Sustainability
Report2019

Contents
UD Trucks:
A history of innovation

2

Message from the President

4‘Fujin & Raijin. Vision 2030.’
Our innovation roadmap 5

Providing trucks the world needs

since

1935

UD Trucks was founded by Kenzo Adachi in 1935 withthe mission “to make the trucks the world needs
today.” We’ve continued to develop advanced
technology, products, and services ever since,
providing the transportation solutions our customers
need. UD stands for Ultimate Dependability, and is at
the core of everything we do.

UD Trucks and Sustainability

11

Sustainability Activities
Customers
Business partners
Employees
Community engagement
Environment

13
19
21
25
27

CSR, Compliance and Corporate
Governance

33

About UD Trucks Corporation

35

About the Volvo Group36

About this report
UD Trucks issues its Sustainability Report each year
for the purpose of providing stakeholders withinformation about its social and environmental
initiatives, including its future vision forsustainable innovation in the logistics industry.
Scope of the report
This report covers the activities of UD Trucks
Corporation primarily in Japan. Some sections
also cover the Company’s activities in othercountries.
Reporting period
This report mainly covers results and activities
in fiscal 2018 (January 1 to December 31,2018). Some sections also refer to results andactivities in previous fiscal years, activities infiscal 2019, and future plans and forecasts.
Published December 20191

UD Trucks: A history of innovation

In 1932 and 1933, thecompanies that would one
day be Nissan and Toyota
were founded. Most of thedemand at this time was fortrucks, supporting the
growth of industry, althoughcars were also developing
rapidly.

1935

The LD1, the company’s first diesel truck

1935

Founding of Nihon Diesel
Industries, Ltd., predecessor to UD
Trucks, by Kenzo Adachi in
Kawaguchi, Saitama, tomanufacture diesel engines

1968

1968

Contract signed with Chrysler toexport UD engines to the US—a firstfor a Japanese truck manufacturer at
the time

The opening of two major
expressways in 1965 and1969 made road transport
more practical than ever.
Japan’s truck manufacturers
developed high-poweredengines to meet soaring
demand, ushering in an ageof high-speed, high-volumetransportation.

1971

1962

1938

Development of PD6T, Japan’s first
turbocharged diesel engine withdirect injection

Opening of Ageo Plant

Development of first diesel engine

1960

1960

Company renamed Nissan Diesel
Motor Co., Ltd.

1975

1975

Launch of the medium-duty truck
Condor

1958

Launch of Japan’s first 6TW-model
truck with a payload of more than 10
tons, later used in the construction of
the Shinkansen network

1955
1939

1939

Completion and legendary 3,000 km
test drive of first diesel truck

1955

Launch of UD engine, a high-powered
and lightweight diesel engine

1989

Release of Traffic Eye, the world’s
first commercialized radar laser
collision prevention system
Development of world’s firstclosed-loop controlled variable nozzle
turbocharger

World’s first (for medium- and heavy-duty trucks)
Japan’s first (for medium- and heavy-duty trucks)

After World War II,
automobile manufacturing
was initially prohibited by
the US occupying forces.
Before long, however, theban was lifted for trucks tohelp with reconstruction. By
the end of 1945, Japan’s
automakers were racing todevelop new engines.

2

84

years of history

Founded in 1935 as a manufacturer of diesel
engines, UD Trucks has always striven to meetthe changing needs of society. The drive toovercome new challenges is in our DNA.

As climate change,
demographic shifts,
urbanization, and technicalinnovation intensify aroundthe globe, new solutions likeautonomous driving,
electromobility, andconnectivity attract
attention.

2007

Company joined Volvo Group

2004

2004

Launch of Quon, UD Trucks’
flagship heavy-duty truck and world’s
first truck with urea SCR system forcleaner emissions

2010

World’s first truck with knee
airbags and knee protectors

2010

Company renamed UD Trucks
Corporation
Launch of UD Information
Service, Japan’s first remotediagnostic service

2013

6,188

employees*

We believe that employee diversity and aworkplace where everyone can exercise hisor her individual talents to the utmost is
the key to a productive and sustainable
workforce. Our workforce includes people
from 25 countries in Europe, Asia, Africa,
Oceania, and the Americas.
* Within Japan. Figure includes contract and temporary
employees. As of December 31, 2018.

2013

Launch of Quester, a brand new
heavy-duty truck developed for
global growth markets

20,636units

sold globally in fiscal 2018
We sell our trucks all over the world, withJapan as our main market. In each market,
we offer a wide range of transport solutions
based on local needs.

2002

Introduction of Japan’s firstheavy-duty CNG engine in the
Big Thumb
Development of world’s firstcapacitator hybrid truck

2014

1998

Global sales volume

2014

Launch of light-duty truck Kazet
Completion of merger with sales
company, UD Trucks Japan
Corporation

Development of GE13, Japan’s
first engine with electronicallycontrolled unit injectors

21.6

2014

(Thousands of vehicles)

19.8

20.4

20.2

20.6

2015

2016

2017

2018

1997

Introduction of Japan’s firstelectric braking system (EBS) for
heavy-duty trucks

1996

National service network of

Introduction of Japan’s first
medium-duty CNG engine in
the Condor

1995

Introduction of ESCOT, Japan’s
first electrically controlled automatedmanual truck transmission

1990

1990

2015

80th anniversary of company’s
founding

2017

165

customercenters(including independent dealers)2017

Launch of new Quon and Condor,
as well as medium-duty Cronerand light-duty Kuzer for global
growth markets

Launch of Big Thumb, offering lower
emissions and improved comfort
and safety

Sales and servicing in over60

The 1990s were an age ofrising environmental
awareness across the world.
In Japan, new restrictions
on nitrogen oxide emissions
were finalized in June 1992
and came into force inDecember of the same year.

countries

In Japan and around the world, we offer
quality service through our extensive
network. Our telematics service monitors
60,000 trucks across Japan, and we offer
client business 24-hour, 365-day support.

3

Towards

2030

Leading the way withsustainable transportation
solutionsJapan’s logistics industry is currently facing various
challenges, including a shortage of drivers amid
the growing popularity of online shopping
services, as well as upwardly trending fuel prices
and increasingly strict environmental regulations.
For UD Trucks to help the industry overcome
these challenges and continue to grow, I believethat two basic approaches are essential.
First, regardless of how the businessenvironment changes, we must maintain an
unwavering commitment to the principles thatUD Trucks was founded on over a history
spanning more than eight decades. That means
staying true to the vision of the Company’s
founder, Kenzo Adachi, “to make the trucks theworld needs today.” Indeed, UD Trucks has
provided countless technical innovations to thelogistics industry—the lifeblood of society—andwill continue passing down the Company’s
founding principles and traditions going forward.
Second, we must move forward with along-term vision. The automotive industry—
commercial vehicle manufacturers included—iscurrently developing autonomous and electricvehicles as solutions for connectable and smarter
logistics. To help accomplish these objectives, theVolvo Group will need to harness its collective
capabilities and work with stakeholders to findthe best solutions. Toward that end, UD Trucks
created an innovation roadmap called ‘Fujin &Raijin. Vision 2030.’ in April 2018, laying out
specific goals and innovative processes leading up
to 2030.
Combining our founding principles andlong-term vision, UD Trucks strives to be a leader
in sustainable transportation solutions.

Takamitsu Sakamaki
President andRepresentative Director

4‘Fujin & Raijin.
Vision 2030.’
Our innovation
roadmap

Raijin

Fujin

5

2030
2020
2019
2018

Mass production of fully
electric autonomous trucks

Commercialization of autonomous driving in
confined areas

Autonomous driving trials with customers,
partners and other stakeholders

Public demonstration of Level 4 autonomous drivingusing heavy-duty trucks

Transport is key to our social infrastructure, helping people andcommunities thrive. At UD trucks, our mission is to reshapetransportation through creative thinking and innovation to help build
the sustainable societies of tomorrow.
The transport industry faces many challenges: climate change, resource
depletion, ageing populations, driver shortages, and safety concerns.
The prosperity of future generations will depend on innovativetechnology, products, and solutions like autonomous driving,
electromobility, and connected vehicles. We call this “smart logistics.”
In April 2018, we unveiled a new roadmap for innovation that will
guide our efforts through the next decade and beyond—‘Fujin & Raijin.
Vision 2030.’

6

Our 2030 Vision

Pioneering
newpossibilities
Douglas Nakano
Senior Vice President of Technology

Solutions the world needs today

The most pressing problem faced by Japan’slogistics industry today is a shortage of skilled drivers,
coupled with the rapid growth in e-commercedeliveries. Compounding the situation are
ever-stricter environmental regulations and upward
trending fuel prices.

Since our inception, UD Trucks has been committed
to providing trucks and services that the world needs
today. Numerous world firsts by UD Trucks havesupported the technological advancement of theautomotive industry.

Global positioning system (GPS)This system enables the truck to drive ona designated route by using GPS. An evenmore advanced network-based RTK-GPS(Real Time Kinematic GPS) was used in
the trial in Hokkaido.

