and enacts
initiatives through business activities.

Toyobo group’s materiality

Process of identifying material issues

Management of materiality KPIs (PDCA)

Our group’s material issues are set on the basis of Sustainable
Vision 2030, which we announced in May 2022.
Working from the two axes of influence on stakeholders
and influence on our group, we clarified high-priority targets andorganized them into four areas: “contributing to the solving ofsocial issues through business,” “human capital,” “environment andmanufacturing,” and “business bases” (see diagram below).

With reference to external initiatives and 12 international guidelines,
including the GRI Standards, we selected candidate items. The
positive and negative impact of these social issues were clarified
through internal questionnaires and interviews, and, taking into
account the views of external parties such as institutional investors,
we finally determined our material issues with approval by the Boardof Directors.
As a result of the discussions by the Sustainability Committee,
we also decided to separate quality agenda from compliance andadd chemical substances management. We will review our goals
and KPIs, including these items, in fiscal 2024.

To steadily ensure the progress of our materiality initiatives, we haveassigned officers in charge of each materiality and have formulated
KPIs and targets.
We report and share information on progress toward the
KPIs two times a year within the Sustainability Committee, and,in accordance with progress status, work toward continuous
enhancement of our efforts by reviewing KPIs and targets.
The content of discussions within the Sustainability Committee
is also reported to the Board of Directors as appropriate.

Materiality map

Identification process
Area of contributing to the solving of social issues through business● A decarbonized and circular society ● Smart communities and comfortable
spaces● A health lifestyle and health care
● Clean water areas, air, and soil, andthe preservation of biodiversity

Materiality(present)

Influence on stakeholders

Enormous

Area of human capital

Area of environment and manufacturing● Well-being of employees (diversity andinclusion, health and productivity
management, occupational safety
and health)● Human capital● Human rights(including in the supply chain)● Safety and disaster prevention● Quality● A decarbonized and circular society(environmental impact reduction)● Chemical substance management

Area of business bases

Big

Enormous

Influence on Toyobo group(present to 2030)● Innovation● Partnerships (supply chain, stakeholder engagement, social contribution)● Digital transformation● Risk management, compliance

KPI management (PDCA)

Ascertaining and listingsocial issues on a global scale

Measures toachievetargets

UNGC, GRI Standards,
SASB etc.

Internal survey and impact assessment
Target: Officers, employees

Hearing of outside views andamendment of content

Approval by the Board of
Directors following discussion
at management meetings

Setting KPIs andtargets for eachmateriality item

Reflecting materiality
in medium- andlong-term
management plans

Verifyingachievement
statusMakingadjustments
as needed

Canvassing
the viewsof third parties

Disseminating information about this seriesof processes in our Integrated Reportand on the company website

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

16

Reference material● Materiality

Materiality

Materiality

Materiality KPIs

April 1, 2023

Area of contributing
to the solving ofsocial issues throughbusiness

Category

Major items

Related
SDGs

Officer in charge
Taichi Sakai
Managing Executive Officer
Head of Safety and Disaster
Management Division

1) 15 employees per year*2) ¥50,000 per year, 21 hours*3) 5.0% or above*4) 75%*
5) 2.0% or lower (reduction of 20% from FY2020)*
6) A t least 80% of eligible men employees taking
childcare leave, with average leave of 14 days ormore (20% increase from FY2021)*
7) Acquisition/maintenance*8) Increase in the percentage of respondents agreeing
with this statement

Takehiko Inada
Executive Officer
Controlling Supervisor of HR,
Administration and Legal
Division

1) Implementation of human rights education and training
2) Employment ratio of people with disabilities

1) O nce a year for 20% of non-consolidated*
employees2) 2.3%

Taichi Sakai
Managing Executive Officer
Head of Safety and Disaster
Management Division

1) No. of major accidents*
2) Frequency rate of workplace accidents resulting in lost workdays3) No. of fires or explosions
4) No. of spills

1) 0 accidents per year2) 0.25 or less
3) 0 accidents per year4) 0 accidents per year

* Set internal standards based on definitions stipulated by the Ministry of Health, Labour and Welfare

Tabulated by calendar year

Masakazu Iwasaki
Executive Officer
Head of Quality Assurance
Division

1) No. of incidents related to products*
2) Implementation of product safety and quality assurance training

1) 0 accidents per year2) 100%

1) 0 accidents
2) 100%Taichi Sakai
Managing Executive Officer
Head of Safety and Disaster
Management Division

1) VOC emissions (total for operations in Japan)
2) Discharge of hazardous substances into water (total for operations in Japan)
3) Waste volume (consolidated)
4) Final disposal (landfill disposal) rate (total for operations in Japan)

1) 60% reduction from FY2015*2) 80% reduction from FY2015*3) 15% reduction from FY2016*4) Less than 1% every year

1) 60% reduction2) 71% reduction3) 13% increase4) 0.4%S : Human capital

E , S , G : Safety and disaster prevention

S , G : Q uality

E : A decarbonized and circular society(environmental impact reduction)

FY2023 results
1) 2
 6.4% reduction(894 thousand t-CO2₂ )2) 35%

1) Number of core overseas personnel undergoing training in Japan2) Training investment per employee (and training time)3) Ratio of women managers
4) Ratio of annual paid leave taken5) R eduction in annual time worked outside specified working hours (no. of employees working more than360 hours of overtime per year / total no. of employees)6) Ratio of men employees taking childcare leave
7) Certification as a “Top 500 Company” for Outstanding Health and Productivity Management8) Improvement in how positive employees feel about their work, based on employee
engagement surveysa. P
 ercentage of respondents agreeing with the statement that they do not feel that their day-to-day work isdifficult to performb. Percentage of respondents agreeing with the statement that the company respects the diverse views
and ideas of each individual employee

health and productivity management,
occupational safety and health)S : Human rights (Toyobo group)

Targets (single fiscal year targets)1) R eduction of emissions by at least 46% comparedto FY2014*
2) Sales ratio of 40%***Target set in anticipation of increase in greenhousegas emissions associated with expansion oftargeted sales in FY2031 (assumed ¥500 billion in
FY2031)**FY2031 target

S : Employee well-being (diversity and inclusion,
Area of human capital

1) Scope 1, 2 greenhouse gas emissions (consolidated)2) E xpansion of ECO-PARTNER SYSTEM® products and services that contribute to the environment(TOYOBO CO., LTD. only)E : A decarbonized and circular society

Takehiko Inada
Executive Officer
Controlling Supervisor of HR,
Administration and Legal
Division

Area of environment and manufacturing

KPIs: Timeframe for achievement set for each theme
Themes*F Y2026 target

1) C anceled because of
COVID-192) ¥50,000 (17.97 hours)
3) 4.7%4) 80.2%5) 4.2%6) 1
 04.3% of eligible men
employees; average leave
taken: 14.8 days7) C ertification as a 2023 “Top500 Company” for Outstanding
Health and Productivity
Management8) a. 38% b. 50%

1) 48.0%
2) 2.3%* TOYOBO CO., LTD., TOYOBO STC CO., LTD., and
TOYOBO INFORMATION SYSTEM CREATE CO.,LTD.
* FY2026 target
1) 0 accidents
2) 0.55
3) 0 accidents
4) 0 accidents* Set internal standards based on definitions stipulated by the Ministry of Economy, Trade and Industry* FY2031 target• In April 2023, the company merged with TOYOBO INFORMATION SYSTEM CREATE CO., LTD.

Introduction

TOYOBO REPORT 2023

● CEO message

Value creation story● Value creation process

Value creation strategy● The history of Toyobo● At a glance

Value creation practiceFoundation for value
creation● Financial and sustainability highlights● Sustainable Vision 2030

Reference material

17● Materiality

Materiality

Materiality

Materiality KPIs

April 1, 2023

Category

Major items

G : Governance

Related
SDGs

Officer in charge

S , G : Partnerships
Areas of business Bases(stakeholder engagement)

S , G : Partnerships (social contribution)

S , G : Digital transformation(data security, privacy)

S , G : Compliance

S , G : Compliance(R&D, intellectual property)

Targets (single fiscal year targets)

FY2023 results

Takehiko Inada
Executive Officer
Controlling Supervisor of
HR, Administration and
Legal Division

1) No. of meetings of the Board of Directors/committees2) Attendance rate of officers at meetings in 1)
3) Effectiveness evaluation of the Board of Directors, content disclosure1) Disclosure of results2) Disclosure of results3) Disclosure of details of effectiveness evaluation

1) 23 meetings2) A ttendance by directors and corporate auditors at
meetings p.71
3) E valuation of the effectiveness of the Board of
Directors p.75

Katsuya Ito
Executive Officer
Controlling Supervisor of
Innovation Division

1) P ercentage of research themes that contribute to achievement of Sustainable
Vision 2030
2) D irect investment in open innovation (commercialization PoC with invested
companies, start of joint development, etc.)
3) No. of cases of intellectual property information analysis
4) No. of cases of business termination due to patent infringement5) N o. of intellectual property training sessions for employees (Toyobo andgroup companies)6) P rofit contribution through the securing of intellectual property rights(expansion of intangible assets)7) No. of industry-academia-government comprehensive cooperative projects

1) At least 90% in FY2026
2) 4 cases or more per year3) 20 cases per year4) 0 accidents per year5) Toyobo: 13 times; group companies: 6 times6) Under review7) 2 cases

1) July 2023 evaluation
2) 2 cases3) 17 cases (FY2023 target: 14 cases)
4) 0 accidents per year5) Toyobo: 15 times; group companies: 7 times6) ―7) 2 cases

Nobuya Fujiwara
Managing Executive Officer
Head of Corporate
Sustainability Division
Controlling Supervisor of
Procurement and Logistics
Department

1) Ratio of biennial CSR procurement surveys returned2) Ratio of reduction in CO2 emissions (basic unit) related to logistics (sales)

1) 90% or above(In years when survey is not implemented, we carry out
dialogue with business partners that had issues in past
surveys)2) Year on year reduction of 0.5%

1) R esponse and engagement following surveys
2) Year on year reduction of 5.3%

Nobuya Fujiwara
Managing Executive Officer
Head of Corporate
Sustainability Division
Controlling Supervisor of
Procurement and Logistics
Department

1) No. of press releases
2) No. of interviews with investors
3) Frequency of meetings with employees and labor unions
4) Frequency of engagement with stakeholders

1) 75 per year2) 150 per year*
3) At least 30 times per year
4) Twice a year

1) 1032) 1243) 77 times4) 3 times

Nobuya Fujiwara
Managing Executive Officer
Head of Corporate
Sustainability Division
Controlling Supervisor of
Procurement and Logistics
Department

1) Clean activities (outside company)

1) 70%(Non-consolidated + domestic group companies,
implementation rate at all sites)

1) FY2023: 93%

Ichiro Takai
Senior Managing Executive
Officer
Controlling Supervisorof Corporate Planning
Division

1) No. of information security education sessions*2) No. of incidents (information leaks, service outages, etc.)*
3) Implementation of information security measures**1) 15 times per year2) 0 incidents per year3) 100% completion (FY2023-2025)

1) 51 times2) 0 incidents3) P romotion of activities with the Cyber Security
Committee in central role

Takehiko Inada
Executive Officer
Controlling Supervisor of
HR, Administration and
Legal Division

1) Increase in awareness of compliance2) Awareness and use of Compliance Consultation Desks
3) No. of serious legal violations

1) Improvement in compliance questionnaire responses
a. Does the company emphasize compliance?
b. Awareness of case study reports, expansion of compliancestudy sessions and other trainingc. F requency of compliance study sessions (managers) andother training
2) Improvement in compliance questionnaire responses
a. Awareness of Compliance Consultation Desksb. Ease of use of Compliance Consultation Desks
Disclosure of no. of cases handled
3) 0 cases

1) a. I feel that it does, or by and large I feel that it does:81%
b. I read every issue, or I sometimes read it, or I readthose articles that are of interest to me: 78%c. C ompliance study sessions:
20 times + video streaming to all employees
Other training: 38 times2) a . 90%b. I would like to try using it, or I can’t really say one
way or the other: 92%
78 cases
3) 0 violations

Katsuya Ito
Executive Officer
Controlling Supervisor of
Innovation Division

1) No. of product safety or quality assurance violations in the R&D QA system
2) No. of violations of ministerial guidelines or of funding bodies’ rules
3) No. of violations of rules governing handling of research topics
4) No. of cease and desist orders received relating to display items

1) 0 violations per year2) 0 violations per year3) 0 violations per year4) 0 orders per year

1) 0 violations
2) 0 violations
3) 0 violations
4) 0 orders

E , S : Innovation

E , S : Partnerships (supply chain)

KPIs: Timeframe for achievement set for each theme
Themes* 2) covers the period from August 2022 to July 2023

* Scope is TOYOBO CO., LTD., TOYOBO STC CO., LTD., and TOYOBOINFORMATION SYSTEM CREATE CO., LTD.
** Scope is 63 directly or indirectly held group companies; Specific measures
for target group companies:• Roll-out of Information Security Policy• Implementation of education and training• Roll-out of IT reinforcement measures• Development of incident structure• In April 2023, the company merged with TOYOBO INFORMATION SYSTEM CREATE CO., LTD.

02

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation● Digital transformation

Value creation strategy
19

CFO message

21

2025 Medium-Term Management Plan

25

Innovation

29

Toward digital transformation

Reference material

18

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practice● Digital transformation

CFO message
We will respond with agility to business environment changes,
and perform cash allocation to increase corporate value
Hiroshi Otsuki
Representative Director and Senior Managing Executive Officer, CFO, Controlling Supervisor of Management and Administration Division

The mission of the CFO is to perform accurate cash
allocation while discerning market structure that is in flux
In the fiscal year ended March 31, 2023, drastically rising raw
material and fuel prices impacted many of our businesses, whileworsening market conditions also affected our core business of film,
leading to a decline in near-term profits. As I see it, the worldwide
rise in raw material and fuel prices is not temporary, and probably
represents irreversible changes in cost structure. In addition, giventhat fixed costs of investment in human capital and GHG emissions
reduction are expected to rise, we are again made aware that theconventional method of passing increased manufacturing costs
through to sales prices will not be enough. We must set productprices that are appropriate to assumed increases in business cost
as we also work to develop products with higher added value.
As CFO, the most important mission I have is that of executing
cash allocation accurately to increase corporate value as we
respond with agility to essential changes in the structure of themarket. In our previous medium-term management plan, we set
the target for our D/E ratio at lower than 1.0, and we achieved thisguideline for financial soundness. Because to make progress withupfront investment toward future growth in our 2025 medium-term
management plan (2025 MTP, FY2023 to FY2026), we need toexercise control to keep from disrupting the balance between cash
flow generation capacity and interest-bearing debt. In addition to the
D/E ratio, our policy is therefore to use the Net Debt/EBITDA ratio asa means of managing our financial condition stably.

Highlights of our financing activities in the fiscal year
ended March 31, 2023 included completion of repayment of asubordinated loan procured immediately after the 2008 financial
crisis. As a new source of capital procurement, we then issued
sustainability-linked bonds, as a type of environmental bond. To
improve our asset efficiency, we have also been reviewing thesignificance of our cross-shareholdings more intensively, andcontinued selling them during this fiscal year.

Improving profitability through reorganization of thebusiness portfolio
We have identified the term of the 2025 MTP as a four-year period
for “remaking and preparing” that will serve as a milestone on theway toward achieving the goals we have laid out in Sustainable
Vision 2030. The crucial task will be thoroughgoing execution ofreorganization of the business portfolio. Even among productsthat are generating a profit today, I would rather not pass products
down to the younger generation which will diminish in value froma long-term perspective. It’s easier said than done, and will entail
some extremely difficult decisions, but I feel strongly that we mustfind out whether we can gain the world’s recognition of the value of
TOYOBO products, determine their intrinsic appeal, and accelerate
the reorganization of our business portfolio.
As the 2025 MTP clearly states, in order to thoroughly
implement this business portfolio reorganization, we have stratified

Foundation for value
creation

Reference material

19Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation

Reference material

20● Digital transformation

CFO message
each of our businesses with respect to two axes, profitability andgrowth potential, and we specify the hurdle rate for each one interms of ROCE and CAGR. The Board of Directors performs arigorous check of each business operation based on these factors,
looking at how much capital the operation has and how it ispositioned relative to its hurdle rate. It then deliberates actions thatmight be taken.
Of the three businesses that require improvement, textiles,
airbag fabrics and contract manufacturing of pharmaceuticals,
we are steadily moving ahead toward profitability under a planthat is in line with our profit improvement roadmap. Moreover,
we will steadily execute growth strategies for the film and life
science businesses, which we have positioned as businesses
focusing on expansion, and will expand our environmental andfunctional materials business through TOYOBO MC Corporation,
while ensuring that about 4% of our sales amount goes to R&D
investments in preparation for the future.
In advancing the reorganization of the business portfolio
described above, our intention for the 2025 MTP is to maintain an
overall ROE of 7.0% and ROIC of 5.0%. The fact that our group's
PBR is currently below 1.0 is something we take seriously. While
working hard to boost our profitability (ROE and ROIC), we will
also work on communicating our growth potential in a way thatis even more readily understood. While continuing to advance
management with an awareness of the cost of capital, we willproactively communicate to all of our stakeholders the fact that weare a company that can aim for sustained robust growth into the
future by providing high-value-added products that meet society’s
needs.

Ensuring consistency between management strategy andour human resource base, while aiming for transformation
into a company with an interesting “something extra”
Under Sustainable Vision 2030, our group has defined several
issues and business opportunities that we could not sufficiently
respond to within the time frame of our previous medium-term
management plans. Although we have formulated a series ofaction plans, we acknowledge that one major prerequisite to
executing them is securing a human resource base. I have thesense that during the long period of our group's structural reform,
our efforts to secure and train the necessary human resources
have not necessarily been sufficient. In taking this reflection toheart, I believe we must ensure that our management strategy andhuman resource base are consistent with each other.
And yet, merely securing from somewhere else the humanresources that we need to implement our current business
operations will not be sufficient for us to fulfill our aspiration to bea group that discerns the changes happening in the world, creates
appealing products, and develops together with our customers.
Only people are capable of creating businesses of the future,
unbound by the present. I am aware of a strong need to get backto this point of departure, and to transform everything from ourpersonnel system to our organizational culture.
We recently performed a thorough review of our personnel
evaluation system, and I think that creating a workplace environmentthat enables people to engage cheerfully and with liveliness will
make the implementation of our business more interesting.
In looking back on the past of businesses that have driven
our group's growth, we see many cases in which the technologies
nurtured through persistent efforts of employees have borne
fruit because the employees believed in the interesting future
developments they were working toward, even if they could not
produce profit immediately. I believe that by establishing anenvironment that ensures psychological safety conducive tofree expression of opinions while encouraging wholehearted
acceptance of challenges, we can enable our employees' abilities
to flourish, please our customers, and come closer to our group's
vision of being a group that continues to create the solutions
needed by people and the earth with materials and science.
The Toyobo group encourages everyone throughout thegroup to engage in “casual discussions on serious issues,” frommanagement on down. Chatting with employees in various
situations makes me aware of completely fresh perspectives
and things happening in the world. I get a sharp sense of how
those of us in management understand only a portion of what ishappening in the world. I think we can make strong progress as asustainable company by making this a company with an awarenessof generational, gender and other forms of diversity which takes aninterest in sharing different perspectives and values that have notexisted in the past (i.e., “something extra”).

At the stage of forward-looking investment for growth.
Working to link shareholder returns with businessperformance toward a target of 30% total return ratio
Returning profit to all of the shareholders is the most crucial matterfor a company, and one of its most important cash allocation
priorities. We are now at the stage in which we make forwardlooking investments, and spend money boldly in areas of priority
investment. Since investment will be particularly extensive during
the period of the 2025 MTP, our cash allocation involves the use of
external capital procurement while also distributing dividends. For
the fiscal year ending March 31, 2024, we anticipate distribution of a
¥40 per share annual dividend. We will work on linking shareholder
returns to business performance during the 2025 MTP period as
we target a total return ratio of 30%. I would like to ask all of ourshareholders for their long-term support for us, the Toyobo group,
as we accelerate our harvest of the fruits of our investment, andsteadily move forward toward the ideals we seek to realize.
Management and financial indicators referenced
ROCE: Return on capital employed
CAGR: Compound annual growth rate
ROE: Return on equity
ROIC: Return on invested capital
PBR: Price to book value ratio

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story

Value creation strategy● 2025 Medium-Term Management Plan

● Innovation

Value creation practiceFoundation for value
creation

21

Reference material● Digital transformation

Transformation to sustainable growth: 2025 Medium-Term Management Plan
— The first stage of rebuilding and preparing toward achieving our ideal for 2030 —In May 2022, the Toyobo group broke away from our former survival mindset and announced Sustainable
Vision 2030, with the aim of sustainable growth.
Toward the realization of this goal, we have formulated and launched the four-year 2025 Medium-Term
Management Plan, which lays the foundation for growth.

Four years to rebuild and prepare

Achieve growth2025 Medium-Term Management Plan
(FY2023-2026)

Subsequent medium-term management plan
(FY2027–2030)

Take concrete action through four measures, under a basic policy of“transformation to sustainable growth.” Rebuild the business andorganizations through “thorough safety, disaster prevention, and quality
assurance,” “reorganization of the business portfolio” and “rebuilding thefoundation,” and carry out “preparations for the future.”2023
5

Five years of reaping the results of upfront investment, following
the four measures of the 2025 MTP. A stage for achieving truesustainable growth by making the most of the new businessportfolio and new organizational foundation.

2030
Vision2026

erm Managem
m-T
en
diu
tP
e
M
la

n

As we entered the 2020s, a pandemic, large-scale natural disasters,
and major political changes have occurred, the impacts of whichhave brought discontinuous, dramatic change to the businessenvironment for companies. New challenges are emerging in
rapid succession, including the orientation toward decarbonizationand circular economies, DX-driven acceleration of technologicalprogress and social implementation, resource prices remaining highglobally, disruption and blockage of supply chains, and alterations
in people’s awareness, values, and behavior, all of which requirecompanies to attend to all stakeholders while increasing theircorporate value.
In order to aim for future growth while confronting this epochal
turning point, companies must speed up their own transformation.
Our group aims to achieve sustainable growth through Sustainable
Vision 2030, in which we set forth our ideal: We will continue tocreate the solutions needed by people and the earth with materials
and science. We identified fiscal 2026 as a milestone on the way toour vision for 2030, initiating the 2025 Medium-Term Management
Plan (2025 MTP) in fiscal 2023. We have identified the 2025 MTP asfour years in which to rebuild and prepare for the transformation tosustainable growth, and have solidified our course toward reforming
our businesses and making forward-looking investments in growth.
Moreover, the subsequent medium-term management plan, startingfrom fiscal 2027, represents the next stage, in which we will achieve
genuine growth by reaping the fruits of these efforts.

Transformation to sustainable growth202

Depicting sustained growth amid a discontinuous
business environment undergoing massive changes

Measure 02
Measure 01

Thorough safety,
disaster prevention,and quality
assurance

Measure 03

Preparations forthe future

Reorganizationof the businessportfolio

Measure 04

Rebuilding
the foundation

ti n
Backcasg
Sustainable Vision 2030
Sustainable growthIntroduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation

Reference material

22● Digital transformation

Transformation to sustainable growth: 2025 Medium-Term Management Plan

The 2025 Milestone— Medium-Term Management Plan Targets and vision concept for 2030 —2025 Medium-Term
Management Plan targets

(¥bn)

600.0
6.7

6.5

8.3

7.8

7.6

Net sales

5.0
4.0

200.0

3.0

2.5

2.0

100.0

Cash flows fromoperating activities
¥

2020

2021

2022

2023

FY2023
results

110

bn.

Investment
for remaking¥

Growthinvestment
¥

115

bn.

Capital investment
2030 vision
concept

375.7

399.9

450.0

600.0

Operating profit (billions of yen)

28.4

10.1

35.0

50.0

Operating profit margin (%)

7.6

2.5

7.8

8.3

EBITDA (billions of yen)

48.5

29.1

63.0

90.0

Net profit (billions of yen)

12.9

- 0.7

15.0

23.0

ROE(%)

6.8

-

≥7.0

≥9.0

ROIC(%)*1

5.1

1.7

≥5.0

≥7.0

D/E ratio
Ratio of net debt to EBITDA(multiples)*2

0.98

1.21

<1.20

<1.00

5.8

<5.0

<4.0

*1 NOPAT ÷ (interest-bearing liabilities + net assets)*2 (interest-bearing liabilities – cash and deposits) [at fiscal year end] ÷ EBITDA

● Interim targets toward our vision: Sales of ¥450 billion,
operating profit of ¥35 billion
Under our Sustainable Vision 2030 financial targets, we envision
sales on the order of ¥600 billion, operating profit of ¥50 billion, andROE of 9.0% or higher. Now almost at its mid-point, the 2025 MTP
specifies financial targets for fiscal 2026, the final year of the plan,that include sales of ¥450 billion, operating profit of ¥35 billion, andROE of 7.0% or higher.

¥

250.0

240bn.

200.0
150.0
100.0

¥

115.8bn.

FY2019–2022
Previous MTP

Film

Growthinvestment¥bn.
Environmental
and functional
materialsLifescience● Film forming/processing line
● Integrated production plantfor dialyzers● New wing for biotechnology● R&D building renovation, etc.

● Upgrade core system● Maintain businesses● Strengthen the foundation

FY2023–2026
2025 MTP

Measure 1

Thorough
Safety, Disaster
Prevention, andQuality

Safety, disaster prevention andenvironmental investments ¥33 bn.
● Safety, disaster prevention, andenvironmental measures● In-house power facilities, etc.

● Three investment objectives: Safety, disaster prevention, andthe environment; rebuilding; and growth
We will invest ¥240 billion, approximately doubling the amount of
the previous medium-term management plan. With top priority
on investments in safety and disaster prevention, as well as on
addressing the environment, we will invest ¥115 billion of growthinvestments in the three businesses of film, life science, andenvironmental and functional materials. In fiscal 2023, we made ourinvestments more or less according to plan. As sources of funding,we expect to use ¥144 billion (estimated) of operating cash flow, as
well as externally procured funds of ¥110 billion, for which we havespecified financial management indicators defining the limits within
which we plan to raise these funds, including a D/E ratio of less than
1.2, and a net debt/EBITDA multiple of 4.

● Implementation of “Zero Disaster,” our Master Plan for Safety andDisaster Prevention● Rebuilding of our quality assurance management system● Strengthening of our risk management system●B usiness stratification (return on capital employed andBusiness
Measure 2 Portfolio
Realignment

115

Investment for remaking ¥92 bn.

50.0
0

OthersGrowth investment ¥115 bn.

300.02025 MTP
targets

Dividends ¥ 14 bn.
Safety, disaster prevention andenvironmental investments ¥ 33 bn.

92 bn.

2031 (FY)

Sales (billions of yen)

3.4

¥

0

2026

2025 Medium-Term Management Plan financial targets
FY2022
results

144 bn.

External financing

1.0
2019

Cash-Out

8.0
6.0

300.0

0

Cash-In

9.0

7.0

400.0

Building a foothold for growth and great strides forward— Four measures —Cash flow allocation capital measures (fiscal 2023-2026)

Estimatesfor 2030 (%)

Operating profit margin

500.0

7.9

Execute strategic investments for growth— Cash allocation —average annual growth rate)

1. Expansion prioritization: Implement proposed growthmeasures and strengthen competitive advantages
 table profit: Explore growth or maintain improvements
2. S
3. Necessary improvements: Execute the Master Plan towardachieving our proper state

Measure 3

Preparing for the
Future● Creation of new businesses and technologies: Strengthen
environmental and biotechnology● DX strategies: Sales force automation (SFA), materials informatics(MI), smart plants, new ways of making money● Roadmap to carbon neutrality (2050)

Measure 4

Rebuilding Our
Foundation● Development of human resources and promote diversity● Workplace manufacturing capabilities● Establishment of business infrastructure● Governance and compliance● Organizational culture reform● Reforms based on key concepts: Social problem-solving,sustainability, and the workplace taking the leading role
We are undertaking four measures in the 2025 MTP. The first ofthese is “thoroughgoing safety, disaster prevention and quality,” which
we have specified as a matter of the highest priority in gaining our
stakeholders’ unwavering trust. The second measure is “businessportfolio realignment,” in which we assess each business with respect
to the two axes of profitability and growth potential. We categorize
this among the four quadrants of “businesses to be newly developed,”“businesses to be prioritized for expansion,” “businesses requiring
improvement,” and “businesses with stable profit.” We then implement
measures at each business stratum. Our three pillars of growth arefilm, life science, and environmental and functional materials. The
third measure is “preparing for the future,” in which we take a longterm perspective on advancing the creation of innovations in which we
combine core technologies with marketing and digital technologies
and know-how.
The fourth measure is “rebuilding our foundation,” in which
we advance reconstruction according to five themes in order toestablish a robust structure for sustainable growth: Developing
human resources and promoting diversity, frontline workplace
manufacturing capabilities, development of business infrastructure,
governance and compliance, and reform of organizational culture.

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story

Value creation strategy● 2025 Medium-Term Management Plan

● Innovation

Foundation for value
creation

Value creation practice

Reference material

23● Digital transformation

Transformation to sustainable growth: 2025 Medium-Term Management Plan

Measure 1

 horough safety, disaster prevention,Tand quality

Measure 2

Business portfolio realignment● In fiscal 2023, we achieved zero serious accident incidents● Each business evaluated and classified along two axes:
Growth potential and profitability

In line with our Master Plan for Safety and Disaster Prevention,
we are systematically advancing active investment in disasterprevention and renovation of aging facilities. We have also installeda disaster prevention training space to carry out education thatraises the awareness of on-site staff and individual managers
toward safety and responding in the event of disaster.
Where quality is concerned, we are taking on a major revisionof our promotional structure while also reforming our organizational
culture, with the aim of fostering a new culture of quality assurance.
In efforts to create a structure that ensures the sustainability ofour business, we are also reinforcing our system of risk managementon the premise that risk is ever-present.
Although this in itself is not sufficient assurance of thoroughgoingsafety, disaster prevention and quality, which are works in progress,
we did achieve zero serious accidents in fiscal 2023. By implementing
quality assurance training and thorough PL/QA assessments,
we made progress in fostering a culture of quality assurance.
We continue to advance each of these measures, including thedevelopment of a group company governance structure.

In our categorization among the four quadrants, comprising “businesses
to be newly developed,” “businesses to be prioritized for expansion,”“businesses requiring improvement,” and “businesses with stableprofit,” the average annual growth rate is our criterion for judging
growth potential, for which we have set a guideline of 4.5%, which isthe acknowledged average for the chemical industry. Return on capital
employed, the criterion for judging profitability, is set at 6.5% from theperspective of capital costs.
In fiscal 2023, we invested capital aggressively in businesses
prioritized for expansion. In the environmental and functional
materials business, identified as a business with stable profit, weestablished TOYOBO MC Corporation in April 2023. For businesses
requiring improvement, including textiles, airbag fabrics and contract
manufacturing of pharmaceuticals, we are aiming to achieve profitability
in each by fiscal 2026 in line with their respective Master Plans. In the
textile business, we established the new TOYOBO TEXTILE CO., LTD.
in April 2022, integrating and reorganizing group companies in efforts
to boost profitability and efficiency of assets. In the airbag fabrics
business, we established Toyobo Indorama Advanced Fibers Co., Ltd.

