Sustainability

Establishment of Sustainability Policy

Sustainability Roadmap

Considering efforts for the Sustainable Development Goals (SDGs) as anLong-Term Vision

important management issue, the Group has formulated the Sustainability

Realize social and industrial infrastructure that is
considerate of the global environment, with a focus on
exceptional motor drive technologies

Policy as a guideline for specific actions.

Environment

Basic policy
The Toyo Denki Group states its commitment to contributing to society in the business principles and initiatives to protect the global
environment as its priority task in the environmental philosophy. The Group has formulated the Sustainability Policy as a guideline forits efforts to realize these principles and contribute to the sustainable development of society.

FYE May 2050 Targets
Scope1&2
CO2 emissions

Corporate principles
Business Principles
The Toyo Denki Group will practice thefollowing business principles to ensure
the growth of its business, earn theconfidence and understanding ofshareholders and stakeholders, andfoster the development of its employees:
Prioritize ethics and contribute to theprosperity of customers and society as a whole
Encourage creativity and an enterprisingspirit to meet the challenges of the future
Build trust by focusing on quality first<Action Guidelines>
1. We will strive to minimize environmental burden through a reduction of energy consumption andother measures across the entire product lifecycle, namely planning, development, design,
procurement, production, sales, distribution, use and disposal.
2. We will protect the environment by responding to climate change, reducing waste, recycling
resources, reducing hazardous chemicals, and taking other actions.
3. We will comply with laws and regulations concerning environmental protection, and withenvironmental protection-related requests to which the Group consents.
4. We will constantly strive to improve our environmental management system through a continuous PDCA cycle.
5. We will provide appropriate training to all Group employees to improve their awareness of the needto protect the environmental protection.

Our Heart and Technology for the FutureThreeperspectives

Initiative in Products and Services

Initiative in Production Activities

Initiative in Valuing People and Communities

PolicyWe will use the Group’s exceptional
technologies to provide products andservices that contribute to the realization ofa sustainable society.

We will strive to minimize environmental
burden in production activities and continue
to protect regional environments.

We will value our employees and the local
communities and carry our aspirations into
the future.

Supply of decarbonized energy, such as
small hydroelectric power generation
Popularization of energy-efficienttransportation, such as railroads andelectric vehicles
Efficiency improvement of electricalequipment and the spread of power
storage systems
Improvement of safety through a shift tobarrier-free transportation systems
etc.

Reduction of energy consumption in
production
Study of solar power generation anddecarbonization of energy currently used
Reduction of energy consumption duringtransportation of materials and products
Recycling activities at production sites
and officesetc.

Support for education through university
endowment courses and offering factory
tours for school students
Promotion of diversity and inclusion
Promotion of health and productivity
management and well-being
Protection of regional environments andcontributions to nature conservation, etc.

30%reduction

10%reduction

Established the Sustainability
Committee and theSustainability Promotion Office
Formulation of Sustainability
Policy2022

2023

Track emission volumes and promote reduction
Scope3CO2 emissions

2026
FYE May 2026 Targets
Percentage of employeeswith disabilities

Certified as 2023 CertifiedHealth & Productivity
Management Organization(Large Enterprise Category)

2050
2030
FYE May 2030 Targets

2.9% or more

Ratio of female employees(Administration divisions /Assistant manager level)

25% or more

Ratio of female employees(Administration divisions /Manager level)

8% or more

Ratio of male employees
taking childcare leave

50% or more
21 Toyo Denki Seizo Report 2023

(Compared with FYE May 2018)(Compared with FYE May 2018)(Compared with FYE May 2018)〜

Sustainability Policy

CO2 emissions

Scope1&2
CO2 emissions

Expressed support for TCFD
recommendations%
reduction

Scope1&2

FYE May 2026 Target

Environmental Philosophy
The Toyo Denki Group sets initiatives to protect the global environment, including responding toclimate change, as its priority task and contributes to the development of a sustainable society.

Company Slogan of the Toyo Denki GroupSpecificactions

100

FYE May 2030 Targets

Percentage of employeeswith disabilities

3.0% or more

Ratio of female employees(Administration divisions /Assistant manager level)

30% or more

Ratio of female employees(Administration divisions /Manager level)

15% or more

Ratio of male employees
taking childcare leave

70% or more

Human
CapitalToyo Denki Seizo Report 2023

22

Sustainability

Disclosure based on TCFD recommendations
Recognizing that responding to climate change is an important management issue, we expressed our support for the TCFD
(Task Force on Climate-Related Financial Disclosures) recommendations in June 2023. We will strive to further implement
climate change initiatives and appropriately disclose information as part of our commitment to helping realize a sustainable
society.

GovernanceIn order to promote sustainability management across the Group,
we established a Sustainability Committee under the Board of Directors and carry out company-wide initiatives based on our Sustainability Policy. The committee, which generally meets once
every quarter, is chaired by the President, and its members comprise mainly Operating Officers. We recognize climate change asa very important challenge and have set numerical targets for the
reduction of greenhouse gases. Progress towards these targets ismonitored by the committee, and the content of committee

discussions is reported to the Board of Directors for incorporationin the Group’s management strategy.