Advanced technologies featured in
the heavy-duty truck used in theautonomous driving demonstration
3D Laser Imaging Detection andRanging (LIDAR)

Equipped with Level 4 autonomous
driving technology (currently permissible
in confined areas), the truck can driveautonomously on precisely designatedroutes while detecting oncoming objects.

This technology helps ensure safe
self-driving by detecting the presence of
oncoming objects.

7

innovation and thereby contribute to a more efficientand sustainable transport system to meet tomorrow’s
challenges.
In April 2018, we announced our innovation
roadmap—‘Fujin & Raijin. Vision 2030.’* The Japanese government uses ‘Society 5.0’ to indicate
initiatives to enhance the quality of life and boost productivity
through innovation in what may be called the fourthindustrial revolution, characterized by artificial intelligence,robotics and IoT, among other disruptive technologies.

Milestones for tomorrow‘Fujin & Raijin. Vision 2030.’ is our innovation
roadmap for the commercialization of autonomous
trucks and fully electric trucks by the year 2030. Fujin
is the Japanese god of wind; Raijin the god ofthunder. Fujin symbolizes the power of movement(automation) and Raijin the power of energy(electromobility).
Automation and electromobility are key to making
logistics more sustainable. As illustrated on page 6,
our innovation roadmap takes a step-by-step
approach together with customers to offer solutions
for select automation and electromobility applications
from 2020, moving towards full-fledgedcommercialization by 2030:
1) Level 4 autonomous driving demonstrations using
heavy-duty trucks;2) Customer trials of Level 4 autonomous driving withheavy-duty trucks;3) Commercialization of autonomous driving in
confined areas .
This roadmap goes beyond refining our existing
technologies in house. We cannot do this alone
and will seek new partnerships to provide
solutions for tomorrow.
Making autonomous and electric trucks an integral
part of our transportation infrastructure requires
broad collaboration with relevant stakeholders. We
must work with the transport companies who actually
use our products in their operations and coordinate
with regulatory agencies, not to mention suppliers.
In order to incorporate the most innovativetechnologies, we anticipate new business relationships
will form. Clarifying our vision and mission is essential
to building long-lasting partnerships with such newstakeholders. In August 2019, our L4 autonomous
driving trial in Hokkaido showed what can be

Most of us depend on logistics to enable thelifestyles that we take for granted.
Reshaping the logistics industry to be more
efficient, sustainable and people-centric throughinnovation is the primary mission for UD Trucks andthe Volvo Group as a whole. We have a responsibility
to do this, and to lead the way.
Our efforts also bode well for ‘Society 5.0,’ aJapanese government initiative, which positions
autonomous driving as a benefit for society—fromreduced congestion and environmental impacts, toimproved safety and convenience.*
With the introduction of the heavy-duty Quon in2017, UD Trucks has focused on supporting smart
logistics—products and services that enhance fueleconomy, environmental performance, drivability,
safety, uptime and productivity. We optimize theseproducts and services to the needs of our customers in
the form of transport solutions. Our success in this area
is backed up by the loyalty of our customers, and our
reputation for excellence in innovation and reliability.
In short, our vision is to be a leader in truck8

Our 2030 Vision

hybrid systems. Connectivity and digitalization also
support smart logistics, including autonomous
driving and electromobility. As a pioneer in this field,
UD Trucks uses telematics to connect more than
60,000 trucks.

Employees at the heart of our vision
Benefitting our customers and society is central to our
Fujin & Raijin innovation roadmap. Our employees areat the heart of executing our vision of the future. My
job is to support our people on this journey.
At the Tokyo Motor Show 2019, under the themeof “Innovation for Smart Logistics,” we areencompassing technologies for Today, Tomorrow,and the Future towards 2030. While focusing on
what we can do today, we are always considering
how we can meet customer needs and society
expectations in the years to come.
By the same token, this means we can never besatisfied and must strive to exceed the expectations of
our customers and all stakeholders. We will continue
to expand and solidify our position as an innovatorand pioneer for sustainable transportation solutions.

achieved through collaborative efforts with partners
from both the private and public sectors. (More on
page 10)

Leveraging the power of the Volvo Group

Volvo Group CAST platform

Renault Trucks

Mack Trucks

UD Trucks

nsmissions
Tra
ctronics
Ele
ngine

E

Volvo Trucks

Automation
romobilityl
E ectConnectivity
Chassiss

By combining the strengths of UD Trucks and the
Volvo Group, we can deliver more value for ourcustomers. The Volvo Group’s CAST platform(Common Architecture & Shared Technology), forexample, offers an extensive array of coretechnologies for the development of vehicles acrossthe Volvo Group.
UD Trucks, in turn, has a solid understanding ofcustomer preferences in Japan and otherpredominantly Asian markets. Our global R&D team,
numbering 850 (approximately 500 in Japan and 350
overseas), develops UD branded products in line withmarket needs.
UD Trucks ultimately decides what products tomake and which technologies to employ. Taking
advantage of CAST, UD Trucks works closely withengineers at Volvo Group headquarters, while working
to develop our own technologies for specific markets.
We combine the Volvo Group’s strengths with ourown technology in many areas. For automation, thisincludes object recognition using onboard cameras,
radar and LIDAR (Laser Imaging Detection andRanging), in addition to incorporating decision-making
software algorithms and vehicle control mechanisms
for steering systems, brakes, and engines.
To develop electric vehicles tailored to customer
needs, we are working on optimal solutions ranging
from battery electric vehicle (BEV) systems to serial

Buses

Construction
Equipment
Volvo Penta

9

Highlights

Autonomous heavy-duty
truck demonstration

Japan’s first Level 4 autonomous
driving trial by heavy-duty truck on
public roads
From August 5 to 30, 2019, UD Trucks jointly conducted a
Level 4 autonomous driving trial with a heavy-duty truck
together with Nippon Express Co., Ltd., a major logistics
service provider, and Hokuren Agricultural Cooperative.
Government officials, agriculture industry representatives andnews media were on hand to observe a demonstration on
August 29 at the Hokuren Sugar Refining Mill in Nakashari,
Hokkaido. The autonomous truck operated on a typicaldelivery route, driving from the produce acceptance area tothe final uploading area, with a portion of the route on a
public road. This was Japan’s first Level 4 autonomous driving
trial by a heavy-duty truck on a public road.

UD Trucks joins a truck platooning project led by two government
ministries, MLIT and METI.

A step closer to thewidespread use of safe
automated vehicles
Japan’s logistics industry is now confronting a shortage ofdrivers and the need to reduce vehicle emissions. Platooning,a type of automated driving that allows vehicles to drive
closely together in groups, is one solution. The Ministry ofLand, Infrastructure, Transport and Tourism is helping
coordinate automated driving initiatives, including platooning
applications, while giving the highest priority to safety andsecurity. In short, it is assisting various companies to verify
the feasibility of automated driving applications and sharing
the results among all players in an effort to overcome
technical hurdles.

Takahiro Hirasawa
Director of Automated Driving Technology,
Road Transport Bureau, Ministry of Land, Infrastructure,
Transport and Tourism

Applying leading autonomous
driving technologies
The specially adapted heavy-duty Quon employednetwork-based RTK-GPS (Real Time Kinematic Global
Positioning System) and was driven at an average speed of
20 kilometers per hour under varying road surface
conditions. UD Trucks President Takamitsu Sakamaki said,“Level 4 autonomous trucks can now be used in confinedareas, helping address Japan’s current shortage of truck
drivers. We will continue collecting data through trials likethese to meet the needs of customers and a wide array of
stakeholders to enable the adoption of autonomous trucks
as soon as possible.”

A video of the driving trial has been made available.

10

UD Trucks and Sustainability

UD Trucks is working with stakeholders to resolve
social challenges.

Automotive
industry

Academia
Challenges facing
society

Challenges facing
the logistics industry- Traffic safety andcongestion- Environmental issues- Demographic changes- E-commerce delivery- Cost and efficiency- Tougher regulations- Shortage of skilled
drivers- Changing transportdemands

Our mission
UD Trucks provides thetrucks and services theworld needs today. We
help make logistics smarter
through improvements in
uptime, fuel economy andenvironmental
performance, drivability,
safety, and productivity.

Recycling andreuseNPOs and
NGOs

Sales andservicing

Local
communities

Volvo Group11

Society
Customers

Logistics
Suppliers

Environment

R&D

Dealers
Procurement

PeopleEmployeedevelopment
Governance

SafetyEmployees

Production

Media

Local
communities

Governments

SDG initiatives
Together with the Volvo Group, UD Trucks
supports all 17 of the Sustainable
Development Goals (SDGs) unveiled by theUnited Nations in 2015, with a particular focus
on people, safety, communities, and theenvironment. We are constantly refining our
initiatives based on business strategies and theneeds of individual markets.