Review● Measures to address items noted in comprehensive
workplace and disaster prevention inspections● Investment in safety and disaster prevention, andrenovation of aging facilities● Safety and disaster prevention training, creation ofa culture of safety (safe, secure workplaces)●Establishment of management systems for disasterprevention and safety+E xecution and progress foreach action+ Introduction of ISO 45001(Iwakuni)‒ 11 lost-workday accidents (zeroserious)‒ Security awareness(dependent-type)

Rebuilding of our quality assurance management system

Review● Reinforcement of personnel and structures, creation of
mechanisms and adoption of systems● Quality assurance training, creation of an organizational
culture, and a culture of quality+ Company-wide implementationof improvement projects+ In-house quality assurance
seminars‒ ISO and FDA approval

Strengthening of Toyobo group governance,risk management structure

Review● Risk map (grasping risk location and impact: Preparedness)● Establishment of group corporate governance→
Establishment of the Group Administrative Management
Department● Monitoring of system expansion+R isk Management Committee
established+ Identification of fatal risks‒ Implementation from nonconsolidated to group

Ideal portfolio concept
Each business evaluated and stratified among four quadrants along the two axes of profitability andgrowth potential• Profitability: Return on capital employed (ROCE) = operating profit ÷ capital
employed * target hurdle rate of 6.5%
• Growth potential: Compound annual growth rate (CAGR)*
Aggressive investment,
target hurdle rate of 4.5%
Enhancement ofcompetitive advantage

High

TextileContract
manufacturingbusinessof pharmaceuticals

Growth potential

Implement of “Zero Disaster,”
our Master Plan for Safety and Disaster Prevention

Airbag fabrics

Low

Businesses to be
newly developed

Commercialization
Preparation

Film

Businesses tobe prioritizedfor expansion

Life science

Seeking growthBusinesses
requiring
improvement

Normalization
Revitalization

Profitability

Businesses withstable profit

Environmental
and functional
materialsHigh● Rather than the hurdle rate alone, include qualitative information to determine whether a businessis one with stable profit or needs improvement● ROIC is used as a capital efficiency indicator for the group as a whole, while ROCE is amanagement indicator for each businessin October 2022 as a joint venture with the Indorama group in Thailand.
Although each plan has been moving ahead steadily, reaping theeffects of these efforts still lies ahead. The plans will demonstrate effectin fiscal 2024.
Changes in net sales of the group

Main expanding businesses

(¥bn)

700.0

600

600.0

others

500.0
400.0
300.0

450
375.7

● Engineering plastics● VYLON ® and HARDLEN ®
Environmental ● VOC recovery equipment
and functional ● RO and FO membranes
materials(mainly TOYOBO ● High-performance fibers
MC Corporation)othersothersLife science

200.0
100.0
0

FY2022
Results2025 Medium-Term Estimates
Management Plan for FY2031

Film● Infection diagnosis-related
products● Artificial kidney hollow fiber● Virus removing filters● Blood purification
membranes● Mold releasing film for MLCC
● Laminate film for steel plates● Eco-conscious films● PEN films● Three businesses comprising the pillars of sustainable growth
Our target of ¥600 billion in group sales for fiscal 2031 includes atarget of ¥220 billion for our core film business, ¥80 billion for life
science, in which we expect growth starting in fiscal 2026, and¥250 billion for environmental and functional materials through the
newly established TOYOBO MC Corporation. Amid the advanceof carbon neutrality and electric vehicle (EV) expansion, major
business opportunities are expected for the environmental andfunctional materials business, which we expect to become a third
pillar of business alongside film and life science.
As cost structures undergo major changes, we changed
packaging film from a business prioritized for expansion to abusiness with stable profit, under the idea that stable earnings
should be prioritized over growth. Also, engineering plastics,
functional materials, and environmental solutions, which we
had categorized as businesses with stable profit, are to be
expanded aggressively as growth businesses within TOYOBO MC
Corporation.

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation

Reference material

24● Digital transformation

Transformation to sustainable growth: 2025 Medium-Term Management Plan

Measure 3

Preparing for the future● Obtained SBT certification for GHG emission reduction
targets toward carbon neutrality
Through our DX strategy to promote and accelerate business
innovation, we aim to create new businesses and business models.
We are advancing investments in updating our legacy systems
as investments in establishing the IT infrastructure that forms thebasis of this effort.
We have formulated a roadmap for carbon neutrality (CN),which we are striving to achieve. We received Science Based
Targets (SBT) certification in December 2022 for our GHG
emission reduction targets. Raw material and fuel costs haveincreased temporarily due to factors including the adoptionof renewable energy, but given that future cost increases are
expected to result from factors including carbon pricing, we haveset aggressive targets.
Creation of new businesses and technologies

Review● Creation of innovations (four core technologies x marketing + Mirai Value Proposition Projectx digital → integration and restructuring)+ Expanding areas of MI utilizationin research departments● New business creation+ Talent management + training( Mirai Value Proposition Project, Open Innovation
expansion)● Establishment of research infrastructure and developmentof human resources to support theseDX Strategy: A cceleration and advancement of business
innovation

Review● Establishment of IT infrastructure(Business systems / IT infrastructure, security)● Refinement of business processes and services(Establishing data utilization infrastructure)● Business model co-creation (expansion of partnerships
inside and outside the group)+E liminating hosting and updating
legacy systems+C onsidering MI utilization andmarketing automation (MA)
adoption‒ Partnerships within and outside
the group

Roadmap to carbon neutrality (2050)

Review● Setting of GHG emission reduction targets (Scope 1 and 2) + Execution and progress for eachaction● Renewal and fuel conversion of in-house thermal power+ S BT certification obtainedplants (coal → liquefied natural gas)Issuance of sustainability-linked+● Introduction of a cross-functional team for CN strategy
bonds
deliberation and adoption of internal carbon pricing● Clarify targets through the vision for creating innovations

Measure 4

Rebuilding our foundation

In April 2023, we formulated the Toyobo group vision for creating
innovation.
By combining core technologies from the disparate fieldsof polymers and biomedical technology, we will create newopportunities and bring about innovation in three new fields(solutions). Our New Circular Plastics Solution can be expected
to have applications in bio-foundry platforms and other biomanufacturing technology. With our Environmentally Active Clean
Solution, we are pursuing the potential to apply technologies that put
unutilized biomass to use, and with our Well-Being Solution, we are
pursuing uses for biocompatible polymers in medical applications.
We also clarified priority themes for new business fields.
Chemical recycling and 100% biomass plastic development are
representative examples in the area of renewable polymers, asis the development of sepsis treatment devices in the field of
acute blood purification. Regarding research reagents, we madeprogress with commercialization of enzymes with applications inpharmaceuticals manufacturing.

● Start of human resources development for diversity andmanagement under our new personnel system

Assignment of priority themes to new business areas● Personnel system reform: Appraisal, training
expansion, rotation, assigning the right person to theright job● Development of next-generation management humanresources, promotion of active participation by
women(women’s leadership development)+D evelopment of next-generation
management human resources,
new human resource system+ Women’s leadership training,
emergence of women board
members

Front-line workplace manufacturing capabilities

Review● Innovation in production and reinforcement of training
for technical personnel+C onstruction of a platform for
manufacturing+ Establishment of education fortechnical personnel, reinforcementof level-specific education

Establishment of business infrastructure

Review● Renewal investment, consideration of company-widebusiness site location concept● Legacy systems updates+R enovations moving forward at eachbusiness site+L egacy systems to be updated

Governance and compliance

Review● Governance system restructuring, group
administrative management● Strengthening of compliance system and internal
audit functions+S trengthening of compliancepromotion system‒C ompliance incident occurrence

Reform of the organizational culture

Review● Spread of corporate philosophy framework PVVs,
organizational development, “casual discussions onserious issues”+S pread of PVVs, from KAERU Projectto KAERU Department
Survey‒ Engagement
(55% / target 70%)

New Circular
Plastics Solution
Renewable polymers●Chemical recycling that refines usedplastic crude raw materials without oilconversion process(Crude raw materials: Ethylene,
propylene, benzene, toluene, xylene)●100% biomass plastic(PEF: Polyethylene furanoate)

Well-Being Solution
Entry into the acute blood
purification market●Development of concentrated ascites
reinfusion therapy (CART) membranes●Development of treatment equipment forsepsis●Establishment of Medical Research Institute
Entry into the business of raw materials
for nucleic acid medicine manufacturing●Deployment of technology for producing
enzymes for nucleic acid amplification

Environmentally Active
Clean Solution
Organic thin film solar cell materials●Unrivaled energy-saving technology●Achieves the world's highest level ofconversion efficiency in a dimly lit interior●Utilizes organic synthesis technology●Expected to expand in distributed power
supply applications indispensable foradvance of the IoT

The group's key business foundation consists of people,
infrastructure, and systems. We made major revisions to ourpersonnel system, which was renewed in fiscal 2022, with a jobtype orientation intended to strike a balance between work duties
and remuneration, including an overhaul of the seniority systemand establishment of a system for promoting junior employees to
executive positions. From fiscal 2023, we have created increased
opportunities for those with motivation to play more active roles,
and are including junior personnel in our development of humanresources for management. In our efforts to promote diversity, we
have revised our promotion system into one that is more inclusiveof diverse human resources such as women and foreign personnel,
aiming for a ratio of women in management positions of 5.0% ormore by fiscal 2026.
Human resources development, work-style reform,
promotion of diversity

Review

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story

Value creation strategy● 2025 Medium-Term Management Plan

● Innovation

Foundation for value
creation

Value creation practice

Reference material

25● Digital transformation

Innovation

Vision for creating innovation
We have formulated a vision for creating innovations, aimed at achieving Sustainable Vision 2030, and looking beyond it to2050 as we work to achieve sustained and discontinuous growth, which amounts to increasing our corporate value.
Under this vision, Toyobo group makes a declaration that we will realize innovations needed by people and the earth.

“Beyond Horizons,” a declaration

In progressing toward 2050, we at Toyobo group aim to provide
solutions through the integration of our core technologies andbusinesses, creating innovations in a wide range of fields as ourcontribution toward the development of a sustainable future forsociety.
Through its long history of more than 140 years, Toyobo
group has combined a wide range of materials, processes, andprocessing techniques to create and implement its own value. We
will greatly value these technological development capabilities thatare the source of our competitiveness, create innovation throughthe technologies accumulated up to now as well as those newly
undertaken, and contribute to the sustainable development ofsociety by providing products that bring about solutions to social
issues.
In envisioning ourselves in 2050, Toyobo group will emphasize
three areas of our value proposition to realize a future that is neededby people and the earth.

Key areas of our value proposition toward creating
innovations

By combining and rebuilding our four core technologies (polymer
technology, biomedical technology, environmental technology, andanalysis and simulation technology) as well as our business value
chains and markets (film, environmental and functional materials, ​life science, and functional textiles and trading), Toyobo group is
working to create a wide range of solutions.

Taking on challenges in new domains by integrating core technologies and businesses

Analysis and simulation technology

Polymertechnology
Catalysts,
polymerization,
molding

Biomedical technology
Bio-foundry* platform

New
Circular
Plastics
Solution

Bio manufacturing
Polymer decomposition technology
using enzymes and catalysts

Fusion + deepening of organic chemistry and biotechnology
Higher-order structure control(separation and recovery)

Environmentally
Active Clean
Solution

Biocompatible polymers and materials

Utilization of unused biomass

Well-Being
Solution

Environmental technologies*Bio-production systems such as cultivation, transport, and contract manufacturing aimed at enhanced productivity and reduced cost for bio-derived products

Designevaluation
technology

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation

Reference material

26● Digital transformation

Innovation

Vision for creating innovation

In order to achieve the future we envision for 2050, we will advanceresearch and development efforts in three priority areas for provisionof value: Our New Circular Plastics Solution targeting 100%
renewable polymers, our Environmentally Active Clean Solution thathelps with environmental cleanup and CO2 recovery and utilization,and our Well-Being Solution that aims for a society in which people
can live out their lives in good health. Our aim in doing so is to solve
the five social issues specified in Sustainable Vision 2030.

Four actions leading to creation of innovation

Within the three key areas of our value proposition, we aim to create
sustainable innovations through the following four actions.
(1) Assign prioritization themes
Promote prioritized research and development, including
adoption of new technologies, in responding to social issues with
an awareness of people and the earth
Measures: Prioritize technology investment for new businessdevelopment(2) Take on challenges by integrating core technologies andbusinesses (see p.25)
Integrate existing businesses and technologies, and establish
marketing innovation throughout the company
Measures: Integrate polymer technology x biomedical technology+ business(3) Accelerate open innovation
Build structure that actively promote new market participation
and adoption of new technologies
Measures: Engage in corporate collaboration across industry
boundaries, direct and indirect startup investment, andpartnerships with universities, etc.
(4) Develop human resources
Nurture human resources with scientific literacy andentrepreneurial spirit, enable each to refine their skills, andcreate a basis for human resources exchange, while providing aspace in which they can apply their knowledge and experienceto the fullest

Three priority areas for provision of value in innovation creation, for the achievement of sustained, discontinuous growth

Sustainable Vision 2030
Solving the five social issues

New Circular Plastics Solutions

2050: 100% renewable polymers

Employee well-being
and human rights in the supply chain
A healthy lifestyle and health care
Smart communities and comfortable spaces
A decarbonized and circular society
Clean water areas, air, and soil,
and the preservation of biodiversity

Environmentally Active Clean Solutions

Well-Being Solutions

Environmental cleanup

Innovative medical devices

CO2 recovery & utilization

Reagents and devices for ultra-early diagnosis

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation

Reference material

27● Digital transformation

Innovation

Research and development

Innovation

In order to create and provide solutions centering on the four core technologies, Toyobo group will reinforce
its structure aimed at improving efficiency of research and development and speed up the commercialization
so as to achieve diverse forms of innovation.

Basic approach

Toyobo group aims to be a group that continues to create thesolutions needed by people and the earth, and will achieve
innovations in diverse areas so that we can contribute to thesustainable development of society toward 2050.
The four core technological supports for our group businesses
are: Polymer technology, biomedical technology, environmental
technology, and analysis and simulation technology. With these coretechnologies, as well as reconstruction of value chains, applicationof digital technology, marketing, and diverse other innovations,
we will provide new solutions as we continue to contribute to asustainable society.

Organizational structure

Our R&D organizational structure comprises two components: The
Corporate R&D Department and the Divisional R&D Departments.
We are also refining the technologies of each of these andworking on collaboration including human resource exchange as
we strive to make research and development more efficient andcommercialization speedier.
● Corporate R&D Department
The Corporate R&D Department includes three sections, which
engage in research aimed at acquiring basic technologies andadvanced technologies for the future, project research that targets
reliable commercialization, and the research infrastructure thathas supported the Group’s research and development up to
now. Analytical technologies including chemical identification,
ultramicroscopic observations and measurement of physicalcharacteristics, as well as technologies that use computational
science, such as simulations, digital transformation, and materials
informatics, enable our creation of next-generation technologies, ournew products and new business commercialization, and thus form
the basis for our competitive development. The department also

partners with domestic and overseas companies, universities andresearch institutions to fulfill its role of studying and evaluating newtechnologies and new technological trends.
● Divisional R&D Departments
As each business department performs integrated operation of
its production, sales, and development functions, research anddevelopment activities within each business department are related
directly to its products and technological trends. We understandcustomer needs to be characteristic to our products, so we cooperate
across areas of business and with the Corporate R&D Department
on a routine daily basis to improve our products and strengthen our
product lineups.

Coordination of company-wide innovation: The Innovation
Strategy Department

The function of the Innovation Strategy Department is to support the
management, planning, and promotion of research and developmentfrom the perspective of group management. It manages andsupports commercialization projects for promising themes advancedby the Corporate R&D Department. In addition, through the effective,
efficient operation of research and development resources including
utilization of intellectual property, the department participates in
research and development projects of the national government,
and advances open innovation with universities and other externalorganizations, while also making use of external venture capitalto make investments that expand the possibilities of new fields oftechnology and product development.

Four core technologies

Our group has four core technologies: Polymer technology which
we have been accumulating since synthetic fibers were introduced
and which includes polymerization, modification, and processing;biomedical technology developed from our waste pulp liquid

processing research using yeast culture; environmental technology
based on polymer technology enabling water and air purification as
well as recycling of solvents and other substances; and analysis andsimulation technology based on our accumulation over many yearsof analytical evaluations and computing science. These are at theroot of our group’s creation of products with natural fibers, synthetic
fibers, chemicals and processed products, films, life science andmembrane separation, and they continue to deepen, integrate anddevelop in response to changing times.

Creation of innovations through core technologies

Our group advances open innovation in order to apply ourcore technologies to solving social issues. We apply the digitaltechnologies that are emerging in rapid succession, and combine
our continuously-developing core technologies with innovativeand reliable external technologies to remake them into new coretechnologies while achieving innovation. Our group’s aim is to placea high value on our original thinking while creating new products andexpanding into domains of business that we have never taken on
before.

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Foundation for value
creation

Value creation practice28

Reference material● Digital transformation

Innovation

Intellectual property

Intellectual property

The innovations by which Toyobo group contributes to society’s sustainable development are supported bydiverse group assets centered around our four core technologies.
By carefully protecting them, securing them as intellectual property rights, and putting them to use, we willachieve stability in our business operations, high profitability, and sustained growth.

Basic approach

By creating innovations based on our four core technologies
of polymer technology, biomedical technology, environmental
technology, and analysis and simulation technology, our groupwill contribute toward the resolving of social issues. We will thenaggressively secure and put to use the results of these efforts
as intellectual property rights including patents, and will stabilize
our business operations and achieve high profitability, which willcontribute to our sustained growth.

Organizational structure

The Intellectual Property Department meets regularly with theintellectual property liaison persons assigned to each department at
liaison meetings in order to share information on intellectual property
and make related activities more effective.

Intellectual property strategy development

The Intellectual Property Department collaborates closely withbusiness and R&D departments, formulating intellectual property
strategies and seeing to coordination between business and R&D
strategies. It reports twice a year to the Sustainability Committee
regarding intellectual property strategy, and advances strategy while
checking on its consistency with company-wide policy.

Building a patent portfolio

We have built a flawless, high-quality patent portfolio to ensure thatour products have predominance, and proactively maintain contacts
among research and development experts to discover inventions.
We aggressively apply for overseas patents for completed inventions
to ensure the security of their global deployment and promotion.

Toyobo group brand management

All items to be displayed outside the company are checked by thedepartments such as legal, quality, public relations, pharmaceutical,so that labels and other displays are appropriate as we strive toelevate our group’s brand value and gain the trust of the customers.

Respect for the rights of others

Patent reviews are performed in conjunction with design reviews
according to the stage of new product development, as we advancedevelopment while being careful not to infringe on the rights ofother parties. In addition, we hold regular patent review meetings tounderstand the patent-holding status of other companies, and to confirm
the security of business continuity while respecting others’ rights.

Initiatives● Use of intellectual property information
We analyze patent and non-patent information, and carry out
activities to put the inferred technological and market trends to use
in our business and R&D strategies. In addition, we intend to makeour business operations more efficient and sophisticated by applying
digital technologies to enable paperless operations and robotic
process automation (RPA), which we started as part of our early
adoption of a workflow system.
● Invention incentive system
Through our patent award system, we honor inventors whose
patents contribute to company profits at or above a specified
threshold level, offering a cash reward (with no upper limit)
commensurate with the profit. In order to honor the inventors early
on, an “Application Commendation” is conferred on inventors who
hold pending applications for patents expected to make a futurecontribution. Also, in order to stimulate the solutions business, fromfiscal 2023 inventors holding pending applications for patents highly
likely to help solve social issues are honored with an “Excellent
Solution Application Commendation.”● Intellectual property education
We perform systematic education on intellectual property according
to job group and function. We hold practical patent seminars forengineering-related employees during their first three years of
employment to enable them to learn about patents. We also conduct
education specializing in patent searches and the production ofdetailed descriptions for patent applications. Through lectures that
include practical hands-on training, participants work with Intellectual
Property Department members to gain competence in producing
high-quality detailed descriptions. In addition to engineering-related
personnel, sales personnel also receive education in intellectual
property-related knowledge that is requisite for sales.
Japan
1,600

Overseas
Number of patent applications*

1,400

6,000

1,200

5,000

1,000

4,000

800

3,000

600

2,000

400

1,000

200
0

Number of patents held *

7,000

2019

2020

2021

2022

2023 (FY)

0

2019

2020

2021

2022

2023 (FY)* Figures include patent applications and patents held by the (former) Toyobo Film Solutions Limited, which
was merged into TOYOBO on April 1, 2021.

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story

Value creation strategy● 2025 Medium-Term Management Plan

● Innovation

Foundation for value
creation

Value creation practice29

Reference material● Digital transformation

Toward digital transformation- Transforming into organizations and human resources that can co-create business Toyobo group aspires to be a group that continues to create solutions needed by people and the earth. We
strive to advance business innovation and realize an accelerated IT environment while addressing not only
the issues facing us today but also those we can expect in the future.
Steps to advancing DX to promote and accelerate our vision for business innovation

Priority themes for fiscal 2024
1

Establishment of IT
infrastructure● Steady updating of legacy systems● Establishing an information infrastructure prepared for the future2

Strengthening ofgovernance andorganization● More sophisticated DX investment cost management● Transition to an organizational structure that helps with business cocreation

3

Promotion ofbusiness cocreation● A dvancing company-wide themes oriented toward societal needs
like GHG and chemical substances management● Holding regular meetings with business divisions regarding DX
promotion

DX promotion
structure

As we aim for collaborative work between the digital promotion divisionand business divisions that creates new business, we will develop
human resources for DX with competence in business co-creation,transform our organization, and work on establishing our IT environment,
by means including updating legacy systems.
In fiscal 2023, we drew up a DX roadmap oriented toward businessco-creation, designed the organization and process for DX advancement,
and formulated a plan for human resources development. We also
started work on establishing an IT environment to provide a foundation
for the initiative, and focused effort on building up infrastructure for
DX advancement. In fiscal 2024, we will complete our preparations foraccomplishing DX as we take action in three areas: Establishment of
IT infrastructure, strengthening of governance and organization, andpromotion of business co-creation.

Taking on new business through co-creation with divisions
Conversations froma business perspective(Do what we should do)

Draw close to the work
(Deepen understanding)

Co-creating new businesses
and contributing to businessexpansion (Unwavering trust)Development of digital human resources able to co-create businesses; transformation into organizations

Contribution to business through IT

Initiatives to advance DX

Businessco-creation

Given that digital transformation (DX) is a means of advancing andaccelerating business innovation, it is crucial that we understand how it
can contribute to business expansion. By establishing IT infrastructure
and building up a DX promotion structure, Toyobo group is moving forwardwith human resource development and organizational transformation
enabling us to co-create business as we pursue our 2030 objectives ofdoing business that contributes to solving the issues facing people and theearth, being a company where people can continue to work with pride andsatisfaction, and being a company that grows sustainably.

transformation

erational process

Development/op

Development

IT organization
restructuring

Utilization of data
within department

IT environment

Our vison for digital transformation

and acquisitio

n of IT/digital

human resour

Sharing of datacompany-wide

Data

Data

ces

Sharing and linking of data withthe group and outside companies

Data

Infrastructure security

Infrastructure security

Infrastructure security

Strengthening of security /Development of integrated certification and IT infrastructure

Upgrading of legacy systems / Expansion of cloud utilization /Strengthening of security /Development of integrated certification and IT infrastructure

Expansion of cloud utilization / Strengthening of security /Development of integrated certification and IT infrastructure

2024

FY

2026

FY

2030

FY

Introduction

TOYOBO REPORT 2023

● CFO message

Value creation story● 2025 Medium-Term Management Plan

Value creation strategy● Innovation

Value creation practiceFoundation for value
creation

Reference material

30● Digital transformation

Toward digital transformation

Priority Theme 1

Establishing IT infrastructure

Priority Theme 2

Strengthening governance and organization

Priority Theme 3

Promotion of business co-creation

Our group’s adoption of IT has been advanced by our subsidiaries
involved in information-related businesses for approximately 30
years. Amid the shift from IT utilization to the DX era, in fiscal 2024
we will apply the organizational strengths in systems construction andoperation that we have established to designing business expansionoriented themes for co-creation between business divisions and withexternal partners, as we work to strengthen organizational functions
other than manufacturing, such as by shifting from an individual
concept of optimization to overall optimization.
Moving forward, we will optimize IT investment through planningand budgeting management and will strengthen the systems thatenable us to bring about continuous reductions of IT expenses throughcost management. We will undertake organizational reforms to makeourselves an organization truly capable of helping our businessexpand, such as human resources development and self-directed
career visioning by each and every employee, as well as improvements
in awareness enabling us to take on our work with a sense of purpose.

In our business divisions and innovation divisions, actions areoriented toward advancing digital and IT themes that contribute tobusiness expansion, and toward advancing digitalization throughbusiness reform. As a manufacturer, we set priorities for resource
allocation with attention to putting in place the infrastructure directly
related to our manufacturing, and also to the impact on our businessas seen from a bird’s-eye view of all business divisions. Individual
discussions that had previously been conducted by those in charge
in the front-line workplace are conducted at regular meetings held by
top managers of business divisions for overall optimization.
Some themes require efforts to be taken by the company assuch, including environmental issues such as carbon neutrality
and chemical substances management, and response to humancapital. By setting targets and building systems, the DX promotion
department takes a central role in company-wide efforts to makesteady progress.

Concept for future IT infrastructure

Strengthen governance (refine DX promotion cost management)

Business co-creation by upgrading business processes and services

IT investment is
optimized

IT expenses arecontinuously reduced

Data
Businessmodel
innovation

Cloud-based integrated network platform
Cloud-based integrated security platform

Budget management

Toyobo network

Domestic group network

Overseas group network

Mid-period

Planning andbudget formulation

Investment
management
Budget formulation

Planning andbudget management

Data center

Cost managementNewbusinesscreation

Carbonneutrality

Open
innovation

Expanded collaboration with partners insideand outside the Toyobo group

Inventing new businesses and launching them immediately
Assessmentof IT investment
portfolio

IT costvisualization

IT costverification

Sophisticationof research anddevelopment

Pre-assessmentof IT investments

Post-assessmentof IT investments

Production
innovation

Sophistication ofbusiness processes
and services

Cloud data center

Co-creation ofbusiness models

Our group is moving ahead with investments for renewal of ourlegacy systems. In fiscal 2024, pilot implementation begins for a newcore online system, and by fiscal 2027, we plan to have finished ourreinforcement of security and conversion to cloud computing.
As we move ahead with revamping systems peripheral to
our new IT infrastructure implementation, we will be building up
an IT infrastructure that enables safe, flexible data utilization andcollaboration, not just between divisions, but also within and outsideof the group.
As an example, once the system renewal is complete, we will
expand investment in DX projects and others that contribute tobusiness expansion. By fiscal 2031, we will have established an IT
environment enabling immediate, secure sharing of information withevery future partner.

Optimizationof supply chain
management

Sophisticationof customer
contact points

Developing and improving a platform to utilize structured and unstructured data

Optimization of IT costs

Able to have dialogues and discussions about the same information
among people from different departments
SCM: Supply chain management

03

Introduction

TOYOBO REPORT 2023

● Overview by business

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material● Functional Textiles and Trading

Value creation practice32

Overview by business

39

Environmental and Functional Materials

33

Films

42

Feature: Launch of
TOYOBO MC Corporation

36

Life Science

44

Functional Textiles and Trading

31

TOYOBO REPORT 2023

Introduction● Overview by business

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

32● Functional Textiles and Trading

Overview by business
Consolidated net sales
composition ratio

Films

Environmental
and Functional
Materials

Functional
Textiles andTrading

Main applications

Net sales

This consists of two fields: The industrial film business and the packaging film business.
Industrial films include films for liquid crystal polarizers, displays, synthetic paper, labels,
ceramic capacitors, etc. Packaging films include multifunctional films centered on foodpackaging, for which we maintain a leading share in Japan.

Life ScienceNet sales and operating profit(¥billion)

This consists of three fields: The bio business, medical materials business, andpharmaceutical contracting business. The bio business includes material enzymes
related to clinical testing, diagnostic reagents and drugs, and diagnostic systems. The
medical materials business includes materials related to treatment, such as dialysis
membranes. The pharmaceutical contracting business involves contract manufacturingof drugs.
Our high-value-added products, made possible through our proprietary technology,
include artificial kidney hollow fiber and diagnostic systems that halve the time required toobtain PCR testing results.

TOYOBO MC Corporation launched in April 2023 as a joint venture with Mitsubishi
Corporation. Its businesses consist of the resin and chemical business and theenvironment and fiber business. Businesses that have migrated to the new company
include VYLON® ,HARDLEN® , photo functional materials, fine chemicals, engineering
plastics, aqua membranes, VOC recovery equipment, functional filters, spunbond,lifestyle materials, and super fibers.

36.5%

146.1
Operating profit● Industrial films● Packaging films

1.6

Net sales

9.5%

38.1

Operating profit

9.2

Net sales

27.7%

110.8
Operating profit4● Bio-related products● Cosmetics ingredients● Medical separation
membranes andmodules● Medical equipment● Pharmaceutical-related
products● Adhesion and coating
agents● Engineering plastics● Elastomers● Seawater desalination
membranes and modules●Environmental solution
equipment and filters● High-performance fibers● Lifestyle materials

Net sales
This consists of the airbag business, functional textile business, apparel textile business,and trading company functions (TOYOBO STC CO., LTD.). For overseas expansion, theairbag business operates under a tripolar structure in Thailand, China, and the U.S. The
textile business is advancing globally, including in Southeast Asia, China, and India.

23.1%

92.4

Operating profit-

2.5● A irbag fabrics and yarn● Sports, inner wear,
uniforms, and otherapparelExamples of products

Introduction

TOYOBO REPORT 2023

Value creation story● Overview by business● Films● Life Science

Value creation strategy

Value creation practice● Environmental and Functional Materials

Foundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

33● Functional Textiles and TradingFilms
We will contribute to sustainability
for people and the earth
through our technologies
for high-performance films

The strengths of Toyobo

Business overview in fiscal 2023

●Films for packaging (a leading share in food packaging)● Industrial films (mold releasing films for MLCC,
polarizer protective films for LCDs, etc.)

Opportunities and risks

Muneo Hirooka
Managing Executive Officer

Opportunities●Expansion of demand for green films aimed
at a circular society and carbon neutrality● Expansion of need for reduction of plastics(increase in the value of technologies forthinner materials)● Expansion of demand for high-performancefilms as digital society advances

Risks● Rise of political instabilities around the worldand subsequent impacts on markets● Soaring costs of raw materials and fuels andincrease in procurement risks

Head of Films Division

In fiscal 2022, customers in many industries resumed production
activities, resulting in special demand. Consequently, a backlash
occurred in fiscal 2023, and the market overall remained sluggish
under multiple factors including an inventory adjustment phase.
Industrial films in particular were greatly affected by slumping
automotive production and let-up in demand for mold releasing films
for MLCC. In the area of earnings, prices of raw materials and fuelscontinued their sharp rise. Turmoil also occurred in procurement,
due to factors including withdrawal from business by domestic andoverseas manufacturers of crude raw materials and other materials.
In packaging films, our revisions of product prices were unable tokeep up with increases in raw material and fuel prices, leading to asignificant decrease in overall profit from the previous year.
Amid sluggishness in the overall market, environmentallyconsiderate films made with recycled resins, bioresins, and othermaterials are exhibiting growth beyond expectations, with demand
expected to continue growing. High-retardation LCD polarizer
protective film, an area in which Toyobo enjoys a technologicaladvantage, remained solid.
As a result of the above, net sales in the segment were ¥146.1
billion and operating profit was ¥1.6 billion (results for new segment).