Examples of matters deliberated/reported at Board of
Directors meetings
Revision of our environmental philosophy
Expression of support for the TCFD recommendations andrelated disclosures
Formulation of a sustainability roadmap

Strategies

Risk management

We have analyzed the future impact of climate change on ourbusiness activities under the 1.5°C/below 2°C and 4°C scenarios, identifying the associated risks and opportunities and calculating the degree of impact in each case. The focus time horizon
was long-term (to 2050) and analysis was also done for the medium-term (to 2030) as a transitional point. The degree of financial impact on business activities was defined according to threelevels: large (L), medium (M), and small (S).

A working group made up of working-level employees engages in
discussions for advancing a company-wide approach to sustainability challenges. Meanwhile, the Sustainability Committee identifies climate change risks, discusses countermeasures, andmonitors progress in implementing those actions. It also tracks
the progress of the medium- and long-term sustainability roadmaps formulated by each division.

Scenarios

Indices and targets

1.5°C/
below 2°C
scenario

Worldview: A lower-carbon transition will take place across society
and contain the temperature rise to a certain extent. Demand forenergy-saving/eco-friendly products will grow. Legal, market, reputational, and other transition risks will increase.
Reference scenarios: SSP1-1.9, SSP1-2.6 (IPCC AR6) / NZE2050(IEA)

We have set the following targets for reducing CO2 emissions associated with our business activities to help curb global warming.

4°C
scenario

Worldview: With priority placed on economic growth, the temperature rise will not be contained and the impacts of climate change
will worsen. A lower-carbon transition will not be realized, and physical risks such as extreme weather events will increase.
Reference scenarios: SSP5-8.5 (IPCC AR6)

Scope 1 & 2CO2 emissions(Compared withFYE May 2018)

FYE May 2026 targets FYE May 2030 targets FYE May 2050 targets

10% reduction

30% reduction

100% reduction

Anticipated risks and opportunities
Transition Risks

Physical Risks

Transition Risks

Anticipated Risks

Policy &regulation

Increase in procurement/shipping costs with adoption of carbon tax and more
stringent regulations; increase in costs from equipment renewal and technological development

Technology

Increase in R&D costs of energy-saving products
Loss of sales opportunities due to stalled development
Decrease in demand for existing technologies and products

Opportunities

Impact1.5˚C / below 2˚C
4˚C
2030 2050 2030 2050
M

M

L

L

S

S

M

EnergySourceIncrease in demand for our products/services with shift
to EVs and growth of demand for renewable energy
and power storage technologies

Prevent failures through condition-based maintenance and increase value added through manpower-saving and labor-saving approaches
Develop products and systems reflecting the shift
to EVs and consider creating alliances with othercompanies

Products /Services

Increase in demand for electrical equipment for railway
vehicles driven by greater demand for highly environmentally advantageous railway service
Increase in demand for high-efficiency motors and inverters, distributed power supply, and other energy-saving products/systems
Increase in demand for new testing systems that support the shift to EVs

Markets

Potential for opening up new markets by uncovering
demand for power storage systems, small hydroelectric
power generation, wave power generation, etc.
Increase in demand for ICT remote monitoring and automatic control systems to avert climate change-related
food shortages and impacts on agricultural and livestock industries
Popularization of EV-related products

Resilience

Increase in demand for solutions that strengthen resilience and BCP in response to increased severity ofnatural disasters

L

L

M

M

Contribute to BCP preparation by supplying emergency generators for businesses and government offices
Promote prediction and early detection of natural disasters using remotemonitoring systems

Reputation

Increased trading, improvement of stock price, and securing of human resources made possible by stronger
reputation for environmental consciousness

L

L

M

M

Enhance disclosure through dialogue with shareholders, investors, suppliers,
communities, and other stakeholders

Reputation

L

L

M

M

Acute

Suspension of operation, damage to production equipment, and stoppage ofbusiness site functions due to typhoons, flooding, etc.
Difficulty in procuring parts and materials due to interruption of supply chain

S

M

M

L

Chronic

Increase in factory energy costs, decline in employee productivity, and increase
in incidence of heat stroke due to the temperature rise
Increase in costs due to tidal flooding countermeasures taken in response to rising sea levelOccurrence of malfunctions and failures in products and equipment due to thetemperature rise

23 Toyo Denki Seizo Report 2023

S

M

M

Actions

Enhance design/development systems, including
production methods, and increase sophistication of
our environmental technologies
Identify needs for existing technologies/products
through customer engagement

Decline in reputation among stakeholders due to delays in responding to climatechangeExclusion from supply chains; rise in financing costs; difficulty in securing humanresources

M

Impact1.5˚C / below 2˚C
4˚C
2030 2050 2030 2050

S

L

L

Anticipated Opportunities

Avoid carbon tax and lower production costs by reducing GHG emissions through renewable energy
use and switching to energy-efficient equipment
Consider adopting ICP