12

Smart logistics
throughvalue creation

Sustainability Activities

1-1

Customers

Improving quality
Our approach

ISO 9001 certification acquired

UD Trucks strives to maintain andenhance quality across the entire value
chain, from product development andmanufacturing through to sales andaftermarket services. At the same time,
the Company adheres to the Volvo
Group Quality Policy, which is based on
the principles of “customer focus,”“commitment and participation by
everyone” and “process approach andcontinuous improvement.”

UD Trucks complies with the ISO 9001 international
standard for quality management systems. The
Company’s Manufacturing Division acquired ISO 9001
certification in fiscal 2002, followed by the ProductDevelopment Division in fiscal 2016. UD Trucks works tocontinuously raise quality by applying a plan-do-check-act(PDCA) cycle.

Plan

Act

Do

Check

13

Measures for promptly dealing
with quality-related issues
UD Trucks set up its Quality Action Group
in 2017 to minimize the impact of any
quality-related issues for customers.
Spanning product development,
manufacturing, and aftermarket services,
the group is comprised of teams that
handle trouble shooting, technical teams
that support dealers and customers’sites, and branch office teams that
directly respond to problems in theirrespective areas. The teams coordinate
their efforts to quickly identify root
causes and implement solutions. Throughthis arrangement, all teams promptly
share quality-related information andquickly respond to the issue, ultimately
leading to greater customer satisfaction.

Product development
quality standards
UD Trucks carries out productdevelopment projects in collaboration
with various organizations in the Volvo
Group. The Company’s ProductDevelopment Division has established its
own quality assessment standards thatincorporate processes shared throughout
the Volvo Group. In accordance withthese standards, the division specifies
checkpoints at each stage of productdevelopment and confirms whether
targeted levels of quality are achieved
across a broad range of indicators,
including a truck’s performance,
functions, durability and reliability. This
process not only ensures higher quality
but also shortens the total time requiredfor product development.

Quality assurance inmanufacturing
Based on UD Truck’s own quality
management procedures, theManufacturing Division conducts daily
inspections of procured parts andmanufactured items to check for quality
defects throughout the production
process and ensure targeted levels of
quality. Refined through continuous
improvement over several years, thesequality management procedures havebeen adopted by all factories in the
Volvo Group.

to help customers maximize the uptimeof their trucks.
UD Trucks also holds a worldwide
competition called UD Trucks Gemba
Challenge with the goal of enhancing
the capabilities of employees involved inaftermarket services. Held bi-annually forperiods of about six months, thecompetition tests the practicalknowledge and skills needed for solving
problems that can arise at service centers.
By working through such tasks, teams ofparticipants acquire new knowledge andskills. In 2018, about 1,300 participantsfrom 347 teams—a record high—fromvarious countries competed in the event,of which 12 teams faced off in the finals
at the Company’s head office.

To reaffirm the importance of quality
among employees, the division
designates November of every year as
Quality Month, during which all
departments reconfirm their respective
procedures, verify the progress of pastactions to limit defects, and work to
make technical improvements.

Improving the skills ofaftermarket service staff
To ensure that customers can safely andreliably use its vehicles, UD Trucks works
to raise the quality of its aftermarket
services through proactive measures for
improving the skills of employees
involved in maintenance and repairs.
For example, UD Trucks has been
holding training workshops called
Uptime Conferences at its head officesince 2013 to provide technical supportand quality-related information about
new products for its dealer network. In
2018, about 350 mechanics and service
parts engineers joined workshops
covering multiple topics, including
engines, truck models, and electronic
control systems. They also discussed how

Disclosure of information
concerning vehicle defects
In the event of a vehicle defect that
could potentially affect customer safetyor the environment, UD Trucks promptly
discloses all relevant information inaccordance with guidelines issued by
Japan’s Ministry of Land, Infrastructure,
Transport and Tourism.

Number of vehicle defects by manufacturer reported in Japan
2016

2017

UD Trucks

Volvo
TrucksDefects resulting
in recall4

Defects requiring
improvement
Defects requiring
servicing

14

2018

UD Trucks

Volvo
TrucksUD Trucks

Volvo
Trucks

3

6

1

9

1

0

2

0

1

1

0

4

6

5

3

7

3

Sustainability Activities

1-2

Customers

Improving safety
Our approach
UD Trucks carries out various initiatives
for improving the safety of its trucks inaccordance with the Volvo Group Safety
Policy, which aims for “zero accidents with
Volvo Group products.” When developing
products and services, UD Trucks
researches how its trucks are actuallyused by customers and systematicallyexamines potential safety issues. Throughthis approach, the Company has beenequipping its trucks with a wide range ofsafety systems and features designed
specifically for drivers and the conditions
they operate in.

Safe-driving seminar participants since 2014
Seminar participants

Cumulative total(Participants)(Participants)

5,000

25,000

4,315
4,000

3,000

3,901
3,415

3,164

3,668

20,00018,46315,00014,1482,000

10,000

10,480
7,065

1,000

5,000

3,164
0

0
2014

2015

15

2016

2017

2018

Equipping trucks withadvanced safety technology

Testing driving performancein cold regions

Providing safe-driving
seminars to customers

In an effort to improve road traffic safety,
UD Trucks has been developing advanced
safe-driving technology and fitting its
trucks with such systems. For instance,
Quon model heavy-duty trucks comewith Traffic Eye Brake, a system for
automatically braking before a collision,and Driver Alert Support, which detects
steering irregularities. In addition to theseadvanced systems, UD Trucks considers
safety in the basic performance of its
trucks. For example, its trucks areequipped with disc brakes designed foroutstanding heat dissipation andresistance to brake fade. All of thesesystems not only help the driver operate
the truck more safely but also make theroad safer for other vehicles.

To ensure that its trucks can operate
dependably and safely in severe cold, UD
Trucks conducts road tests every year in
the city of Kitami, Hokkaido, where it is
not uncommon for temperatures to drop
to minus 20 degrees Celsius. In 2018,about 300 engineers and technicians
conducted tests on six trucks during theextremely cold months of January andFebruary. On a snow-covered course
totaling about 1,000 meters, the trucks
were tested under various roadconditions, including icy, slushy, andpotholed surfaces, for their powertrain
and braking performance, as well as
drivability, ice buildup, engine startup,
and ability to stay in a traffic lane
without sliding out. In addition, thetrucks were tested on city streets andmountain passes culminating in as manyas 300 kilometers per day.

UD Trucks invites customers toparticipate in safe-driving seminars. The
seminars cover a broad range of topics,
the dangers of driving under the
influence, blind spots, defensive driving,
and reducing human error. The programs
combine lectures with hands-on training
so that drivers can quickly acquire
practical skills. Moreover, videos of actual
accidents taken with drive recorders areused to give participants a real sense of
how accidents can happen.
In 2018, 4,315 people participated in
145 sessions, compared with 3,668 people
in 137 sessions in the previous year.

Advanced safe-driving systems installed in Quon model trucks
Traffic Eye Brake

Driver Alert Support

Equipped with cameras and millimeter-wave radar technology,
the Traffic Eye Brake system warns the driver of a possible
collision with the vehicle ahead. If the distance becomes
dangerously close, the system automatically applies the brakes
while alerting the driver. UD Trucks adopted the system well inadvance of the November 2019 deadline set by the Japanese
government for equipping heavy-duty trucks with advanced
emergency brake systems.

The Driver Alert Support system isdesigned to estimate the driver’s levelof concentration by measuring steering
irregularities with a camera that detects
the position of the truck relative totraffic lanes and other vehicles. If thedriver’s concentration is deemed to fall
below a certain threshold, the systemsounds an alarm and two stages ofmessages (one to stay focused and thenext to take a rest) shown on amulti-display.

Lane Departure Warning System

UD Stability Control

Utilizing cameras that monitor bothsides of the traffic lane, the Lane
Departure Warning System lights up
and buzzes to alert the driver if thetruck appears to deviate from thetraffic lane when driven over 60
kilometers per hour.

The UD Stability Control system uses
sensors to detect road conditions underwhich the truck could become
unstable, such as slippery road surfaces
on curves. When such conditions aredetected, the system slows down theengine and appropriately applies thebrakes on each tire to maintain stability.

16

Sustainability Activities

1-3

Customers

Supporting
our customers
Our approach

Assisting women in the trucking industry

Aiming to be the best choice forcustomers, UD Trucks actively creates
opportunities for promoting the benefits
and performance of its products tocustomers. Moreover, UD Trucks is
involved in helping its customers operate
their businesses profitably and overcome
challenges, such as securing enoughtruck drivers, increasing utilized truckload
capacity, and complying withenvironmental regulations.

UD Trucks periodically organizes seminars and test driving events for female truck drivers
with the intention of helping alleviate the shortage of drivers in Japan’s trucking industry. In
2018, the program included a presentation by a female engineer, a factory tour, test drivesof Quon heavy-duty trucks, and a question and answer session.
The presentation was given by a UD Trucks employee in charge of productdevelopment. She emphasized the importance of ergonomically designed truck cabs formaking truck driving work more comfortable and user-friendly, which is often requested byfemale truck drivers. She showed how handrails, in particular, were designed to improvesafety and make it easier to get in and out of the cab.