Net sales and operating profit (¥billion)(¥bn)

Net sales

Operating profit-50000

146.1

FY

2023
1.6
COSMOSHINE SRF® LCD polarizer protective film

Introduction

TOYOBO REPORT 2023

● Overview by business

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

34● Functional Textiles and Trading

Films

Growth strategy

We are advancing our growth strategy atop the two pillars of“progress of digital society” and “a decarbonized and circularsociety.” Our main strength lies in the polyester-based releasing
film used in the ceramic capacitor manufacturing process. Ourfilm is highly regarded for its functionality, and our capabilities
for integrated production and processing of film give us anadvantageous position in the market. We intend to undertake new
product development for this film as well as establish technology
for its recycling. We will also advance the development of new
products and applications for LCD polarizer protective film andhigh-durability and heat-resistant polyethylene naphthalate (PEN)
film for use as fuel cell sealing material.
In the area of reducing plastic waste, films stand at theforefront of environmental issues. We will reduce the thicknessof films and advance adoption of biomass-based raw materials
to help achieve a decarbonized society. Our new machinery
for biaxially-oriented polypropylene (OPP) films let us maintainstrength even in significantly thinner OPP films, contributing toa circular society through a shift to mono-materials. Films areindispensable materials in distribution and in people’s lives.
We are making efforts in individual products to increase ourenvironmentally considerate product lineup.

Capital investment and R&D investment

We plan to invest ¥80 billion under our 2025 Medium-Term
Management Plan (2025 MTP, FY2023 to FY2026), of which
about 80% is earmarked toward growth investments. We will firstcontinue increasing production and expanding sales in line withmarket recovery in high-performance films. Production capacity formold releasing film for ceramic capacitors will increase about 2.5fold through the combination of our new first and second coatingmachinery units, and production volume of COSMOSHINE SRF®
LCD polarizer protective film will increase about 1.2-fold. We will
also make active investments in the development of the highrigidity films noted earlier, in 100% bioresin films, and in films
made with recycled raw materials, as well as in the creation of
mechanisms for recycling processed films inside and outside ofour company.

(¥bn)

Net sales target of the film business
300.0

New manufacturing facilities at the Utsunomiya Plant (mold releasing film for ceramic capacitors)

250.0

220

150.0

Future initiatives

190

200.0

146.1

100.0
50.0
0

FY2023(results)

FY2026

FY2031

In fiscal 2024, we will first work to reset our pillars of earnings andrecover profitability. We will further undertake price revisions for
packaging films, a major issue remaining from fiscal 2023, andwill quickly undertake full-scale launches of new products and an
OPP film production line. Keeping a constant eye on the state ofrecovery in markets, we will meet customers’ expanded production
structures with our mold releasing film for MLCC and will proceedwith construction of a new production line. In LCD polarizer

protective film, too, we will meet customers’ expanded production
structures while also carrying out price revisions.
Under the 2025 MTP, the film business is focusing its sight onthree of the five social issues of Sustainable Vision 2030. The firstof these is “employee well-being and human rights in the supply
chain.” With seven manufacturing sites in Japan and overseas,
the business considers the safety of employees, the fosteringof motivation, and the achievement of disaster prevention andzero disasters at worksites to be the most important issues for
its business bases. The next issue of focus is “a decarbonized
and circular society.” Here the business seeks to achieve Scope
1 and 2 carbon neutrality and to widely supply society with films
that contribute to the environment and resource recycling-oriented
films. Finally, with regard to the issue of “clean water areas, airand soil, and the preservation of biodiversity,” the business willcontribute to the reduction of food loss and waste through highperformance packaging films that maintain food freshness. In thisbusiness, we will set individual targets for these issues, make themknown throughout the company, and tackle them together.
On the theme of resource recycling, initiatives at the levelof the company or this business face limits in increasing theefficiency and efficacy of recycling. Accordingly, we are actively
taking part in resource circulation initiatives that span industries,
including the creation of mechanisms for the recycling of films forceramic capacitors with the involvement of electrical and electronic
products manufacturer customers, as well as a recycling project forlabel paper (KAMISHINE® mold releasing film) in cooperation withmedical manufacturer and printing industry customers. We hope to
expand our recycling technologies not only within Japan but also
into initiatives that cross national borders.

Introduction

TOYOBO REPORT 2023

● Overview by business

CSV examples

Value creation story● Films● Life Science

Value creation strategy

Value creation practice● Environmental and Functional Materials

Foundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

35● Functional Textiles and Trading

Films

Contributing to reducing plastic volume
New development of the world’s thinnest 20μm shrink film

Contributing to the proliferation of next-generation energy and a carbon-neutral society
TEONEX® PEN film adopted for use in Toyota’s fuel cell vehicles

Masahito Jinguji

Shigeto Yoshida

Hisato Ichimiya

Kenji Handa

Manager
Packaging Operating Department

Manager
Packaging Operating Department

Manager
Films New Business
Development
Operating Department

Industrial Films Operating
Department

Toyobo is a specialty manufacturer of PET films in the shrink film market. Our policy is to boost ourcompetitiveness through product development that is cutting-edge in terms of both performance andenvironmental consideration. Our production technology creates thinner films while maintaining strength,
an achievement that cannot be imitated by others. In 2012, we succeeded in developing and launching
SPACECLEAN® , a heat shrinkable PET film that significantly cuts the mainstream 40μm thickness toa world’s-thinnest 20μm. This product offers benefits not only in the environmental value of reducing
plastic volume but also in terms of productivity, and has found use with many customers, mainly beverage
producers.
In response to strong demands by customers, we will also start using recycled PET material frombottles to produce this 20μm film. In the past, the use of recycled raw materials yielded differing grades of
product. We will further expand this and contribute to achieving customers’ specific goals for sustainable
packaging.
Along with the reduction of plastics, the reduction in use of virgin raw materials is also a pressing
global issue. We plan to actively propose products made from recycled raw materials to our customers
overseas as well. As PET labels are easier to recycle
than polyvinyl chloride and polystyrene labels,
we aim to build a resource circulation network forrecycling containers that use shrink film, drawing
on cooperation from brand owners, converters, andrecycling business operators in overseas markets.

PET bottle labels made with SPACECLEAN® heat-shrinkable PET film

Our TEONEX® high-durability and heat-resistant polyethylene naphthalate (PEN) film is positioned as a defacto global standard, finding wide use in automotive applications in recent years. Since the early 2000s,
we have proposed TEONEX® to the automotive market as a material that will contribute to innovation inhighly anticipated, next-generation technologies for fuel cells. In 2020, we developed a sealing material that
subjects TEONEX® to a proprietary adhesive coating and precision processing. This sealing material has
been adopted for use in the “MIRAI” fuel cell automobile for its high durability even in high-temperature orother harsh environments, and for its contribution to ensuring long-term reliability in fuel cells. Changing fromconventional vulcanized bonding to thermoplastic bonding with sealing material that uses TEONEX® hassignificantly improved cycle time from over 10 minutes to several seconds. This accomplishment earned the
product the “Toyota Group Technology & Development Award” in fiscal 2021.
Fuel cell vehicles are the ultimate “eco-cars,” emitting only water during operation. Fuel cell vehicles,
including large buses, trucks, and passenger automobiles, are expected to become widespread throughout
the mobility sector. In addition to bonding, TEONEX® provides functions including protection of power
generation surfaces, insulation, and retention of gas intake/exhaust shape, contributing to technologicalinnovation in fuel cells. The product is also expected to see use in water electrolytic hydrogen generators.
The use and evaluation of TEONEX® is advancing in hydrogen-related markets around the world. TEONEX®
holds potential as a key component
supporting the hydrogen society of the
future, and is indispensable as a material for
proliferation of next-generation energy andthe achievement of a carbon-neutral society.

“MIRAI” fuel cell vehicle, an adopter of TEONEX®

Introduction

TOYOBO REPORT 2023

Value creation story● Overview by business● Films● Life Science

Value creation strategy

Value creation practice● Environmental and Functional Materials

Foundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

36● Functional Textiles and Trading

Life Science
Through our proprietary
technologies, we are aiming
for the top of our global niche
and will contribute tohealthy living and health carefor people worldwide

The strengths of Toyobo

Business overview in fiscal 2023

● Integrated development and manufacturing that spans raw
materials to end products in the diagnostic reagent and drug
domain; securing of dominance in quality●Film forming technology for hollow separation membranes(development began in the 1970s)● Exclusive position in the global market for CTA membranes fordialysis applications

Opportunities and risks

Opportunities● Expansion of demand for genetic testing (PCR)
amid the spread of infectious diseases●Acquisition of national policy-based
development support and subsidies for
antibody drugs and testing systems

Risks● Sharp exchange rate fluctuations● Soaring oil and coal prices due to shift awayfrom fossil fuels● Shortages of supplies of goods procured
overseas

Takahito Sagara
Managing Executive Officer
Head of Life Science Division

In the bio business, sales of PCR test reagents decreased ascases of COVID-19 infections fell significantly in the 4th quarter,
but sales of raw material enzymes for diagnostic drugs andgenetic testing reagents in overseas markets remained strong. To
expand the infection diagnosis solution business, in fiscal 2023
we introduced new products including in vitro diagnostics andreagents for simultaneous detection of whooping cough bacteria+ para whooping cough bacteria, SARS-CoV-2 + respiratorysyncytial virus, and SARS-CoV-2 + influenza virus.
In the medical materials business, sales of artificial kidney
hollow fibers remained strong but were affected by soaring pricesof raw materials and fuels. In policy measures, the business madepreparations for the implementation of market evaluations aheadof the market launch of continuous renal replacement treatment(CRRT) in the next fiscal year.
The contract manufacturing business of pharmaceuticals
ran up expenses related to dealings with the U.S. Food and Drug
Administration (FDA), but sales recovered as production andshipment of over-the-counter formulations resumed in turn.
As a result, net sales in the segment were ¥38.1 billion andoperating profit was ¥9.2 billion (results for new segment).

Net sales and operating profit (¥billion)
Net sales(¥bn)-50000Operating profit

38.1

FY

2023
9.2
Reagents for the GENECUBE® fully automated gene analysis system SARS coronavirus nucleic acid kit

Introduction

TOYOBO REPORT 2023

● Overview by business

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

37● Functional Textiles and Trading

Life Science

Capital investment and R&D investment

In the bio business, we have invested about ¥6.5 billion in the
Tsuruga Biochemicals Plant to create new manufacturing facilities,
and are undertaking development of raw materials for PCR test
reagents and genetic diagnostic drugs along with strengthening ofour production system. A third cultivation and purification building
will be built in first-stage construction, going into operation in April
2024. A research reagent building and genetic testing building
will be built in second-stage construction, with completion andoperation expected during fiscal 2025. We plan to further continue
investments with the aim of tripling development and production
capacity.
In the medical materials business, we have invested about¥5 billion in the launch of an integrated production plant for dialysis
equipment together with NIPRO Corporation. As this business’s
hollow fiber membrane manufacturing site is located in Yamaguchi
Prefecture with assembly performed at a customer’s plant in Akita
Prefecture, issues have occurred in dealing with customers and therisks of long-distance transport. With the new investment, we areconstructing and readying manufacturing facilities in an integrated
production plant that connects our hollow fiber membranes and
NIPRO’s Odate Plant assembly lines, with the building structure
and other components already completed.
Full-scale shipment of products is scheduled for July 2024.
We have also been tackling the development of CRRT withthe aim of entering the field of acute blood purification therapy forconditions such as sepsis. In May 2023, we were granted approvalby the Pharmaceuticals and Medical Devices Agency (PMDA). We
will continue investing in a manufacturing and sales structure toachieve market launch in the near future.

meet strict standards, we are constructing a leading world-classquality management system (QMS) along with structures for drug
manufacturing management and quality control standards (GMP).
To deliver peace of mind and smiles to people worldwide, we have
put forth a business policy of seeking to maximize future value.
Nearly all of the main products of the bio business are used inclinical testing, but its product groups are largely unrelated to each

80

80.0
60.0
40.0

38.1

40

Realizing sustainable growth

20.0
0

FY2023(results)

Growth strategy

The Life Science Division is tackling innovation by generating
new chemical reactions, combining the cutting-edge technologies
that Toyobo has built up in the medical treatment, medicine, andpharmaceutical fields. As technologies and products related to
medicine cannot be supplied without production structures that(¥bn)

Net sales target of the life science business
100.0

Integrated production plant for dialyzers

other. Accordingly, we are working to concentrate resources in thefield of epidemiology, establish the Toyobo brand in the infectious
disease testing market, and provide value through one-stop
solutions for infectious disease.
In the medical materials business, we are focused on thedevelopment of applications other than membranes for dialysis,
including acute blood purification membranes and process
separation membranes that take our strengths in hollow fiber
membrane manufacturing technology as their starting point. In
the field of process separation membranes in particular, we havebegun supplying products to major overseas vendors and areengaged in sales promotions toward major manufacturers in every
market. We will also focus on our Bonarc ® bone regenerationinducing materials in the dental area, constructing a stable supply
structure to contribute to new dental treatments.

FY2026

FY2031This division is active in the areas of diagnosis and treatmentin the patient journey. While these areas largely go unseen by
the general public, they make great contributions to health andtreatment for people around the world. As one of the social issues
in Sustainable Vision 2030, we are focusing on “a healthy lifestyleand health care.” Our people involved in this business work withgreat pride.
To make a greater contribution to society by providing higherperformance products to the clinical testing market in the diagnostic
area, we are tackling two targets in the bio business: A yearly 10
million tests that contribute through the provision of diagnostic
drugs for infectious diseases, and a 30% market share in raw
materials for biochemical tests, etc.
In the medical materials business, we will take advantage
of our world-class hollow fiber development and manufacturing
technologies, as well as our materials development capabilities, toexpand into the area of treatment, thereby contributing to society
through products that medical professionals and patients can use
with confidence.

Introduction

TOYOBO REPORT 2023

● Overview by business

CSV examples

Value creation story● Films● Life Science

Value creation strategy

Value creation practice● Environmental and Functional Materials

Foundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

38● Functional Textiles and Trading

Life Science

Contributing to measures against unknown infectious and other diseases that threaten humanity
GENECUBE® fully automated gene analysis system for PCR testing, and specialized reagentsContributing to both patients and the earth through high permeability
Cellulose-derived artificial kidney hollow fiber membrane unique to Toyobo

Toshihiro Kuroita

Kimihiro Mabuchi

General Manager
Biotechnology Operating Department

General Manager
Medical Materials Operating Department

Toyobo developed the GENECUBE® fully automated gene analysis system in 2011. The system’s combinationof fast-acting DNA amplification PCR enzyme KOD® DNA polymerase with a high-speed temperature control
system is able to return results as quickly as 25 minutes from the start of measurement. As COVID-19 beganrunning rampant across the globe in 2020, we leveraged our experience in the development of enzymes toaccelerate development of PCR testing drugs for SARS-CoV-2 tests, receiving regulatory approval in July ofthat year. At present, over 300 GENECUBE® units have been adopted by medical institutions in Japan, where
they contribute to society through use in daily testing.
About 70 years ago, Toyobo undertook the development of technology using microorganisms to treat
effluent generated from the manufacturing of pulp used as a raw material for rayon. We also investigated thepotential for industrial use of the enzymes created in the cells of microorganisms, and succeeded in applying
the enzymes to diagnostic drugs. Expanding the types of enzymes, about 40 years ago we moved into thefield of genetic research reagents, focusing on restriction enzymes for genetic engineering. Reagents using
the KOD® DNA polymerase PCR enzyme developed by our company, collected from unique microorganisms
inhabiting the undersea volcanic craters of Kodakara-jima Island in Kagoshima Prefecture, demonstrate aparticularly fast DNA amplification rate and accurate
replication. This has led to the reagents’ use in genetic
diagnosis and many other applications. Today, enzyme
technologies have become core technologies in the life
science business.
Unknown infectious diseases and other diseases
that threaten humanity are expected to occur again in
the future. By providing higher-performance products
to clinical testing and other markets, we will contributeto the health of people around the world and to greater
efficiency in treatment.
GENECUBE® fully automated gene analysis system

The life science business’s products are involved in the diagnosis and treatment of diseases, contributing
to patients and society. Hollow fiber membranes are a core product of the business. Since the late 1970s,
we have engaged in development of hollow fiber membranes for seawater desalination. We developed
artificial kidney hollow fiber membranes as one of the applications and launched full-scale production in
1984. For four decades years since then, we have provided artificial kidney hollow fiber membranes for everincreasing numbers of dialysis patients. The product features two main strengths. First, it boasts outstanding
waste removal performance with little change over time during dialysis, thanks to our proprietary film-forming
technology. Second, it features outstanding biocompatibility, with few cases of allergies. While general dialysis
membranes are made from petroleum-derived materials, our cellulose triacetate (CTA) membrane uses natural
cellulose from cotton as its starting material. This confers the advantage of very few patients experiencing
allergic reactions during treatment due to conversion of hydroxy groups that affect patients to acetate. Our
precise control of the membrane surface further prevents clogging and thus a lower likelihood of pressure
fluctuations during dialysis, letting patients undergo treatment with confidence.
We are now working with NIPRO Corporation to build a new plant capable of integrated production thatspans hollow fiber manufacturing to processing into
dialyzers (filtration devices) and commercialization, withthe start of operation scheduled for July 2024.
We have also extended our film-forming technology
to other treatments and developed concentrated ascites
reinfusion therapy (CART) membranes in 2020. These
membranes see application in treatment that filters ascites
accumulated due to conditions such as cancer andcirrhosis of the liver, then collects beneficial proteins witha concentrator and returns them to the patient’s body. We
are also advancing development of acute blood purification
membranes for patients with conditions including sepsis,
Illustration of Dialyzer using Toyobo’s CTA membranewith delivery to patients planned for fiscal 2024.

Introduction

TOYOBO REPORT 2023

Value creation story● Overview by business● Films● Life Science

Value creation strategy

Value creation practice● Environmental and Functional Materials

Foundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

39● Functional Textiles and Trading

Environmental and Functional Materials
Contributing to solving
the world’s issues throughhighly functional materials

The strengths of Toyobo

Business overview in fiscal 2023

● A new corporate body created through a functional materials
manufacturer and a general trading company● Uniqueness of technology, development capabilities,
responsiveness, and ability to comprehend needs● G lobal expandability leveraging our network of overseas sites
and wide-ranging points of customer contact

Opportunities and risks

Chikao Morishige

Opportunities● The global trend toward a circular society andcarbon neutrality (holding of manytechnologies)● Overseas expansion through co-managementwith a general trading company

Risks● Soaring costs of raw materials and fuels andincrease in procurement risks● Alliances between textile and chemical
manufacturers● Intensification of market competition due tosignificant changes in business conditions

Representative Director & Co-COO
Head of Environmental and Functional
Materials Division
President & Representative DirectorCEO
TOYOBO MC Corporation

Net sales and operating profit (¥billion)(¥bn)

Net sales

Operating profit

110.8

FY

2023
4

In fiscal 2023, the final year of financial results under the previous
segment categories of Toyobo group, soaring prices of raw materials
and fuels and other significant changes in business conditions
yielded severe results.
In the environmental solution business, sales of VOC recovery
equipment for lithium-ion battery (LiB) separator plants andreplacement elements were strong under growing demand for LiBs
amid global adoption of electric vehicles (EVs). Non-woven materials
struggled as revisions of product prices were unable to keep up
with increases in prices of raw materials and fuels. In particular, thebusiness was unable to effect price pass-through in products forcivil engineering and construction while quantities did not recover in
automotive-related products, resulting in an operating loss. We plan
to advance reforms including a review of production capacity. Sales
remained strong for high-performance ZYLON® fiber, primarily forarchitectural reinforcement and bicycle tire applications. Sales of
IZANAS® remained strong, primarily for fishing line applications.
As a result, net sales in this segment were ¥110.8 billion andoperating profit was ¥4 billion (results for new segment).

Start of a new company

TOYOBO MC Corporation began operation in April 2023 as a joint
venture between our company and Mitsubishi Corporation. Our aim
is to grow the environmental and functional materials businesses
shouldered by the new company as a third pillar of the Toyobo
group, alongside the film business and life science business.
The businesses cover many functional, cutting-edge products
based on Toyobo’s proprietary technologies, including functional
resins and environmental solution systems. Looking back, however,net sales of these have been sluggish in terms of growth, withoverseas expansion in particular presenting challenges. In response,
we made the decision to create a new “manufacturer + general
trading company” framework, in order to grow the business throughToyobo’s commitment to technology combined with the overseas
expansion and marketing capabilities of Mitsubishi Corporation.
From the day the business launched, we began efforts to-50000Introduction

TOYOBO REPORT 2023

● Overview by business

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

40● Functional Textiles and Trading

Environmental and Functional Materials

enhance the solidarity of the employees. The initiatives haveincluded briefings on the Medium-Term Management Plan (MTP);
training camps for managers; Medium-Term Management Plan
caravans (dialogues with top management) for three divisions,domestic and overseas workplaces, and affiliated companies; anddialogues with vice presidents.

Growth strategy

To achieve target sales of ¥600 billion for the Toyobo group in
fiscal 2031 as set out in Sustainable Vision 2030, we believe thatthe achievements of the Environmental and Functional Materials
Division will be instrumental. In this business, we are aiming for net
sales of ¥250 billion in fiscal 2031, with ¥145 billion in fiscal 2026,
the final year of the Medium-Term Management Plan. To achieve
this high target, we will strategically roll out initiatives that take abird’s-eye view of the materials value chain and the industry overall.
Specifically, we are tackling individual businesses divided into
“growth,” “revenue enhancement,” and “business reform” categories,
and, through fiscal 2026, are making efforts aimed at expanding
applications in existing businesses while leveraging the information

Net sales target of the environmental and functional
materials businessnetwork of Mitsubishi Corporation. From fiscal 2026 onward, we will
broaden our development of new technologies to meet new needs
and speed the cycle overall, while advancing M&A and corporate
alliances.
This growth strategy represents a major challenge for Toyobo
group. We are committed to achieving significant business
transformation in terms of three points: Global penetration andexpansion of our customer base which has been centered onJapanese companies in Japan and overseas, acceleration of ourdevelopment cycle, and enhancement of production efficiency.
Positive evaluation from our customers will be indispensable inachieving this. We intend to grow TOYOBO MC Corporation into a
company that customers can trust to create things in responseto requests.

(¥bn)

300.0

250

250.0

Future initiatives

Among the five social issues named in Sustainable Vision 2030,
we recognize that “a decarbonized and circular society” and “cleanwater areas, air, and soil, and the preservation of biodiversity” inparticular involve aspects to be shouldered by this business.
Within its Vision of “solving the world’s issues through highly
functional materials,” TOYOBO MC Corporation has put forth threematters to address as its Mission: (1) Ceaselessly transforming
itself, (2) Connecting material technologies to future needs, and (3)Engaging in co-creation to solve social issues. On this foundation,
the company will make every effort to enhance its corporate value
by solving social issues.
Materials that achieve lighter weight and greater functionality inthe field of mobility, along with components and materials required
for flexible printed circuits (FPCs) and for the LiBs vital to the shift
to EVs, are the core products of TOYOBO MC Corporation. In theenvironmental field, the company will be able to ably leverage aqua
membrane technologies and effluent treatment technologies in LiB
manufacturing, contributing to the effective use of water and otherresources and to the reduction of environmental impacts. Osmotic
power generation using aqua membranes, now at the stage ofpractical application in Denmark, is considered highly promising for
deploying high-performance fiber in offshore wind power generation.
These are technologies that will contribute greatly to carbon
neutrality. The business’s products bring together elements that canmake general contributions to the environment despite their differing
scopes. We believe that we will be able to expand the business on
the back of worldwide megatrends.

200.0
150.0

145
110.8

100.0
50.0
0

VOC recovery equipment

FY2023(results)

FY2026

FY2031Feature: Launch of TOYOBO MC Corporation

p.42

Introduction

TOYOBO REPORT 2023

● Overview by business

CSV examples

Value creation story● Films● Life Science

Value creation strategy

Value creation practice● Environmental and Functional Materials● Feature: Launch of TOYOBO MC Corporation

Reference material

41● Functional Textiles and Trading

Environmental and Functional Materials

Contributing to enhanced performance and safety in lithium-ion batteries
HARDLEN ® sustainable adhesive

Helping to bring on the 6G communication era
HARDLEN® leverages the strength of low dielectric properties

Kenji Shiga

Koichi Sakamoto

Manager
TOYOBO MC Corporation

TOYOBO MC Corporation

The appearance of diverse electronic devices and the accelerated development of electric vehicles (EVs) arespurring ever greater demand for lithium-ion batteries (LiBs). The electrolytes in LiBs must be tightly sealed
to prevent internal leaks. As the batteries themselves become hot, however, high heat resistance is also
required for sealing materials and adhesives. Impurities must be thoroughly removed, as their presence in thematerials used in LiBs can result in degradation of battery performance and in fires. The HARDLEN® adhesion
promoter for polyolefin handled by TOYOBO MC Corporation is an adhesive that features excellent adhesion
to polypropylene (PP) resin. With its heat resistance enhanced through the application of maleic anhydride
modification technology, it has been adopted as an adhesive for LiB sealing materials. The company achieved
supply to customers from an early stage of the growing demand for LiBs thanks to its one-of-a-kind technologies
and manufacturing processes for removal of impurities, and boasts a high market share even now.
These technologies originate in the company’s textile dyeing technologies. About 50 years ago, the resin
known as PP faced a challenge in that while it was light and convenient, it did not dissolve in organic solvents
and was thus difficult to process and dye. Toyo Kasei Kogyo Co., Ltd.* developed a technology to chlorinate PP,
dissolve it in solvent, and dye it. The company also introduced maleic
anhydride modification technology that enables precise modificationof the chlorinated PP, for free control over its physical properties.
HARDLEN® which is able to freely bond PP to other polymers, has won
strong approval in the marketplace and has grown its market shareprimarily in automotive coating applications. As a further application,
the company developed the above-mentioned adhesive for LiB sealingmaterials and has been boosting production since 2017.
LiBs are indispensable not only for EVs but also for renewableenergy storage batteries, robots, IoT devices, and more. The stablesupply of HARDLEN® which aids battery performance and safety,
will contribute to the evolution and advancement of electronic
devices.
*Merged into TOYOBO CO., LTD. in 2010

Foundation for value
creation

New HARDLEN® manufacturing facility at the
Takasago Plant

Toyobo’s maleic anhydride modification technology and impurity removal production technology areboth without rival. Making use of these technologies, HARDLEN® boasts a strong advantage in themarketplace. We are currently conducting research and development into new applications. The terms“5G” and “6G” are commonly heard in the context of next-generation communication systems as an eraof ultra-high speed, ultra-low latency, and massively simultaneous connections rapidly approaches.
Technical hurdles remain, however, including those of materials. As an example, 6G makes use of evenhigher frequency electromagnetic waves than 5G does, but signal attenuation and delay problems arise
with the use of current materials. Prevention of these problems demands materials with lower dielectric
constants for use in components such as antennas. The key to technological innovation in this area is ourcompany’s impurity removal production technology. Adhesives designed around HARDLEN® are able toachieve a low dielectric constant. We are already supplying our low dielectric adhesives to printed circuitboard material manufacturers in the Asian region, and our development unit is rushing to develop ultra-low
dielectric adhesives for 6G that leverage the strengths of
HARDLEN® .
Multiple sensors and radar systems are also usedin autonomous driving systems and factory automation
systems, which are expected to proliferate in the future.
As high speed, high-capacity, and stable communication
infrastructure is indispensable for the safety of thesesystems, low dielectric properties are demanded of theadhesives used in this infrastructure. Under the belief
that our business will see use in many industrial andlifestyle scenarios and that it can broadly contribute to
the safety and security of society, we undertake our workwith enthusiasm every day.
Circuit board using HARDLEN ®

Introduction

TOYOBO REPORT 2023

● Overview by businessFeatureLaunch of TOYOBO MC Corporation
TOYOBO MC Corporation (TMC), established by Toyobo
TOYOBO MC Corporation (TMC), established by Toyobo andand Mitsubishi
Corporation
new joint
ventureto
Mitsubishi
Corporation
as a new as
jointaventure
to plan,develop,manufacture,andmanufacture,sell functional materials,
operations
onplan, develop,
and sell began
functional
materials,
April 1, 2023. We spoke about TMC’s growth strategy with vicebegan
operations
on
April
1,
2023.
We
spoke
about
presidents from both parent companies, who have been involved inthe
new growthcompany’s
launch frompreparation
stage
onward.
TMC’sstrategy
withthevice
presidents
from
both
parent companies, who have been involved in the newcompany’s launch from the preparation stage onward.
The road to the launch of a new company
The fusion of the two companies will create a stronger, moreinteresting company
Fujii I was involved in preparations for the company for about two

years from the start of the project. From 2022, I served as the officer
in charge of establishing a new company. During the process, I
had many discussions with Mitsubishi Corporation. What I think
connected the two companies, in a word, is fate.
Toyobo’s environmental and functional materials business,
which the new company is succeeding, is an areathat enjoys cutting-edge technology, yet has not beenable to grow significantly. I sensed a risk that growth
could become even more problematic for the businessduring a phase of rising management costs
for reasons such as environmental
response. I wondered whether
insufficient marketing capabilities
in Toyobo, especially in terms ofoverseas marketing and deployment,
might underlie the inability tosignificantly expand thebusinesses. If it were a

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practice● Feature: Launch of TOYOBO MC Corporation

matter of just one business, working with manufacturers could yield
greater synergy. However, transferring 12 businesses and growing
them significantly definitely requires comprehensive strengths. The
partner who offered those strengths was Mitsubishi Corporation.
Baba I think there are two main things expected of Mitsubishi

Corporation.
One is marketing, a traditional strength of trading companies.
Mitsubishi Corporation has enormous contact area in regions andindustries around the world, which we will leverage to increase
opportunities for entry into customer bases, regions, and markets
that have eluded Toyobo so far.
Another expectation is for the knowledge and experience gained
from sending management teams to about 1,700 companies in which
Mitsubishi Corporation has invested. Incorporating the good partsof the company’s problem-solving know-how, including technicalsupport, overseas regulatory compliance, and governance measures,
into TMC should enable a stronger, more interesting company.
Fujii Mitsubishi Corporation has very compelling functions andassets, including a 110-site network, global information capabilities,
the intelligence functions to analyze that information, and planningcapabilities. Mitsubishi Corporation has also been investing heavily
in carbon neutrality, and is developing a lot of clean energy witha focus on wind power generation. I believe that this will makeconsiderable contributions to expanded use of Toyobo’s energyrelated materials, as well as to the advance of energy conversion at
production sites.
Trough our discussions, I’ve felt a difference between two
companies in terms of sense of speed and persistence, a weak
point for Toyobo. This sort of cross-cultural integration itself is a

Juro Baba
Executive Vice-president &Representative Director, COO
Controlling Supervisor ofPortfolio Management
TOYOBO MC Corporation

Dialogue

Foundation for value
creation

Reference material

42● Functional Textiles and Trading

major factor in growth. I have expectations that growth opportunities
for human resources, including experience at overseas sites, will
broaden.

The strengths of TOYOBO MC Corporation
Meeting the needs of society with technology, information, andplanning capabilities
Baba TMC has already announced its medium- to long-term
management targets. Approaching those high targets will require
growing existing customers while also cutting into new customers
and markets not yet reached. Decarbonization has become alarge movement over the past few years, and we’ve arrived at
an era that demands a change from the passive environmental
response of the past to an aggressive environmental response.
Toyobo has many materials that are needed now, not only inJapan but across the world. These include engineering plastic
materials that contribute to weight reduction in electric vehicles(EVs) and low dielectric adhesive raw materials that are required
for the advance of digitalization. In talks with several companies
before the establishment of TMC, I heard many times that Toyobo
is a company that has the creation capabilities to properly meetcustomers’ detailed demands.