Decrease in railway product sales due to decline in railway ridership from population shrinkage and due to drop in relative environmental advantage of railtransport stemming from improvements in environmental performance of automobiles
Stagnation of testing machines business due to delays in responding to the shift
to EVsDecrease in equipment demand from manufacturers of printing machines, paper,and chemicals due to shift to paperless and plastic-free approaches

MarketActions

M

L

Enhance disclosure through dialogue with shareholders, investors, suppliers, communities, andother stakeholders

Reinforce disaster countermeasures of production
bases by strengthening business continuity planning (BCP)
Increase supply chain resilience by establishingmultiple channels, using local suppliers, and taking
other actions, and transfer risk by purchasing insurance

Resource
Efficiency

Increase in maintenance opportunities driven by longer
use and recycling of products
Decrease in costs through streamlining of product processes, optimized use of materials, and streamlining of shipping

L

L

M

M

Construct advanced production/processing systems that capitalize on
high-efficiency motors and invertors
Improve recyclability through environmentally conscious design

L

L

M

M

Promote battery storage of regenerative power, and build new storage systems, such as a superconducting flywheel railway power storage system
Develop and supply testing equipment that support the shift to EVs

M

Improve environmental friendliness of electrical equipment for railway vehicles by increasing efficiency and reducing size/weight
Make improvements to motors and inverters that enhance energy efficiency
and maintainability of production equipment
Develop testing systems that support the shift to EVs
Increase the sophistication of status monitoring, alarm notification, and remote control of generators using IoT remote monitoring systems

M

Popularize power storage systems, small hydroelectric power generation systems, and biomass generators
Participate in the demonstration of wave power generation and consider its
commercialization
Increase the sophistication of status monitoring, alarm notification, and remote control of generators using IoT remote monitoring systems

L

L

L

L

M

M

Toyo Denki Seizo Report 2023

24

Sustainability

Initiative in Products and Services
We will provide products and services that help build a sustainable society using the exceptional technologies of the Group.
Business Category

Transportation
Business
Segment

Business Description

Electrical equipment
for railway vehicles

Contribute to the world’s railway infrastructure throughthe supply of high-quality electrical equipment for
railway vehicles

Railway power storage
systems

Contribute to energy-saving and stable railway
transportation with the effective use of regenerative
power

Automobile testingmachines

Support the development of next-generation vehicles
with testing systems that use industry-leading
high-performance motors and inverters

Production andprocessing equipment
drive systems

Contribute to manufacturing around the world by
providing customers with optimal control systems using
a wealth of technologies and products

Industry
Business
Segment

ICT Solution
Business
Segment

25 Toyo Denki Seizo Report 2023

Value We Offer

Power generation andpower supply systems

Supply power generation systems for continuous/
emergency use and generators using natural energy tosupport public infrastructure

Car-mounted electricalequipment

Contribute to the development of electric vehicles (EVs)and hybrid electric vehicles (HEVs) with power electronics technologies

Railway station
operating equipment
systems

Achieve greater convenience for railway patrons andlabor-saving for railway operators by combining
advanced ICT and mechatronics

IoT solutions

Realize monitoring and control of mobile entities andremote facilities with a variety of simple, inexpensive
IoT/M2M solutions

Focus SDGs

Examples[Ongoing actions]
Adoption of propulsion systems that are smaller, lighter, and highly energy efficient (drive systems such as VVVF inverters and low-noise motors)
Establishment of condition-based maintenance (CBM) with real-time monitoring of product operation status and analysis of accumulated data to prevent product failureand save manpower and labor[Future actions]
Promote the development of autonomous driving technology for the realization of driverless driving
Establish a new maintenance model using digital twin technology
Improve recyclability and eliminate specified hazardous substances with promotion of environmentally conscious design[Ongoing actions]
Battery storage of regenerative power generated by train braking and supply of power to trains in emergencies[Future actions]
Further reduction of energy consumption through adoption of systems combining solar power generation, hydrogen fuel use, etc.
Build new storage systems, such as a superconducting flywheel railway power storage system[Ongoing actions]
Popularization of next-generation automobile testing systems using in-wheel-well dynamo, which saves space and is quiet, suitable for various driving test evaluations
Development and supply of testing equipment in response to the shift to automobile electrification, such as ultra-high-speed dynamos and high-capacity battery simulators[Future actions]
Adapt in-wheel-well dynamo to advanced driver-assistance systems (ADAS) and popularize autonomous driving systems[Ongoing actions]
Construction of advanced systems that capitalize on high-efficiency motors and invertors
Improvement of energy-saving performance and maintainability of production facilities with economical and eco-friendly Eco-Drive Motor (ED motor)[Future actions]
Design products with better recyclability and develop rare-earths-free motors and control systems for them
Expand RoHS compliant products and promote responses to REACH regulations[Ongoing actions]
Establishment of power generation infrastructure by providing continuous-use generators to developing countries
Popularization of small hydroelectric power generation systems and biomass generators
Contribution to BCP preparation by supplying emergency generators for government offices, financial institutions, etc.
[Future actions]
Realize small and highly efficient pumps using Eco-Drive Motor (ED motor)
Develop emergency generators using hydrogen and biofuels
Popularize distributed power supply systems (mechanism in which power is supplied by small-scale generators distributed near consumption areas) for local production
and local consumption of energy
Participate in the demonstration of wave power generation and consider its commercialization[Ongoing actions]
Supply of on-board electrical equipment in response to the shift to electrification, such as for construction machinery[Future actions]
Promote recycling of used invertors, motors, and batteries of EVs[Ongoing actions]Improvement of rail service convenience through popularization of railway station operating equipment systems (commuter pass issuing machines and in-train ticket issuing machines)[Future actions]
Provide low-price ticketless systems to areas where IC has not yet been introduced, using QR codes, touch payment credit cards, and facial recognition technology
Provide QR code payment systems shared by private railway companies and online booking services for commuter passes[Ongoing and future actions]
Provide train operation information systems and bus location systems to improve the convenience of transportation systems
Status monitoring, alarm notification, and remote control of generators using IoT remote monitoring systems
Prediction and early detection of natural disasters (heavy rains, flooding and inundation, landslides) using IoT remote monitoring systems
Conduct remote monitoring and control of agricultural greenhouses, poultry farms, pig farms, and onshore aquaculture facilities to support stable agricultural production
Conduct remote monitoring and control of frozen food trucks and refrigerated containers to support safe and stable distribution of foods
Toyo Denki Seizo Report 2023