17

Opportunities forfemale truck drivers
In Japan today, while trucks deliver over
90% of all cargo (on a tonnage basis), a
shortage of truck drivers is a serious
problem facing the country. Only 2.4%
of truck drivers are women in Japan, so
efforts are being made to attract more
women to the industry by improving
working conditions. The Ministry ofLand, Infrastructure, Transport andTourism even launched a project in 2014
to provide support for women who
aspire to become truck drivers.
Playing a part in these efforts, UD
Trucks invited 23 female truck drivers to
the UD Experience Center at its head
office in January 2018 to give them an
opportunity to test drive the Quon
heavy-duty truck and participate in a
discussion about improving working
conditions and drivability. This was thesecond time the event was held.
During the test drive, the women
evaluated the user friendliness of theQuon, which is ergonomically designed tomake driving easier for anyone. While allof the women were truck drivers, several
did not hold a heavy-duty license.
However, many were so impressed withthe drivability of the Quon that theyexpressed a desire to acquire a heavy-duty
license. Based on this feedback, UD
Trucks reaffirmed its conviction thatproviding fuel-efficient trucks that areeasy to drive, even by beginners, will help
attract new people to the industry andalleviate the shortage of drivers.

Instruction on how to drive
more economicallySince 2007, UD Trucks has been holding
eco-driving seminars aimed at equipping
truck drivers with practical skills andknowledge about how to improve fuelefficiency while driving. During theseminars, truck drivers learn and practicespecial fuel-saving techniques formaneuvering and decelerating. The
seminars also make use of the UD
Information Service, a wirelesscommunications system for collecting
and analyzing data on a truck’s locationand movements, enabling evaluations ofvehicle speed, gear changing, and otherdriving-related factors. Participants havefound this to be very insightful andhelpful for objectively understanding
their driving habits and making
improvements accordingly.
In 2018, a total of 1,018 truck drivers
participated in seminars held at 81
locations nationwide. Their fuel efficiency
improved by 24.9% on average after
taking the seminars according to data
analysis, demonstrating how thisinitiative is helping customers improvemileage and reduce CO2 emissions.

Message from a participant in the test-driving event for women“I want to drive a heavy-duty truck.”Not too long ago, driving was rather stressful because I
couldn’t accelerate and decelerate as I was used to after our
two-ton delivery trucks were replaced with models that haveautomatic rather than manual transmissions. Now, however, I
want to drive a heavy-duty automatic truck since test-driving
the Quon, which I find very easy to drive. I am currently
preparing to get a heavy-duty truck license.

Yoko Ichiyanagi
Nippon Express Co., Ltd.

18

Motivating truck drivers
worldwide to develop
their skills
Every year, UD Trucks holds a global
driving skills competition called the UD
Extra Mile Challenge for drivers of its
trucks, with the goal of motivating thedrivers to develop their capabilities andhelp operators make maximum use of its
products and services. In 2018, winnersof regional qualifiers competed in the
final round of the competition in Octoberat the Company’s head office in Japan. A
driver representing Singapore who won
the Quon category remarked that after
diligently preparing for the event overthe past year, the competition proved to
be a valuable experience as he learned agreat deal about conserving fuel, proper
cargo storage, and many other aspectsof truck driving.

Prompt and usefulcustomer service
UD Trucks has established a customer
service call center made available with atoll-free telephone number for customers
to ask questions, provide feedback andmake requests. To help the center’s
operators effectively handle calls, theCompany has prepared a guidebook
explaining responses to all foreseeable
inquiries. The center’s procedures andoperations are also regularly reviewed toensure that it continues to provide
prompt and helpful customer service. In
2018, the center handled a total of 3,791
calls compared with 4,691 in 2017.

Sustainability Activities

2

Business partners

Strengthening
our partnerships
Our approach

Volvo Group procurement in 2018

To help commercial vehicle operators run
their businesses successfully, it is essential
for an automaker to develop andmanufacture vehicles tailored to theirneeds and to provide after-sales services
for the long term. From that standpoint,
UD Trucks recognizes that its suppliers
and independent dealers areindispensable business partners.
Accordingly, it strives to forge strong
business partnerships while working toraise customer satisfaction and adhering
to Volvo Group policies.

270.3 billion

51,000 Tier 1 suppliersof goods and services were purchased.

Around 6,000 automotive product components
suppliers accounted for about 91% of the purchases.

Swedish kronor

2.5 billion parts for 40 factories
worldwide were delivered.

96%

of automotive product suppliers
passed CSR self-assessment.

91%

of automotive-related procurement was purchasedfrom suppliers certified with ISO 14001 or
equivalent standard.

Percent of purchases by region
EuropeNorth America

Asia

South America

Africa andOceania

62%

26%

7%

4%

1%

19

Ensuring responsible
procurement

Balancing people, planet,and profit

Working in partnership withindependent dealers

When procuring raw materials andequipment along with services and goods
that are essential for daily operations, UD
Trucks purchases in accordance with
Volvo Group policies from suppliers
around the world. The Company’s
management understands that issues ofpublic interest, locally based production,compliance with tariff agreements, viablemeans of transportation and prohibitionof conflict minerals are vital for
maintaining sustainable supply chains,
and requests its suppliers to work
towards the sustainability of theirrespective communities.

The Volvo Group aims to maintain agood balance between people, theplanet, and profits throughout its entire
supply chain. Toward that end, theGroup has been requesting all of its
suppliers to complete a sustainability
self-assessment questionnaire and adopt
best practices. In 2018, the Group took
the final steps toward issuing a code of
conduct for suppliers to specify andexplain its basic expectations for themwith respect to human rights, labor
conditions, health and safety, responsible
sourcing of raw materials, environmental
performance, and business ethics.
Meanwhile, the Volvo Group has
been examining the impact of raw
materials used in its products in regards
to the environment, society, andgovernance. Drawing from the results ofa report issued by Drive Sustainability andthe Responsible Minerals Initiative (RMI),
the Group implemented a conflictminerals program covering tin, tungsten,tantalum, gold, and cobalt. To conduct
due diligence and proactively ensuretransparency in its procurement of theseminerals, the Volvo Group became amember of RMI, which is an international
NGO that studies responsible procurementin the auto and electronics industries.

In addition to its own network ofdealers, UD Trucks supplies products andservices to customers through six
companies that operate a total of 32
independent dealerships. While
respecting the corporate traditions andlocal business practices of each of thesedealerships, UD Trucks works closely withthem towards the common goal of
improving customer satisfaction, andinvites them to the same training
programs and events as its own dealers
to help their employees acquire moreskills and expertise.

Human Rights Due
Diligence Program
The Volvo Group initiated its Human
Rights Due Diligence Program to identify,
analyze and prioritize risks related to thesustainability of its supply chains, andtake appropriate countermeasures. A key
component of the program aresustainability audits of suppliers, throughwhich suppliers’ sites are visited andevaluated with respect to labor, humanrights, and health and safety conditions.
In 2018, the audits targeted 35 suppliers
located mainly in China, India, and South
Africa. In 2019, the Volvo Group plans to
use the results of its sustainability audits
to establish criteria for selecting suppliers
at the procurement stage.
Along with these activities, the Volvo
Group has been working to raiseawareness of sustainable procurement
among its employees and the public, andbegan offering an e-learning course on
this topic for all procurement department
members in 2018. It also offers a training
program covering human rights,
environmental performance, and businessethics to its suppliers through Drive
Sustainability, a Europe-based partnershipof 10 global automakers formed for the
purpose of promoting sustainability in theauto industry. In 2018, the Group trained
staff from around 100 suppliers fromnumerous countries, including China,
Thailand, Spain, and Hungary.

20

Helping aftermarket service
personnel improve their skills
Every year, UD Trucks holds a training
event called the Uptime Conference andan international skills competition called
the Gemba Challenge for the purpose ofenhancing the expertise of its mechanics,
service parts engineers and otheraftermarket service personnel. In 2018,40 employees from independent dealers
joined the Uptime Conference, while 41
people from 11 teams competed in theGemba Challenge.

Sustainability Activities

3

Employees

Empowering
our people
Our approach

Employee data in 2018

In order to develop people that can
thrive anywhere in the world, UD Trucks
provides effective and practical training
programs, and assists employees withcareer development through a fair andtransparent evaluation system. These
programs and systems emphasize theimportance of respect for individuals,
self-actualization, diversity, teamwork,
taking responsibility for one’s work, andopen communication. The Company
uses employee attitude surveys andother tools in an effort to create an open
and comfortable workplace that allows
all of its members to make the most of
their capabilities.