Fujii We had discussions with Mitsubishi Corporation about
how we want to make TMC a company with technology at its core.
Although the company’s materials all contribute in different forms,
they all hold the potential to be environmentally conscious. In the
coming era of providing solutions rather than materials
themselves, it will be important to use materials andtechnologies to solve the problems
customers face. I think that if we
can also uncover and suggest
issues that customers are notaware of, we can make evengreater contributions. I believe
Director, Vice President, Executive Officer,that we’ll be able to achieve
Assistant to the President, Special Mission
this by combining the strong
Officer, CCO
technical capabilities of

Naoki Fujii

TOYOBO MC Corporation

Introduction

TOYOBO REPORT 2023

● Overview by businessToyobo with the high-level information and planning capabilities ofMitsubishi Corporation.
Baba Mitsubishi Corporation has continued to think about where
the world’s needs lie, and what we can connect, and how, in order toaddress those. As long as we can learn where the needs are that callfor TMC, we can consider what to make and then execute on that,which is Toyobo’s area of expertise. This fusion is our greatest strength.
As an example, even as a circular society advances, there arestill many plastics that are thrown away without recycling. To recycle
these, their materials must be recyclable to begin with. It is also
important to create mechanisms for the recycling of these materials. If
we can participate in the creation of regulations and rules for countries
and industries to create such social mechanisms, and propose
materials to customers, I think that would be really interesting.

Reviewing organizational design
Going beyond the conventional boundaries of materials
manufacturers
Fujii In the organizational design of TMC, I thought it would be goodto review our organizations so far. In Toyobo, the growth potential
of individual businesses reached limits because of silos created inorganizations under the vertical divisions of the business division
structure. I thought that we should first change these vertical divisions.
Baba Right. I think that the business division structure, withbusinesses subdivided and with sales, production, and development
integrated, functioned extremely efficiently interms of quickly responding to customers’

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practice● Feature: Launch of TOYOBO MC Corporationneeds. Since the 1990s in particular, with no large new products
appearing and sales stagnant, the company overcame difficult times
through solid earning in small units.
However, looking at what’s important in a phase where thecompany aims for further growth, I think there are two things. The
first is bold allocation of management resources. When verticaldivision is strong, maximizing its own return becomes the goal for
an individual organization, which leads to the encircling of humanresources and funds. Taking down such walls and creating afunctional division structure at TMC, capable of making concentrated
shifts of people and funds, was a major decision.
The other important thing is the achievement of co-creationthat goes beyond businesses and products. Until now, cooperation
among business departments has been weak, and we’ve been
unable to make multifaceted responses even when potential arises
to provide varied products and solutions. As the needs of the world
become increasingly complex, solving problems through a single
product will likely become difficult. A mindset of proposing solutions
that combine several businesses or different products, or of goinghorizontal and introducing other business divisions depending on theissue, will be important.
As information sharing is the key to functional organizations,to address adverse effects such as increased difficulty incommunicating, we established strategic planning departments
at three functional divisions to facilitate information sharing andoperations. These departments shoulder a big role in achieving
cooperation among divisions.
Fujii There is no correct answer to the question of what form
organizations should take. The answer naturally changes according
to goals and strategy. With the new company, I expect that a lot ofJuro Baba

Foundation for value
creation

43● Functional Textiles and Trading

things will come to light through the change to function-specificorganizations.

A wonderful fusion
A shiny new company with a one-of-a-kind corporate culture
Baba I was surprised that the two companies, which both havelong histories, share a common corporate philosophy of viewing
contribution to a prosperous society as the purpose of their businessactivities, going back to our “Jun-Ri-Soku-Yu” and Mitsubishi
Corporation’s “The Three Corporate Principles,” corporate
philosophies set by our companies’ respective founders in the Meiji
era. I feel that, flowing beneath, there was something very common
to both companies. In terms of work, however, there’s a difference
akin to that of hunting people versus agricultural people. There’s astark contrast between Toyobo, which advances matters carefully
and accurately to avoid any mistake, and Mitsubishi Corporation,
which tends to first take action and think on the run. With thosecompletely different corporate cultures coming together, I want to
see the good parts of each merge, to create a company with a new
culture not seen before.
Fujii Yes. I think it’s a fusion of dissimilar things. One goal of TMC
is enhancing the mobility of people. This may be a brash thought,
but I want to implement human resource development that takes a
step forward to let employees grow through diverse experiences, bymeans such as creation of opportunities for inter-company learningthat includes Mitsubishi Corporation too, rather than interaction within
TMC alone. Creating a shiny, new company with a wonderful corporate
culture is what I see as my biggest
mission as a vice president.

Naoki Fujii

April 1990

Joined Mitsubishi Corporation

April 1987

Joined TOYOBO CO., LTD.

September 2001

Mitsubishi Corporation (Americas)

November 2007

General Manager, Procurement Department

April 2013

Corporate Planning Department

April 2022

Appointed Executive Officer

June 2011 	General Manager, Planning and Management Functional
Materials

July 2022	Senioir Vice President
Special Appointments
General Manager to Industrial Materials
Group CEO

Reference material

April 2015

Manager, Iwakuni Production Center

April 2018

Manager, Corporate Planning Department

April 2021

Appointed Executive Officer

Introduction

TOYOBO REPORT 2023

Value creation story● Overview by business● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material

44● Functional Textiles and Trading

Functional Textiles and Trading
Executing business portfolio
reform to arrive at what ourbusiness should be

The strengths of Toyobo

Business overview in fiscal 2023

● Know-how for deployment of biodegradable fibers, developed
as a synthetic fiber manufacturer, to airbags● A product lineup friendly to people and the earth● Polymerization and modification technology developed as
Japan’s first acrylic fiber manufacturer

Opportunities and risks

Opportunities● Expansion of business opportunities throughreplacement with environmental materials(biodegradation and recycling)● Restructuring of the environmental materials
industry, strengthening of corporate
constitution through alliances, and expansionof opportunities

Risks● Soaring prices due to monopolization anddiscontinuation of production of
biodegradable, recyclable, and other small-lot
raw materials● Risk of acceleration of business closures bydomestic subcontractors in the apparelindustry, and risk in securing labor in plants

Shigeo Nishiyama
Senior Managing Executive Officer
Head of Functional Textiles andTrading Division

In this business, we are making efforts to carry out a businessreform master plan for arriving at what our business portfolio shouldbe, based on the 2025 Medium-Term Management Plan.
In fiscal 2023, businesses were significantly affected by soaring
prices of raw materials and fuels, with exchange rate factors causedby sharp depreciation of the yen also having a negative impact.
Amid this, sales and profit were led by thobe, traditional Middle
Eastern apparel. We were able to pass along nearly all of theincrease in raw material prices but struggled significantly in passing
along fuel prices, with the result that performance declined otherthan in TOYOBO STC CO., LTD.
As a result, net sales in this segment were ¥92.4 billion andoperating profit was - ¥2.5 billion (results for new segment).
With the exception of cost increase factors, progress was madeaccording to schedule in addressing issues in each business. We
expect that exchange rate impacts will be mitigated throughnew contracts.

Net sales and operating profit (¥billion)(¥bn)

Net sales

Operating profit-50000

92.4

FY

2023
-2.5
Thobe, traditional Middle Eastern apparelIntroduction

TOYOBO REPORT 2023

● Overview by business

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practice● Feature: Launch of TOYOBO MC Corporation

Functional Textiles and Trading

Business strategy

Under its vision of creating small comfortable changes in living
through textile technologies, the business is working to develop
and commercialize distinctive technologies that find use in varied
lifestyle scenarios. The division’s business is diverse, covering
many products related to everyday living. To solve users’ concerns
and issues, we intend to leverage our technical and development
capabilities and use trading company functions to bring together
wide-ranging knowledge and skills, then commercialize andglobally deploy these. We will abandon the idea of continuing
through our own efforts, and will enhance our strategies throughalliances with other companies and other industries, including
industry restructuring. With regard to the social issues noted in
Sustainable Vision 2030, we are strengthening our initiatives related
to “employee well-being and human rights in the supply chain” and “adecarbonized and circular society” in particular.
Based on our master plan, we are working to achieve early
profitability, prioritizing “withdrawal from unprofitable businesses
and products,” “optimization of production scale and personnel,”“pass-through pricing to address cost increases,” and other items inorder to earn an appropriate marginal profit rate in each business.
We entered the airbag business through non-coated fabrics.
We also manufacture silicone coated fabrics at present, but inthe recycling society of the future, non-coated fabrics that do not
require removal of silicone will grow in importance. Our know-how
in the utilization and manufacturing of biodegradable fibers is also
a strength. We are steadily carrying out our roadmap for achieving
profitability and are moving forward with negotiations on base pricerevision, integration of product numbering, proper allocation, andreview of shared expenses. Toyobo Indorama Advanced Fibers Co.,
Ltd. (TIAF), a joint venture with Indorama Polyester Industries PCL(IPI) to manufacture airbag yarn, began operation in October 2022.
We are working to achieve stable operation as quickly as possible.
The functional textile business is carrying out improvements
to its human capital structure, with the start of a new structurescheduled for March 2024. Together with this, we are also
undertaking transfer of production technology to Toyobo Textile

Foundation for value
creation

Reference material

45● Functional Textiles and Trading

CSV examples(Malaysia) SDN.BHD.
In the textile business, our founding industry in which we haveaccumulated over 140 years of technologies, we have carried out
integration and reorganization of group companies with the goal ofenhanced profitability and asset efficiency, and launched TOYOBOTEXTILE CO., LTD. in April 2022. Through the consolidation of threeplants and a return to profit through integrated business operations atoverseas sites, we aim to establish a foundation for profitability. The
greatest advantage of woolen menswear company Miyukikeori Co.,
Ltd. is its status as a luxury brand capable of integrated productionthat spans yarn, weaving, processing, and sewing. The company
is also developing the world’s finest, lightest class of fabrics using
ultra-strong yarn (Manerd® wool technical hybrid yarn). Whileachieving stable management through enhanced efficiency in the
textile business, we are engaging in selection and concentration ofbusiness partners (moving away from department stores and toward
high value-added apparel).
Responding to a sharp rise in construction steel materials andconstruction-related costs, acrylic fiber company Japan Exlan Co.,
Ltd. conducted a review of its original revitalization plan, and has
undertaken a new start. The company will shift to OEM for acrylic
raw cotton, improve the efficiency of its production processes,
and carry out sales strategies and sales expansion measures that
include external collaboration.
The trading company TOYOBO STC CO., LTD. will focus on the
expansion of new commercial flows with Toyobo group companies
and on expansion of proprietary technical products.

Contributing to the advancement of the domestic
recycling market through our technology
Taking on the upcycling of apparelEiichi Shimizu
President
TOYOBO TEXTILE CO., LTD.

While the Toyobo group has established a variety of recycling
technologies, recycling related to apparel has been limited
to the reuse of fiber scrap in plants. One reason for this is thatthe development of a domestic recycling market in the field ofapparel is still a matter for the future. A considerable problem
has existed in that value creation supporting both the economy
and the environment cannot be achieved without the creation ofrecycled clothing with greater appeal to consumers. However,unlike general apparel manufacturers, our textile businessperforms integrated production that spans fiber to yarn making
and sewing. Accordingly, operating a recycling loop throughout
the supply chain will enable higher-value recycling. TOYOBOTEXTILE CO., LTD. isundertaking full-scale
upcycling of apparel,seeking to create amarket by providing highquality and compelling
recycled products inJapan.

Upcycled apparel products (hangers madefrom crushed and pelletized fiber scrap)
Completion of a nylon yarn production plant for TIAF’s airbags on the grounds of IPI

Introduction

TOYOBO REPORT 2023

● Overview by business

CSV examples

Value creation story● Films● Life Science

Value creation strategy● Environmental and Functional Materials

Value creation practiceFoundation for value
creation● Feature: Launch of TOYOBO MC Corporation

Reference material46● Functional Textiles and Trading

Functional Textiles and Trading

Contributing to the protection of lives
and the environment
Successful development of airbag fabric technologies

Contributing to the prevention of damage to healthand reduction of environmental impacts
Development of adhesive-free waterproof sheets

Contributing to the reduction of environmental
impacts through high energy efficiency
Joint development of energy-saving air conditioner
components and materials together with PanasonicTadao Kuroki

Masahide Takemoto

Tatsuaki Sumitani

General Manager
Airbag Operating Department

President
TOYOBO STC CO., LTD.

Director
Japan Exlan Co., Ltd.

For its heat resistance and other merits, nylon 66 has been widelyadopted as airbag fabric that protect lives in emergencies while driving.
However, the material faces issues including shortages of supply anddifficulty in recycling, leading to increased calls for polyester fabrics.
Compared to nylon, the use of polyester as a raw material is
expected to roughly halve CO2 emitted in the polymer resin production
process. A high percentage of recycled polyester materials can also
be used. Our company has undertaken the development of polyester
airbag fabric that features outstanding environmental compatibility.
The material achieves heat resistance and storability on par with nylon
66, and was adopted by automobile manufacturers in 2022.
We will continue advancing technological innovations aimed atcreating “the solutions needed by people and the earth.”

Varied types of airbags to secure greater safety

The urethane coating film waterproofing and ventilation buffer method,a standard method used in rooftop waterproofing, makes use of
conventional chloroprene adhesives. This entails a major issue inatmospheric dispersion of toluene, xylene, and other chemicals containedin the adhesives. As these chemical substances are causes of damage
to site workers’ health and photochemical smog, posing a concern about
global warming impacts due to chemical changes in the smog, it is hopedthat use of the substances will be reduced or discontinued.
New asphalt self-adhering ventilation buffer sheets developed by
TOYOBO STC CO., LTD. can be directly affixed to rooftops with no use ofadhesives. This alleviates concerns
over air pollution and significantly
reduces construction work manhours as well, enabling reductionof both environmental impacts andconstruction costs compared toconventional products. Through thedevelopment of industrial materials
that take the global environment
into consideration, we will continue
contributing to both business andthe environment.
Applying waterproof material coating toventilation buffer sheets

Japan Exlan Co., Ltd. has developed a desiccant rotor using paper
coated with fine particles that absorb and desorb moisture throughacrylic material. Heat pump-type air conditioning is typically used inbuildings and plants. Absorbing moisture from air prior to intake by
the heat pump, followed by contact with the refrigerant, eliminates
discharge of drain water and enables highly energy-efficient cooling.
Providing humidity in winter also enables efficient heating, achieving
significant energy savings compared
to conventional heat pump-based air
conditioning.
Panasonic evaluated the desiccantrotor, which features quick regeneration
at lower temperatures and with low
energy usage and adopted for use in
its air conditioners in 2022. As a resultof achieving industry-leading energysaving performance through joint systemdesign by Panasonic Corporation andour company, Panasonic Corporation
was a recipient of the Energy
Conservation Grand Prize in fiscal 2022
and fiscal 2023.
Desiccant rotors adopted for use inPanasonic air conditioners

04

Introduction

TOYOBO REPORT 2023

● Sustainability management

Value creation story

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Foundation for value
creation

Reference material

47● GovernanceFoundation for value creation48

Sustainability management

51

Disclosure based on TCFD
recommendations

55

61

Realization of a circular society
C onservation of water resources, conservation of
biodiversity, chemical substances management

Safety and disaster prevention

Quality

Respect for human rights

Human capital

KAERU — Creating opportunities for dialogue that brings awareness —Partnerships (supply chain)

Environment
Realization of a decarbonized society

Society69

Partnerships (social contribution)

Governance​Outside Director message

Management teamCorporate governanceRisk management

ComplianceIntroduction

TOYOBO REPORT 2023

● Sustainability management

Value creation story

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Sustainability management
Commitment of the officer in charge of sustainability

We accomplish sustainable growthby solving social issues throughour business and with steadyadvancement of our initiatives

Nobuya Fujiwara
Managing Executive Officer
Head of Corporate Sustainability Division

Foundation for value
creation

Reference material

48● Governance

Sustainability management

Toyobo group has strengthened its sustainability initiatives since
fiscal 2021, and has achieved definite results over these past
three years. In Sustainable Vision 2030, the long-term vision weannounced in May 2022, we identified five social issues that we
can solve through our contributions, given the society we envision
for 2030, including climate change, biodiversity, and human rights.
Regarding measures against climate change, we revised our
GHG Emissions Reduction Plan, raising the fiscal 2031 reduction
target for Scope 1 and 2 from 30% of the fiscal 2014 level to 46%
or higher, and also setting a new reduction target for Scope 3. Our
reduction target has been recognized as adhering to the levels
stipulated by the Paris Agreement, and was also certified by the
global Science Based Targets initiative in December 2022. As wework to reduce GHG emissions throughout our supply chain, we
will strengthen our collaboration with our diverse stakeholders.
Our biodiversity conservation efforts include joining the 30
by 30 Alliance for Biodiversity in November 2022, an initiative toconserve 30% or more of land and sea as healthy ecosystems by
the year 2030. We also applied for OECM international certification
for forests owned by our group. We are implementing activities
toward the (nature-positive) goal of stopping biodiversity loss andeffecting restoration.
Regarding business and human rights, in October 2020 we laidout the Toyobo Group Human Rights Policy, and have stated our“respect for human rights throughout our supply chain” at the topof Sustainable Vision 2030. Having begun practicing due diligencein human rights from fiscal 2023, we place priority for our groupon gaining a thorough understanding of the operational status of
non-Japanese technical trainees. After starting the effort in Japan,
we will implement a phased expansion to other countries in the
future. Regarding our supply chain, we have established CSR
Procurement Guidelines for all suppliers, and are advancing efforts
to ensure our policies are understood, including through dialogue
with suppliers that have issues.
Corporate sustainability consists of solving social issues
through our business.

We have numerous products and solutions that contributedirectly to solving social issues, and while expanding those
products, we will generate new businesses by evolving andintegrating our stock of technologies accumulated in the past.
We could, for example, expand our products that bring about areduction in carbon footprint through a combination of Scope 1 and2 reductions and the use of recycled and biomass raw materials,
thinning of components, etc. We will expand products andsolutions that contribute to measures against climate change andto preservation of biodiversity, such as seawater desalination using
less energy and renewable sources of energy, reuse of water,
power generation using membranes, and devices that collect andreuse the volatile organic compounds used in the manufacture ofelectric vehicle batteries.
Genetic test reagents for PCR tests are helping with measuresagainst the spread of COVID-19 and other infectious diseases.
Biomanufacturing, which combines polymer technology andbiomedical technology, the core technologies involved in genetic
test reagents, can create businesses that solve issues in bothclimate change countermeasures and biodiversity conservation.
We have, for example, started conducting basic research on uses
for unutilized biomass. Future potential is thus hidden in such raw
materials as those produced by thinning our group-owned forests.
We have been operating businesses that contribute to solving
the social issues of the times ever since our founding in 1882, andour business portfolio has therefore been changing. One of themottoes of our company’s founder, Eiichi Shibusawa, was “JunRi-Soku-Yu (Adhering to reason leads to prosperity).” With this as
our corporate philosophy, we aim to be a group that continues tocreate solutions needed by people and the earth.
Being oriented toward sustainable growth means becoming acompany that achieves sustainable growth through its contributions
to the sustainability of society. Spreading and promoting thisawareness is my duty.

Introduction

TOYOBO REPORT 2023

● Sustainability management

Value creation story

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Foundation for value
creation● Governance

Sustainability management

Sustainability management

Basic approach

By contributing to the realization of a sustainable society, we realize
the vision of Toyobo group, which expresses how we think aboutsustainability: “We are a group that continues to create the solutions
needed by people and the earth with materials and science.” At
the same time, the contributions our group makes to realizing
a sustainable society will lead to profits, thereby increasing ourcorporate value, which in turn will lead to the growth of our businessand to the realization of the next sustainable society. Our concept ofsustainability consists in the continuation of this positive spiral.
● Policy
1. M anagement that takes the sustainability of society into
consideration, and thus management that increases thesustainability of our company
2. Sustainability that builds a solid management foundation: The
axis of our management foundation (ESG)
3. Sustainability that strengthens our competitiveness and drives
growth: The axis of our business (CSV)

Toyobo group has established a Sustainability Committee, with
our President serving as chairperson. Committee meetings were
held four times in fiscal 2023, with deliberations covering themes
including checking on company-wide sustainability action, GHG
emission reduction targets, nature-positive matters, geopoliticalrisk, and committee structure in consideration of the requirementsof ISSB, etc. In April 2023, we reviewed our vision for our
Sustainability Committee as a component of the sustainability
management required by the Corporate Governance Code and byinternational sustainability standards. We reformed the committee
into a system for integrated deliberations with a focus on mediumto long-term sustainability themes related to our company-wide
long-term strategy.
This new structure transfers the roles of eight committees
previously under the Sustainability Committee umbrella to
the respective divisions in charge, which will be responsible
for advancing their activities. We are continuing with the Risk
Management Committee and Compliance Committee, which
require company-wide cross-organizational discussions and tasks,

Sustainability promotion structure (as of April 1, 2023)
Reporting

CSV

Sustainability

Promotingpositive impacts

Sustainability Committee

Creating social value
through our business(Solving social issues)
Business divisions

ESG
Controlling
negative impacts
Not having anegative (–) impact
on society

and have established a new Climate Change and Biodiversity
Committee.
Meeting six times a year beginning in fiscal 2024, the committee
will advance sustainability initiatives that lead us toward ourenvisioned ideal. It will engage in integrated discussions of priority
issues (materialities), deliberate on strategies, measures, andindicators from the perspective of risk and opportunity, and manage
the progress.
We have also established a Corporate Sustainability Division,
which is responsible for drafting and promoting various specificmeasures, communicating them externally, and encouraging
dialogue.

Organizational structure

Conceptual clarification: Sustainability/CSV/ESG

Having a positive (+)
impact on society

49

Reference material

Responding to society’s needs inour management and business development
Reducing greenhouse gas emissions, respect for human rights, social
andenvironmental considerations in the supply chain, etc.
Business divisions, corporate departments

Chair:
President
Members: Heads of Divisions,ofﬁcers in charge ofcorporate departments
Secretariat: Corporate Sustainability
Department
Corporate Planning
Department

Board of Directors

Board of Corporate Auditors

President

Board of Managing
Executive Officers andControlling Supervisors

Risk Management Committee
Chair:
President
Members: Heads of Divisions,ofﬁcers in charge ofcorporate departments
Secretariat: Corporate Sustainability
Department

Corporate
Planning Committee

Climate Change andBiodiversity Committee
Chair:
Ofﬁcer in charge of sustainability
Members: Ofﬁcers in charge of related departments,
appointed by Chair
Secretariat: Corporate Sustainability Department
Engineering Department

Financial
Control Committee

Corporate Departments
Business Divisions

Compliance Committee
Chair:
Ofﬁcer in charge of compliance
Members: Heads of Divisions, ofﬁcers in charge of corporate departments
Secretariat: Legal and Compliance Department

Introduction

TOYOBO REPORT 2023

● Sustainability management

Value creation story

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Foundation for value
creation● Governance

Sustainability management
Initiatives

Since our group’s founding by Eiichi Shibusawa, we have taken
the philosophy of one of his mottoes, “Jun-Ri-Soku-Yu (Adhering
to reason leads to prosperity),” as the basis for our concept that
we grow our own business by enriching society. By putting this into
practice, we have anticipated modern CSV.
Since fiscal 2021, we have been moving ahead with activities
under a full-fledged sustainability management orientation. Our
efforts have been particularly directed toward carbon neutrality, thecircular economy, human rights, human capital, and biodiversity,and upon formulating these strategies, we have specified
milestones.

The United Nations Global Compact

In January 2020, we became a signatory
to the United Nations Global Compact(UNGC) and joined the Global Compact
Network Japan, which comprises
Japanese companies and organizations
that are UNGC signatories. We havedone so because we agree with theprinciple of solving global issues andachieving sustainable growth as a responsible corporate citizen.
Moreover, through participating in subcommittees of the Global
Compact Network Japan (on ESG, supply chains, environmental
management, Kansai, reporting research, etc.), we gather
information that we apply in our day-to-day activities.
Moving forward, we will strengthen our efforts in keeping with
the Ten Principles of the UNGC as we contribute to the realizationof a sustainable society.

50

Reference material

Sustainability management

Year and monthJanuary 2020

April 2020

Details of initiatives
Became a signatory to the United Nations Global Compact and joined the Global Compact Network Japan
Endorsed the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD)
Established the Corporate Sustainability Department. Incorporated ESG elements into management and strategy, and strengthened
communication of information to stakeholders
Established the Sustainability Committee (renamed the CSR Committee), chaired by the President
Placed the Corporate Sustainability Department under direct control of the President

April 2021

Established a system to promote efforts toward carbon neutrality
Established the Carbon Neutral Strategies Council and the Carbon Neutral Strategies Cross-Functional Team
Established the Risk Management Committee, chaired by the President

April 2022
May 2022

Established the Corporate Sustainability Division
Announced Sustainable Vision 2030
Formulated the GHG Emission Reduction Plan by 2050

November 2022

Joined the 30 by 30 Alliance for Biodiversity

December 2022

Obtained Science based target (SBT) certification

April 2023

Restructured the Sustainability Committee

The Ten Principles of the UNGC
Human Rights

Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; andPrinciple 2: make sure that they are not complicit in human rights abuses.

See p.15-17,
p.63, p.67

Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right tocollective bargaining;

labourPrinciple 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; andSee p.15-17,
p.64-65

Principle 6: the elimination of discrimination in respect of employment and occupation.
Principle 7: Businesses should support a precautionary approach to environmental challenges;

Environment

Principle 8: undertake initiatives to promote greater environmental responsibility; andSee p.15-17,
p.32-41,
p.44-46, p.55-60

Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

See p.15-17, p.77

Introduction

TOYOBO REPORT 2023

Value creation story● Sustainability management

Value creation strategy● Disclosure based on TCFD recommendations

Foundation for value
creation

Value creation practice● Environment● Society

Reference material

51● Governance

Disclosure based on TCFD recommendations
Recognizing the enormity of the impact that climate change has on our stakeholders and our group.
Toyobo group has identified the realization of a decarbonized and circular society among its importantsustainability goals.
In January 2020, we endorsed the Task Force on Climate-related Financial Disclosure (TCFD)
recommendations, and are moving forward with disclosure of our initiatives in keeping with therecommendations.
In May 2022, we published our Roadmap for Carbon Neutrality as
part of Sustainable Vision 2030.
In keeping with the levels sought by the Paris Agreement,
we aim to reduce emissions of greenhouse gases (GHGs) fromour business activities (Scope 1 and 2) by 46% or more from thefiscal 2014 level by fiscal 2031, and to reach net zero emissions
by fiscal 2051.
Moreover, we have set a goal for fiscal 2051 of avoided
emissions in an amount that exceeds the GHG emissions of theentire value chain of Toyobo group.

Governance

We have established the Sustainability Committee, chaired by thepresident who has the highest seniority regarding issues related toclimate change. The committee deliberates the setting of high-level
policies and targets for solving these issues. The Board of Directors
receives the committee reports, approves important items such as
high-level policies and targets, and monitors progress of the relevant
activities.
We established the Carbon Neutral Strategies Council and theCarbon Neutral Strategies Cross-Functional Team (CN-CFT), andsince fiscal 2022 have tasked them with formulating and advancing

Roadmap for Carbon Neutrality

Promotion structure (after fiscal 2024)
Transition (low-carbon)

26
121

10,000 tonnes%

Production
increase

Reporting
Fuel
conversion
Renewableenergyadoption90

10,000 tonnes

FY2014

Board of Directors

Carbon neutral (decarbonization)

Energyconservation

Reduction
Reduction

FY2021strategies toward realizing carbon neutrality. To steadily address
the realization of carbon neutrality, we also formed a working groupwithin the CN-CFT comprising members from an organizational crosssection of the whole company, and undertook initiatives including
formulation of a roadmap for carbon neutrality and the introduction ofinternal carbon pricing.
We revised our structure in fiscal 2023, including establishmentof the Climate Change and Biodiversity Committee. As we
incorporate international sustainability standards, we are moving
ahead with a company-wide response to climate change.

President

46%

Supervision of progress

Reduction

Major GHG reduction policies

Carbon-neutral measures

Energy conservation (work improvements)

Conversion to carbon-free fuels(hydrogen, ammonia, etc.)

Enhancement of production efficiency
Introduction/procurement of renewableenergy (photovoltaics, micro-hydroelectric
power generation, etc.)

65.5

10,000 tonnes

Electrification of
production processes

Fuel conversion (coal-free)Procurement of carbon-freeelectric power

Examination of introduction ofcarbon-free fuels

Introduction of carbon offsets(CCUS, forest absorption, etc.)

Switching to lower carbon in purchased
electric power

FY2031Net zerozero
NetSustainability Committee
Climate Change
andBiodiversity Committee

Offset
FY2051(Chair: President)(Members: Officers sitting on the Board ofManaging Executive Officers andControlling Supervisors)*(Chair: Head of Sustainability Division)(Members: CTO, Deputy Head of Films Division,
General Manager ofIT and DX Planning Department)*T he president, vice-president, heads of divisions, executive officers in controlling supervisory
positions, the chairperson, and corporate auditors may express opinions.

Introduction

TOYOBO REPORT 2023

Value creation story● Sustainability management

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Foundation for value
creation

Reference material

52● Governance

Disclosure based on TCFD recommendations
Risk management

In fiscal 2022, our group set up a Risk Management Committee,
which performs uniform group-wide management of risks including
climate change issues. In addition to its overall administration ofrisk management activities (identification, analysis, assessment,
and response), the committee formulates policy related to risk
management for the whole group, builds and operates effective,
sustainable organizations and systems by running the PDCA cycle,
and works to strengthen the risk management system.
As our point of departure for risk management activities, we
identify serious company-wide risks requiring intensive attention
from the results of evaluations in terms of the two axes of severity of
impact*1 and likelihood of occurrence*2 based on each risk scenario.
Toyobo group manages its important risks based on a companywide assessment of risks that include natural disasters such as
flooding (floods, storm surges, etc.), which are increasing in severity
due to climate change.

Summary scenario analysis
Specified scenario

Description of society

In Sustainable Vision 2030, Toyobo group has identified therealization of a decarbonized and circular society among its
important sustainability goals.
In keeping with the TCFD recommendations, we also analyzed
and compiled future risks and business opportunities under climatechange scenarios based on the Paris Agreement. After identifying
the financial and other impacts of these risks and opportunities, we
intend to boost the resilience of our business strategy by specifying
countermeasures together with indicators and targets.

4°C scenario

Case example● Introduction of a carbon tax and increased carbon prices● Shift to vehicle electrification, spread of renewable energy

Case example● Increase in flooding damage due to heavy rains

Reference scenarios● SDS (IEA WEO2021/ETP2020)● NZE (IEA Net Zero by 2050 A Roadmap for the Global Energy Sector)● RCP2.6 (IPCC AR5)
● SSP1-1.9 (IPCC AR6)

● RCP8.5 (IPCC AR5)
● SSP5-8.5 (IPCC AR6)
● STEPS (IEA WEO2022/ETP2020)

Risk and opportunity trends

In the transition, risks and opportunities emerge more readily

Physical risks and opportunities emerge more readily

Risks, opportunities, and their countermeasures under each scenario
Social change
and its impact

Risks and opportunities
Category

PeriodShort
Term*1 Scope of impact, duration of business operation stoppage, personal harm, reputation, andfinancials are evaluated on a three-point scale that includes “major damage equivalent,”“moderate damage equivalent,” and “minor damage equivalent.”*2 Evaluations use a three-point scale including “occurs frequently,” “occurs occasionally,” and“occurs infrequently.”

Strategy

Under 2°C scenario

Sweeping policies and technological innovations are advanced in efforts to keep
Even with the implementation of intended nationally determined contributions
the average atmospheric temperature increase by the end of the century to withinestablished by Paris Agreement signatory countries in line with the agreement,
1.5°C, and to achieve sustainable development of society. We will have a society in average atmospheric temperature rises by as much as 4°C under business as
which social changes accompanying a shift to a decarbonized society will be highly usual by the end of the century. We will have a society in which changes in climate,
likely to impact business.
including rising temperatures, will be highly likely to impact business.

Details
Introduction of carbon pricing
Increases in raw material prices(carbon price pass-through, etc.)

Impacts of thetransition to a
decarbonizedsociety(sweeping changes
in policy, laws
and regulations,
technology,
markets, etc.)

