TOCALO Co., Ltd. Environmental Report 2021

Contents
Contents / Editorial Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・1
Message from the President・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・2
TOCALOʼs surface modification technologies・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・5

Environmental Management・・・・・・・・・・・・・・・・・・8Together with Customers and Suppliers・・・・・・36

Targets and Results・・・・・・・・・・・・・・・・・・・・・・・・・17

Together with Our Employees・・・・・・・・・・・・・・・41

Material Balance・・・・・・・・・・・・・・・・・・・・・・・・・・・22

Together with Local Communities・・・・・・・・・・・・48

Measures to Reduce Environmental Impact・・25

For Shareholders and Investors・・・・・・・・・・・・・51
Business Continuity Activities・・・・・・・・・・・・・・・・53

Countermeasures to Prevent the Spread of COVID-19・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・54
Editorial Policy
TOCALO is a specialized manufacturer of surface treatments focused on thermal spraying. We believe that it isimportant for us to contribute to society through the various functions of coatings, including resource savings,
energy savings, and reduction of environmental impact, as well as to engage in efforts to become carbon neutral,
including reducing CO2 emissions. This report has been prepared with up-to-date information̶current as ofAugust 2021̶that presents a non-consolidated corporate profile and the results of activities of TOCALO for fiscal
2020 (April 2020 to March 2021) in an easy-to-understand manner.
We support sustainable development goals (SDGs).
1

Message from the President

We will contribute to a bright future forpeople and nature.
Noriyuki Mifune President and Representative Director

Focusing on ESG Management in the Aim of Realizing a Carbon Neutral Society
I believe the aim of technological development can be summarized as creating a “bright future for people andnature.” When thinking about sustainable growth of corporate value, I am deeply reminded of the importance of
this concept.
As such, I have established ESG-focused management as one of our management issues. This is because I
believe that an ESG approach is appropriate as a pillar of management for solving social issues.
From a global standpoint as well, awareness of global issues such as environmental problems is increasing as
symbolized by the sustainable development goals (SDGs) adopted by the United Nations.
TOCALO is working toward the realization of these goals. For that reason, in fiscal 2021, we established theEnvironmental Promotion Department as a strategic department in charge of everything from analysis of thecurrent situation to planning of measures in the environmental field. We will promote further reduction ofenvironmental impact by both providing technologies that contribute to the environment through our businessand engaging in internal initiatives. We set our fiscal 2030 target for reducing CO2 at a 46% reduction comparedto fiscal 2013 in line with the government's target. We will decide on the road map to get there, including specificmeasures, within the next two years. Balancing business growth with environmental contribution, we willcontribute to the realization of a carbon neutral society.

2Contributing to reducing environmental impact with surface modification
technologies
One of the ways we contribute to the environment through our business is by providing surface modification
technologies, primarily in the energy field. Surface modification technologies contribute to the conservation ofenergy and resources and the reduction of environmental impact by our customers by adding various
characteristics to the surfaces of components. These technologies prevent wear and corrosion of appliancesand equipment and also contribute to longer product life and greater efficiency. Further improvement ofefficiency is expected in surface treatment of renewable energy appliances and equipment such as wind power
generators, hydraulic power generators, and thermal power generators. We are promoting research on surface
treatment of appliances and equipment to bring that about. In addition, by utilizing it in carbon-free power
generation such as hydrogen and biomass power generation, we will also contribute to the building of ahydrogen or decarbonized society. Our technologies are also used in storage battery manufacturing lines,
contributing to greater productivity. We are working to cultivate green growth markets. Research divisions are
not working on this alone but are joined by our sales divisions.
Reduction of CO2 emissions is one indicator of the internal environmental contribution. Currently, 95% (roughly
16,000 tons per year) of the Company's CO2 emissions come from the use of electricity. As such, we areworking on conserving energy at our workplaces and also considering the introduction of renewable energy.

Creating an environment in which diverse human resources can play active roles
In July 2020, we launched a Diversity Promotion Committee in the aim of becoming a company where diverse
human resources can play active roles. In April 2021, we introduced a new human resources system that
addresses the diversity of our employees.
In addition, during the COVID-19 pandemic, we have been implementing measures to ensure business
continuity and protect the health of our employees. We are a manufacturer, so we cannot generate profits
unless we manufacture products. The most important thing for us when it comes to business continuity isensuring that operations are not suspended at our plants. We are carrying out thorough measures for prevention
to ensure that infection does not spread within the Company.