26

Sustainability

Initiative in Production Activities

1,000

We will strive to minimize environmental burden in production activities and continue to protect regional environments.

400

A sustainable society as envisaged by the Company is the combination of a “low-carbon society,” a “recycling-based society” anda “nature-symbiotic society.”
The environment technologies of the Company have produced
numerous products that contribute to energy conservation, including
high efficiency motors and inverters that capitalize on the amalgamation of our outstanding motor drive technology and other state-of-theart technologies. In the meantime, the Company has been striving toconserve resources through not only the efficient use of energy but
also the reduction of the size and weight of its products.
Decarbonized society
Implementation of measuresagainst global warming

Energy conservation throughthe Company’s technologies andproducts
Energy conservation in
production activities

Recycling-based society
Promotion of 3Rs(reduce, reuse, recycle)

Nature-symbiotic society
Conservation of biodiversity

Use of sustainable energy
Improvement of logistics
efficiency
Proper treatment of wastes
Reduction of amount of final
disposal of wastes
Proper management of chemical
substances
Cleanup around offices

Environmental Management System
In order to tackle environmental issues on an independent and continuous basis, the Company has developed and operates an environmental management system and thereby obtained ISO 14001
certification. This certification has been acquired for all offices andthe production bases Yokohama Plant and Shiga Ryuo Plant.
Years of ISO 14001 certification

Yokohama Plant
2004

Shiga Ryuo Plant*
2001

Extended to all offices
2010*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Initiatives to Prevent Global Warming
Initiatives to reduce greenhouse gas (CO2) emissions
The Company is promoting energy conservation at each of its
production bases and offices to reduce its CO2 emissions. At the

production bases in particular, we are promoting power-savingand streamlining at production facilities. In addition, the Yokohama
Plant uses solar power generation for peak shaving of power demands.

Yokohama Plant

200

As described in the sustainability roadmap (page 20), the Company has set a target of reducing CO2 emissions at the Company’s
production bases, the Yokohama Plant and the Shiga Ryuo Plant,by 10% in fiscal 2026. CO2 emissions per unit of production output in fiscal 2022 increased by 3.3% at the Yokohama Plant anddramatically decreased by 17.8% at the Shiga Ryuo Plant as aresult of emissions control efforts, against the target of 1% reduction year on year.The Company will continue to make efforts to
reduce CO2 emissions per unit of production output by 1% year
on year in the next fiscal year.

Yokohama Plant initiatives(1) Installation of a solar power generation system
We installed a solar power generation system (500 kW) on theroof of the Yokohama Plant in 2012. In recent years, the system
has generated 600,000 to 650,000 kWh of electricity annually, allof which is consumed internally. This contributes to reducing
greenhouse gas emissions (equivalent to approximately 300 tonsof CO2 per year) and curbing global warming.
(2) Modal shift in logistics
The plant is expanding its shift of some outgoing customer shipments from truck transport to railway container transport, whichplaces a smaller burden on the environment.

Total amount of air emissions(kg)

10,000

6,990
5,750
6,490
7,200
6,700
6,150 6,600

Total amount of shift

8,000 6,800
6,000

4,520
5,300

4,000

3,440
4,400

2,000
0

2017

2018

2019

2020

2021

2022

2017

(year*)

2018

2019

2020

2021

2022

(year*)

Total energy input (gas)
Yokohama Plant

500

400

350.4

443.4
74.3

300
200

369.1

100

Shiga Ryuo Plant (formerly Shiga Factory)

408.2
80.2

424.7

419.2

86.1

392.7

89.9

80.6

328.0

338.6

329.3

312.1

2017

2018

2019

2020

2021

2022

Initiatives for Reducing Disposed Waste as Well as Recycling
Main actions

0(year*)The Company has been thoroughly implementing waste processing rules, sorting metal waste, and recycling paper resources. As
a result, its landfill waste volume rate was 1.1% in fiscal 2022,
reduced to the previous level.