Transition andrisk

Measures taken by the Toyobo group● Advancement of GHG reduction plans(energy conservation, better production efficiency, fuel conversion, renewable energy adoption, etc.)● Use of internal carbon pricing systems● A ppeals to and collaboration with suppliers (low-carbon raw material development, production technology
assistance, etc.)● Diversification of raw material procurement methods (expanded multiple purchasing and local procurement)

Increase in costs resulting from promotion ● Innovation in production processes and pursuit of super-efficiencyof energy conservation, adoption of high● Greater efficiency of production throughout the value chain (affiliate integration, stronger partnerships, M&A, etc.)
efficiency equipment, etc.
Medium Cost increases due to adoption ofrenewable energy
tolong term
Cost increases due to requirements for
low-carbon and decarbonized productmanufacturing

Transition andopportunities

Mediumterm

Impacts from
Physical risks
progressive climatechange(direct damage
to assets,indirect impact
of supply chain
fragmentation,
Physicalchanges inopportunities
technology,
markets, etc.)

Short tomediumterm● Renewable energy procurement method selection● Expansion of renewable energy adoption and procurement● Promotion of greater efficiency and energy conservation in production processes● Fuel conversion for (coal-free) in-house power generation● Study of carbon-free fuel utilization (hydrogen, ammonia, etc.)● Study of adoption of CCU/CCS or other innovative technologies
Increasing demand for petroleum-derived ● Acceleration in the shift in raw materials toward recycled and biomass-derived materials
resource reduction and replacement● Study of withdrawal from general-purpose materials business that relies on petroleum-derived resources● Acceleration in the shift in raw materials toward recycled and biomass-derived materials
Increase in demand for low-carbon and ● Addressing of procurement issues (shortages) with raw materials (recycled and biomass-derived materials)
decarbonized materials and products● Advancement of development and planning of products with low-carbon and decarbonized materials● Enhanced production and quality control systems for low-carbon and decarbonized products● Enhanced product development and planning in businesses related to renewable energy and storage batteries*
Expansion of markets related to*Osmotic power generation membranes, stationary storage battery electrodes, special fibers and films used for floating offshore
renewable energy and storage batteries wind power, VOC recovery equipment used at secondary lithium ion battery (LiB) plants, separation membranes used at LiB
recycling plants, separation membranes used for lithium purification, etc.

● Scenario analysis
Although a wide range of scenarios are conceivable depending
on how global warming countermeasures are implemented, we
referenced the scenario shown in the diagram on the right as
being typical. We considered the impact on our business andnew opportunities for our group through 2050 under each of two
scenarios: One in which the average global temperature increase is
kept under 2°C, and one in which it rises by 4°C.

Mediumterm
Medium
term
Long
term

Stoppage of raw material supply due tonatural disasters● Review of inventory levels and expansion of multiple purchasing● BCP training implementation
Facilities damage and operational
shutdowns due to flooding (floods, storm ● Enhancement of durability of production and power facilities, relocating or elevating them to higher locations
surges, etc.)● Production site dispersal, relocation, and consolidation
Increase in demand for civil engineering ● Expansion of products used in disaster mitigation and restoration work
work
*Sand-proofing sheets, concrete delamination prevention sheets, soft roadbed improvement materials, etc.
● Expanded sales of (RO/FO, etc.) membranes for seawater desalination
Increased demand for seawater
desalination due to water shortages and ● Energy-conserving and high-durability development for RO/FO membranes, etc.
droughts● Strengthening of production and quality control system for RO/FO membranes, etc.
Increased demand for (prevention and● Expanded demand for products related to food packaging
treatment) measures against infectious
diseases associated with temperature● Promotion of research and development of products and technologies related to infectious diseases
increases

Introduction

TOYOBO REPORT 2023

● Sustainability management

Value creation story

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Foundation for value
creation

Reference material

53● Governance

Disclosure based on TCFD recommendations● Determining risks and opportunities under each scenario
We worked out the group’s risks and opportunities focused on
climate change in the under-2°C scenario and the 4°C scenario.
Only the film business was under consideration in fiscal 2022, but
the study was expanded to cover all group businesses in fiscal
2023. We compiled the specified risk and opportunity items,
reclassified them from the standpoint of social changes, and thenconsidered countermeasures proposed for each (diagram: “Risks,
opportunities, and their countermeasures under each scenario”).
Risks and opportunities we recognize as being particularly
important upon evaluation along the two axes of severity of impact
and likelihood of occurrence are described as follows.
We recognize GHG emissions reduction throughout the
supply chain, including in raw material procurement, as a means ofboth reducing risk and creating opportunity. Specifically, throughplanned Scope 1 and 2 reductions, we will lighten the future burdenof carbon pricing as we prepare to reliably meet our customers’
requirements for decarbonization. In addition, shifting to recycled
and biomass materials for our raw materials will lower our relianceon petroleum-derived resources, reduce future business risk, andlead us to obtain and expand business opportunities. With respect
to the water shortage issue, which poses a growing worldwide risk,
we intend to obtain and expand business opportunities throughsolving this social issue by selling membranes for seawater
desalination, which enables low-energy fresh water production.

Risks and opportunities recognized as particularly
important● Important risk 1: Risk of damage to buildings and facilities
due to flooding (floods, storm surges, etc.)
Our group’s primary plants at Tsuruga, Iwakuni, and Inuyama, are
all located near rivers and coastline and are situated in low-lying
areas, which puts them at risk of flood damage. In the event thatclimate change progresses, we assume that rising sea levels andchanges in rainfall patterns will further heighten the flood damage
risk. Our estimate of asset decrease (the amount of damage
to buildings and equipment) due to flood damage in the 2030s,
calculated from book value, indicated a maximum total for all threeplants of approximately ¥50 billion. To obtain our estimate of theamount of asset decrease from flood damage at these three plants,
we multiplied the book value of their buildings and equipmentby the flood damage rate* published by the Ministry of Land,
Infrastructure, Transport and Tourism.
Because our group understands the flood damage risk to ourplants to be an important climate-related risk, we are implementinga phased reinforcement of our flood damage countermeasures that
includes moving items such as our production and power facilities
to higher locations.
*“ Flood Control and Economic Research Manual (Draft)” (April 2020), Ministry of Land,
Infrastructure, Transport and Tourism● Important risk 2: Carbon pricing implementation
Under a business-as-usual (BAU*) scenario taking fiscal 2021
(actual 900,000 tonnes CO 2) as the base year, Scope 1 and 2
will increase to approximately 1.3 million tonnes CO 2 in fiscal
2031 as sales expand. Assuming that the unit price for carbon is¥15,000 per tonne CO 2 in fiscal 2031, our annual cost would beapproximately ¥20 billion under a BAU scenario.
Our group understands Scope 1 and 2 increases to be an
important climate-related risk, and published Sustainable Vision
2030 in fiscal 2023, which includes our Roadmap for Carbon
Neutrality through fiscal 2031. With the roadmap, we are targeting
reductions in Scope 1 and 2 in fiscal 2031 to 655,000 tonnes CO 2
or less through energy optimization measures that involve energy
conservation (including increased production efficiency), fuelconversion, and adoption of renewable energy. In such a case, ourannual cost incurred from carbon pricing would be approximately¥10 billion, resulting in the cost reduction effect of approximately¥10 billion compared to under the BAU scenario. We plan toinclude the cumulative amount of investments through 2025 under
our Roadmap for Carbon Neutrality in our investments in theenvironment, safety, and disaster prevention (approximately ¥33
billion).
*BAU: “Business as Usual,” indicating a case in which no particular GHG emission reduction
measures are taken.

● Important risk 3: Increase in demand for reduction andreplacement of petroleum-derived resources● Important opportunity 1: Increase in demand for low-carbon
and decarbonized materials and products
Our group’s core films and functional materials businesses
represent more than 40% of total group sales. Amid the change(transition) of society into future decarbonization, we can expect
to see increasing demands from society, including our customers,that we reduce or replace our use of petroleum-derived resources,
and we acknowledge that this is an important climate-related
risk. At the same time, we recognize that there are business
opportunities in the simultaneous increase in demand for lowcarbon and decarbonized materials and products.
Of our current film business sales, approximately 90%, or ¥120
billion, depend on petroleum-derived resources. In Sustainable
Vision 2030, we have defined the technologies and initiatives*that bring about reductions in petroleum-derived resource use
as “greening,” and have set the goal of greening 60% of our film
products by fiscal 2031. Film products that cut down on petroleumderived resource use are also low-carbon or decarbonizedproducts, and by promoting the greening of our film products, we
intend to reduce risk while also obtaining and expanding business
opportunities.
Of our film business sales target for fiscal 2031 ofapproximately ¥220 billion, approximately ¥130 billion is to comefrom obtaining and expanding these opportunities.
*Development of films using biomass raw materials, and films of thin, lightweight materials(strengthening), environmentally friendly design facilitating post-use film recycling (monomaterialization), development of films using recycled raw materials and of recycling technology

Introduction

TOYOBO REPORT 2023

Value creation story● Sustainability management

Value creation strategy● Disclosure based on TCFD recommendations

Value creation practice● Environment● Society

Foundation for value
creation

Reference material

54● Governance

Disclosure based on TCFD recommendations● Important opportunity 2: Increase in demand for seawater
desalination
Our group recognizes that the advance of climate change will
increase the risks of water shortages and droughts worldwide.
Securing water will become an issue in many regions, not just forindustrial uses, but for domestic uses as well. This is expected tofurther intensify the demand for seawater desalination.
Our group’s HOLLOSEP® hollow fiber reverse osmosis
membrane module has characteristics that include resistance tocontamination, giving it particular advantages in desalination ofseawater in enclosed sea areas (such as in the Middle East) thatare susceptible to proliferation of microorganisms. Since its superior
chlorine resistance enables HOLLOSEP® to supply chlorinated raw
water directly to the module, this controls microbial growth within themodule at a relatively low cost, while easy maintenance also helps
improve desalination plant operating rates.
As we work toward obtaining and expanding business
opportunities through solving societal issues, our group set thegoal in Sustainable Vision 2030 of using seawater desalination
with membranes to produce a volume of tap water equivalent to theneeds of 10 million people in fiscal 2031.

Indicators and targets
Category*Indirect emissions other than Scope 1 and 2. This SBT certification concerns GHG emissions
resulting from activities (manufacturing, etc.) related to the purchase of products and services,and to the use of sold products.

Target

Key measures

FY2031: 27% reduction (SBT)*(From FY2014: Equivalent to a 46% reduction)*Base year: FY2021● Improved energy conservation, improved production efficiency, fuel conversion,
adoption of renewable energy, etc.

FY2051: Net zero

● A doption of carbon-free fuels, renewable energy procurement, production process
innovation, etc.

FY2031: 12.5% reduction (SBT)**Base year: FY2021● Category 1*: A cceleration in the shift in raw materials toward recycled and biomassderived materials*Emissions from activities (manufacturing, etc.) related to purchased raw materials andservices● Category 11*: Energy conservation with VOC recovery equipment, etc.
*Emissions from the use of products soldGreen ratio of film products(Specified also as an indicator fortransition risk reduction)

FY2031: 60% or more

● Progress in material and chemical recycling,development and increased adoption of biomass raw materials, reduction of film
thickness, etc.

Seawater desalination withmembranes

FY2031: Equivalent of tap water volume for 10
million people● Expansion of sales of (RO/FO, etc.) membranes for seawater desalination● Energy-conserving and high-durability development for RO/FO membranes, etc.
● Strengthening of production and quality control system for RO/FO membranes, etc.

Capital allocation

Capital investment

FY2023-26 cumulative total: ¥33 billion(Total capital investment for environment, safety,
and disaster prevention)● Carbon reduction for in-house power generation facilities, adoption of renewableenergy facilities, etc.

Internal carbon
pricing−● Set an in-house carbon price of ¥10,000 per tonne CO2 (revised annually as needed)● Expansion of decision-making on capital investment and investment in development facilities which increase or decrease CO2 emissions

Compensation−● Consideration of officer’s compensation set according to the state of GHG reduction

Scope 1, 2

GHG

GHG emissions

Scope 3(Categories 1 and11)

Climate-related
opportunities

Indicators and targets

Our group has set targets with respect to climate change, and weare moving forward with measures for each of them. Our targets for
Scope 1 and 2, as well as for Scope 3*, are based on levels soughtby the Paris Agreement, and were certified as Science Based
Targets under the SBT Initiative in December 2022.
Amid a 6.4% year-on-year increase in sales, we produced 894
thousand t-CO2 under Scope 1 and 2 in fiscal 2023 (a 1% decrease
from 903 thousand t-CO2 the previous fiscal year).

Indicator

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

55

Reference material● Sustainability management ● Disclosure based on TCFD recommendations ● Environment │ Realization of a decarbonized society ● Environment │ Realization of a circular society● Environment │ Conservation of water resources, conservation of biodiversity, chemical substances management ● Society ● GovernanceE

Climate change

Policies and activities-environmental aspects

Realization of a decarbonized society

Basic approach

At Toyobo group, we recognize that climate change is a social issueof great importance and will have major impacts on our business.
We support the Paris Agreement and the Glasgow Climate Pact
adopted by the Conference of the Parties (COP) to the United
Nations Framework Convention on Climate Change (UNFCCC), andwe aim by fiscal 2051 to achieve carbon neutrality according to theglobal target of 1.5℃.

Organizational structure

Our president serves as our most senior executive officer forclimate change-related issues. We have established a Sustainability
Committee chaired by the CEO & Co-COO, which deliberates highlevel policies aimed at solving climate change-related issues. The
Board of Directors receives committee reports, approves important
items such as high-level policies and targets, and monitors progressof the relevant activities.

Targets and results● Targets
Our target for fiscal 2051 is net zero (Scope 1 and 2*) greenhousegas (GHG) emissions from our business activities. As momentum
toward realizing a decarbonized society has grown, we responded in
May 2022 with the passage by our Board of Directors of a resolution
to increase our fiscal 2031 interim target to a reduction of 46% ormore compared to fiscal 2014. We will promote the reduction of GHG
emissions throughout the value chain involved in our activities, andwill expand the avoided emissions of GHGs through our products andservices.
In December 2022, we received certification from the global
Science Based Targets initiative confirming that our group's GHG
emission reduction targets are grounded in science.
* Scope 1: Direct emissions by the business itself.
Scope 2: Indirect emissions resulting from use of electricity, heat or steam provided by othercompanies.

Targets for Scope 1 and 2 reduction of emissions frombusiness activity
Fuel conversion
Conversion to carbon-freepromotion, production
fuels, electrification ofefficiency improvements,
production processes, carbon
renewable energy
offset and carbon-negative
adoption, etc.
measures, etc.
Fuel conversion
Conversion to carbon-freepromotion, production
fuels, electrification ofefficiency improvements,
production processes, carbon
renewable energy
offset and%carbon-negative
Reduction of at least
adoption, etc.
measures, etc.

46

● Results
Of the GHG emissions (Scope 1 and 2) from our group’s businessactivities, about 70% are emitted by our three main plants (Tsuruga,
Iwakuni, and Inuyama).
Scope 1 and 2 ratios by emissions source
Other plants(overseas)
Other plants(Japan)Total for three plants(Tsuruga, Iwakuni, Inuyama)

Net zero
Reduction of at least 46%
Net zero
2014

2031

2014

2031

2051

(FY)

In fiscal 2023, our total Scope 1 and 2 emissions were 894
thousand t-CO2 (down 26.4% compared to fiscal 2014). Amid a sales
increase of 6.4%, we kept GHG emissions below the level of fiscal
2022 by acting to conserve energy and taking measures to improve
production efficiency.

(FY)
Present 2051
FY2051

Targets for the whole value chain(Fiscal 2051, including contributions made through products and solutions)

Present

FY2051

GHG emissions
Scope 1

Scope 2

(1,000t-CO2)

1,000

Reduction

GHG emissions
throughout theReduction
value chain

174

184

183

182

709

699

718

720

712

2019

2020

2021

2022

800

Expansion
Avoided GHG emissions
Expansion

600

400

GHG emissions
throughout the value chain

196

Avoided GHG emissions
200

Details on acquiring SBT certification

02023 (FY)

Scope: Toyobo group

ESG performance data (Environment)

Materiality KPI

A decarbonized and circular society items, Targets ,and Fiscal 2023 results

p.16

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

56● Sustainability management ● Disclosure based on TCFD recommendations ● Environment │ Realization of a decarbonized society ● Environment │ Realization of a circular society● Environment │ Conservation of water resources, conservation of biodiversity, chemical substances management ● Society ● Governance

E Realization of a decarbonized society

Climate change

Policies and activities-environmental aspects

Initiatives● Reduction of Scope 1 and 2
In our efforts for the low-carbon transition, we are moving forwardwith fuel conversion (coal-free) for our in-house power generation
facilities, and with expansion of our gas co-generation systems.*1
We will begin by renewing our in-house thermal power generation
plant at the Iwakuni Production Center, converting the fuel fromcoal to liquefied natural gas and RPF.*2 Major reductions in GHG
emissions are expected from the operation, scheduled for October
2023. We are carrying out GHG reduction measures including fuelconversion at other business sites as well.
Solar power generation equipment that takes advantage ofrooftops and vacant lots is also being installed at business sites,with systems to become operational at the Inuyama Plant in fiscal
2023 and at the Utsunomiya Plant in fiscal 2024. We are considering
the introduction of renewable energy sources at other sites as well.
*1 A system that uses natural gas or other fuels to generate electricity where it is needed, while
making effective use of the thermal energy generated simultaneously to make steam or hot
water, which will be used in the production process, hot water supply, or heating and cooling.
*2 A n acronym for “Refuse-derived Paper & Plastics Densified Fuel,” solid fuel made mainly fromused paper and waste plastic● Scope 3 reduction
Our group is aiming for reductions in Scope 3 emissions, focusing
efforts on Category 1*3 and Category 11*4 in which emissions arelarge. In Category 11, we will continue to reduce GHG emissions by
reducing our usage of utilities (steam, electricity, etc.), adopting new
and energy-conserving technologies for VOC recovery equipment.*5

Scope 3
Other categories
Scope 1, 2

Scope 3*3 Emissions from activities (manufacturing, etc.) related to purchased raw materials and services*4 Emissions from the use of products sold*5 Equipment that recovers volatile organic compounds (VOCs) as liquid organic solvents through
VOC removal by absorption or cooling methods. In addition to zero CO2 emissions from VOC
decomposition, this enables the reuse of the recovered organic solvents.

Solar power generation equipment
installation at the Inuyama Plant
We have proclaimed the slogan “Aiming for a
Sustainable Plant” at our Inuyama Plant, where
we are striving to improve energy efficiency, adopt
energy-conserving facilities, and put renewableenergy to use. In March 2023, we used a powerpurchase agreement (PPA) arrangement toinstall a new solar power generation facility of
approximately 500 kW. We will use the resulting
knowledge to move forward with the adoption ofsolar power generation facilities at our other plants
in the future.

Scope 3Category 1
Scope 3Category 11

Voice of the person in charge

At the Inuyama Plant, 1,608 solar panels installed on
the rooftop generate approximately 500 kW.

This was the first time our company had tried a
PPA (Power Purchase Agreement), so we got
the cooperation of a range of people, and the
manufacturer of the solar power generation
facilities, company headquarters and the
manufacturing division within the plant all worked
together. It was a particular struggle connecting
these facilities while giving consideration to theeffect it would have on our existing electricalsystem. When it started generating electricity
without a hitch, I breathed a sigh of relief, and ourhard work is paying off even more as it leads toreduced electric charges while prices continue tosoar.
Tatsuro Fukudome, Section Manager
Kenjiro Ueda, Section Chief
Inuyama Plant● Expansion of the avoided emissions
Our group’s products mostly comprise materials and intermediates.
Among these are many that contribute to reducing GHGs in thevalue chain, compared to conventional products and technologies.
We are conducting calculations to quantitatively assess the
avoided emissions of GHGs over the products’ life cycles. Sometypical examples of these technologies are reverse osmosis (RO)membranes used in seawater desalination, and VOC recovery
equipment that suppresses emissions of VOCs, which are ofconcern in terms of atmospheric pollution and their effects on thehuman body.
In fiscal 2023, we compiled in-house guidelines that summarize
our methods of calculating the GHG emissions avoided as a meansof integrating our in-house rules for calculation while expanding therange of products subject to the calculations. Moving forward, we
will advance the development of technology and expand sales of
products that help reduce GHGs as we promote the expansion of
avoided emissions.
● Participation in organizations focused on climate change
issuesOur group has endorsed the GX League (GX: Green transformation)
announced by the Japanese government. GX refers to the aimof transforming the overall economic and social system towardachievement of the nation’s 2030 targets for GHG emissions
reduction, and of carbon neutrality in 2050. Through our participationin the GX League, which has been fully operational since April 2023,
we will accelerate our in-house initiatives toward decarbonization.
As a member organization of the Japan Chemical Industry
Association (JCIA), we also participate in the Carbon Neutral Action
Plan of the Japan Business Federation (Keidanren). Throughthe activities of JCIA, we confirm the climate change policies of
the Japanese government and reflect them in our group policies.
Together with JCIA, we carry out climate change countermeasures
such as submission of opinions on policies, and conduct activities
aimed at achieving a decarbonized society.

ESG performance data (Environment)

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

57● Sustainability management ● Disclosure based on TCFD recommendations ● Environment │ Realization of a decarbonized society ● Environment │ Realization of a circular society● Environment │ Conservation of water resources, conservation of biodiversity, chemical substances management ● Society ● Governance

E Realization of a decarbonized society

Climate change

Policies and activities-environmental aspects

FY2023 results
Indicators for fiscal 2023 with this icon are externally assured by KPMG AZSA Sustainability Co., Ltd. See p.82 of this Integrated Report for Independent Assurance Report.

p.82

Relevant laws are shown in abbreviated form, e.g., Act on the Rational Use of Energy (Energy Conservation Act)
Data aggregation period: (Domestic) April 1, 2022 - March 31, 2023

FY2023 results
Scope 1(Overseas) January 1, 2022 - December 31, 2022

Calculation methods

712 thousand t-CO2 In accordance with the GHG Protocol, we include GHG emissions, calculated by converting the quantity of energy required to produce electricity or steam sold to other companies.
GHG emissions with non-energy origins are calculated for Toyobo (non-consolidated) only.
The factors shown below are used in the respective calculations.
■ CO2 emission factors for purchased electricity:(Domestic) Adjusted emission factor for each electric power service provider listed in “Emission Factors by Electric Utility (for Use in Calculating Greenhouse Gas Emissions of Specific Emitters), FY2022
182 thousand t-CO2
Results,” Ministry of the Environment. (In cases where the emission factor of a given utility was unknown, the “national average factor” was used.)(Overseas) Factors for 2019 listed by country “Emission Factors 2021” (2021), IEA■ CO2 emission factors other than for purchased electricity:“Greenhouse Gas Emissions Calculation and Reporting Manual (v4.8)” (2022), Ministry of the Environment and Ministry of Economy, Trade and Industry (used for both domestic and overseas subjects).

Scope 2

Energy consumption 

2,937 GWh

In accordance with the GHG Protocol, the quantity of energy required to produce electricity or steam sold to other companies is not deducted.
The values from Energy Conservation Act are used in showing the unit calorific value of fuel as a higher calorific value.

Boundary of aggregated data: Toyobo group (TOYOBO CO., LTD. [non-consolidated] with domestic and overseas group companies)

Scope 3 Categories

FY2023 emissions

Calculation methods

1. P urchased goods and services

2,055 thousand t-CO2

The total value obtained by multiplying the quantity of activity (the amount of purchases of raw materials, services, etc., during one year) by the emissions intensity (Ministry of the Environment DB)*1

2. Capital goods

55 thousand t-CO2

The total value obtained from multiplying the amount of activity (the book value of capital goods purchased during one year) by emissions intensity (Ministry of the Environment DB)*1

3. F
 uel- and energy-related
activities (not included inscope 1 or scope 2)

113 thousand t-CO2

The total value obtained from multiplying the amount of activity (the amount of fuel and electricity purchased during one year) by the respective emissions intensities of fuel and electricity (Ministry of theEnvironment DB, IDEA)

4. U
 pstream transportation anddistribution

50 thousand t-CO2

The total value obtained from multiplying the amount of activity (the distance and weight of upstream transportation during one year) by emissions intensity (Ministry of the Environment DB)*1

5. W
 aste generated in operations

53 thousand t-CO2

The total value obtained from multiplying the amount of activity (waste generated in business activities during one year) by the respective emissions intensities of each waste category (Ministry of theEnvironment DB, IDEA)*1

6. Business travel

7 thousand t-CO2

The total value obtained from multiplying the amount of activity (annual employee business travel expenses by transportation organization used) by the respective emissions intensities of each transportation
organization (Ministry of the Environment DB)*1

6 thousand t-CO2

The total value obtained from multiplying the amount of activity (the scale of the city in which the business site or plant is located, the number of employees, and the days of business operation per year) by therespective emissions intensities of each form of work and city size class (Ministry of the Environment DB)*1

7. Employee commutings
8. Upstream leased assets―

Toyobo group does not perform calculations for upstream leased assets because they are not pertinent.

9. Downstream transportation anddistribution―

The basic practice of Toyobo group is for our company to serve as the cargo owner for transportation to the shipment destination, so that emissions associated with these shipments are calculated in Category 4.

10. Processing of sold products―

At Toyobo group, we have wide-ranging and diverse array of procedures for processing beyond shipment destinations, which makes it impossible to determine all GHG profiles or perform reasonablecalculations. The information therefore is not disclosed.

2,745 thousand t-CO2

The total value obtained from multiplying the amount of activity (the amount of electric, steam, cold water and other utilities consumed during the use of final products sold annually) by emissions intensity,
years of service life, and operating rate.
Our company uses a unique emissions intensity unit, which is calculated from the Ministry of the Environment DB, IDEA, IEA, and the product specifications of equipment used in generating each utility.
We perform calculations for VOC recovery equipment, urine sediment testing equipment, and fully automated gene analysis systems.

11. Use of sold products
12. E
 nd-of-life treatment of soldproducts

207 thousand t-CO2

The total value obtained by multiplying the amount of activity (assuming the disposal of the total one-year sales volume) by the respective emissions intensities of each material used in the items sold (Ministryof the Environment DB)*

13. Downstream leased assets―

14. Franchises―

Toyobo group does not engage in franchise activities, and therefore does not perform calculations for them because they are not pertinent.

15. Investments―
5,290 thousand t-CO2

Toyobo group’s emissions from investments are extremely small, and we therefore do not disclose them.

Toyobo group does not perform calculations for downstream leased assets because they are not pertinent.

Total
Boundary of aggregated data: Toyobo group (TOYOBO CO., LTD. [non-consolidated] with domestic and overseas group companies.)*1 Calculations are made using weighted averages for some subsidiary and affiliated companies, according to ratios of sales, sales volume, and number of employees.

Referenced Guidelines(1) In making the calculations, we referred
to “Corporate Value Chain (Scope 3)
Accounting and Reporting Standard”
and its evaluation guidelines from the
GHG Protocol; “Guidance for Accounting& Reporting Corporate GHG Emissions
in the Chemical Sector Value Chain”
from the WBCSD; and various sourcesof information on the Green Value Chain
Platform.
(2) W ith regard to emission intensity, we
referred to the following database as ofMarch 2023.
● “ Emission Intensity Database for
Calculating Greenhouse Gas Emissions
by Organizations Throughout Supply
Chains ver. 3.3” (March 2023), Ministryof the environment. Cited as “Ministryof the Environment DB.”● “ IDEA (Inventory Database forEnvironmental Analysis) ver2.3”(December 2019), National Instituteof Advanced Industrial Science andTechnology/Sustainable Management
Promotion Organization. Cited as“IDEA.”● “ Emission Factors 2022” (September2022), International Energy Agency(IEA). Cited as “IEA.”

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

58

Reference material● Sustainability management ● Disclosure based on TCFD recommendations ● Environment │ Realization of a decarbonized society ● Environment │ Realization of a circular society● Environment │ Conservation of water resources, conservation of biodiversity, chemical substances management ● Society ● GovernanceE

Plastic resource circulation

Policies and activities-environmental aspects

Realization of a circular society

Basic approach

At Toyobo group, we handle numerous plastic products, including
the films that comprise our core products, and we acknowledge
that the transition to a resource-circular society not only poses abusiness risk, but also may present major opportunities. In 2022,
we clarified in Sustainable Vision 2030 the contributions that ourgroup can make to realization of a circular society, and set targets
for fiscal 2031. We will initiate the effort with progress in greening(by promoting the use of biomass and recycled materials, reducing
thickness, introducing mono-materials, etc.), beginning with ourfilm products (excluding some products where safety and life are atstake).

Targets and results● Targets
In Sustainable Vision 2030, which outlines the ideal that we envision
for our group in 2030, we set ourselves the goal of increasing thegreening ratio of films* to 60% by fiscal 2031. In fiscal 2023, wedeliberated methods of calculating the greening ratio, and tabulated
results for the present.
ThemesGreening ratio of films

FY2031 target
60%

FY2023 results

Initiatives

Our group has undertaken recycling and biomass materials
use since the 1990s. We have since developed many products
and materials to date, such as ECHORCLUB®, a PET bottle
recycled fiber product that we have been developing since 1996.
Moving forward, we aim to realize a circular economy from a
3R+Renewable* perspective.
* Rationalize (reduce and reuse) plastic uses that can be avoided, switch to recycled materials
and renewable resources for uses that are unavoidable (renewable), and implement thoroughrecycling (recycle).

11%*Volume ratio

Material recycling of label backing paper and resource recycling projectIn 2022, we developed a new recycling technology for our KAMISHINE® mold releasing
film, one of our polyester-based synthetic papers made with recycled PET bottle raw
material, that was developed for label mount paper (removable film) applications.This
is a technology for using label backings after use and collection as a raw material to
manufacture KAMISHINE® series products that maintain performance on a par with theconventional product.
In order to socially implement resource recycling initiatives using this product andtechnology, the Resource Recycling Project was launched at the invitation of NEION Film
Coatings Corporation, an all-round manufacturer of PSA-films and Coating Technology. We
are replacing label mount paper with KAMISHINE® mold releasing film, and collecting usedlabel mount paper from users. This is a resource recycling project in which we collect usedlabel backing paper to recycle it as raw material for film.
Since resource recycling initiatives are limited when carried out by individualcompanies, such efforts are being advanced collaboratively across different industries by
those with expertise in their fields.

Conceptual image of label structure

Overall scheme of the Resource Recycling Project
By establishing arterial industry functions and venous industry functions,
we are achieving a circular recycling scheme.
Printing
company
Finished products

LabelsPrinting andpunching

Seal portion
Used mount paper
for recycling

Collection
box
Label rolls

Manufacture of adhesive film

Label mount(removable film)

Raw materials
Mount paper
for recycling

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

59

Reference material● Sustainability management ● Disclosure based on TCFD recommendations ● Environment │ Realization of a decarbonized society ● Environment │ Realization of a circular society● Environment │ Conservation of water resources, conservation of biodiversity, chemical substances management ● Society ● Governance

E Realization of a circular society

Plastic resource circulation

Policies and activities- environmental aspects

An overall picture of Toyobo group’s efforts to address the plastics lifecycle and resource recycling

Product development using biomass raw materials
By reducing CO2 emissions and reliance on petroleum-derived
resources, using biomass is expected to serve as a climate change
mitigation measure.
Our group is working for the conversion and expanded use of
biomass raw materials, and for the practical application of biomass
plastics that remain highly functional.
Related technologies
and products● BIOPRANA ®
● V YLOAMIDE®
● HOLLOSEP®
● Polyethylene furanoate (PEF)
resin (under development)

Collaborations andinitiatives● Partnership with Avantium N.V.
to develop PEF resin● Partnership with Suntory Groupand Anellotech, Inc. to develop
PET resin that uses 100% plantbased raw material● Japan BioPlastics Association● T HE JAPAN PLASTICS
INDUSTRY FEDERATION

Related technologies and products

Chemical recycling

Reduce: D evelopment of mono-materialization
technologies and products

Material recycling*2

Through these initiatives,
we are achieving the greenificationof plastic products
Used
plastic

Rawmaterials

ReduceRecycling in the
manufacturing process

Manufacturing

Plastic
materials

Minimization

Consumption● PYLEN EXTOP®

We collect offcuts generated in the manufacturing process(originating from airbags and film products) and reuse them asmaterials for products in the same and other categories. In doing
so, we reduce waste generated in the production process.
In addition to the manufacturing processes of our group,
we also implement initiatives to advance recycling in the
manufacturing processes of our customers.
Related technologies
and products● ECHORCLUB®
● ECOVYLOPET®
● COSMOSHINE SRF®

Collaborations andinitiatives● Resource Recycling Project(KAMISHINE® mold releasing
film)

Marine plastic and microplastic response

ReducePlastic
products
Waste

Related technologies and products● ECOSYAR® VP Series

Recycling in the manufacturing process(Promotion of the use of biomass and recycled
raw materials; reduction of thickness)

Re-useDevelopment of technology and products formaterial recycling* 2

Collaborations andinitiatives● Licensing of technology toIndorama Ventures PublicCompany Limited● SPACECLEAN®

We are reducing the amount of raw materials used while increasing
recyclability by replacing previous products consisting of several
different materials with those using a single material while
maintaining strength and functionality.