Number of employees by gender
Male

319

Percentage of total

FemalePercentage of total(Employees)
8,000

86.8

92.7

92.6

(%)
100

6,082
5,823
5,789
800
422
433
4,000

50

5,282
13.2

5,367

5,390

7.3

7.4

0

0
2016

2017

2018

Figures are for employees directly
employed by UD Trucks

21

newly hired
employees

52femalemanagers

Comprised of
177 new graduatesand 142 mid-career
employees

25 nationalities
Australia, Belgium, Bolivia, Brazil, Canada,
China, France, Germany, India, Indonesia,
Ireland, Japan, South Korea, Malaysia,
Myanmar, Nepal, South Africa, Spain, Sri
Lanka, Sweden, Thailand, the Philippines,
Turkey, Ukraine, United States, and Vietnam
As of December 31, 2018

Promoting diversity andinclusion in the workplace
At UD Trucks, differences among
employees are embraced and respectedbased on an understanding that diversity
is essential for the Company to succeed
globally. Accordingly, while striving forsustainable growth, UD Trucks actively
promotes diversity and a working
environment that allows each individual
to maximize his or her potential. The
Company assesses how employees feel
about diversity in periodic employee
attitude surveys, which cover factors
related to gender, nationality, and age.
The surveys also incorporate questions on
inclusion, such as the extent that employees
feel valued as important members of
their teams. The results of these surveys
are then used towards diversity andinclusion management initiatives.
In 2018, these initiatives included
workshops on preventing harassment,
seminars on diversity and inclusion for
managers, and employee andmanagement meetings on genderequality. Moreover, during its annual
Diversity & Inclusion Week in October,
the Company held an event on
women’s empowerment featuring
presentations by Toko Shirakawa, awell-known female journalist in Japan,
and Tetsuya Ando, a representativefrom NPO Fathering Japan.

Employee-led efforts topromote diversity and inclusion
At UD Trucks, various efforts to promote
diversity and inclusion are led by
employees throughout the Company inaddition to campaigns initiated byhuman resources. This grass roots
approach has been fostering a corporate
culture that values diversity and inclusion.

Raising awareness ofdiversity and inclusion
UD Trucks has established a dedicatedinternal organization called Diversity &Inclusiveness Community Japan. With thepresident serving as director, theorganization is made up of male andfemale employees from different
departments, age groups andnationalities. It held a variety of events in
2018, including harassment prevention
workshops and training sessions for
managers in charge of diversity andinclusion activities. Members were also
involved in planning, publicizing andmanaging events and programs during
the Company’s annual Diversity &Inclusion Week.

Support for improving
the skills of female employees
A volunteer group called the Women’s
Inclusive Network (WIN) has been set up
in the Company for the purpose ofhelping female employees develop theirskills and abilities. The group plannedand carried out various activities in 2018,
including roundtable discussions about
women’s issues together withmanagement, workshops on emotional
and physical health, and communication
skills training.

Putting employees first
UD Trucks recruits new employees inconsideration of their skills andaspirations as well as management’s

22

medium- and long-term strategies. In
fiscal 2018, the Company hired 177 newgraduates and 142 mid-career employees.
Management also makes proactive
efforts to facilitate the success of female
employees in the workplace, and had
appointed 52 women to various
management positions as of December
31, 2018. In addition, all new job postings
are advertised internally to provide equal
opportunities for employees, and, inprinciple, current employees are given
preference over external candidates.

Helping employees growand develop
UD Trucks places importance on
developing and refining the expertise andcapabilities of its employees to equipthem with the skills they need not only
for their current jobs but also for the
future. Toward that end, the Company
set up a committee in 2017 to put forwardspecific measures for developing humanresources, which have included theadoption of a new training management
system and upgrading training facilities.
A “learning day” was also held at the head
office in 2018 to make employees moreaware of the need for skills development
and to explain training programs madeavailable by the Company.

Sustainability Activities

Rewarding performance
UD Trucks has established an employee
evaluation system designed to help its
members develop their skills and gain
valuable feedback on their job
performance. Through the system, allemployees set goals each year andconfirm their progress with supervisorssemi-annually. The accomplishment ofthese individual goals provides a basis forsalaries and bonuses under theCompany’s remuneration system, which
also takes into account the performanceof teams and the Company as a whole.

score of the survey, management organizes
various interactive events throughout theyear, including town hall meetings andSwedish-style group coffee breaks calledfika, and regularly shares relevant news
and information on employee
engagement efforts across the company.

Promoting a healthy
work-life balance
UD Trucks has put in place various
systems and policies designed to help
employees maintain a healthy balance
between their working and personal lives.

Conducting employee
attitude surveys

Main systems and policies forsupporting work-life balance

Employee attitude surveys are conducted
on a regular basis in order to assess how
employees feel towards the Company
and demonstrate how their ideas andopinions are regarded as important. Witha view to continually increase the overall• Childcare leave system• Nursing care leave system• Telecommuting system• Flex-time system• Anti-harassment policy• Reduction and elimination of overtime

Occupational healthand safety
The Company’s management oversees awide range of initiatives designed tomaintain safe workplaces and assist
employees with healthier lifestyle choices.

Improving pedestrian safety
UD Trucks has clearly separated
pedestrian routes and vehicle lanes on
the premises of its head office and Ageo
Plant in order to create a safe
environment for employees and visitors.
It has also constructed sidewalks
separated from traffic by greenery on thestreet leading to the main gate of thepremises to ensure public safety,
especially for local school children.

Fitness check-up for employees
In June 2018, UD Trucks held a fitness
check-up for employees at its head office
fitness center. Fitness indicators,
including their weight, body mass index,
muscle and fat mass, basal metabolism
rate and visceral fat level are checked.
Based on the results, fitness instructors
would give advice on diet and exercise.
About 50 participants also joined
relaxation sessions and yoga classes
designed for alleviating lower back pain.

Helping employees manage stressStress assessments are routinely held in
the Company’s workplaces. Employees
are encouraged to meet with physicians
or counselors if their results indicate highstress levels, and their job responsibilities
may be reduced based on the advice ofthe physicians.

23

3

Employees

Empowering our people

Learning Day

Members of the Human Resources Division introducing a project
management training program

Demonstrating how to use the training management system

As one of its human resources development initiatives, UD Trucks helda learning day for its employees in August 2018, with over 2,000
employees participating. The event built on the Company’s past efforts
to create a supportive environment for employees to develop their skills.
Those efforts include the adoption of a training management system
in 2017 that allows employees to easily acquire information on training
programs. Learning day was intended to raise awareness of training
opportunities among employees while fostering a culture of learning.
Held in the head office auditorium, the event featured
motivational talks by managers followed by five hands-on workshops
covering various fields that the Company specializes in. Outside theauditorium, two booths were set up to consult with employees
directly, with one demonstrating how to use the training management
system and the other displaying information about project
management, which is one of the training programs made available
by the Company.
The majority of participants gave the event high marks in afollow-up questionnaire, with many expressing satisfaction that theyobtained the specific information they had wanted. Others commented
that they had gained an even greater appreciation for the importanceof learning. UD Trucks plans to continue holding learning days in the
future with the goal of increasing participation in training programs
and raising awareness of skills development among employees.

Comments from an event organizer

Providing opportunities to enhance
the capabilities of our employees
This was our first time to hold a learning day, so ourbiggest challenge was to generate interest among
employees and encourage them to participate. Before
the event, we used posters and a website to clearly
explain the benefits of participating, and on the dayof the event, we organized various games andactivities to create some excitement. Thanks to these
efforts, many employees participated, which greatly
contributed to our human resources development
objectives. The event demonstrated that employees
are very interested in learning, so we are motivated toprovide them with useful tools and exciting training
opportunities going forward.

Chikako Kitayama
Training and human resources
development manager
Volvo Group University

24Sustainability Activities

4

Community engagement

Engaging with
communities
Our approach

Number of traffic safety program participants

UD Trucks draws from the expertise andtalents of its people and makes use of its
facilities and resources to support
communities. The Company strives to forge
strong ties with its many stakeholders,
including the communities it operates inand its partners in the automotive
industry, through initiatives aimed atcreating shared value. Starting from thisapproach, UD Trucks is working to help
pave the way for a sustainable society.

Elementary school students
Participants

Employees

Cumulative total(Participants)
600

Participants(Participants)
2,000

589

Cumulative total(Participants)
60(Participants)
200

56
45

438
1,372

42

143

345
300

1,000

30

100

87

783
45

438
0

0
2016

2017

25

2018

0

0
2016

2017

2018

Road safety instruction forelementary school students
Among prefectures in Japan, Saitama has
a comparatively high number of fatalroad accidents involving medium- andheavy-duty trucks*. As a truck
manufacturer based in Saitama, UD
Trucks recognizes its responsibility to help
prevent road fatalities, and has been
conducting traffic safety programs forelementary school children in the city ofAgeo since 2016. Through the program,elementary school students learn aboutroad safety and participate in activities
with actual heavy-duty trucks todemonstrate their blind spots and thespace required when turning corners(specifically the different arcs taken by
the front and rear wheels).
Over three years up to 2018, 1,372
students have participated in the
program and 143 employees have
served as instructors. The practicalactivities involving the trucks inparticular have been very valuable
learning experiences for the children
according to their teachers.
* Based on data published by the Japan
Trucking Association

Helping senior citizens use
the internet
In the city of Ageo, employees from theCompany’s IT Division offer instruction on
how to use the internet for local
residents aged 60 and older. The
employees initiated the program in 2016
with a desire to use their skills to givesomething back to the city. The programis intended to improve the quality of lifeof older residents who are largely
unfamiliar with the internet by teachingthem how to access news andinformation related to their interests.

build a futsal court at an orphanage near
the Company’s head office in Japan. The
employees were members of the teams
competing in the final round of the UD
Trucks Gemba Challenge aftermarket
skills competition. Children at theorphanage are highly motivated to playsoccer, especially since the facility has
produced a number of professionalsoccer players, so the completion of thecourt was very special for them. On thesame day, the employees also repaired
old equipment and constructed awooden deck and benches.