Introducing an executive officer system to enhance governance
We are also pouring effort into enhancing governance.
We introduced an executive officer system to facilitate
swift decision-making by the Board of Directors,
strengthen oversight functions, strengthen businessexecution functions, and increase the efficiency ofmanagement. It is set up to allow executive officers to
execute operations responsibly. We also communicate
closely with overseas offices to ensure governance at the
global level.

3

A bright future for people and nature
I believe that the steady promotion of ESG activities will also lead to the achievement of sustainable
development goals (SDGs). In addition, our reason for existence is to contribute to a bright future for people andnature through our technology. In order to remain a company that employees are proud to work at, we willcontinue to provide technologies and services that contribute to a bright future while making people happy andprotecting the wonderful natural environment.

We will work on ESG activities, sharing a group-wide vision.
I believe that what the Company should do to realize a sustainable
society is contribute to reducing environmental impact in Japan andaround the world and improving the efficiency of production activities
through our business activities and bring happiness to people. As thecompany president mentioned in his message, we summarized thisthinking into the phrase, “Contributing to a bright future for people andnature,” and set this forth as the Company’s vision starting in fiscal
2021. The entire TOCALO Group, including our subsidiaries andaffiliates in Japan and other countries, will work toward achieving thisvision. To facilitate that, we hope to make it so that each employee
can think for themselves and take action at each work site.
Hiroshi Goto
We recognize that there are still many ESG issues that require our
Director, Managing
focus. However, if this is done unilaterally via top-down instructions
Executive Officeror, conversely, if it is left up to the work sites, it will not go well. I hope
to solve these issues with the collective strength of the Company,
working on ESG activities while sharing what we should do and what direction we are taking with all
employees.
My role as head of the Administrative Division, which labors in the background, is to promote bilateralinternal communication. Going forward, I will focus more on instilling the vision within the Company. Our
ESG activities are just getting off the ground, so there may be some things that do not go as planned at
first. However, through trial and error, we will work on these activities in the aim of reaching the top. That
will, in turn, lead to improvement of the Company’s medium- to long-term corporate value.
Through our surface modification technologies, we will continue to fulfill our mission of contributing to abright future for people and nature.

4

TOCALO's surface modification technologies

Contribution to environmental issues

TOCALO's surface modification technologies
Heat resistance, corrosion resistance, abrasion resistance... The surface modification technologies of TOCALO
are effectively used to extend the life of industrial equipment and improve production efficiency by providing
appropriate characteristics to material surfaces.
TOCALO will continue to pursue surface modification and provide a variety of functions that help to reduce
environmental impact and conserve energy and resources.

Customers
Facilities, equipment,
and components

TOCALO's
Surface modification
technologies

Thermalconductivity

Lubricity
Electricalinsulation

Water repellency

Corrosion resistanceNon-stick
SeizureresistanceDielectric/Conductive
property

Heat resistanceAbrasion resistance
Extension ofservice-life

Improvement inproduction efficiency

5

ExampleIn wind power generation
Improve facility durability andpower generation efficiency
Electricity generated by wind power is renewable energy derived from theforces of nature. In Europe and the USA, infrastructure is alreadywidespread, and it has become increasingly common to see the gigantic
propellers also in Japan. However, since bearings used in the generator
are built into propellers, there is a concern that sparks could be
generated by internal currents, which could cause damage to thebearings. Bearing replacement is almost impossible with a large windturbine generator, but insulated bearings utilizing our technology can stabilize operation for a long period oftime.

On automobile production lines
Contributing to the manufacturing of high-tensile strength steel sheets, which willlead to reduced CO2 emissions
Improving fuel efficiency is a major challenge pursued by the automotive
industry to reduce CO2 emissions. Therefore, high tensile strength steel
sheets that are thin and have sufficient strength are used to reduce theweight of automobile bodies. TOCALO's surface modification
technologies are being used to ensure the stable production of highquality, high-tensile strength steel sheets. For example, on a production
line of high-tensile steel sheets, foreign matter readily sticks to surfacesof conveying rolls and pushes against the steel sheets, causing scratches. As a solution to this problem, athermal spray coating is formed on the roll surface to prevent the adhesion of foreign matter.

In hydroelectric power generation
Supporting a Stable Supply of Electricity by Preventing Sediment Erosion
River water used for hydroelectric power generation contains sedimentsthat erode the turbine blades. This erosion decreases power generation
efficiency. A sediment erosion resistant coating newly developed by
TOCALO proved to be 19 times stronger than conventional high-Cr caststeel, which is often used for pump parts, in sediment erosion tests. In
addition, the coating is designed for the kind of toughness that withstands
the impact of large stones.