Collaborations and initiatives

Related technologies
and products● ECHORCLUB®
● Crisper®
● TOYOBO GS Catalyst®

● HARDREN® DN036

Manufacturing● R PLUS JAPAN● A nellotech, Inc.
● Japan Chemical Industry Association

We proactively develop and market products made of used plastics as
raw materials. We have also developed and are marketing TOYOBO
GS Catalyst® , a polymerization catalyst for PET resin designed to makeresin recyclable after polymerization reactions.
Through efforts centering on the PET material to which thistechnology is applied, we are advancing the expansion of material
recycling technologies and materials in the global market.

We reduce the amount of raw material used by reducing thickness
while retaining strength and functionality. When these kinds ofmaterials are used by customers, packaging can be simplified andthe amount of packaging materials used in the final product can be
reduced.

Crude rawmaterials

Chemical recycling*1 technology development
In developing and practically applying chemical recycling
technologies, we seek out technologies from around the world andcollaborate proactively with external organizations and companies.
For example, we participate in the R PLUS JAPAN project, actively
pursuing development of chemical recycling technologies forconverting recycled plastic into raw material for the production ofhigh-quality recycled plastic.

Reduce: Development of thin, lightweight materials

Biomass raw
materials

Manufacturing* 1 Chemical recycling: The reuse of used plastics after chemically breaking them down into crude raw materials
*2 Material recycling: The reuse of used plastics as resins (raw materials) after they are pulverized or melted

To help reduce marine plastic waste, we participate in the Clean
Ocean Material Alliance (CLOMA) established in Japan, as well asother initiatives in our efforts to develop and advance alternative
materials.
Collaborations and initiatives

Waste reduction

Waste reduction● CLOMAIntroduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

60● Sustainability management ● Disclosure based on TCFD recommendations ● Environment │ Realization of a decarbonized society ● Environment │ Realization of a circular society● Environment │ Conservation of water resources, conservation of biodiversity, chemical substances management ● Society ● GovernanceE

Policies and activities-environmental aspects

Conservation of water resources, conservation of biodiversity,
chemical substances management

Conservation of water resources
Basic approach

Water is an invaluable resource that supports us in our lives
and our livelihoods, so conserving it is one of the world’s mostimportant issues.
The Toyobo Group Charter of Corporate Behavior affirmsthat Toyobo group will work to reduce and reuse water andother resources we use, and take protective measures against
environmental risk. We work to conserve water resources in ourbusiness activities by minimizing their use through efforts such as
promoting the use of recycled water.
As we also aim to become a group that continues to create
the solutions needed by people and the earth with materials andscience, we will contribute to water resource conservation in Japanand overseas through such activities as our seawater desalination
membrane business.

Initiatives

As a group, we are aware that securing water resources is an
important matter of business continuity, and we are promoting
reduction of water consumption and use of recycled water.
Specifically, we strive to recycle water by reusing once-usedcooling water, etc., in the manufacturing process.
In addition, we used the World Resources Institute’s
AQUEDUCT Water Risk Atlas to evaluate water risk at eachbusiness site worldwide, and discovered that amounts of usable
water in some areas in which we have business sites were at highrisk. At those business sites, we are taking measures against
risk, and the water usage is less than 0.1% of the total water
withdrawals of the group, so we assume that the sites are notcurrently at serious water risk.

Conservation of biodiversity
Basic approach

We work hard to minimize any negative impacts that our businessactivities might have on the ecosystem, as reflected in the TOYOBOGroup Fundamental Policy on the Global Environment, in which westate that, as a good corporate citizen we will actively support andparticipate in environmental protection and biodiversity conservation
activities throughout society and in local regions.
With an understanding of how our business activities relate
to biodiversity, we are working under the Action Guidelines for
Biodiversity Conservation on making a contribution through our
products and solutions, minimizing the environmental impact ofour business activities, and cooperating with local communities onconservation activities.

Initiatives

In our business activities, we discharge emissions only after
appropriately treating harmful substances in waste water andwaste gas from our business sites and plants. In order to preventthese substances from being released accidentally, we installmonitoring equipment within the manufacturing process, and strive
to improve them in order to keep the amounts in which they areused and emitted to an absolute minimum. Through the equipmentthat our group sells, such as VOC recovery equipment, we also
help our customers reduce their environmental impacts.
In 2022, we endorsed the Declaration of Biodiversity Initiativeof the Japan Business Federation (Keidanren), and also joined
the 30 by 30 Alliance for Biodiversity led by the Ministry of theEnvironment and other organizations to enhance biodiversity
conservation efforts.

Water resources

Biodiversity

Chemical substance management
and reducing environmental impact

Chemical substances management
Basic approach

Under the TOYOBO Group Fundamental Policy on the Global
Environment, our group works hard to manage chemical
substances appropriately throughout the whole product lifecycle(research, development, design, manufacturing, sales, use, anddisposal) for the sake of global environmental conservation,
disaster prevention, occupational health and safety, productsafety, as well as compliance with regulations around the worldconcerning chemical substances.

Initiatives

Recent years have seen requirements that chemical substances
be managed through the supply chain. In Japan, management
is required under the Act on the Regulation of Manufacture andEvaluation of Chemical Substances (Chemical Substances Control
Law) and other chemical substance control regulations, while theUnited Nations has standardized the classification and labeling ofchemical substances under the Globally Harmonized System ofClassification and Labeling of Chemicals (GHS).
Considering these circumstances, we have adopted a systemfor chemical substance management that covers all processes,
from procurement to manufacturing and sales of our products,
as a means of ensuring accurate, rapid green procurement andcustomer service. We use it to check on the usage status ofchemical substances subject to laws and regulations, and to
examine the chemicals contained within products. It is also used
to help suppliers with chemical substance safety data sheet (SDS)
production. We have also established the TOYOBO Chemical
Substance Management Classification, with which we categorize
the chemical substances we handle among five levels, specifying
details of management for each rank to facilitate efficient use andsubstitution.

ESG performance data (Environment)

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S

Reference material

61● Society │ Quality

Safety, disaster prevention

Policies and activities with social aspects

Safety and disaster prevention
activities, drafts and formulates company-wide policies, and determines
policy through the Sustainability Committee. The Conference reports
on progress to the Board of Directors as appropriate.
Placed under the Safety and Disaster Management Division,
the Safety and Disaster Management Department hosts the Safety
and Disaster Management Promotion Conference, whose members
comprise representatives of each department, to engage in policybased deliberation and decision-making on specific matters andto manage progress. It also organizes teams of members and achairperson to visit the company’s business sites, factories, andgroup companies to conduct safety and environmental assessments
and to inspect local activities. To address fire and explosion risks inparticular, we perform periodic inspections of on-site management
through third-party experts.

Basic approach

At the Toyobo group, we believe that ensuring health and safety isa key prerequisite to corporate activity, and have established the
TOYOBO Group Basic Policy on Health & Safety. Applicable togroup employees and partner companies, the policy is part of ourefforts to create a safe workplace environment. As of April 2022,
we have adopted the safety declaration, “We thoroughly adhereto ‘safety first’ -work safety, environmental safety, product safety,
and equipment safety,” and the slogan, “Protect yourself. Protect
your colleagues. If you notice something, speak out.” September
has been designated Disaster Prevention Month, while September
6 is TOYOBO Group Disaster Prevention Day. We will continue tospread awareness of preventing disasters, including fires.

Organizational structure

The Safety and Disaster Management Division has been establishedunder the direct control of the President in order to steadily promote
safety and disaster prevention initiatives, which are of prime importanceamong management issues. The Head of the Safety and Disaster
Management Division hosts the Safety and Disaster Management
Conference, which has experts in varied fields as its members, andevaluates the effectiveness of safety and disaster management

Targets and KPIs

We establish and appropriately manage the following goals and KPIs.
● Targets● Toyobo group as a whole will make the fundamentals of safety
clear, adhere to them thoroughly, and work to prevent incidents andserious accidents.

The Toyobo group system for safety, disaster prevention, and the environment
President
Business divisions
Activity planning /implementation /management

Production center / plants
Health and
Safety Committee
Environment & Safety Office

Policy formulation*1 *2
Sustainability
Committee(Chair: President)
Board of Managing
Executive Officers
and Controlling
Supervisors(Chair: President)

Head of Safety and Disaster Management Division
Safety and Disaster
Management Conference

Global Environment
Conference

Toyobo group

General Manager, Safety andDisaster Management Department

General Manager, Environmental
Management Department

Environment
and Safety
Conference

Safety and Disaster Management
Promotion Conference*3

Global Environment
Promotion Conference*3*3(Secretariat)*4

Safety and Disaster Management Department /Environmental Management Department

Groupcompanies*1 Deliberates and decides policy on safety and disaster prevention *2 Deliberates and decides policy on the global environment *3 Deliberates and decides specific matters and manages progress*4 Supports activities, provides information, and conducts interdepartmental coordination

ESG performance data (Social)

Materiality KPI

Initiatives●Safety initiatives
We identify serious hazards and enact measures to prevent serious
accidents. We use risk assessments and work research to assess
on-site risks and improve facilities and work processes, and to
conduct education on these matters.
In order to promote security and disaster prevention, allemployees participate in disaster prevention drills at least once a
year to reaffirm responses in the event of a fire. Regarding fire andexplosion risks, worksite management status is inspected by thirdparty experts on a regular basis.
● Acquisition of occupational health and safety management
system certification (ISO45001)
In order to reduce risks in the work environment, we are working
toward acquiring occupational health and safety management
system (ISO45001) certification. As of March 31, 2023, both the
Iwakuni Production Center and Utsunomiya Plant have beencertified.
● Initiative to prevent recurrence of fire accidents
Following the fire incidents that occurred at the Tsuruga Researchand Production Center No. 2 in September 2018 and at the Inuyama
Plant in September 2020, we have been working on preventing
recurrences from the two perspectives of nurturing a culture ofsafety and improving safety infrastructure. We held safety workshops
for newly appointed officers and group company presidents in fiscal
2023, and have administered safety awareness surveys of membersof management, our employees, and employees of various partnercompanies (7,525 subjects, 93% response rate). We are also
working on development of a disaster prevention management
system under the Disaster Management Project. In fiscal 2024, theinitiative will move forward on the key issues of deployment of safetyand disaster prevention activities with participation by all employees,
enhancement of hierarchy-specific training, and reduction of fire andexplosion risks.

Safety and disaster prevention items, Targets, and Fiscal 2023 results p.16

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S

Reference material

62● Society │ Quality

Quality

Policies and activities with social aspects

Quality

Basic approach

Out of consideration for the environment, the safety of our products
and services, compliance with laws and regulations, and also togain the satisfaction and trust of customers by providing high quality,
Toyobo group has established the TOYOBO Group Basic Policy on
Quality Assurance and the TOYOBO Group Basic Policy on Product
Safety. We have established a management system appropriate toensuring the quality and safety of the products and services that
we provide, and we follow proper procedures in performing quality
inspections, while also working to handle data, etc., appropriately.

Our group has established the Quality Assurance Division
Conference to oversee product liability (PL) and quality assurance(QA). This body meets on a monthly basis, and is formed bycontrolling supervisor (Executive Officer) overseeing quality,
the Quality Assurance Department General Manager in chargeof business divisions, and members of the Quality AssuranceManagement Department. The PL/QA Promotion Committee,
composed of members at the business division General Manager
level, is scheduled to meet six times a year, and did so in fiscal 2023.
In terms of organizational structure, we have established the
Quality Assurance Division, under whose authority the Quality
Quality assurance system (as of April 2023)

Quality Assurance
DivisionTargets and KPIs

We establish and appropriately manage the following goals and
KPIs.

Organizational structure

President

Assurance Management Department and the Quality Assurance
Departments, responsible for the business divisions, are situated.
In working to establish an appropriate quality management systemand to improve our system of governance, we have granted the
Quality Assurance Management Department authority to direct orhalt development, production, and sales operations at our company
or group companies in connection with group product safety andquality assurance.

Quality Assurance Management Department

Films Quality Assurance Department
Functional Textiles and Trading Quality
Assurance Department
Environmental and Functional Materials Quality
Assurance Department● Targets
By managing quality upstream and elsewhere throughout the
supply chain, we ensure trust in our quality while increasing
customer satisfaction.

Initiatives● Quality assurance activities
Our Quality Assurance Manual, which lays out the basic concepts
and action guidelines for employees as they perform the group’s
development, production, and sales activities, is provided in multiple
languages. It represents our group’s basic thinking on manufacturing
activities. We have also set Quality Assurance Guidelines as wetake action to build systems that can guarantee quality. In fiscal
2023, we conducted Head of Quality Assurance Division's reviews
to check on the quality assurance initiatives at each businessdivision.
We designate November of every year as Quality Month. During
this period of fiscal 2023, a message from the President, a response
message from each head of division, and a Quality Month poster
were displayed on digital signage at all locations. We also held PL/
QA seminars and conducted reviews of quality-related irregularities
at workplaces, as described in the Compliance Manual.

● Product safety promotion activities and education
The Quality Assurance Division, which is independent from theSales and Marketing Division, and quality assurance personnel
from other divisions, carry out PL/QA evaluations to confirm andimprove the product safety (PS) activities of each division and groupcompany. We have also established criteria for judging levels of
PL and PS risk. In working to reduce risk, we perform inspections
based on these standards at each step from product development
to sales. We also implement product safety and quality assurance
education as appropriate for each level of employee.
● Strengthening the quality-related risk management system
Our group established the Three-line System in response to thequality-related misconduct incidents that came to light in 2020.
Made up of three components, the system detects and prevents
irregularities by multiple means comprising three Lines: Line 1(business divisoion, production sites), Line 2 (Quality Assurance
Division), and Line 3 (Internal Audit Department). Since then, we
have been making progress in strengthening various systems, suchas establishing a Risk Management Audit Team, conducting Line
1 audits by the Internal Audit Department in cooperation with the
Quality Assurance Division, and making efforts to control
human error.

Life Science Quality Assurance Department

ESG performance data (Social)

Materiality KPI

Quality items, Targets, and Fiscal 2023 results

p.16

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S

Reference material

63● Society │ Quality

Respect for human rights

Policies and activities with social aspects

Respect for human rights

Basic approach

We believe that respect for human rights is an element essential
to Toyobo group in fulfilling our responsibilities as a member ofsociety, and also in remaining a company that people trust. Amongthe ten principles in the TOYOBO Group Charter of Corporate
Behavior, we included “4. Respect for human rights,” and “6. Active
employee participation,” in the TOYOBO Group Human Rights
Policy formulated in October 2020.
Our group upholds and respects international norms regarding
human rights, such as those described in the International Bill of
Human Rights, the ILO Declaration on Fundamental Principles andRights at Work, the Children’s Rights and Business Principles, and
the Guiding Principles on Business and Human Rights.
Regarding respect for human rights in the supply chain, weclearly state in our CSR Procurement Guidelines that we takematters involving human rights (including the prohibition of childlabor, forced labor, and discrimination against people of any
attributes, including LGBTQ) into account in our selection ofbusiness partners.
Organizational structure
Aiming to positively and systematically address respect for humanrights, our group has appointed managers in charge within the
Diversity Promotion Group of the Human Resources Department,
to address employees of the group, and within the Planning Groupof the Procurement and Logistics Department, to address the
supply chain. As we deepen our understanding of international
human rights issues and other matters requiring attention, weare also moving forward on preparing initiatives on due diligencein human rights. The Head of the Corporate Sustainability
Division and officer (Managing Executive Officer) overseeing
the Procurement and Logistics Department supervise and takeresponsibility for human rights.

Targets and KPIs

We establish and appropriately manage the following goals and
KPIs.

● TargetsOur whole group works to respect basic human rights anddiversity, a commitment that we spread among our employees
through training, etc.
● 
Our aim in these initiatives is to make ourselves a company thatis fair and trusted by society.
●

Initiatives● Human rights considered from a global perspective
The countries and regions in which our group is located havevarious human rights-related issues associated with political,
economic, and social conditions.
In order to grasp human rights-related issues that require
our consideration as a group, we participate in the Human Rights
Subcommittee of Global Compact Network Japan. Together
with participating companies, we are collecting information oninternational human rights issues and other matters requiring
attention by companies, and are deepening our understandingof human rights issues. In the future, we will move forward withefforts at our group business sites to identify human rights issues
that require attention.

● Establishment of a system to handle complaints and internal
whistleblowing reports
Human rights-related consultation and reports are accepted by the
Grievance Committee and the Compliance Consultation Desks,
an internal whistleblowing system. In addition, we work to identify
and resolve human rights problems early on through compliancequestionnaires.
● Internal dissemination
Our group has produced an English-language edition of the
TOYOBO Group Charter of Corporate Behavior so that employees
all over the world share the same vision. We use our TOYOBOGroup Compliance Manual to familiarize employees with rules
and case studies concerning respect for human rights, prohibitionof discrimination, prohibition of child labor and forced labor, andprotection of personal information.
Moreover, we implement training, etc., to spread awarenessand understanding of our Human Rights Policy. We continued theeffort at each business site in fiscal 2023, with 515 participantsjoining in training for new employees, education by job level,
lecture sessions, and training conferences for Human Rights
Promotion Committee members.

● Survey on labor and human rights administered
In fiscal 2023, we conducted a “Labor and Human Rights” survey
regarding child labor, employment equality, health and safety, etc.
for our domestic business sites (non-consolidated). Through thesurvey, we were able to confirm the absence of any violations ofhuman rights laws and ordinances.
● Respect for workers’ rights
Our group respects the rights to freedom of association andcollective bargaining. Our employees have formed a labor union,
whose membership is acknowledged under a collective bargaining
agreement to which labor and management have consented(as of the end of fiscal 2023, 85.1% of all employees were union
members). Labor-management dialogues are held on an annual
basis between the labor union and the company.
Materiality KPI

Human rights items, Targets, and Fiscal 2023 results

p.16

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● GovernanceS

64

Reference material● Society │ Quality

Human resources management

Policies and activities with social aspects

Human capital

Basic approach

Our group aspires to be an organization that undergoes continuoustransformation for new value creation aimed at realizing the
TOYOBO PVVs corporate philosophy framework. Since revising
our personnel system in July 2022, we have proclaimed andimplemented four policies so that all employees can experience
growth, pride and motivation: Promotion and support of competence
upgrades, compensation and evaluation commensurate with job
duties, strengthening of management, and active promotion ofdiverse specialized human resources.

Organizational structure

The person assigned to be in charge of executing human resourcesmanagement is the controlling supervisor (Executive Officer) withoverall supervisory responsibility for the HR department. The
Human Resources Department takes a leading role, providing
opportunities for regular exchange of information and discussion
with those in charge at each business site and group company,
and seeing to the proposal and execution of human resourcesmanagement-related measures. Priority issues in the annual plan
are reported to the officer in charge on a quarterly basis, and arealso discussed in the Sustainability Committee, while the Board ofManaging Executive Officers and Controlling Supervisors and theBoard of Directors confer on important measures.

Targets and KPIs

Initiatives
Human resources management● Developing human resources
As a group, we regard human resources to be the most importantresource of management. It is by supporting the growth of eachand every employee in their diverse individuality and views, andby putting in place an environment in which they can be active andself-actualized both within and outside the company, that our groupas a whole will be able to survive and thrive. We manage humanresources development under an educational system that provides
education for everyone from new employees to senior management,
designed according to job level, category of position, and purpose.
As part of our development of next-generation management humanresources, we select personnel, rotate personnel, and implement
support for successor candidate training, based on discussions in the
Human Resources Conference, in operation since fiscal 2022.
Although we had to halt global human resources development
measures during the COVID-19 pandemic, we resumed shortterm overseas business training for domestic employees during the
fiscal 2023 second half, and in fiscal 2024, national staff training forexecutive candidates at overseas business sites will also resume.
Under our TOYOBO PVVs corporate philosophy framework, we
conduct training for all management positions to ensure awarenessof security and disaster preparedness, occupational safety, quality,
and compliance, and to advance organizational initiatives.

We establish and appropriately manage the following goals and
KPIs.
● Targets
As a whole group, we will build an organizational structure in which
employees can work comfortably and feel genuine job satisfaction,in which impartiality and fairness are guaranteed, and which isconsiderate of diversity and human rights.

● Prevention of harassment
As a group, we believe that striving to put in place a work
environment free of harassment will boost work motivation andheighten job fulfillment, leading to securing and developing
excellent human resources, so we focus effort on these measures.
While implementing manager training to deepen understandingof our organization, we ensure that employees are aware of theCompliance Consultation Desks and Grievance Committee in which
the labor union participates, so that we can discover problems anddevelop solutions as early as possible.
● Employee engagement
In 2021, our group launched a survey on organizational climate
and job satisfaction, targeting all officers and employees, and we
conducted the second survey in September 2022. In addition tocommunicating an overview of the survey results to employees, weoffer feedback on the survey results at the workplace level, promotedialogue within workplaces, and prepare and carry out action plans.
Improvement in employees’ affirmative
responses about work based on theengagement survey

2021

1. No difficulty performing daily work duties

33%

38%

2. R
 espect the diverse views and ideas of each person

42%

50%

2022

● Work-life balance
As a group, we are working on work style reform to enable
employees to undergo changes in mindset, work with greater
efficiently, and have fulfilling work and personal lives, so we have set
up systems for childcare, nursing care, flextime, telework, and more.
We have built an environment enabling more flexible work styles
tailored to employee lifecycles, and are providing opportunities toheighten their creativity.

Training in fiscal 2023

ESG performance data (Social)

Materiality KPI

Human capital items, Targets, and Fiscal 2023 results

p.16

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S Human capital
Diversity and inclusion

Our group understands that when people of different work styles,
careers, genders, nationalities, races, and creeds mutuallyacknowledge each other and cooperate as they make efforts toward a
goal, individual and organizational growth will result. While promoting
women’s participation and advancement as a matter of course, we
also advance a range of initiatives to foster a corporate culture thatenables diverse human resources to experience professionalfulfillment, and we put in place the necessary systems and measures.
● Promotion of women’s participation and advancement
In order to carry out our group’s activities for women’s participation
and advancement, we have established a Diversity Promotion
Group within the Human Resources Department to advancevarious initiatives from the three perspectives of recruitment,
training, and continued employment support.
For our Phase 2 Action Plan from fiscal 2022 to fiscal 2026, wehave formulated and announced targets for the final fiscal year forincreasing the ratio of women in management positions to at least
5%, the ratio of women in managerial career-track positions to atleast 22%, and the percentage of men taking paternity leave to atleast 80%, while also increasing the number of days taken by atleast 20% from the level of fiscal 2021. These ratios were on trackin fiscal 2023, with the ratio of women in management positions at
4.7%, and of women in managerial career-track positions at 18%.
Important measures● Women’s Leadership Training Seminar● Seminar for supervisors on managing
women subordinates● Career Development Support Program roject for the Promotion of Women’s●P
Participation and Advancement
conducted for six consecutive fiscal years(with membership changes)
 otification for employees and supervisors●Nto promote the paternity leave usage rate,
and promotion of interviews before andafter leave● Inter-industry exchange meetings heldwith other companies to broaden theviews of junior and women employees
regarding work styles● Mentoring system (for new-graduate
hires and women hired mid-career,
with eligibility up to the second year of
employment)● Babysitter support system (the company
covers babysitting costs during businesstravel)● In-house nursery school established(Research center, capacity for 10 children)● External evaluation
We have received “Eruboshi (Level2)” certification from the Ministerof Health, Labor and Welfare
as a company that engages
proactively in women’s participation
and advancement, as well as “Platinum Kurumin” certification
acknowledging our support for childrearing.
● Participation and advancement of diverse human resources
In hiring people with disabilities we maintain the work environment,seek understanding of the workplace, and recruit actively. In 2023,
the percentage of our hirees with disabilities was 2.29%, comparedto the legally mandated hiring rate of 2.3%. We have introduced asenior employee system for rehiring employees who have left workat the retirement age of 60, who wish to return to work, and who
have been recognized as capable of regular work duties. They are
active in training junior employees and in passing on their technicalexpertise. We also have a variety of support systems in place toenable the smooth return to work by employees who have taken
childcare leave, family care leave, or mental health leave.
Health and productivity management
In order to create a comfortable workplace with consideration for
employee health, our group engages in helping our employees
maintain and improve their mental and physical health. We believethat investing in employee health and having a lively workplace
where employees can work energetically are what lead to longterm corporate growth. Our labor affairs department, occupational
physicians, occupational health nurses/medical care nurses, andthe health insurance association all cooperate under the Executive
Officer supervising the HR Department, who serves as Chief Health
Officer (CHO). We also undertake priority measures with input fromthe labor union. In March 2020, our President led the creation of the
TOYOBO Health & Productivity Management Declaration.
In 2023, our company received its first “Top 500” certification(large enterprise category) in the 2023 Certified Health &ESG performance data (Social)

65● Society │ Quality

Diversity & inclusion

Policies and activities with social aspects

Reference material

Health and productivity management

Productivity Management Outstanding Organizations Recognition
Program.
● Response to health and productivity management issue
We organize and analyze
issues from multiple angles,
including health check-up
results and the use of scoring
reports and data indexed over time in cooperation with insurers, toput measures into practice. We use content from our annual Healthand Productivity Management Survey to conduct annual reviewsof our initiatives, and connect this to our activities in the following
fiscal year.
● Improvement of employee lifestyle habits
We are carrying out measures for regular exercise habits andsmoking cessation, and providing educational opportunities
to improve literacy, which leads to improved lifestyle habits for
employees.
In fiscal 2023, in conjunction with seminars on passive
smoking and nicotine addiction, we provided information on
online outpatient clinics for smoking cessation and implemented
measures to partially subsidize the cost of outpatient smoking
cessation treatment for those who successfully quit.
● Mental healthcare and restricting prolonged working hours
When working hours exceed specified standards for threeconsecutive months, we examine measures in management
meetings (company-wide, including managerial staff) to prevent
recurrence. Labor and management have specified lines for eachbusiness site, and reductions in excessive working hours are being
promoted, with a KPI of a 20% reduction set for the number of
employees subject to overtime work.
Regarding mental healthcare, training for managers is
conducted once a year, and occupation health staff engage inindividual consultations at each business site.

Materiality KPI

Human capital items, Targets, and Fiscal 2023 results

p.16

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S

Reference material

66● Society │ Quality

Policies and activities (topics) on social aspects

KAERU -Creating opportunities for dialogue that brings awareness -KAERU, an overview

We launched the KAERU Project in April 2018 with participationof all executive officers and employees across the company.
(KAERU means “to change.”) This project was initially proposedby an officer who felt a sense of crisis and urgent need for change
because Toyobo group had failed to meet the targets in its previous
four medium-term management plans, and compliance violation
incidents had occurred. Many employees agreed to the officer’s
idea, leading to the establishment of this project. In March 2019, weestablished TOYOBO PVVs as a framework of corporate philosophy
that can also be a banner for reform, which we have been advancing
by spreading the corporate philosophy from the dual perspectivesof systems and structural KAERU and work and workplaceenvironment KAERU. In April 2022, we renamed the KAERU
Project Department the KAERU Department as we continue making
KAERU activities take root in our culture.

wanted to create opportunities to think again about what it means tolearn. We hosted a talk by company former employee Hisao Nishinaka
titled “Textile Vision (Road Map) and Reskilling,” which was followed
by a “casual discussions on serious issues” gathering in which allparticipants could converse frankly and openly without regard to rank.
A diverse range of views were exchanged, inspired by contact with theenthusiasm of Mr. Nishinaka, who has remained energetic and active
in his work and study since his retirement as Corporate Auditor. In afollow-up survey, 95% of the participants responded that it had given
them an opportunity to think about learning.
Participant feedback (excerpts)● A s I answered questions posed by otherpeople, I sometimes found myself being
made aware of ways of thinking andfeelings that I myself hadn’t understoodvery well.
● I realized that increasing the motivation
we bring out while talking with lotsof people is also really important incontinuing to learn.

Dialogue and exchange workshop example● Every other person besides ourselves
has something we can learn from, whichmakes it important to take an interest inpeople.

Exploring learning through dialogue

Nonwoven Fabrics Materials Operating Department (at the time)
KAERU in numbers (results)
ThemesIncrease the number of people
with awareness

Creating opportunities forawareness

Leading from awareness to
KAERU
Connecting with people eager
for change

Results

FY20192023

FY2023

Basic training in organizational development

Number of attendees

66

Basic training in organizational development for managers

Number of attendees

8

8Facilitation training

Number of attendees

315

1,155

Writing business department operations into unified company-wide workflow

Flow (number)

1216

Briefings and talk sessions

Number of times held (events)

325

Dialogue and exchange workshops*See case examples above.

Number of times held (events)

Isolating issues through taking inventory and writing
Support for improvement
Work style proposals by interdepartmental teams

157

133

275

1,043

2,749

Incidents

90

640

Incidents

18

223

Number of subcommittees (type)

828

Number of attendees

68

170

Number of attendees

KAERU members (planners and promoters)

9 full-time, 80 concurrently (as of May 2023)

KAERU supporters (those who have experience as members, supporters, etc.)

163 (as of the end of March 2023)

Participants in KAERU activities

2,471 (as of July 2022)*Totals.

Workplace-led KAERU

Ikuo Takeuchi

President & Representative Director
CEO & Co-COO

KAERU is now in the sixth year since its launch, and its activities
have shifted focus to building up people and organizations
capable of sustained transformation. Creating an organizational
culture in which people feel at ease freely exchanging words
with each other enables mutual recognition and ties between
people across organizations. Different perspectives andideas give rise to an awareness of improvement, reform, andtransformation. Meanwhile, it can be expected to provide
occasions to discover safety risks and signs of malfunctions thatcan lie hidden in daily routine work and in the workplace.
Through KAERU, we take ownership of workplace issues
and discuss them in teams to solve issues by ourselves as we
carry out the initiative known as T-UP (boosting team capabilities
through TOYOBO TALK, our in-house term for organizational
development). As this initiative gradually spreads, caseexamples are emerging of how it is transcending workplacebarriers.
I am also continuing with monthly “casual discussions onserious issues” in which I speak directly with employees. It
provides many new insights, not just for the people participating
but for me as well. There are also new interactions that begin
with these “casual discussions on serious issues”. I believe thatthese activities will ensure the solid trustworthiness of our safety,
disaster prevention, and quality, and that they will result in ourcreation of an organizational culture that reflects the attitude
expressed in our TOYOBO PVVs corporate philosophy framework:“We welcome change, we enjoy change, and create change.”