Total CO2 emissions
(t)

6,000

Yokohama Plant

Shiga Ryuo Plant (formerly Shiga Factory)

Head Office ∙ Regional Offices

4,000

4,240
143
183

5,037
132 4,274
4,251
933
3,767
121
105 3,836
105
774
736
94
829
670

2,000

3,914

3,972

2017

2018

3,379

3,410

2019

2020

2,902

3,003

2021

2022

Output of general and valuable waste
General waste output(t)Yokohama Plant

Shiga Ryuo Plant

Valuable waste output Yokohama Plant Shiga Ryuo Plant
450.7
48.8 416.5
368.3
365.5
55.1
325.5
34.3
300
39.2 291.3
37.1
286.3
361.4
401.9
254.2
331.2
147.6
150
138.5
129.6
131.6
29.8
101.5
19.8
21.8
21.7 95.4
16.4
117.8
116.7
111.8
107.9
79.0

450

0
(year*)

0

2017

Initiatives for Control over Chemical Substances
Volatile organic compounds (VOCs) emitted as a result of ourbusiness activities are adequately controlled and the amount ofemission is monitored under the Pollutant Release and Transfer
Register (PRTR).
We will further engage in the reduction of waste through suchmeasures including using non-VOC materials and implementing
recovery and reuse of solvents. PCB waste is also subject to adequate control, storage and disposal in accordance with Japan’s
Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.

Shiga Ryuo Plant initiatives(1) Revision of compressor operation
The duration of compressor operation was revised based on theconditions of use.
(2) Revision of air conditioning system operation
1. An automatic air conditioning control system was installed andthe conditions of use were visualized. The air conditioning system’s operating program was revised to reduce the duration of
automatic operation.
2. Thermal barrier film was applied to windows in some areas
significantly heated by sunlight.

Head Office ∙ Regional Offices0(Unit: 1,000 m3)

Targeted reduction of CO2 emissions and progress status

Shiga Ryuo Plant (formerly Shiga Factory)

864.3
772.2
25.0 767.6
705.2
20.6 733.721.2 644.0
23.5
24.9 176.6
171.4
178.5
18.0
179.3
36.0
158.0
662.7
580.2
644.3
565.6
533.2
468.0

800
600

Aiming for Realization of a Sustainable Society

Notification volume for Pollutant Release and Transfer Register (PRTR) substances

Total energy input (electricity)(Unit: 10,000 kWh)

2018

2019

2020

2021

2022

Volume of landfill waste
Yokohama Plant

(t)

15

4.1
5

5.0

0
2017

7.2
3.2

6.3
2018

Production Management Division
Transportation Systems Works
Transportation Business Unit

Shiga Ryuo Plant

12.4
1.1

10.4

10

11.3

6.8

4.0
2019

7.1
0.3

2020

2021

5.3
1.6
3.7
2022

Striving to be more environmentally conscious and address the 2024 logistics issue

Shinsuke Suzuki(year*)(year*)VOICE

We place top priority on quality for the transportation products we supply to railway operating companies.
Traditionally we relied mostly on trucks to make customer deliveries, but we have been shifting more
toward railway container transport as part of our efforts to be more environmentally conscious (reduction of CO2 emissions) and to address issues
posed by the cap that will be placed on truck driver overtime hours in
2024. This approach is being applied particularly to shipments to the Kansai, Chugoku, and Kyushu regions.
Since the transportation efficiency and CO2 emissions-reducing effect ofrail freight shipping increase with distance, we are proactively utilizing thisenvironmentally friendly mode of transport.

*The fiscal year is from April to March of the following year *Figures for the Shiga Ryuo Plant include those of TD Drive Co., Ltd. from fiscal 2018.
*Prior to fiscal 2017, total energy input (gas) data is available only for the Yokohama Plant due to zero input of the Shiga Plant.
*Prior to fiscal 2017, data on output of general and valuable waste and volume of landfill waste is presented only for the Yokohama Plant.

27 Toyo Denki Seizo Report 2023

Toyo Denki Seizo Report 2023

28

Sustainability

Quality Control – Providing Safe and High-Quality Products
Basic policy on quality control
The Company’s electrical equipment for rail vehicles is installed inmany rail vehicles. These extremely important products play a direct role in ensuring the safety of human life and property during
rail transportation. In the Industrial Systems and Information
Equipment Systems segments as well, the Company’s products
and services are used in customers’ production facilities, development sites and in the field of social infrastructure, and they
form the foundation supporting the sustainable development of asociety that is safe and comfortable to live in.
In order to ensure the high quality of our products and services, the Company has established a quality policy, which is deployed across the Group as we strive to maintain and improve ourhuman resources education, compliance with rules, and our facilities.
Quality Policy
1. T he Toyo Denki Group’s commitment to quality
Based on our commitment to make quality our top priority, we willcontribute to society by reliably providing safe and high-quality products and services that satisfy our customers.
2. E fforts to improve quality
We will make efforts to further improve quality, with the involvementof all Group employees and with the cooperation of partner companies.
3. C ompliance with laws and regulations
We will comply with quality-related laws and regulations, and with requirements to which the Group consents.
4. C ontinuous improvement
We will set quality targets and continuously strive to improve ourquality management system.