Diverse nationalities
meet school children

Support for communities
damaged by torrential rains

In August 2018, UD Trucks held an eventto provide Japanese elementary students
with an opportunity to meet people fromvarious countries. The event wasorganized in collaboration with local
education boards in the area in which
the Company’s headquarters is based.
Fifty-five students in grades five and six
were given the chance to communicate
in English with international employees
working at UD Trucks. The students
introduced themselves in English andparticipated in a quiz aimed at guessing
the home country of the employees.
While interacting in English waschallenging for many of the students, theexperience was enjoyable for everyone.

UD Trucks donated five million yen to theJapanese Red Cross Society to support
people in areas of Western Japan thatwere severely damaged by flooding andlandslides caused by torrential rains inJuly 2018. The Company also helped
ensure that relief supplies could bedelivered in the damaged areas byproviding tracking information fortelematics-equipped trucks to ITS Japan,
a non-profit organization. UD Trucks
provides tracking information for trucks
during disasters and emergencies
through its own information service tohelp determine the best delivery routes inconsideration of damaged roads.

Futsal court for an orphanage
In 2019, 67 group employees fromvarious countries worked together to26

Sustainability Activities

5

Environment

Reducing ourenvironmental footprint
Our approach

The Volvo Group Environmental Policy

The Volvo Group has been working tominimize environmental impacts
throughout its history, and established
the Volvo Group Environmental Policy forthat purpose. In 2018, the Volvo Groupbegan implementing the policy anddeclared that environmental initiatives
are important for realizing the Group’s
mission. Guided by this policy, UD Trucks
has been implementing environmental
conservation initiatives in all of its
business activities with the aim ofminimizing its environmental impacts.

Environmental progress is a key element in our mission to drive prosperity
through transport solutions.
The following principles provide direction for the work:• Continually reduce life-cycle environmental impacts as an enabler for increased sustainability
and customer success• Demonstrate responsible care for the environment wherever we operate and build trust byadhering to our Code of Conduct.
• Minimize resource use, emissions and waste and utilizing means within our sphere of influence
to create change towards a circular economy and to further improve our competitiveness

Environmental management organization
Executive officer in charge ofcompany-wide environmental management

Chief environmental manager ofthe Manufaturing Division

Chief environmental manager of
the Product Development Division

Chief environmental manager of
the Sales Division

Departmental
environmental managers

Departmental
environmental managers

Departmental
environmental managers

27

ISO 14001 certificationacquired group-wide
UD Trucks has acquired ISO 14001
certification for environmental
management. Beginning with its Ageo
Plant in 1998, all of UD Trucks’ plants
and affiliated companies acquired
certification by 2017, allowing the entire
group to implement an ISO
14001-compliant environmental
management system. Leveraging thebenefits of this group-wide system, UD
Trucks is currently working to achieve theobjectives and targets of its
environmental action plan.

Auditing of environmental
management system
UD Trucks conducts an annual internal
audit of its environmental management
system to ensure that it functions
effectively. During the audits, a team ofqualified audit committee members
verify whether the system is being
implemented properly and complies withcompany rules and relevant

Pursuing better fuel efficiency

environmental laws and regulations.
In addition, the system is audited
every year by an accredited certificationbody to verify its compliance with the
ISO 14001 international standard forenvironmental management. Between
May and August 2018, such an audit
was carried out to confirm that theCompany had incorporated 2015
revisions of the standard.

The fuel that trucks burn is not only amajor expense for commercial vehicle
operators but also a source of CO2
emissions, which are a major contributing
factor to climate change. For that reason,
UD Trucks is constantly improving thefuel efficiency of its trucks. Like othertruck manufacturers in Japan, UD Trucks
has been subject to stricter fuel efficiency
standards for heavy-duty vehicles since2015, with specific targets set for eachweight class. Over 98% of all trucks soldby the Company in 2018 complied withthese targets, reflecting its efforts toequip trucks with leading-edge
fuel-saving technologies. UD Trucks has
also achieved its own targets for average
fuel consumption since 2012.
In addition to pursuing technicalinnovations for improving fuel efficiency,
UD Trucks has been holding eco-driving
seminars for truck drivers in every regionof Japan to offer practical advice and tips
on driving more efficiently.

Reducing environmental impact
over the product life-cycle
UD Trucks analyzes the environmental
impacts of its trucks at each stage of the
product life-cycle, beginning fromproduct development and design
through to the disposal and recycling ofparts and components. Based on the
results of its analyses, the Company
strives to reduce the impact of its
products and operations on theenvironment by using resources
efficiently and producing moreenvironmentally conscious trucks.

Material flow

Input
1. Development
and design

We use:Energy2. Procurementof materials
and auto parts• technologies that
reduce emissions• systems for
improving mileage• fewer materials that
impact the environment• technologies toreduce vehicle noise• recyclable materials
and components

We ensuresustainableprocurement anddeliver parts to
suppliers via
energy-efficienttransport

OutputCO2
PM
NOx

Raw materials
and truck parts

Resources andenergyResources andenergyEnergyWater, electricity,oil, etc.

Replacement
tires, fuel, etc.

Electricity andfuel for facilities
and equipment

4. Product usage

5. Product disposal

3. Production
Includes pressing, heat treating,machining, painting, assembly,
and inspections

We reduce the use of resources andhazardous substances, andoperate factories efficiently toconserve energy

CO2
NOx
SOx
Dust
Odor

Effluent

Waste
matterNoiseandvibration

We provide
eco-driving seminars

We sort materials
and parts for reuse
and recycling, andproperly treat anddispose waste

CO2
PM
NOx
Waste matter

Waste matter
Automotive
shredded residue
Airbags
Chlorofluorocarbons(incl. disposed tires)

Noise and vibration

The main environmental impacts of trucks over the entire product life-cycle are due to emissions of CO2 andexhaust gases containing particulate matter (PM) and nitrogen oxide (NOx) at the product usage stage.

28

and recycling

Sustainability Activities

Improving fuel efficiency withindustry-leading technologies

Chemical substancemanagement

UD Trucks has continually improved thefuel consumption of its heavy-duty trucks
by equipping them with a wide range ofindustry-leading technologies, including
in-vehicle displays for advising drivers,
optimally designed engine systems, andadvanced functions for precisely controlling
driving speed. Indicating the effectiveness ofthese technologies, compared with Japan’sfuel efficiency standards for heavy-duty
vehicles set in 2015, the Company’s flagship
Quon heavy-duty truck beat targets by over
5% in over 90% of tests.

UD Trucks strictly manages the chemical
substances used in its products,
specifically those included in the Global
Automotive Declarable Substance List, in
accordance with industry standards andlaws concerning the production, import,
management, and recycling of chemical
substances.
The Quon’s driveline is designed to improvefuel efficiency

Major technologies applied in heavy-duty trucks
Vehicle• Fuel Coach system for advising drivers on fuel-efficient driving• Foretrack function for predicting the road ahead based onscanned data
• Aerodynamic designs including front bumper-fitted air dams
and newly developed wind deflectors

Engine• Ultra-high-pressure fuel injection systems• Optimally shaped combustion chambers• Optimally designed induction systems• Variable speed water pumps

Power train• ESCOT Roll system for minimizing the decline in speed
when coasting• Acceleration limiter for ensuring gradual speed increases• Soft Cruise Control function for controlling acceleration

Average improvements in fuel efficiency of UD-brand trucks
Comparative improvement in fuel efficiency*(Percentage points)
107
106
105
104
103
102
101
100
99
98
97
0
2010

2011

2012

2013

2014

2015

2016

2017

2018

* The percentages were calculated using the harmonic average of the fuel efficiency achieved bymedium- and heavy-duty trucks sold each year, with the base year of 2015 set as 100%.

29

Managing chemical substances
before and during manufacturing
At the product development and design
stage, UD Trucks determines what
chemical substances will be used at the
manufacturing stage, including chemicals
used by suppliers. It then registers relevant
data with the International Material Data
System, a database jointly managed byautomobile manufacturers worldwide.
At the production stage, UD Trucks
reports to the government each year on
its usage of chemicals subject to Japan’s
Pollutant Release and Transfer Register,which is a system for restricting andcontrolling the discharge of designatedchemicals into the environment. The
Company also makes efforts to replace
hazardous chemicals with less harmful
alternatives, and properly comply withrevisions of relevant laws or regulations.