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S

Reference material

67● Society │ Quality

Supply chain management

Policies and activities with social aspects

Partnerships (supply chain)

Basic approach

Toyobo group supports the development of a sustainable society
throughout our supply chain, and we have established the propertransaction policies and execute responsible procurement
and logistics so as to contribute to achieving the Sustainable
Development Goals (SDGs).
In keeping with Principle 2, Fair Business Practices, of the
TOYOBO Group Charter of Corporate Behavior, we will engage
in proper competition and transactions, as well as responsible
procurement and distribution, and we will maintain a healthy
relationship with society. We also established our CSR Procurement
Guidelines to address issues including legal compliance, fairtransactions, environmental considerations, and respect forhuman rights, and our Green Procurement Guidelines to addressenvironmental considerations. In September 2022, we revised our
CSR Procurement Guidelines in light of several recent global issues.
CSR Procurement Guidelines
Green Procurement Guidelines

Organizational structure

Having established a proper basic policy on transactions, wehave also built systems for responsible procurement and logistics.
Moreover, we have established our CSR Procurement Guidelines
and Green Procurement Guidelines, and administer CSR
procurement survey to all of our suppliers, while requesting theirunderstanding of and cooperation with our proactive advancementof initiatives.

Targets and KPIs

We establish and appropriately manage the following goals and
KPIs.
● Targets● 
Throughout our supply chain, we will realize procurement andlogistics with consideration for its social and environmental

aspects, fair and honest transactions, and respect for humanrights.
● 
By promoting green logistics, including modal shifts and betterloading efficiency, we will reduce CO2 emissions.

Initiatives● CSR procurement survey
To all of our major suppliers worldwide, we provide notification of
our CSR Procurement Guidelines and administer a survey basedon the guidelines every other year. We administered it most recently
in fiscal 2022, and in fiscal 2023, we took corrective measures andrevised our CSR Procurement Guidelines based on the results.
Gather CSR procurementrelated information
Run the cycle on an
ongoing basis,
help raise supplierawareness,
Engagement with suppliers
and promote CSR risk
reduction including therisk related to human rights
embedded in the supply
chain
Administer questionnaire

Guideline survey review

including for sustainable procurement activities, and reward
excellent proposals with commendations.
● Addressing conflict minerals
In our CSR Procurement Guidelines, our group calls for thepromotion of responsible procurement with respect to regulations
on conflict minerals. Using specific Chemical Substances Data
Sheets, we investigate whether conflict minerals are used in the raw
materials behind all of our company’s products. In fiscal 2023, weinvestigated products that contain the four minerals tin, tantalum,
tungsten and gold among their raw materials. We also prepared aninternal survey and response system that lets us provide prompt andproper responses to survey requests from customers.
● Solving social issues of logistics
In efforts to solve social issues that emerge in logistics, we areworking to reduce environmental impacts through such means as
shortening transport distances, increasing loading efficiency, andadopting effective systems, while also reforming work styles in thelogistics field.

Hold briefing sessions● Education for sustainable procurement
Training for personnel in charge of procurement and logistics(buyers) is conducted once a year for all of those in charge, in which
each group manager in the Procurement and Logistics Department
is involved in presenting a thorough familiarization with the CSR
Procurement Guidelines. We also incorporate goals related tocontribution to sustainable procurement (stable procurement)
into personnel evaluations of procurement and logistics staff, andconduct guidance and training on topics including management ofprogress toward the goals. We solicit proposals for improvement
ESG performance data (Social)

Materiality KPIPartnerships (supply chain) items, Targets, and Fiscal 2023 results

p.17

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society │ Safety and disaster prevention● Society │ Respect for human rights ● Society │ Human capital ● Society │ Topic: KAERU ● Society │ Partnerships ● Governance

S

Reference material

68● Society │ Quality

Social contribution

Policies and activities with social aspects

Partnerships (social contribution)

Basic approach

In the TOYOBO Group Charter of Corporate Behavior, we declarethat “We will actively participate in society as a good corporate
citizen and contribute to its development.” It is our belief that
fulfilling our responsibilities as a good corporate citizen and making
investments for the future is one way for us to put our corporate
philosophy of “Jun-Ri-Soku-Yu” into practice. To build and support
a better society as a member of that society, we will engage in the
promotion of science and technology, environmental conservation,and communication with local communities, and will incorporate
what we gain from these activities into our corporate activities.

on providing international students with research grants in supportof the young researchers who represent the future.
In fiscal 2023, six young researchers were granted longterm research subsidies totaling ¥33 million, with a presentation
ceremony held in February 2023. With the current fiscal year
included, a total of 220 researchers have received long-term
research subsidies. The recipients are actively engaged at theforefront of research and education in the field of biotechnology, andthere are some who have served as directors and trustees of thefoundation out of a desire to contribute to the development of thenext generation.

Promotion of science and technology

Contribution to local communities● Supporting junior researchers to contribute to thebiotechnology field
In order to promote interdisciplinary academic research in the fieldof biotechnology so that the results can contribute to society, Toyobo
established the Toyobo Biotechnology Foundation in May 1982 tomark the centennial anniversary of the company. The foundation
has since hosted research conferences and symposiums, andoffered research grants. In recent years, it has focused its activities

Fiscal 2023 long-term research grant recipients and foundation officials(at the February 13 presentation ceremony)● Toyobo Aya-no-Mori forest conservation and contribution to
the local community
We have been purchasing pine and other forests since the 1950s
for the purpose of domestic self-sufficiency in chemical fiber raw
materials (wood pulp). As the composition of the chemical fiber
business has changed, however, we have now accomplished thismission of supplying raw materials, and are holding some of theforests we own in order to produce lumber.
Among our company-owned forests is Toyobo Aya-no-Mori,located in the town of Aya-cho, Miyazaki Prefecture. It has been
discovered that the forest contributes to the recharging of local water
sources, that a rich ecosystem is maintained by its mixture of naturalforest and cedar and cypress plantations, and that rare plants andanimals find their homes there, which have led to our reassessmentof its value. Moreover, the whole woodland owned by the company(approximately 1,500 hectares), which contains Aya-no-Mori, isestimated to absorb approximately 6 thousand t-CO2 annually,
thus contributing to society from the standpoint of climate change
mitigation.
By maintaining this valuable ecosystem, we will contribute toachieving the target of conserving 30% or more of land and sea as
healthy ecosystems by the year 2030, set by the 30 by 30 Alliancefor Biodiversity, an international initiative agreed upon at the 15th
Conference of Parties to the UN Convention on Biological Diversity(COP15) in 2022. One of the means by which we aim to achieve
this goal is to obtain certification under the international database ofother effective area-based conservation measures (OECM).
In addition, given Toyobo Aya-no-Mori’s location adjacent to a
UNESCO Eco Park, and its convenient proximity to the city center,
we are considering a collaboration with the local community inwhich we would offer it as a site for visitor education on the naturalenvironment. Furthermore, the forest has a rich ecosystem that
holds within it the potential to yield new materials and raw materials
that we think could be developed into better products in the future,
which would contribute to a prosperous society.

Toyobo Aya-no-Mori, Aya-cho, Miyazaki Prefecture

Comprehensive cooperation agreement
concluded with Aya-cho, Miyazaki Prefecture

TOYOBO REPORT 2023

Introduction

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

69● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ Compliance

Outside Director message
We will overcome our immediate
issues and difficulties to achievetransformation.
Look forward to
the future of TOYOBO!

Hiroshi Fukushi
Outside Director

Helping to overcome high hurdles to transform thebusiness portfolio

Management aiming for a high position in the long term
only makes sense in a harsh business environment

Toyobo is currently undertaking the reorganization of our businessportfolio, which is our biggest management challenge. It is aprocess that any long-established company must go through inorder to grow sustainably when changes in the times diminish thecompetitiveness of the businesses it has built, resulting in pressure
to transform the portfolio. Amid weakening growth potential at someof the businesses at Toyobo, excessive importance was placed on
immediate profits, which resulted in the occurrence of serious fire
accidents and quality problems, making it necessary to review thebusiness structure. I commend the group’s highly active initiatives
under President Takeuchi, first of all for the strengthening of its safetyand disaster readiness system that is a foundation of manufacturing
as well as the rebuilding of its quality assurance system, while taking
further steps to reorganize its business portfolio. Toyobo’s Boardof Directors has five outside directors with diverse backgrounds
including business operation, research and development, andcompliance, and engages in active discussions. Among these,
I have been in charge of managing a manufacturing company,
where I experienced a major business portfolio transformation.
Transformation is not easy, but we must achieve it for the sake of thecompany’s future survival and development. I will make the most of
my own experience toward Toyobo’s transformation, and I will backPresident Takeuchi and all of the executive officers in their efforts toovercome this high hurdle.
Most recently, our operating cash flow has dropped under
the impact of the economic disturbances during the COVID-19
pandemic and soaring raw materials and fuel prices, so wemust reclaim our earning power as we advance efforts to earn
unwavering trust in our safety, disaster prevention, and quality.
Although I think all chemical manufacturers are confronting thesame issue, the difficulty of raising prices on product lines thathave undergone commoditization is precisely what makes thisa critical moment. Toyobo must change its business structure to
one that generates cash flow by optimizing product prices andadvancing the shift to high value-added products.

In order for Toyobo to be a company that continues to envision a
growth trajectory through contributing to society while responding
to changing times, there is enormous significance to ourestablishment of the TOYOBO PVVs corporate philosophy system
and Sustainable Vision 2030. In addition to the major changes
currently taking place in the global and business environments,
we are also being rushed by a wave of digital transformation (DX).
In order to weather high seas like these, it is crucial that everyone
aim for a high position from a long-term perspective, and movetoward that goal step by step.
In Japan, DX tends to be understood as the introductionof digital technology, but the genuine meaning of DX is theapplication of digital technology to the transformation of society.
In looking at Amazon or Apple, we get a true sense of the powerof advanced DX companies. DX has the kind of speed and power
in which one equation can answer everything, so industrial andoccupational structures change, renewing everything having to dowith companies, lifestyles, and work. This kind of transformation
has already started everywhere throughout industry, so thatboth companies and individuals are all under pressure to make adecision and do something about whether to ride this rogue wave
or get swamped by it.
In order to realize the TOYOBO PVVs, it will be necessary for
Toyobo to review its existing businesses and operations from theground up and to rebuild the company, and DX will be essential
to that effort. Ten years from now, Toyobo’s business portfolio will
have undergone some enormous changes. Now is the time thatmanagement must exercise its leadership to transform Toyobo into
a company that will keep growing. As an outside director, I intend
to solidly advance that transformation.

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation70

Reference material● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ Compliance

G

Policies and actions on governance aspects

Management teamDirector
Seiji Narahara

Ikuo Takeuchi

Chikao Morishige

Hiroshi Otsuki

Taichi Sakai

Chair of the Board & Director

President & Representative Director

Representative Director & Co-COO

Director, Managing Executive Officer

CEO & Co-COO

Assistant to the president, Head ofEnvironmental & Functional Materials
Division

Representative Director
Senior Managing Executive Officer

Controlling Supervisor of Corporate
Sustainability Division, Internal Audit
Department, and KAERU Department

January
April
June
April
April

January
April
April
October
April
April
June

1988
2010
2011
2014

Joined TOYOBO
Executive Officer
Director and Executive Officer
President & Representative Director, CEO &Co-COO
2021 Chair of the Board & Director (to present)

April
October
April
April
June
April

1985 Joined TOYOBO
2015 Deputy Director, General Manager, Corporate
Planning Office2018 Executive Officer
2020 Managing Executive Officer
2020 Director and Managing Executive Officer
2021 President & Representative Director
CEO & Co-COO (to present)

April
April
April
April
April
June
April
April

1983 Joined TOYOBO
2014 Deputy Director, Head, Films Development
Department
2017 Executive Officer
2019 Managing Executive Officer
2020 Senior Managing Executive Officer
2021 Representative Director & Senior Managing
Executive Officer
2022 Representative Director & Co-COO (to present)
2023 TOYOBO MC Corporation
President & Representative Director
CEO (to present)

CTO, Head of Safety and Disaster
Management Division, Controlling
Supervisor of Production Technology
Division

CFO, Controlling Supervisor ofManagement and Administration
Division, Supervisor of KAERU
Department

November
October

April
June
April
April

1987 Joined TOYOBO
2014 Deputy Director, General Manager,
Chemicals Management Planning Office& General Manager, Films Business
Management Office2017 Executive Officer
2020 Director and Executive Officer
2021 Director and Managing Executive Officer
2022 Representative Director, Senior Managing
Executive Officer, CFO (to present)

April
March

April
December
April

1986 Joined TOYOBO
2012 General Manager, Production Technology
Division & Member, Corporate Planning
Office(project under direct control of the
President)
2016 Deputy Director, Production Technology
Supervisory Division Head & Member,
Global Promotion Department
2020 Executive Officer
2023 Director, Managing Executive Officer, CTO(to present)

Takafumi Isogai

Kimie Sakuragi

Masaaki Harima

Hiroshi Fukushi

Shoko Takase

Outside Director

Outside Director

Outside Director

Outside Director

Outside Director

1987 Associate Professor, Department of Education,
Osaka University
1996 Associate Professor, Graduate School ofEngineering Science, Osaka University
2002 Professor, Faculty of Merchant Marine, Kobe
University of Mercantile Marine
2003 Professor, Faculty of Maritime Sciences, Kobe
University
2013 Professor, Faculty of Commerce, University ofMarketing and Distribution Sciences
2018 Part-time lecturer, University of Marketing andDistribution Sciences
2018 Outside Director of the company (to present)

March

1981 Fukutake Publishing Co., Ltd.
(currently Benesse Holdings Inc.)
1995 General Manager, Book Business
Department, Publishing Department,
Benesse Holdings
November 1998 Section Manager, Business Ethics Committee
January
2003 General Manager, Corporate Ethics andCompliance OfficeJune2003 Full-time Corporate Auditor (retired in June
2019)
April
2007 Specially Appointed Professor, University of
Aizu Graduate School (to present)June2019 Outside Director of the company (to present)June
2021 Isuzu Motors Limited
Outside Director (Audit and Supervisory
Committee member) (to present)June
2021 Outside Director, Kumagai Gumi Co., Ltd. (topresent)
April

Corporate Auditor

April
May
September
April
June
June
June
April

CEO & Co-COO
Ikuo Takeuchi
Co-COO

Takayuki Tabo

Yasuo Ohta

Akihiko Irie

Wakyu Shinmen(Outside)(Outside)

Chikao Morishige

1977 Assistant Judge, Osaka District Court
1981 Registered as attorney (Osaka Bar
Association)
1987 Established Harima Law Offices(now Fushimicho Law Offices)
2010 Chairperson, Osaka Fairness Review
Board
2011 Outside Corporate Auditor, Ishihara
Sangyo Kaisha, Ltd. (to present)2014 Member, Independent Committee
2020 Outside Director of the company (topresent)
2021 Chairperson, Pollution Control Board,
Osaka Prefecture (to present)

April
June
June
June
June
June
June
June

1984 Joined Ajinomoto Co., Inc.
2011 Executive Officer
2013 Director & Managing Executive Officer
General Manager, Bio-Fine Business Division
2019 Director, Vice President & Executive Officer
Chief Digital Officer
2021 Director, Representative Director & Vice
President
2022 Special Advisor (to present)
2022 Outside Director of the company (to present)
2022 Outside Director, MEGMILK SNOW BRAND Co.,
Ltd. (to present)

April
January
July
July

July
April
July
SeptemberJune1987 Joined IBM Japan Ltd.
2005 Seconded to IBM Corporation (IBM U.S.
head office)2015 Manager, Growth Strategy, Mobile ​Strategy, IBM Japan Ltd.
2016 General Manager, Global Technology
Services Business
General Manager, Resiliency Services
Division2018 Director, General Manager, Cloud
Solution Center2019 Senior Managing Executive Officer& Head, Enterprise Business, Cisco
Systems G.K.
2021 Consultant, TechnoPro Holdings, Inc.
2021 Outside Director (to present)
2023 Outside Director of the company (topresent)

Senior Managing
Executive Officers

Managing
Executive Officers

Executive Officers

Hiroshi Otsuki

Nobuya Fujiwara

Seiji Yamazoe

Yoshihiro Nomi

Naoki Fujii

Shigeo Nishiyama

Taichi Sakai

Eiichi Shimizu

Kazuyuki Kawata

Kenji Fujihashi

Ichiro Takai

Takahito Sagara

Nobuyuki Hoshino

Masanao Kudo

Atsushi Sogabe

Tadao Kuroki

Masakazu Iwasaki

Tetsuro Yabuki

Sonoko Ishimaru

Katsuya Ito

Takehiko Inada

Hisashi Arimoto

Kazuhito Ikeda

Muneo Hirooka

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Foundation for value
creation

Value creation practice

Reference material

71● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ Compliance

G Management team

Policies and actions on governance aspects

Directors and Corporate Auditors attendance status and skills matrix

Corporate Auditor

Director

OutsideIndependent

Age

GenderAttendance status (attendance rate)
Of the skills and experience we seek, those that can be put to particularly effective use
Nomination and
Production,
Governance, risk
BoardofCompensation Corporate
technology,
Marketing Finance and Environment management, and IT/DX
Board of
Advisory
management andand sales accounting
and society
Directors Corporate
compliance
AuditorsCommittee
development

Nomination andCompensation
Advisory
Committee

Chairpersonsof eachcommittee〇

Board ofDirectors

18/18
sessions(100%)

Board ofManaging
Executive
Officers andControlling
Supervisors

18/18
sessions(100%)〇

5/5
sessions(100%)〇

Seiji Narahara

66

Man

Ikuo Takeuchi

60

Man

ChikaoMorishige

63

Man

18/18
sessions(100%)〇

Hiroshi Otsuki

62

Man

18/18
sessions(100%)〇Taichi Sakai(Newappointment)

60

Man

Takafumi
Isogai

〇

〇

74

Man

Kimie Sakuragi

〇

〇

64

Woman

MasaakiHarima

〇

〇

72

Man

Hiroshi Fukushi

〇

〇

65

Man

Shoko Takase(Newappointment)

〇

〇

58

Woman

Takayuki Tabo

62

Man

Yasuo Ohta(New
appointment)

63

Man

Akihiko Irie

〇

〇

66

Man

Wakyu
Shinmen(New
appointment)

〇

〇

66

Man

18/18
sessions(100%)〇

18/18
sessions(100%)

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

17/18
sessions
(94%)

〇

14/14
sessions(100%)

18/18
sessions(100%)

15/15
sessions(100%)

Observer15/15
sessions(100%)〇〇

Reasons for election

12

Based on his deep knowledge of finance, accounting, and other areas, Mr. Narahara has
supported the long-term reform of the company’s business portfolio, and, acting as President
and Representative Director since April 2014, has led the management of the group, including
the reworking of our corporate philosophy structure and the expansion of the film business,
committed to the improvement of corporate value. He assumed the post of Chair of the Board &Director in April 2021, and in that position, plays an appropriate role in decision-making on key
matters and in the oversight of execution.

3

After serving in key positions in corporate planning and overseas business sites of the company,
Mr. Takeuchi was appointed as Head of the Functional Membranes and Environment Division,a position from which he set a concrete path toward growth of the business. Since April 2021,
he has undertaken formulation of the 2025 Medium-term Management Plan as President andRepresentative Director, demonstrating strong leadership and steering the sustainable growthof the group.

2

Mr. Morishige has held key positions in the fields of R&D and production technologies in
the company’s core Films Division, and has contributed to the expansion of the Division’s
performance. He assumed the post of Representative Director in June 2021 and has played acentral role in management as an assistant to the President.

3

Mr. Otsuki has held key positions in the company’s corporate departments, including in financeand accounting, corporate planning, and corporate communications. Since June 2020, he has
contributed to the strengthening of the group’s financial base and to corporate governance in therole of Director.

0

Mr. Sakai has held key positions in the company’s production technology department and core
manufacturing sites and, drawing on his abundant experience and expertise in the field of
production technology, contributes to initiatives aimed at technological innovation.

5

Leveraging specialized knowledge and wide-ranging insights gained as an academic expert
versed in the field of quality control, Mr. Isogai made proactive statements from an independent
standpoint at meetings of the Board of Directors. He appropriately fulfills roles expected of him
by the company, including those of supervising management through vital decision-making andproviding counsel to management, advising management in areas including technology and
R&D.

〇

〇

4

Leveraging her abundant experience and wide-ranging insights in fields including corporate
ethics, compliance, and sustainability, Ms. Sakuragi made proactive statements from an
independent standpoint at meetings of the Board of Directors. She appropriately fulfills roles
expected of her by the company, including those of supervising management through vitaldecision-making and providing counsel to management, serving as a member of the Nomination
and Compensation Advisory Committee.

〇

〇

3

Leveraging specialized knowledge and wide-ranging insights gained as an attorney, Mr. Harima
made proactive statements from an independent standpoint at meetings of the Board of Directors.
He appropriately fulfills roles expected of him by the company, including those of supervising
management through vital decision-making and providing counsel to management, advising
management with the aim of strengthening risk management and governance.

〇

〇

〇

〇

1

Leveraging his abundant experience and wide-ranging insights gained as a business manager,
Mr. Fukushi made proactive statements from an independent standpoint at meetings of the Boardof Directors. He appropriately fulfills roles expected of him by the company, including those of
supervising management through vital decision-making and providing counsel to management,
drawing on his high-level expertise in the bio and digital fields to advise management.

〇

〇

〇

〇

0

In addition to extensive experience and wide-ranging insights as a business manager, Ms.
Takase possesses high-level expertise in the IT and digital fields. The company expects that she
will appropriately fulfill roles including those of supervising management through vital decisionmaking and providing counsel to management.

2

Mr. Tabo has a long involvement in the accounting and control department of the company,
possesses considerable knowledge of finance and accounting, and has a deep understanding of
the management and business operations of the group.

0

Mr. Ohta has a long involvement in the field of research and development, and, after serving
as head of the Research Center, has held key positions in the biochemical business and in
corporate planning, contributing to new business development and global expansion. He
possesses abundant experience and a record of performance as a manager in charge of various
departments, and has a deep understanding of the management and business operations of
the group.

2

Mr. Irie possesses abundant experience in auditing and has served as a corporate auditor at
listed companies.

0

Mr. Shinmen possesses abundant experience in auditing as a certified public accountant.

〇

〇

〇

18/18
sessions(100%)〇〇

5/5
sessions(100%)〇

Yearsin
office

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

72● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ ComplianceG

Corporate governance

Policies and actions on governance aspects

Corporate governanceaccurate decision-making, ensuring transparency of management,
and placing importance on fairness. We will also fulfill our
fiduciary and accountability duties to ensure the effectivenessof our corporate governance, and will strive to make continual
improvements.

Basic approach

Under our corporate philosophy of “Jun-Ri-Soku-Yu,” we at Toyobo
believe that discerning social issues from a long-term perspective
and helping solve them with our own unique technologies is our
purpose for being.
In order to respond to changing times and continually
improve our corporate value, we will do our utmost to collaborate
appropriately with all of our stakeholders, beginning with ourshareholders, based on how we think about ensuring prompt,

Organizational structure

As a company furnished with a Board of Corporate Auditors,
we have adopted an executive officer system. Our Articles ofCorporate governance structure (as of June 2023)

Conference and committee overview

General Meeting of Shareholders
Election and dismissal

Nomination and Compensation
Advisory Committee* 3 members (of whom 2 are outside directors)*Chair: Outside director

Board of Directors Composition

ReportingConsultation

Election and dismissal

Board of Directors

Reporting

ReportingBoard of Managing Executive
Officers and Controlling Supervisors
Outsidedirectors
ratio

Board of Executive Officers

Business
execution

Diversity* 4 corporate auditors(of whom 2 are outside corporate auditors)

Financial Control Committee

Risk Management Committee

Compliance Committee

Functionalorganizations

Internal auditing

Internal
Audit Department

Internal auditing

10 members. The Board of Directors is composedof the chairperson who presides over its
deliberations, 5 independent outside directors,
and directors who serve concurrently as executive
officers. It is stipulated that the number of Boardof Directors members may not exceed 14, thatthe term of office is one year, and that the ratio ofoutside directors must be one-third or greater.

Board of Corporate
Auditors

15

4 members. Includes 2 independent outside
corporate auditors.

Nomination andCompensation Advisory
Committee

5

3 members. Consists of 2 independent outside
directors and the chairperson. An outside
director chairs the meeting. One outside
corporate auditor also attends as an observer.

Board of Managing
Executive Officers andControlling Supervisors

32

12 members. Includes those serving concurrently
as directors. The chairperson and 2 internal
corporate auditors may also participate andexpress opinions.

Sustainability
Committee

4

13 members. The members of the Board ofManaging Executive Officers and Controlling
Supervisors are members of the committee, withthe president serving as chairperson. 2 internal
corporate auditors may also participate andexpress opinions.

Corporate Planning
Committee

8

19 members. Members of the committee are
selected from each area of expertise andbusiness department. The officer in charge ofplanning serves as chairperson.

Financial Control
Committee

17

There is 1 chairperson and 4 permanent
members.

Cooperation

Auditing

Group companies
Auditing

Cooperation

Corporate auditors ofgroup companies

Constituent members

18

Assessing theappropriatenessCorporate Planning Committee(Numbers of persons as of June 2023)

Board of Directors

Reporting

Climate Change and Biodiversity Committee

20%

Men directors: 8 members
Women directors: 2 members

Auditing

Sustainability Committee

50%
Independent outside directors: 5 members
Inside directors: 5 members

Accounting Auditor
Board of Corporate Auditors

Decision-making, supervision,
election, and dismissal

Number ofmeetings infiscal 2023

Election and dismissal

Accounting auditing* 10 directors(of whom 5 are outside directors)

CEO & Co-COO(President & Representative Director)

Incorporation stipulate this system, by which the Board of Directors
supervises the execution of business operations by executive
officers. We have thus built a structure of governance that enables
prompt decision-making and effective business execution bymaking a clear separation between the decision-making andoversight functions of the Board of Directors and the businessexecution functions of the executive officers.

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

73● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ Compliance

G Corporate governanceCorporate governance

Policies and actions on governance aspects

Targets and KPIs

● Targets
We have set KPIs and manage them appropriately in order to build
a fair and transparent governance structure through compliancewith the Corporate Governance Code and proactive information
disclosure, etc. We set KPIs for initiative items involving thestrengthening of corporate governance and information disclosure.

Senior management election and dismissal, andnomination of director and auditor candidates● Policy
In selecting and dismissing senior management (executive officers
who serve concurrently as directors), and in nominating director
and corporate auditor candidates, consideration is given towhether the person excels in the character and insight appropriate
to the respective duties as a basis for consideration with respect
to our criteria for nominating officers and corporate auditors. The
decisions are made by the Board of Directors after deliberation by
the Nomination and Compensation Advisory Committee.
(1) C onceptual approach to the composition of the Board of
Directors and the Board of Corporate Auditors
1 Board of Directors
In order to achieve overall structural balance while ensuring
diversity of career history, gender and age, while affording theexpertise and skills necessary to exercise appropriate strategic
direction and decision-making on execution of important business,and the independence needed to strengthen supervision of the
management team, the Board of Directors is composed of thechairperson who presides over its deliberations, outside directors
and directors who serve concurrently as executive officers. In
keeping with our mindset regarding the assurance of prompt,
accurate decision-making, management transparency, and placing
importance on fairness, our Articles of Incorporation stipulate thatthe number of Board of Directors members may not exceed 14,
and that the ratio of outside directors must be one-third or greater.

2 Board of Corporate Auditors
From the standpoint of ensuring the effectiveness of its audits,
the Board of Corporate Auditors is composed of personnel who
possess finance and accounting expertise and skills as well as
knowledge of the group’s business operations.
(2) Outline of criteria for nomination, etc.
1 Directorship candidates (excluding outside director candidates)• Must have managerial knowledge, track record, experienceand skills, and a company-wide perspective
2 Outside directorship candidates• Must help increase corporate value and strengthen oversightfunctions by providing business suggestions, management
support, etc.
• Must satisfy the separately defined criteria for independenceof outside officers
3 Corporate auditorship candidates• Must be capable of appropriate decision-making from an
independent and objective standpoint in executing audits andother duties• Outside corporate auditorship candidates must satisfy the
independence criteria● Procedures for nomination, etc.
In order to ensure fairness and transparency, the Nomination andCompensation Advisory Committee has been established as anadvisory body for the Board of Directors, with outside directors making
up a majority of its members. An outside director serves as chairpersonof the Nomination and Compensation Advisory Committee.
The Nomination and Compensation Advisory Committee
reports to the Board of Directors upon deliberating basic policies
and criteria such as officer nominations, succession planning, andother matters based on proposals from the president.
● Policy and procedures for dismissal
In the event of any conduct suspected of being unfair, unjust or
constituting a breach of trust, or any other cause of unfitness forservice as an officer, the Board of Directors will make a decision
regarding dismissal upon deliberation by the Nomination andCompensation Advisory Committee.

Officer training

In addition to conducting briefings for newly appointed directors
and corporate auditors on their roles and duties, we also help themacquire the necessary knowledge by sending them to external
training programs upon assuming their posts as executive officers
and directors. Newly appointed outside directors and outside
corporate auditors are also briefed on the company’s business
operations, finances, and organization. After they assume office,we provide further support for their participation in external training
programs, while also presenting lectures by outside instructors sothat each individual can continuously strengthen their management
literacy.

Officer compensation system● Basic policy
We have designed our system for officer compensation in accordancewith the following policy items, within the scope of the compensation
amounts approved by the General Meeting of Shareholders.
1 It must incentivize the motivation to increase sustained growth of
the group and medium- to long-term increase in corporate value.
2 It must facilitate the securing of excellent management personnel.
3 It must have a highly objective, transparent decision-making procedure.
We will review the composition and levels of compensation withreference to our management environment, employee salarylevels, and levels current at other companies, according to surveys
conducted by external expert organizations.
● Monetary compensation (including performance-linked
component)(1) Composition of monetary compensation
Monetary compensation for directors (excluding outside directors)
consists of fixed monthly compensation comprising the following
two components.
Materiality KPIGovernance items, Targets, and Fiscal 2023 results

p.17

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

74● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ Compliance

G Corporate governanceCorporate governance

Policies and actions on governance aspects

1 Base compensation
2 Short-term incentives(2) Short-term incentives
1 Short-term incentive compensation reflects evaluations ofcompany-wide performance and the performance of thedepartment under charge, in accordance with position.
•R epresentative Director and Executive Director: Companywide performance only
• Director: Company-wide performance 2; performance of
department under charge 1• Executive Officer (full-time): Company-wide performance 1;
performance of department under charge 2
2 I ndividual compensation is calculated to reflect company-wide
performance and the performance of the department under charge,
and is decided by the Board of Directors.
 he major management indicator EBITDA is used as a KPI for
3 T
company-wide performance. It varies between 0% and 200%,
according to the degree of achievement with respect to the target
value.
 ith regard to specific target values, the Nomination and
4 W
Compensation Advisory Committee is consulted. Based on its
reports, the Board of Directors makes decisions.
 erformance of the department under charge is evaluated on
5 P
a 5-point scale that takes into account the degree of operating
income achieved, the degree of improvement in ROA, EBITDA, andother factors in the department under charge. It varies between
50% and 200%.
● Stock compensation
In order to strengthen incentives for a sustained increase incorporate value, and to promote even greater value-sharing withshareholders, we offer a certain percentage of compensation in
the non-monetary form of restricted stock (non-performance-linked
and pre-delivery type).
● Ratio of paid compensation
The ratio is designed to allow incentives for enhancement ofcorporate value to function appropriately. For base compensation,short-term incentive, and long-term incentive, a ratio of 6:3:1 is set
as a guideline (when KPI achievement is 100%).
● Other(1) C ompensation for outside directors consists only of a fixedamount of monetary compensation, given their role andindependence.
(2) C ompensation for corporate auditors consists only of a fixedamount of monetary compensation according to the duty
and responsibility of each auditor, and given their role andindependence, is determined in consultation with the auditor.
(3) I n order to ensure transparency and objectivity in the

Details of officer compensation (fiscal 2023)
Category

Total compensation, etc.
[millions of yen]

Total compensation, etc., by type
Base compensation[millions of yen]

Performance-linked
compensation[millions of yen]Non-monetary compensation(restricted stock compensation)[millions of yen]

Numberof eligible
officers*

Directors(including outside directors)

407 (50)275 (50)101 (−)31 (−)

12 (5)

Corporate auditors (including
outside corporate auditors)

70 (18)70 (18)

− (−)

− (−)

4 (2)

Total (including outside officers)

478 (68)345 (68)

101 (−)31 (−)

16 (7)*Including officers newly appointed and retired during the term

determination of compensation, the Nomination andCompensation Advisory Committee has been established
as an advisory body for the Board of Directors, with outside
directors making up a majority of its members. It is consulted
by the Board of Directors, and deliberates on the structure,levels, and methods of calculation of officer compensation,
as well as the target amounts for company-wide performance
evaluations that are a component of the compensation foreach position. The Board of Directors makes final decisions
on individual compensation amounts with reference toreports from the Nomination and Compensation Advisory
Committee.
● Revision of the officer compensation system
The Board of Directors partially revised the system of officer
compensation in fiscal 2023 in light of considerations of social
trends and appropriate incentives for improved businessperformance. Effective from July 2022, the key content of therevision is shown below.
(1) Compensation composition ratios
The guidelines for the ratio of base compensation, shortterm incentives, and long-term incentives (restricted stockcompensation) will be changed as follows.
Pre-change: 7:2:1 Post-change: 6:3:1(2) Short-term incentive composition ratio
Pre-change: C alculated by multiplying evaluations of companywide performance and departmental performance.
Post-change: The ratios of company-wide performance anddepartmental performance reflected in short-term
incentives are as follows:● Representative Director and Executive Director: Companywide performance only
● Director: Company-wide performance 2; performance of
department under charge 1● Executive Officer (full-time): Company-wide performance 1;
performance of department under charge 2

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

75● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ Compliance

G Corporate governanceCorporate governance

Policies and actions on governance aspects(3) Short-term incentive KPIThe KPI for company-wide performance will be changed fromconsolidated operating income to EBITDA,* linking it to the targetsof the 2025 Medium-Term Management Plan.
*EBITDA: An acronym for “earnings before interest taxes depreciation and amortization,”a corporate profit level indicator.