Promotion framework
With regard to quality control, each fiscal year the Company develops policies and the promotion framework aimed at further
maintaining and improving quality in each business unit, alongwith specific policies pertaining to the reduction of flaws and other issues.
The Company’s Corporate Quality Control Division works together with the quality control department or the quality assurance department in each business unit to put together a report on
the status of quality control and results in each unit. The report isdelivered to top management at the monthly Operating Officer Liaison Meeting where measures are debated and decided.
Furthermore, in the event that a flaw is discovered after a
product has been shipped, the necessary steps are swiftly taken,
mainly by the quality assurance department in each business unit,
while at the same time the causes that led to the flaw and its
mechanism are investigated, and this information is put into a database so that the information can be shared in-house in an effort
to prevent recurrence.

29 Toyo Denki Seizo Report 2023

Initiative in Valuing People and Communities

Quality Management System
The Company has created and operates a quality management
system and has obtained ISO 9001 certification, including at its
production bases, the Yokohama Plant and the Shiga Ryuo Plant.

We will value our employees and the local communities and carry our aspirations into the future.
With Our Employees

Year ISO 9001 certification obtained

Yokohama Plant
1997

Shiga Ryuo Plant*
2000

Extended to all offices
2005*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Acquisition of International Standards
High level of safety is essential for rail vehicles. UNIFE, the Association of European Rail Industry, established the International Railway Industry Standard (IRIS) in 2007 to ensure the quality of rail
vehicles. In 2013, we became the first company in Japan to obtain an IRIS certification (current international standard: ISO
22163) for auxiliary power supply (SIV).
In 2014, we were also accredited to the China Railway Certification Center’s (CRCC) certification for driving gear units. CRCC, astate-owned enterprise set up in April 2003 after obtaining approval of the Certification and Accreditation Administration of thePeople’s Republic of China, is an organization that mainly manages the quality of railway products. It is necessary to obtain thiscertification to sell high-speed rail products in China. We will continue to acquire international standards and further expand ourbusiness globally.

Towards Just and Fair Procurement
Communication with suppliers
The Company’s products possess various distinctive characteristics such as being individually built-to-order, manufactured in
multi-product small lots, and demanding high reliability. Therefore,
the Company can be affected by the performance of our suppliers
as a result of issues such as delays in supply due to fluctuationsin production quantity or delays in processing due to the quality of
products received.
In order to reduce these risks as much as possible, the Company carries out instruction and support related to quality, technology, and skills for our suppliers, as well as guidance for
improvement of manufacturing sites, in order to ensure stableprocurement of even better quality products. In addition, we actively promote information sharing through the “Toyo Denki Seizo
Cooperation Association” to which our leading suppliers belong.
Policies and Guidelines for Procurement
The Toyo Denki Group will, in its procurement of raw materials, services,
etc. for the products that it supplies to customers, engage in practices
mindful of society’s expectations concerning human rights and the environment, and in doing so will advance sustainability initiatives and will
work together with suppliers to help realize a sustainable society.
*For details on the Policies and Guidelines for Procurement, please see our corporate website.
https://www.toyodenki.co.jp/en/procurement/

local special-needs schools and support organizations. We willcontinue pursuing efforts to be a company where everyone canwork vibrantly.

Ensuring diversity
Female empowerment
We have 792 employees, and women make up 7.2% of our permanent employees. The ratio of women in administrative professional positions is 1.5%, and raising female representation acrossthe board is a challenge that we need to address.
We have started tackling this challenge by setting targets forincreasing the ratio of female employees in administration divisions for fiscal 2026 and fiscal 2030, and are working to meetthose targets.
As part of our new graduate recruitment activities, we hostcompany briefings for women that provide the opportunity forthem to speak with female employees and gain a better idea ofwhat it is like to work for Toyo Denki. We further strive to recruit
diverse talent through mid-career hiring and a program that enables fixed-term contract employees to switch to permanent employment.
We will continue engaging in these efforts while also providing
career development training targeted at female employees.

Ratio of female employees
Administration divisions
Assistant manager level(%)

Manager level

40
30
20

15

10
0

30

25

22.7

8

3.8
FYE May 2023

FYE May 2026 FYE May 2030
targets
targets*As noted above, women make up 7.2% of our permanent employees, and work needs to be done toraise female representation across the board. We are initially targeting administration divisions in ourefforts to increase the ratio of female managers.

Employment of the disabled
Aiming to be a company where both the disabled and nondisabledwork together lively, the Company makes improvements to theworkplace environment and carries out workplace training. We
have promoted the hiring of people with disability by offering
hands-on workplace training opportunities in collaboration with

Percentage of employees with disabilities
Percentage of employees with disabilities
(%)

3.0

2.67

2.84

3.08*

2.9

3.0

2.0
1.0
0
June 2021 June 2022 June 2023

FYE May 2026 FYE May 2030
targets
targets*The percentage of employees with disabilities rose above the target for fiscal 2030 in conjunction
with a year-on-year drop in the number of all employees. We will continue promoting the hiring ofpeople with disabilities.