5

Environment

Reducing our environmental footprint

Helping the Volvo Group
reduce CO2 emissions
In 2011, the Volvo Group became the first
automobile manufacturer to join Climate
Savers, a World Wildlife Fund (WWF)initiative that brings global corporations
together in effort to reduce greenhousegas emissions. The Group then set thegoal of reducing CO2 emissions from its
factories by an average of 12% by 2014
compared with its result in 2008. The
Group exceeded its target early, cutting
emissions by 20% in 2013. Riding thatmomentum, the Volvo Group stepped up
its efforts and set a new target of
reducing emissions by 8% over the 2013
result by 2020.
To help achieve this goal, UD Trucks
has established a number of committees
comprised of members of all relevant
divisions, including a committee charged
with saving energy, to set targets andformulate action plans. In 2013, theCompany succeeded in reducing CO2
emissions by 61.3% compared with the1990 result, beating its target of 39% by
a wide margin. Building on that trackrecord, UD Trucks is currently working tooffset growth in emissions resulting fromrising production volume to help the
Volvo Group achieve its 2020 target.

Reducing waste matterat the product disposal stage
The final disposal of a truck at a dealer’ssite accounts for the largest amount ofwaste matter during the productlife-cycle. For that reason, UD Trucks has

Workplace recycling areas are set up on each floor of the head office building

established its own waste-management
system and created waste sorting
management standards for all of its
dealers in 2014. In accordance with thestandards, each dealer has installed
disposal facilities and properly sorts
waste materials during truck disassemblyand disposal. In addition, the Company
delivers service parts in returnable
packages to dealers to facilitate the reuseof materials.
UD Trucks looks for ways to makedisassembly work easier and use
resources more efficiently starting fromthe product development stage. For
example, bumpers are designed to be
simply disassembled into threecomponents, headlights can also beeasily dissembled into interchangeablelens and LED units, and fenders are madefrom recyclable materials.
At the production stage, UD Trucks

Environmental event held for community leaders
In November 2018, UD Trucks invited 11 officials from a neighborhood association near its
head office in the city of Ageo to a meeting about the environment. At the meeting,
employees explained measures for reducing environmental impact at the Company’s Ageo
plant and head office building, and presented plans for developing more environmentallyconscious products. The officials expressed their appreciation for being given theopportunity to learn about how UD Trucks considers the local environment in its businessactivities, and their desire for it to actively contribute to the community and environmental
conservation in the future as a good corporate citizen.

30

works to reduce and recycle waste
matter with the goal of minimizing theamount of waste it disposes in landfills.
In 2018, the Company reduced thevolume of waste sent to landfills by
99.9% compared with the amount in
1990, and achieved its target of limiting
landfilled waste to under 1% of total
waste generated.
In order to improve its waste
management system, UD Trucks
concluded a consulting agreement with acompany that specializes in waste
disposal in April 2015. Through thispartnership, UD Trucks has been using
only highly reputable disposal firms,
administering and submitting allnecessary reports to government
agencies, and keeping records on theamount of waste disposed in an effort tostrictly comply with laws and regulations
concerning waste management.

Sustainability Activities

Environmental performance data
PCBs used at the Ageo Plant in 2018

History of ISO 14001 certification by plants and subsidiaries
1988
2004
2004
2005
2005
2006
2008
2009

Ageo Plant

Equipment containing PCBs

Kounosu Plant

Weight*(kilograms)(Sold to Global Component Technologies Corporation in January 2015)

Capacitors

2,804

Hanyu Plant

Ballasts

25,367

Transformers

800**

Total

28,971(Sold to UniCarriers Corporation in March 2016)

DRD Co., Ltd.
(Sold to Persol Tempstaff Co., Ltd. in June 2013)

Techsus Co., Ltd.

* The figures include estimated amounts.
** The weight includes the transformer unit.

(Acquired by UD Trucks Corporation in July 2013)

N-Tech Co., Ltd.
(Sold to Kihara Manufacturing Co., Ltd. in March 2015)

Japan Vehicle Co., Ltd.
(Acquired by UD Trucks Corporation in July 2011)

Volvo Logistics Corporation Japan Co., Ltd.
(Acquired by UD Trucks Corporation in April 2014)

Energy and CO2 emissions
CO2 emissions
Total emissions

Targeted emissions

Emissions per vehicle(Thousand tons of CO2 emissions)(Tons of CO2 emissions)

150

10

120

8

90

140

137

6

60

4

30

2

53

0
1990

1995

35

2014

2015

CO2 emissions by energy source
Electricity
Heavy oil
Liquified petroleum gas

Coke
Other

Diesel oil

33
2016

24

29
2017

0

2018

Heat usage from large-scale natural gas
cogeneration systems

City gas(Thousand tons of CO2 emissions)

0.5%
5.3%
5.9%

140
0.3%
0.03%
46.0%

12.4%
14.7%

Heat lost
through exhaust

43.4%

19.2%

17.5%

0.1%

34.4%
1990

2018

31

Total natural gas
consumed in 201856.6%
To generate
electricity

To produce steam

24

43.7%

Heat recovered
and used

16.1%

40.5%

Environment

5

Reducing our environmental footprint

Resources
Total waste reused and disposed in 2018
Reused iron andnon-ferrous materials

Ageo Plant
Gunma Parts
Distribution
CenterWaste reused and recycled

Total waste generated

5,121 tons
(99.7% of total)

5,135 tons

Recycled as fuel chips

Reused as raw
materials for cement

Waste
disposed in landfills

14 tons (0.3% of total)

Amount of total waste disposed and percent
reused or recycled
Waste disposed in landfills

Target*Water consumption

Percent of total waste
reused or recycled(Tons of waste)(Percent)

20,000

89.4

2,000

99.8

99.7

99.8

99.7

100

19,268

50

2,273
22

0
1990

1995

2014

21
2015

13
2016

16
2017

Total water consumed

Water consumed per
vehicle produced(Thousand cubic meters of water)(Cubic meters of water)

100

2,500

100

80

2,000

80

60

1,500

40

1,000

20

500

99.7

68.5

1,000

Recycled as refuse
paper & plastic fuel

14

0

2,070

60

1,643

40
20

678

508

0
1990

2018

1995

2014

2015

382

317
2017

2016

340

0

2018

* UD Trucks began setting ambitious targets in 2004 following initiatives
for recycling and reducing waste implemented by the Japan Automobile
Manufacturers Association.

Regulated chemical substances handled by the Ageo Plant in FY2018
Regulation
numberChemical substance

Emissions

Kilograms per year

Mileage

VolumehandledAtmosphere

Water

Soil

Waste

Disposed orprocessed

Recycled

Consumption
by products

53

Ethylbenzene

16,633

6,475

0

0

0

1,876

8,196

86

80

Xylene30,982

9,369

0

0

0

2,043

19,124446

296

1,2,4-Trimethylbenzene

2,191

1,102

0

0

0

524

0

564

297

1,3,5-Trimethylbenzene

4,124

483

0

0

0

41

3,491

109

300

Toluene

6,153

4,062

0

0

0

1,244

85

763

Amounts shown in the graphs for energy and CO2 emissions as well as resource-related data are combined results from the Ageo Plant and Gunma Parts
Distribution Center. Amounts shown in the graphs for water consumption and total waste disposed and percent reused or recycled, however, include resultsfrom other plants up to fiscal 2017.

32

CSR, Compliance and Corporate Governance

Our CSR framework
UD Trucks has created its own framework for fulfilling its
corporate social responsibility (CSR) and guiding related activities
in a focused and systematic manner. The purpose of thisframework is summed up by the Company’s vision of providing
practical solutions that promote sustainable logistics and help
communities thrive. Toward that end, UD Trucks is aiming to createshared value with stakeholders and the communities it serves byworking with them to overcome challenges. The Company focuseson community engagement as well as logistics and transport, theindustry most closely linked to its business, while drawing on its
know-how, technical expertise, human resources and network offacilities to make positive and lasting contributions. Within theindustry, it makes concerted efforts to protect the environment

and promote safety while working together with stakeholders.
At the same time, UD Trucks works to fulfill its basic corporate
responsibilities across all of its business activities. Accordingly, it
carries out measures to ensure sound corporate governance,
strengthen compliance with laws and regulations, maintainmanagement systems certified by the International Organizationfor Standardization (ISO), and closely follow the Volvo Group
Code of Conduct and other important group policies.
This framework was designed to comply with the Volvo
Group’s CSR policies and reflect the Company’s business strategies
and brand characteristics. Under the framework, UD Trucks
encourages its employees to become actively involved in a wide
range of CSR initiatives.

VisionUD Trucks shall strive to realize practical solutions that
promote sustainable logistics and help communities thrive.