Ratio of paid compensation

Base
compensation

Short-term incentives:

Reflects prior fiscal year
performance evaluations
for the whole company anddivision under charge:

Long-term incentives
Restricted stockcompensation=6:3:1

During fiscal 2024, the Board of Directors decided that from July
2024, the short-term incentives within officer compensation would
incorporate a sustainability index in the pursuit of sustained growthand environmental, social, and governance (ESG) perspectives.

Evaluation of the effectiveness of the Board of Directors

With the goal of further increasing the functionality of the Boardof Directors, we obtained the advice of an external organization in
conducting an analysis and evaluation of the overall effectivenessof the Board of Directors in fiscal 2023. A summary is as follows.
● Methods of analysis and evaluation of effectiveness(1) S ubjects: All directors and corporate auditors(2) M ethod: We administered a questionnaire (with approximately
50 questions), with responses made directly to the outsourced
external organization.
(3) A nalysis and evaluation: Performed by the Board of Directors
upon consideration of the report of aggregate results from theexternal organization.

● Summary of evaluation results(1) T he number of directors, the ratio of inside to outside directors,
and the Board of Directors chairperson’s management of the
discussion agenda were generally assessed as appropriate.
(2) It was confirmed that certain results and improvements wereachieved as a result of addressing the five issues identified
previously: 1) addressing risk management including of
quality assurance and of safety and disaster prevention, 2)
tackling medium- and long-term themes, 3) initiatives towards
succession planning and appointment procedures, 4) further
streamlining Board of Directors’ management of meetingsprocedures, and 5) strengthening of group governance.
However, some voices viewed the improvements as insufficient.
(3) T he items 2), 3), and 5) above in particular received relatively
low evaluations, and were identified as issues to be addressedalong with the newly identified issue of reviewing our businessportfolio. In addition, the item 1) above remained an issue tobe addressed in order to make further improvements throughongoing initiatives.
● Issues and future initiatives
Through the following initiatives, the Board of Directors will strive
to improve its overall effectiveness.
(1) Risk management to address safety, disaster prevention,
quality assurance, etc.
We will further enhance the risk management systems of ourgroup as a whole by means including supervision of the statusof our initiatives for KPIs and materiality targets.
(2) Business
portfolio review initiative• We will set this as a priority theme in our annual plans, andwill undertake it from the beginning as we work to enhance
discussions.
• We will engage in a review of our business portfolio, withgroup companies included.
(3) Strengthening of group governance• We will receive reports on risk management at groupcompanies and on other topics from the Corporate Business

Management Department, and will engage appropriately.
• We will ensure the effectiveness of internal audit functions
through means including audit plans from the Internal Audit
Department and reports on their outcomes, and will work tostrengthen group governance.
(4) Initiatives for CEO succession planning and appointment
procedures
We will further ensure transparency and fairness bymeans including activity reports from the Nomination andCompensation Advisory Committee.
(5) Initiatives aimed at other medium- to long-term themes (DX,human capital, environmental action, etc.)
We will set this as a priority theme in our annual plans, andwill undertake it from the beginning as we work to enhance
discussions.

Cross-shareholdings

We inspect cross-shareholdings on a regular basis for validity
in terms of a range of perspectives including effectiveness inmedium- to long-term elevation of corporate value, and economic
rationale. When such shares are no longer regarded as significant,our policy is to sell them. On the other hand, we may hold sharesof business partners in cases where we determine that doing so
will contribute to our sustainable growth and increase in corporate
value over the medium to long term through the maintenance andstrengthening of stable relationships with important partners. Each
year, the Board of Directors individually considers the validity ofcross-shareholdings, including consideration of future businessstrategies and relationships, and decides whether or not tocontinue holding the shares.
In exercising our voting rights on our cross-shareholdings,
we make comprehensive decisions upon in-depth study of thecircumstances of the business partners involved and of the detailsof their proposals. When necessary, we engage in dialogue todetermine factors such as whether or not the proposal will contributeto the sustained growth and an increase in the medium- to long-term
corporate value of the business partners involved and our company.

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

76● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ ComplianceG

Risk management

Policies and actions on governance aspects

Risk management

Basic approach

Having established a Basic Policy on Business Risk that presents
our basic stance toward risk management activities, Toyobo groupalso anticipates a diverse range of crises that might threaten ourbusiness activities overall, and we implement risk management bymeans appropriate to the characteristics of each risk. In the eventof an emergency, we establish a task force under the direction of
the responsible executive officer to swiftly contain the crisis througha prompt response. By putting these systems in place and making
these efforts, we strive to secure the trust of all of our stakeholders,which include our customers, members of local communities, andshareholders.

Organizational structure

We have established a Risk Management Committee chaired by
the President, which performs uniform group-wide managementof risks. Comprising the members of the Board of Managing
Executive Officers and Controlling Supervisors, as well as members

appointed by the chairperson, it met four times in fiscal 2023. The
committee supervises risk management activities (identification,
analysis, assessment, and response), formulates group-wide risk
management policies, and works to strengthen the risk management
system under its objective of building up and operating an effective
and sustainable organization and system.

BCP conceptual approach and structuregroup must ensure that each and every employee acknowledges
the importance of information security, and that we properly manage
information and prevent problems involving information security
from occurring if we are to contribute to society and remain acompany that earns people’s trust. Our basic Information Security
Policy includes a declaration of its five essentials: A system ofmanagement, legal compliance and in-house regulations, educationand training, information systems operation, and incident response.

Conceptual approach and system for information security● Information security management system
We have established an Information Security Sub-committee(TOYOBO-CSIRT), led by a chief information security officer (CISO)
appointed by top management, as an organization to promote
information security measures and activities. TOYOBO-CSIRT
assesses the status of information security across the company,
formulates basic policies, maintains management systems, andimplements and supervises specific measures.

As we carry out continuous improvements, our group has formulated
a Business Continuity Plan (BCP) structured around a dual coreof performing our supply responsibilities as a manufacturer andcoexisting with the local environment and society. It provides clear
instructions in chronological order regarding the roles and functions ofeach department from the emergence of a crisis to its resolution, andlays out the specific details of preparedness during normal times.

As stated in our TOYOBO Group Charter of Corporate Behavior, ourManagement structure and processes

Monitoring

Sustainability Committee
Risk Management Committee

Activity reporting

Climate Change and Biodiversity Committee

Compliance Committee

Board ofDirectors

Participation / Reporting
Corporate Sustainability Department
Group Governance Department

Participation /Reporting

Follow-up

Summary of activities
Departments managing risks
Departments with intrinsic risks

Consideration / Expansion / Monitoring of measures
Execution of measures / Self-inspection● Information security measures
Cyber attacks are intensifying year by year, often targeting overseas
sites and group companies. In response, we are working to raise
the information security measures of our domestic and overseas
affiliates to the same level as our headquarters, and to strengthen
information security across the group. Specific measures include
support for communication and improvement of policies andregulations, support for the introduction of education for employees
and managers, implementation of targeted email attack drills,
deployment and inspection of IT reinforcement measures, andcontinuous strengthening of our contact system for security andincident response.

Major risks we recognize as having the potential to seriously impact the business results and financial status of the Toyobo group.
Risks that have occurred or could occur

Medium- to long-term risks(1) Disasters, accidents, and infectious diseases(2) Further worsening of political and economic conditions(3)Inappropriate conduct, etc., related to the content of third-party
certification registration(4) Raw materials purchasing(5) Product defects, etc.
(6) S ecuring human resources(7) Climate change(8) Environmental impact

Financial risks(9) Information security(10) Regulations and compliance(11) Overseas business activities(12) Litigation(13) Major exchange rate fluctuations(14) M ajor interest rate increases(15) Major stock price declines(16) Fixed asset impairment(The risks included here are not an exhaustive list of all risks involving the group. Forward-looking statements are based on determinations made by the group as of the end of fiscal 2023.)

Materiality KPIDigital transformation items, Targets, and Fiscal 2023 results

p.17

Introduction

TOYOBO REPORT 2023

Value creation story

Value creation strategy

Value creation practiceFoundation for value
creation

Reference material

77● Sustainability management ● Disclosure based on TCFD recommendations ● Environment ● Society ● Governance │ Outside Director message● Governance │ Management team ● Governance │ Corporate governance ● Governance │ Risk management ● Governance │ ComplianceG

Compliance

Policies and actions on governance aspects

Compliance

Basic approach

Based upon our corporate philosophy of “Jun-Ri-Soku-Yu,” at thecore of Toyobo group’s compliance activities is the idea of “do whatshould be done” and “don’t do what should not be done.” In addition,
based on the principles declared in the TOYOBO Group Charter ofCorporate Behavior, we created the TOYOBO Group Compliance
Manual, in which we compile in concrete and easily understoodterms the rules that employees should follow as we work to
encourage understanding among group employees and thoroughlyfamiliarize them with our rules.

Organizational structure

We have established a Compliance Committee made up of membersof the Board of Managing Executive Officers and Controlling
Supervisors to promote compliance throughout the group from amanagement perspective, and a subordinate Compliance Promotion
Committee to consider specific initiatives, while the Legal andCompliance Department promotes legal and regulatory compliancethroughout the group.

Targets and KPIs

We have set KPIs and manage them appropriately in order to foster
an ethical corporate climate and culture in which each and every
employee adheres to laws, regulations and rules, and responds
appropriately and transparently. The initiative items for which
we specify KPIs include improvement in compliance awareness,
recognition and utilization of Compliance Consultation Desks, andthe number of serious legal and regulatory violations.

Initiatives

During fiscal 2023, the Compliance Committee met two times andthe Compliance Promotion Committee held four meetings in efforts
to increase the effectiveness of education, training, and preventive
measures.
● Compliance Consultation Desks
Our group has established a variety of points of contact available

to all group employees, including the internal reporting desk
and Compliance Consultation Desks, where whistleblowing
and consultation inquiries are received for the prevention, early
discovery, and correction of problems. There were 78 consultation
cases during fiscal 2023 (including 7 taken by external consultation
services). A breakdown by type shows that the most common
problems were with communication, human relations, andharassment, followed by labor relations (attendance, employee
treatment, etc.). Depending on the nature of the consultation, we
recommended corrective or disciplinary action in cases whereproblems were recognized, offered advice to those seeking
consultation, and answered questions regarding the issues.
Number of Compliance Consultation Desk cases(including the internal reporting desk)
FY2019FY2020

FY2021

FY2022

FY2023

32

35

37

62

78

Consultation details

Incidents

Communication, personal relationships, harassment

31

Labor relations (attendance, treatment, etc.)

12

Violations of work rules, etc.

9

Other

26

Total

78

During fiscal 2023, we conducted 20 compliance study (training)sessions for management-level personnel at all of our business sites
and affiliate companies, as well as 38 sessions of various training
types categorized by rank and job type.
● Compliance risk assessment
Every year, we administer a compliance awareness survey andcheck on workplace compliance risk status. In fiscal 2023, 6,566
employees responded to the survey. We disclose the results to all
employees, and share the information with the related departments
in a form that prevents identification of those who filled out thequestionnaires, which has been useful in improving circumstancesand preventing problems.
● Corruption prevention initiatives
In addition to coercion or corruption including bribery, we rank theprevention of unfair bidding or competition, and of falsification offinancial records, as priority compliance issues.
Every year, we make a report to the Board of Directors on thestatus of our corruption prevention initiatives and other complianceactivities to enable effective supervision. To build fair and soundbusiness relationships with partners, we decline the receipt ofgifts or entertainment that exceed socially accepted norms, andhave adopted a system for reporting the receipt of any gifts orentertainment.

● Activities for education and awarenessIn order to promote understanding among all group employees andto thoroughly familiarize them with the rules, we have produced
the TOYOBO Group Compliance Manual. Every year, we revise
and distribute the Manual during Compliance Enforcement Month,while overseas sites create local versions with additional edits.
We familiarize all employees with the TOYOBO Group Charter ofCorporate Behavior through readings of the Manual during training
at workplaces.
ESG performance data (Governance)

Materiality KPICompliance items, Targets, and Fiscal 2023 results

p.17

05

Introduction

TOYOBO REPORT 2023

Value creation story● Key financial data (FY2013–FY2023)● Corporate data

Value creation strategy

Value creation practice● External recognition, third-party assurance report

Reference material
79 Key financial data (FY2013–FY2023)
81 Corporate data
82 External recognition, third-party assurance report

Foundation for value
creation

Reference Materialmaterial

78

TOYOBO REPORT 2023

Introduction

Value creation story● Key financial data (FY2013–FY2023)● Corporate data

Value creation practiceFoundation for value
creation

79

Reference material● External recognition, third-party assurance report*1 Since partial Amendments to the Accounting Standards for Tax Effect Accounting have been applied since fiscal 2019, these figures represent values resulting
from the retroactive application of the standards to fiscal 2018.

Key financial data (FY2013–FY2023)
Fiscal Year

Value creation strategy

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023339,009351,577

351,279

347,763

329,487

331,148

336,698

339,607337,406

375,720399,921

Operating profit

17,081

21,006

20,58023,12323,332

23,923

21,727

22,79426,65728,43010,063

Ordinary income

15,522

18,426

16,257

20,393

20,65020,415

17,78818,03520,70623,092

6,590

Extraordinary income

2,673

595

1,160

702

469

11,492

1,519

11,206

629

6,529

9,753

Extraordinary losses

5,420

5,151

5,101

4,871

7,179

13,683

19,204

9,525

15,753

14,825

15,731

Profit or loss (-) attributable to owners of parent

7,639

8,154

8,117

10,1509,444

13,044-603

13,774

4,202

12,865-655

Comprehensive income

11,097

12,98818,182

2,147

13,51915,611

-467

4,437

9,471

12,112-1,232Current assets

184,739

184,630

196,607

186,633

196,293

186,571

193,125

206,416

212,963

239,314299,133

Non-current assets

262,707271,625

269,202257,954

254,497258,924

267,922

282,458

278,225

278,460

289,773

Current liabilities

164,831

160,582

146,250

130,690

136,865

125,110

131,768

122,321

131,444

146,750

202,500

Non-current liabilities

127,093

150,558

158,472

153,795

143,016

135,870

148,053

183,916

171,109

173,876

164,984

Net assets

155,522

145,115

161,087

160,101

170,910

184,515

181,226

182,636

188,635

197,149

221,422

Shareholders’ equity

138,024

142,310

157,988

156,915

167,773

180,561

176,585

177,890

185,729

194,876

189,588

Total assets

447,445456,256

465,809444,587

450,790445,495

461,047

488,874

491,188

517,774

588,906

Interest-bearing debt

159,430

170,721

177,085

165,358

169,230

145,594

164,769

175,139

186,958

191,249

229,405

Items of consolidated statements of income (millions of yen)
Net sales

Items of consolidated balance sheet (millions of yen)*1

Cash flow (millions of yen)
Cash flow from operating activities

30,35423,927

20,10732,337

26,872

22,353

7,838

44,25535,02817,097

7,798

Cash flow from investing activities-11,294-22,218-20,089-10,636-14,132-1,174-24,286-39,216-31,678-24,608-36,011

Cash flow from financing activities- 2,636-10,839797-21,384-324-27,831

12,608-1,8055,340-1,72961,295

Free cash flow

19,0601,709

1721,701

12,74021,178-16,448

5,040

3,350

-7,511-28,213

Cash and cash equivalents at end of period

26,467

19,177

20,38920,101

32,17925,85722,16725,08434,52626,43360,204

Capital expenditure, depreciation and amortization, and R&D expenses (millions of yen)
Capital expenditure

18,041

20,074

17,491

17,336

18,36021,25925,51236,44523,25333,64042,734

Depreciation and amortization

13,246

14,03814,916

14,434

14,93915,666

15,82317,00519,09520,08019,050R&D Expenses

9,966

10,474

10,81911,266

11,114

10,402

11,022

11,69012,656

13,792

14,112

Introduction

TOYOBO REPORT 2023

Value creation story● Key financial data (FY2013–FY2023)

Per-share information (yen)*● Corporate data

Value creation practiceFoundation for value
creation

80

Reference material● External recognition, third-party assurance report*2 As of October 1, 2017, Toyobo consolidated every 10 shares of its common stock into 1 share based on a resolution of the 159th Ordinary General Meeting of Shareholders held on June 28, 2017. In addition, the number ofshares comprising one unit of stock changed from 1,000 to 100 on the same date.*3 ROE: Profit attributable to owners of parent ÷ average fiscal year-end/year-initial shareholders’ equity.*4 ROA: Operating profit ÷ total assets.
*5 ROIC: NOPAT ÷ average fiscal year-end/year-initial invested capital (invested capital: Net assets + interest-bearing debt). *6 Calculated using fiscal 2012 as base year.*7 EBITDA: Operating profit + depreciation andamortization (including goodwill).*8 In fiscal 2015, we changed the acrylate-based fiber (AP) business from films and functional polymers to industrial materials. In fiscal 2017, we changed the activated carbon fiber (AC)business from industrial materials to healthcare, and the AP business from industrial materials to textiles and trading.*9 We changed the business segment in fiscal 2021. Figures for fiscal 2020 have been reclassified under
the altered categories to facilitate comparison.

Key financial data (FY2013–FY2023)

Fiscal Year

Value creation strategy

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY20232,146.46

2

Book value per share (BPS)

155.35160.28177.95176.75188.982,034.04

1,989.29

2,003.01

2,090.47

2,192.17

Earnings or loss (-) per share (EPS)

8.61

9.18

9.14

11.43

10.64

146.93-6.80

155.1247.30

144.75-7.37

Dividend per share

3.50

3.50

3.50

3.50

3.50

40.00

40.00

40.00

40.00

40.00

40.00

Overseas sales ratio (%)

23.4

26.6

28.5

29.5

29.2

29.0

30.5

32.3

33.0

34.3

36.8

Operating profit margin (%)

5.0

6.0

5.9

6.6

7.1

7.2

6.5

6.7

7.9

7.6

2.5

Return on equity (ROE)*3 (%)

5.7

5.8

5.4

6.4

5.8

7.5

-0.3

7.8

2.3

6.8

-0.3

Return on assets (ROA)*4 (%)

3.8

4.6

4.4

5.2

5.2

5.4

4.7

4.7

5.4

5.5

1.7

Return on invested capital (ROIC)*5 (%)

3.4

4.3

4.2

4.8

4.8

4.9

4.4

4.5

5.0

5.1

1.7

Price earnings ratio (PER)

18.58

17.65

17.72

14.78

18.14

14.29

—

7.37

30.11

7.55

—

Price book value ratio (PBR)

1.0

1.0

0.9

1.0

1.0

1.0

0.7

0.6

0.7

0.5

0.5

Total return ratio (%)

40.6

38.1

38.3

30.6

32.9

27.2

—

25.8

84.6

27.6

—

Dividend on equity (DOE) (%)

2.3

2.2

2.1

2.0

1.9

2.0

2.0

2.0

2.0

1.9

1.8

138.6

143.2

146.2

155.1

178.4

196.1

141.5

121.9

149.1

124.4

123.2

Financial indicators

Total shareholder return (TSR)*6 (%)
Equity ratio (%)

30.8

31.2

33.9

35.3

37.2

40.5

38.3

36.4

37.8

37.6

32.2

30,32835,04435,49637,557

38,27239,58937,55039,79945,752

48,50929,113

D/E ratio (multiples)

1.16

1.20

1.12

1.05

1.01

0.81

0.93

0.98

1.01

0.98

1.21

Net debt / EBITDA ratio (multiples)

4.4

4.3

4.4

3.9

3.6

3.0

3.8

3.8

3.3

3.4

5.8

170,028

EBITDA*7 (millions of yen)

Results by business segment (millions of yen)*8, *9
Net sales

Operating profit

Films and Functional Polymers

137,394

148,000

146,029

143,398

138,574

148,667

156,241

Films and Functional Materials

127,127

152,842

170,326

Industrial Materials

71,891

71,704

71,52070,522

59,92563,45466,540

Mobility

43,90536,57344,721

49,320

Healthcare

24,83927,344

28,777

27,72336,42335,72334,675

Lifestyle and Environment

128,409109,148

114,295

129,872

Textiles and Trading

79,211

79,08985,09385,48677,552

68,31764,585

Life Science

25,53827,08735,00338,134

Real estate and other business

25,67325,44019,86020,63417,013

14,987

14,657

Real estate and other business

14,62911,757

11,375

12,567

Films and Functional Polymers

7,634

7,794

6,988

9,920

12,747

13,713

13,727

Films and Functional Materials

14,582

20,02819,897

4,641

Industrial Materials

5,453

5,501

6,601

6,288

3,875

4,262

2,620

Mobility-701-1,572-1,753-4,485

Healthcare

4,170

5,140

5,042

4,726

5,242

5,179

5,170

Lifestyle and Environment

5,936

4,376

3,453

2,999

213

2,952

2,334

2,500

1,066

645

914

Life Science

3,798

4,517

8,655

9,212

Real estate and other business

2,739

2,732

2,630

2,841

3,344

2,819

2,233

Real estate and other business

2,623

2,302

2,218

2,187

Adjustment-3,128-3,113-3,016-3,152-2,941-2,694-2,936

Adjustment-3,444-2,993-4,041-4,490

Textiles and TradingIntroduction

TOYOBO REPORT 2023

Value creation story● Key financial data (FY2013–FY2023)● Corporate data

Value creation strategy

Foundation for value
creation

Value creation practice81

Reference material● External recognition, third-party assurance report

Corporate data (As of March 31, 2023)
Corporate data

Investor information

Company nameTOYOBO CO., LTD.

Stock exchange listings

Tokyo Stock Exchange Prime Market

EstablishedMay 3, 1882

Securities code

3101

Head OfficeOsaka Umeda Twin Towers South
1-13-1 Umeda, Kita-ku, Osaka
530-0001, Japan
Main TEL: +81-6-6348-3111

Administrator ofshareholder register

Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku, Tokyo
100-8233, Japan

Number of
employees

10,885 (consolidated) / 4,015 (non-consolidated)

Main locationsin Japan

Independent auditing
corporation

KPMG AZSA LLC
3-6-5 Kawaramachi, Chuo-ku, Osaka
541-0048, Japan

Number of shares

Total number of authorized shares200,000,000
Total number of shares issued 89,048,792

Iwakuni
Production Center

Research Center
Head Office● TOYOBO (SHANGHAI) CO., LTD. (China)● TOYOBO U.S.A., INC.
● TOYOBO (THAILAND) CO., LTD.
● TOYOBO DO BRASIL PARTICIPACOES LTDA. (Brazil)● TOYOBO INDUSTRIAL MATERIAL (THAILAND) LTD.
● TOYOBO Chemicals Europe GmbH (Germany)● PT. TOYOBO TRIAS ECOSYAR (Indonesia)● Spinreact, S.A.U. (Spain)● TOYOBO TEXTILE (MALAYSIA) SDN. BHD.
 rabian Japanese Membrane Company, LLC (Saudi Arabia)●A

The Master Trust Bank of Japan, Ltd.

13,894

15.73

Custody Bank of Japan, Ltd.

7,444

8.43

Toyobo Employees
Stockholders’ Association

2,315

2.62

Toyukai

1,940

2.20

SMBC Nikko Securities Inc.

1,854

2.10

Number of shareholders

66,591NIPPON LIFE INSURANCE COMPANY

1,750

1.98

Ordinary general meetingof shareholders

Held annually in June

DFA INTL SMALL CAP VALUE
PORTFOLIO

1,472

1.67

1,402

1.59

STATE STREET BANK WEST
CLIENT-TREATY 505234

1,111

1.26

Takasago Plant
STATE STREET BANK AND
Iwakuni Production Center
Research CenterTRUST COMPANY 505223
Distribution of shares by shareholder
Head Oﬃce

946

1.07

Toyama Production
MeijiCenter
Yasuda Life
Utsunomiya Plant
Insurance Company
Tsuruga ResearchandProduction
Inuyama Plant TokyoCenter
BranchNagoya Branch(according to number of shares owned)

Note: Treasury stock (723,040 shares) is excluded from shareholding ratio calculations

Other domestic
companies
4.05%

Securities
companies
4.61%

Main locations
overseas

Shareholding
ratio
(%)

¥51,730 million

Utsunomiya Plant
Tokyo Branch

Number ofshares held
(thousands)

Shareholder namePaid-in Capital

Number of shares per unit 100
Toyama Production Center
Tsuruga Researchand Production Center
Inuyama
Plant
Takasago Plant
Nagoya Branch

Major shareholders

Share priceForeigncompanies
and others
21.11%

Number ofshareholders

66,591

Financial institutions
31.44%

Individuals
and others
38.79%

Five-year highest / lowest
Fiscal year

2019

2020

2021

2022

2023

Highest price (yen)

2,164

1,684

1,687

1,505

1,134

Lowest price (yen)

1,386

903

1,033

1,046

979

TOYOBO REPORT 2023

Introduction

Value creation story● Key financial data (FY2013–FY2023)● Corporate data

Value creation strategy

Foundation for value
creation

Value creation practice

Reference material

82● External recognition, third-party assurance report

External recognition, third-party assurance report
External ESG evaluation

Third-party assurance report
Independent Assurance Report

Incorporation into ESG indicators
Toyobo was selected in June 2021 as a constituent security for inclusion in the FTSE Blossom Japan Index, aglobal index of share prices for ESG investments; for inclusion in the MSCI Japan ESG Select Leaders Index in
December 2021; and for inclusion in the FTSE Blossom Japan Sector Relative Index in March 2022. (Selection
remained effective as of June 2023.)
We are included as a constituent stock in the MSCI Japan Empowering Women Index (WIN), the Morningstar
Gender and Diversity Index (GenDi), and the S&P/JPX Carbon Efficient Index, as well as a constituent stock in
the ESG indices of Japanese stocks adopted by the Government Pension Investment Fund (GPIF). We have also
been selected as a constituent security for all ESG indicators targeting Japanese stocks referenced by Japan’s
Government Pension Investment Fund (GPIF).

Morningstar Japan ex-REIT Gender Diversity Tilt Index

Other evaluations
The following are some assessments of our initiatives.

To the President & Representative Director, CEO & Co-COO of TOYOBO Co., Ltd.

We were engaged by TOYOBO Co., Ltd. (the “Company”) to undertake a limited assurance engagement of theenvironmental performance indicators marked with(the “Indicators”) for the period from April 1, 2022 to March 31, 2023
included in its TOYOBO REPORT 2023 (the “Report”) for the fiscal year ended March 31, 2023.
The Company’s Responsibility
The Company is responsible for the preparation of the Indicators in accordance with its own reporting criteria (the “Company’s
reporting criteria”), as described in the Report.
Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Indicators based on the procedures we have
performed. We conducted our engagement in accordance with the ‘International Standard on Assurance Engagements(ISAE) 3000, Assurance Engagements other than Audits or Reviews of Historical Financial Information’ and the ‘ISAE 3410,
Assurance Engagements on Greenhouse Gas Statements’ issued by the International Auditing and Assurance Standards
Board. The limited assurance engagement consisted of making inquiries, primarily of persons responsible for the preparationof information presented in the Report, and applying analytical and other procedures, and the procedures performed vary innature from, and are less in extent than for, a reasonable assurance engagement. The level of assurance provided is thus
not as high as that provided by a reasonable assurance engagement. Our assurance procedures included:● Interviewing the Company’s responsible personnel to obtain an understanding of its policy for preparing the Report andreviewing the Company’s reporting criteria.
● Inquiring about the design of the systems and methods used to collect and process the Indicators.
●P erforming analytical procedures on the Indicators.
●E xamining, on a test basis, evidence supporting the generation, aggregation and reporting of the Indicators in conformity
with the Company’s reporting criteria, and recalculating the Indicators.
●V isiting one of the Company’s factories and one of the Company’s subsidiaries selected on the basis of a risk analysis.
●E valuating the overall presentation of the Indicators.
Conclusion
Based on the procedures performed, as described above, nothing has come to our attention that causes us to believe that
the Indicators in the Report are not prepared, in all material respects, in accordance with the Company’s reporting criteria as
described in the Report.
Our Independence and Quality Management
We have complied with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board
for Accountants, which includes independence and other requirements founded on fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and professional behavior. In accordance with International
Standard on Quality Management 1, we design, implement and operate a system of quality management including policies
or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
/s/ Shinosuke Kayumi
Shinosuke Kayumi, Director
KPMG AZSA Sustainability Co., Ltd.
Osaka, Japan
October 20, 2023
Notes to the Reader of Independent Assurance Report:
This is a copy of the Independent Assurance Report and the original copies are kept separately by the Company and KPMG AZSA Sustainability Co., Ltd.

Environmental data including items that have received third-party assurance

p.57

Sustainable Vision 2030

Prosperity
Ushering in both a prosperous society
where people can live with peace of mind,
and the enhancement of corporate value

TOYOBO CO., LTD.
Corporate Sustainability Department
Osaka Umeda Twin Towers South
1-13-1 Umeda, Kita-ku, Osaka City, Osaka 530-0001, Japan
URL : https://www.toyobo-global.com/sustainability/ MAIL : sustainability@toyobo.jp

Disclaimer
This report contains forward-looking statements that reflect the plans, outlook, strategies and performance of Toyobo group. These forward-looking statements are based on
judgments reached using currently available information. Therefore, please be aware that actual performance is influenced by a variety of factors such as risks and uncertainties
that could result in performance significantly different from these forward-looking statements. Factors influencing our future outlook include the economic environments in which
we conduct business operations, competitive pressure, related laws and regulations, changes in the status of product development, and exchange rate fluctuations. The factorsthat could affect our outlook include, but are not limited to these.