Improvement of working environment
Flexible workstyles
We are expanding our systems supporting flexible workstyles in order to help
employees achieve a good work-life balance. In 2014, we were certified as a“company that supports child-rearing”
and received the “Kurumin” certification
logo from the Tokyo Labor Bureau. Since then, we have also implemented various support systems, including for: rehiring former
employees who had to leave their jobs due to reasons such as
childbirth, child-rearing, family care, or their spouse’s reassignment; limiting the working location of employees caring for children or other family members to a defined region; offering diverse
options for reduced working hours; and providing annual leave onan hourly basis.
Our efforts to encourage more male employees to take childcare leave include providing information to those who are expecting a child. Specifically, we created and distribute a guidebook onchildbirth and childcare, and a collection of male employees’ personal stories about their experiences in taking childcare leave.
Going forward, we will continue developing an environment thatenables employees to work with peace of mind as they balance

Toyo Denki Seizo Report 2023

30

Sustainability

their job and private life, including by further enhancing childcare
support programs, expanding the range of flextime options, andestablishing a remote work system.

Health and productivity management promotion framework

Toyo Denki Health
Insurance Association

Ratio of male employees taking childcare leave
Toyo Denki
Labor Union

Ratio of male employees taking childcare leave
(%)

80

70

60
40

50
33.3

0
FYE May 2026 FYE May 2030
targettarget*The above ratios were calculated for childcare leave, etc. as prescribed in Article 71-4, Item 1 of theOrdinance for Enforcement of the Act on Childcare Leave, Caregiver Leave, and Other Measures for
the Welfare of Workers Caring for Children or Other Family Members (Ordinance of the Ministry of Labor No. 25 of 1991), pursuant to the provisions of the Act on Childcare Leave, Caregiver Leave, andOther Measures for the Welfare of Workers Caring for Children or Other Family Members (Act No. 76
of 1991).
*The ratio of female employees taking childcare leave is 100%, and we will strive to maintain that levelby further working to support work-life balance of women.

Direct dialogue between the President and employees
Roundtable meetings have been held regularly since December
2022 to share values between the President and employees andto practice management that listens to employees’ opinions. The
President has visited each of our domestic bases and held themeetings 10 times so far, with a total of 46 employees participating. We will continue toplace importance on twoway communication with
employees.

Health management
Promotion of “health and productivity management”
We promote health and productivity management with the health insurance association and labor union, with the aim of being
a company where employees can play active roles in good physical and mental
health. With the “Health and Productivity Management Declaration” in place, our efforts focus on the following six priority items.

Health and Productivity Management Declaration
The Toyo Denki Group expresses in its business principles its commitment to “ensure the growth of its business, earn the confidence andunderstanding of shareholders and stakeholders, and foster the development of its employees.” Recognizing that the realization of the commitment involves each employee to be physically and mentally healthy
and able to play an active role with enthusiasm, the Company will support its employees to achieve good health.

31 Toyo Denki Seizo Report 2023

Officers in charge
Human Resources Division
Yokohama Plant
Administration Division

Shiga Ryuo Plant
Administration Division

Occupational physician

Occupational physician

Occupational health staff

Occupational health staff

Promotion framework members meet twice a year

20
FYE May 2023

Group company
administration divisions

Toyo Denki Seizo K.K.

In addition, we provide line care training for managers so thatthey recognize the importance of communication and promptly
coordinate with occupational health staff at each office.
Moreover, we have set up in-house and external mental healthconsultation services to further support mental health care for our
employees.
Health management of employees at overseas posts
In addition to properly conducting health checkups before andafter overseas postings, we manage employee health during
those assignments by utilizing external healthcare services toprovide access to medical care, including for emergencies.

Disease prevention, prevention of illness aggravation
We will maintain a 100% participation rate for regular healthcheckups, improve the take-up rate for specific health guidance
aimed at preventing lifestyle diseases, and support the attendanceof follow-up examinations.
Work-life balance
We are expanding our systems supporting flexible workstyles toenable employees to balance their jobs with family life. Specificexamples of our efforts in this regard are given under “Flexible
workstyles” on the preceding page.
Promotion of health and safety activities and realizationof a comfortable working environment
To secure a safe working environment and achieve zero occupational accidents, we have in place the “Company-Wide Safety andHygiene Management Policy,” and the Safety and Hygiene Committee at each office addresses any issues at workplace. Information on the committees’ actions is shared at the Company-Wide
Safety and Hygiene Committee, which convenes quarterly, in order to raise the level of health and safety activities at each office.

We have established minimum rest periods between the end ofeach day’s work and the start of the next day’s work to ensurethat employees can get sufficient rest and sleep. In addition, we
support employees’ voluntary health maintenance and improvement efforts, internal club activities, and social events at each
workplace. We also hold health events together with the healthinsurance association and labor union to improve the health of
employees and promote communication.
Prevention of mental health problems and support for
returning to work
We annually carry out employee stress checks and analyze
stress-related conditions of each organization to prevent and detect mental health problems at an early stage.