Approach

Create shared value

Scope

Focus

Fulfill basic corporatesocial responsibilities

Community
engagement

Logistics and transport

Protectthe environment

Promote safety

Work withstakeholders

Respond tocommunity needs• Ensure sound corporate governance• Maintain compliance withlaws and regulations• Conduct thorough risk management• Manage a sustainable supply chain• Comply with ISO 14001 andISO 9001 standards• Enforce the Volvo Group Codeof Conduct• Follow all Volvo Group policies

Active involvement of employees

The Volvo Group Code of Conduct
Aiming to ensure that its business activities are carried out ethicallyand in compliance with the laws of every country it operates in,
the Volvo Group has specified basic principles and conduct for all
employees around the world to follow in the Volvo Group Code of
Conduct. UD Trucks has been taking a variety of measures tomaintain an in-depth awareness of the code among all of its
members, such as producing and distributing promotional posters
and a handbook that explains exemplary cases related to the code.
Articles about the code and videos of panel discussions on related
topics among managers and representatives from various
Company departments are also featured on UD Truck’s intranet.

A poster promoting the Volvo
Group Code of Conduct

33

The Volvo Group Code of
Conduct booklet

CSR management system
At UD Trucks, social contribution activities are overseen by the
manager in charge of CSR and environmental management. This
manager along with the managers in charge of corporate
communications and brand management, respectively, comprise
the Company’s CSR senior management team. In addition tocoordinating CSR activities across all divisions and compilinginformation on those activities, the team formulates CSR-related
strategies and plans as well as initiatives for raising awareness of
the Company’s social contribution activities among employees
and the public. To ensure these strategies and plans are
consistently implemented company-wide, CSR managers areappointed in each division, and they jointly hold regular meetings
to share inter-divisional information and plan specific activities.
They report on the progress of these activities to executive
management, and receive instructions, resolutions, and approvals
from executive managers.

Executive management meetings
CSR senior management team comprising managers in charge of
CSR and environmental management, corporate communications,and brand management
CSR manager of the Domestic Sales and Aftermarket Division
CSR manager of the Overseas Sales and Aftermarket Division
CSR manager of the Product Development Division
CSR manager of the Manufacturing Division
CSR manager of the Corporate Governance Division
CSR manager of overseas operations

Systems for ensuring compliance
UD Trucks carries out its business activities based on the Volvo
Group Code of Conduct, which is organized under the five key
principles of respecting one another, earning business fairly andlawfully, separating personal interests from business activities,
safeguarding company information and assets, andcommunicating transparently and responsibly. UD Trucks regularly
offers training and e-learning courses for employees and managers

in order to ensure that all members understand these principles of
the code. It also provides training courses specifically for new
employees as well as personnel in charge of certain duties.
Furthermore, UD Trucks has also set up an internal whistleblower
system and audit program for facilitating prompt and proper
responses to any cases of wrongdoing or suspicious actions.

Risk management
At UD Trucks, efforts to strengthen risk management are led by
the Security Management Division. Tasked with a diverse range of
responsibilities, the division oversees the safety of employees andvisitors at all workplaces, safeguards confidential information andintellectual property, handles emergency response activities,

formulates crisis management and business continuity plans, andmakes preparations for resuming operations in the event of adisaster. UD Trucks has been maintaining safe and secure
operations thanks to the division’s ongoing efforts to identify risks
and takes proactive steps to prevent them from materializing.

Information security
Based on the Volvo Group’s information security policies, UD Trucks
has taken measures for maintaining the security of its informationand data, and has been putting an information security
governance system in place. To guard against an information
system breakdown caused by a disaster, the Company stores andmanages electronic information at an earthquake-resistant data
center in addition to its head office. It has also stepped up

measures for preventing data breaches resulting fromcyber-attacks, and regularly provides training sessions on
improving information security to its dealers nationwide. In
addition, UD Trucks strictly manages and protects all personal
information it possesses in accordance with the Volvo Group’s
privacy policies.

34

About UD Trucks Corporation

UD Trucks is a leading Japanese commercial vehicle solutions provider, active in more than 60 countries on all continents.
Since its inception in 1935, the company has been an innovation leader with a clear vision to provide the trucks andservices the world needs today. The company is committed to go the extra mile for smart logistics withthe most dependable solutions for all customers.

Company overview(As of October 1, 2018, unless otherwise stated)

Company name

UD Trucks Corporation

Date of foundation

December 1, 1935

Head office address

1-1, Ageo-shi, Saitama 362-8523, Japan

Capital77.5 billion yen

Number of employees

6,188 employees including contract and temporary employees (as of December 31, 2018)

Main businessJapanese business
Development, manufacture, export, and sales of heavy-duty trucks; sales of medium- and light-duty
trucks; manufacture and sales of vehicle components; maintenance and sales of service parts fortrucks and buses; import and sales of Volvo brand products.
Businesses outside of Japan
Development, manufacture, and sales of heavy-, medium-, and light-duty trucks for growthmarkets; manufacture and sales of vehicle components; maintenance and sales of service parts fortrucks and buses.

Domestic groupcompanies

VFS Japan Co., Ltd.; New-Mech Co., Ltd.

Main locations
outside of JapanUD Trucks Singapore Office; UD Trucks Bangkok Plant; parts distribution centers in Singapore,
the United Arab Emirates and South Africa

Total vehicles shipped byregion in 2018

Officers

Asia

16,221Africa and Oceania

4,034South America
Total
Joachim Rosenberg
Executive chairman andrepresentative director

Takamitsu Sakamaki
President andrepresentative director

Jan Gurander
Director

319
20,574Masahiro Otsuki
Auditor

Products sold by UD Trucks

UD Trucks brand trucks

Volvo trucks

Volvo Penta engines

Volvo construction equipment

Quon heavy-duty truck, Condor
medium-duty truck, and Kazet
light-duty truck for the Japaneseand other mature markets, andQuester heavy-duty truck, Croner
medium-duty truck, and Kuzer
light-duty truck for growth markets

Imported Volvo brand heavy-duty
trucks, particularly the Volvo FH
lineup of 4×2 and 6×4 tractors forthe domestic market

Imported Volvo Penta brandindustrial and marine engines forthe domestic market, including
forklift and pleasure craft engines,
and installation and technicalsupport for original equipment
manufacturers

Imported Volvo brand construction
equipment, including wheel
loaders and articulated dump
trucks for the domestic market

35About the Volvo GroupUD Trucks is a member of the Volvo Group, a global enterprise headquartered in Gothenburg, Sweden. The Volvo Group
manufactures trucks, buses, construction equipment, and marine and industrial engines, while also providing financial
services. Employing about 100,000 people worldwide, the Group manufactures its products at factories in 18 countries
and sells them in more than 190 markets.

Volvo products in everyday life

On the roadOff roadIn the city

At seaThe Volvo Group’s products help
ensure that people have food on
the table and roads to drive on.
Its vehicles enable people totravel to their destinations anddeliver goods to keep production
plants running.

The Volvo Group’s engines,
machines and vehicles can befound at mining and construction
sites and in the middle of forests.

The Volvo Group’s products are apart of daily life. They take people
to work, distribute goods, andcollect rubbish. The Group isdeveloping tomorrow’s public
transport solutions with anincreased focus on electrification.

The Volvo Group’s products andservices are present at sea,
whether one is at work on a ship,on holiday on a pleasure boat, orin need of urgent help from sea
rescue services.

Volvo’s basic approach to CSR• Driving prosperity
through transport
solutions“Driving prosperity through transport solutions” is the Volvo Group’s
mission. To fulfill it, the Group has formulated a vision backed by
specific aspirations for all of its members. To foster a corporate
culture underpinning this future direction, Volvo Group is
promoting values for every employee to share and integrate in all
operations, with a view to grow its business while helping makethe world more sustainable.
In addition, the Volvo Group has created a Code of Conductthat specifies basic principles and conduct for all employees tofollow, and clearly explains business ethics and compliance-related
issues relevant to all business activities.

MissionVisionAspirations
ValuesVolvo Group Code of Conduct• Be the most desired andsuccessful transport
solution provider
in the world• Have leading customer
satisfaction for
all brands in theirrespective segments• Be the most admired
employer in our industry• Have industry leading
profitability• Customer success• Trust• Passion• Change• Performance

Results of key performance indicators in 2018
Net sales

Operating income(SEK bn)(SEK bn)

283

5%

29.7

333

302

South America

34.5

391
313

Share of net sales by market
Europe41%

Africa and Oceania

23.3

6%

20.8

Asia

20%

North America

28%

5.8

Share of net sales by revenue type
2014

2015

2016

2017

2018

2014

2015 20162017

Total number of employees

Total CO2 emissions

Share of women

Energy consumption

105,175
19%2018

Financial services

3%

1.1 tons/SEK M

Services20%

5.8 MWh/SEK M

SEK: Swedish krona. The US dollar to SEK exchange rate averaged approximately
0.10 dollar per SEK in November 2019.

36

Vehicles77%1-1, Ageo-shi, Saitama 362-8523, Japanudtrucks.com