6

In biomass power generation
Supporting the Longer Life of Power Generation Facilities Exposed to Severe
Environments
Biomass is generally referred to as "renewable, bio-derived organic
resources, excluding fossil resources." Common biomass includes foodresidue and animal manure. Biomass power generation produces
electricity by burning these resources directly or by gasifying them. We
contribute to the longer life of boiler components by applying hightemperature corrosion resistant coatings to boiler heat transfer tubes
exposed to high-temperature combustion gases and wear-resistantcoatings to components of flue gas desulfurization equipment that removes sulfur oxides from flue gases.

EnergyResources

Helping to Reduce
Environmental Impact

7

For the Environment

Environmental Management
We have established an environmental management system at all of our sites and are making continuous
improvements based on proper operation.
Basic Philosophy

Promotion of ISO14001

Scope of Application

Compliance with Environment-Related Laws and Regulations

Environmental Accounting

Environmental Education and Training

Basic Philosophy
Basic Environmental Philosophy
TOCALO recognizes that "continuous improvement of the global environment by preventing pollution" is
one of the most important challenges of our time. Our basic environmental philosophy is to contribute tosociety by protecting the global environment through various functions of surface modification technologies
such as resource saving, energy saving, and reduction of environmental impact.

Environmental Policy
Based on our activities, products, and services focused on surface modification technologies, TOCALO will
strive to continuously improve the environment based on the following policy in accordance with our Basic
Environmental Philosophy.
1. Constantly recognize the environmental impact of our activities, products, and services, and establish,
implement, and maintain an environmental management system.
2. Commit ourselves to preventing environmental pollution, using sustainable resources, and preventing
climate change.
3. Commit ourselves to the continuous improvement of our environmental management system.
4. Comply with environmental laws and regulations relating to our operations, products and services, aswell as other requirements to which we agree.
5. Based on this environmental policy and the environmental impact of our activities, products, andservices, set environmental targets and engage in activities based on the following themes to contributeto the improvement of the environment:(1) Energy and resource conservation in business activities(2) Environmental contribution through promotion of business activities
To successfully implement this policy, we will set environmental targets and contribute to environmental
conservation by bringing together the strengths of all our divisions and all levels of our workforce.

Revised: 5/1/2021
8

Environmental Management Organization Structure

Promotion of ISO14001
Certified at all sites

We are continually making improvements to our environmental management system to contribute to society andsupport conservation of the global environment through the conservation of resources and energy and reductionof environmental impact. Since acquiring ISO 14001 certification at all our sites in 2012, we have maintainedthat certification even when relocating or launching new sites, so our certification rate remains at 100% to thisday.
Status of ISO 14001 Certification (Certification Number JQA-EM2253) (In order of registration date)
Acquisition of certification
Plants and research laboratories

Expansion of certified sites

Headquarters

Mar. 2002

Thermal Spraying Technology R&D Laboratories

Mar. 2002

Kitakyushu Plant

Sep. 2005

Nagoya Plant

Sep. 2006

Kobe Plant

Sep. 2006

Tokyo Plant (Gyoda Workshop)

Sep. 2007

Mizushima Plant

Sep. 2007

Akashi Plant (including Akashi-Harima Plant)

Sep. 2009

Miyagi Technical Service Center

Aug. 2012

Tokyo Plant No.2 (Suzumi Workshop)

Aug. 20189

History of ISO14001 Certification
2002
2004

March

The Headquarters and Thermal Spraying Technology R&D Laboratories were thefirst sites in TOCALO to acquire ISO14001 certification.

October The Thermal Spraying Technology R&D Laboratories moved from Higashinada-ku, Kobe
City to the Minami-Futami Industrial Park, Akashi City.

2005 September The registered address of the Thermal Spraying Technology R&D Laboratories waschanged to the new address.
The Kitakyushu Plant was the first plant to acquire certification.
2006 September The Nagoya Plant, Kobe Plant, and Akashi No. 3 Plant acquired certification.
2007 September The Tokyo Plant (Gyoda Workshop) and Mizushima Plant acquired certification.
2009 September The Akashi Plant acquired certification. All major TOCALO sites were certified.
2010
2011

October Akashi Plant No.3 was relocated and integrated with the Akashi Plant.
July The Miyagi Technical Service Center was established in Miyagi Prefecture.
September Each sales office acquired certification.
Certification of Akashi Plant No.3 was cancelled.

2012

August The Miyagi Technical Service Center acquired certification. All TOCALO sites werecertified.