Our education and training system is designed to closely support
the growth of each employee. We provide level-specific trainingthat develops the skills needed for each year, individual training
according to job types and roles, a support program aimed at
helping employees to obtain academic degrees and official qualifications, and division education conducted by each division.
Furthermore, new employees in technical positions receive lectures and practical training at the Technical Training Center for
one year to equip them with basic and specialized technical skills
before their assignment to a workplace.

Skill transfer

Human resources development
Human resources development policy
Guided by the following policy, we strive to be a company that continuously develops the competencies of its employees so that everyone canmake the most of their talents as professionals.
(1) To develop human resources who understand and practice ourbusiness principles and code of conduct and who are of value bothas company employees and as members of society.

Employees with exceptional manufacturing skills or expertise arerecognized as “Technical My Star” and assigned to instruct andtrain younger employees. Three employees of the Company haveaccepted Contemporary Master Craftsman awards from the Minister of Health, Labour and Welfare, and two have been awarded
to the Medal with Yellow Ribbon by the Japanese government.
Moreover, a large number of employees have become certified as
special-grade skilled workers.

(2) To develop human resources who are professionals, each possessing a high degree of specialized expertise, by enhancing the knowledge, techniques, and skills they need to carry out their duties.
(3) To provide a variety of educational opportunities in order to promotepersonal development, with emphasis on a self-directed approachto study and growth.

Workforce data (at Toyo Denki Seizo K.K.)*
Item

Unit

FYE May 2019

FYE May 2020

FYE May 2021

FYE May 2022

FYE May 2023

831

841

847

830

792

Persons

762

773

766

746

708

69

68

81

84

84

%

8.3

8.1

9.6

10.1

10.6

Total

Improvement of employee health, communication
promotion and support

Education and training system

Number of employees

Men
Women

Ratio of female employees
Number of administrative
professionals

143

136

139

134

133

Persons

139

133

136

132

131

4

3

3

2

2

%

2.8

2.2

2.2

1.5

1.5

40.8

41.0

41.7

42.3

42.6

40.8

40.9

41.6

42.2

42.5

Women

40.9

41.7

42.8

43.0

43.5

Overall

15.4

15.4

16.0

16.5

16.9

15.5

15.5

16.2

16.7

17.2

14.1

14.1

13.9

14.0

14.2

Total
Men
Women

Ratio of female administrative professionals
Overall

Average age

Average years of employment

Men

Men
Women

Age

Years

* Number of permanent employees including Operating Officers, and number of special employees, temporary employees, contract employees and staff on loan from other companies, etc.

Toyo Denki Seizo Report 2023

32

Sustainability

Contributions to Local Communities

To Convey the Mission and Appeal of Toyo Denki
Receiving interns
We are committed to activities that raise awareness and appreciation of our manufacturing expertise by accepting interns from local technical high schools and providing them with hands-on
experience at manufacturing sites. This internship system serves
as an effective means of recruiting outstanding technical staff on
a consistent basis as some students from these schools apply for
positions at the Company.

Participation in university endowment courses andhands-on courses
We conduct lectures leveraging the know-how fostered throughoperations and our business activities in on-site training courses
held by educational institutions including universities. This year,
we continued to participate in endowment
courses sponsored by
the Yokohama Green
Purchasing Network sothat participants candeepen their knowledge
on history of railway andthe environment throughour business activities.

Donation to Yokohama Kyodo no Mori FundOur Yokohama Plant cooperates in small woodlands conservation
activities led mainly by the city of Yokohama by donating part ofthe proceeds from its vending machines to the Yokohama Kyodo
no Mori Fund.

Donations to Omi Victim Support Center
As part of its activities for giving back to the community, our Shiga
Ryuo Plant donates a portion of the proceeds from charity-purpose vending machines to the Omi Victim Support Center.

Factory tours
We conduct “factory tours” that enable the public to gain a deeper
understanding about the business operations of the Company.
During these tours, we inform the participants of our products aswell as our actions for environmental protection.

33 Toyo Denki Seizo Report 2023

Conducting cleanup activities
As part of our “initiativein valuing people andcommunities,” employees
at the Yokohama Plant
and the Shiga Ryuo Plant
conduct community
cleanup activities.
The Shiga Ryuo Plant
also expressed its endorsement of Shiga Prefecture’s MotherLake Goals (MLGs) and carries out rivercleanup operations near Lake Biwa in cooperation with local communities.

Certification under the Shiga Businesses Supporting
Facilities for People with Disabilities program
The Shiga Ryuo Plant’s support for the employment of people withdisabilities includes outsourcing site landscaping and other work
to an agency that employs disabled people. This and other contributions were recognized in 2023 with the plant’s certification under the Shiga Businesses Supporting Facilities for People with
Disabilities program.

Yokohama Plant internships for people with disabilities
The Yokohama Plant provides internships for students of local
special-needs schools as another initiative for promoting the employment of disabled people.