2014

August The Kobe Plant moved from Higashinada-ku, Kobe City to Nishi-ku, Kobe City. The former
plant, where some production processes remained, became the Fukae branch office of theKobe Plant.
December The Akashi-Harima Plant was acquired and placed under the control of the Akashi Plant.

2015 September The registered address of Kobe Plant was changed to the new address.
2016

February The Nagoya Plant was relocated from Midori Ward, Nagoya City to Tokai City, Aichi
Prefecture.
September The Akashi-Harima Plant acquired certification following the start of full-scale
operations.
The registered address of the Nagoya Plant was changed to the new address.

2017

August The Headquarters were relocated from Fukae, Higashinada-ku, Kobe City to Minatojima(Port Island), Chuo-ku, Kobe City.
September The registered address of the Headquarters was changed to the new address.

2018
2020

August Tokyo Plant No.2 (Suzumi Workshop) was newly certified following the partial
relocation (Gyoda Workshop).
July The Kita-Kanto Sales Office was relocated.

10Scope of Application
The scope of application of the environmental management system applies to the business activities of
TOCALO Co., Ltd.

(1) Target organization
TOCALO Co., Ltd.
Headquarters/Miyagi Technical Services Center/Tokyo Plant/Nagoya Plant/Kobe Plant/Akashi Plant/Thermal
Spraying Technology R&D Laboratories/Mizushima Plant/Kitakyushu Plant(2) Certified activities
R&D, manufacturing, sales, and after-sales service of surface modification products using thermal spray andperipheral technologies(3) Location (physical scope) and scope of activities
The contents are in accordance with matters registered with JQA.

① Organization name: Headquarters, TOCALO Co., Ltd.
Address: 6-4-4 Minatojima Minamimachi, Chuo-ku, Kobe, Hyogo
Scope of activities: Corporate management and support operations at the Headquarters② Organization name: Miyagi Technical Service Center (Miyagi TSC), TOCALO Co., Ltd.
Address: 21-11 Kitanaka Bessho, Kawauchi, Osato-Cho, Kurokawa-Gun, Miyagi
Scope of Activities: Manufacture, sale, and after-sales service of surface modification products using thermal
spray technologies
Organization name: Yamanashi Sales Office, TOCALO Co., Ltd.
Address: 1-1-24 Iida, Kofu, Yamanashi
Scope of Activities: Sales and after-sales service of surface modification products using thermal spray andperipheral technologies③ Organization name: Tokyo Plant (Gyoda Workshop), TOCALO Co., Ltd.
Address: 1-1-1 Gyoda, Funabashi, Chiba
Scope of Activities: Manufacture and after-sales service of surface modification products using thermal sprayand peripheral technologies

11④ Organization name: Tokyo Plant No.2 (Suzumi Workshop), TOCALO Co., Ltd.
Address: 606-5 Suzumi-cho, Funabashi, Chiba
Scope of Activities: Manufacture, sale, and after-sales service of surface modification products using thermal
spray and peripheral technologies
Organization name: Kanagawa Sales Office, TOCALO Co., Ltd.
Address: 1-14-20 Shinyokohama, Kohoku-ku, Yokohama, Kanagawa
Scope of Activities: Sales and after-sales service of surface modification products using thermal spray andperipheral technologies
Organization name: Kita-Kanto Sales Office, TOCALO Co., Ltd.
Address: 2F, 1086-45 Shimohamada-cho, Ota, Gunma
Scope of Activities: Sales and after-sales service of surface modification products using thermal spray andperipheral technologies⑤ Organization name: Nagoya Plant, TOCALO Co., Ltd.
Address: 33-3 Nibanwarishimo, Nawamachi, Tokai, Aichi
Scope of Activities: Manufacture, sale, and after-sales service of surface modification products using thermal
spray technologies
Organization name: Shizuoka Sales Office, TOCALO Co., Ltd.
Address: Fujioji Bldg.102, 411-1, Motoichiba, Fuji
Scope of Activities: Sales and after-sales service of surface modification products using thermal spray andperipheral technologies⑥ Organization name: Kobe Plant, TOCALO Co., Ltd.
Address: 1-5 Mitsugaoka, Nishi-ku, Kobe, Hyogo
Scope of Activities: Manufacture and after-sales service of surface-modified products using thermal sprayand peripheral technologies⑦ Organization name: Akashi Plant, TOCALO Co., Ltd.
Address: 14-1, Minamifutami, Futami-cho, Akashi, Hyogo
Scope of Activities: Manufacture, sale, and after-sales service of surface modification products using thermal
spray technologies
Organization name: Akashi Plant (Akashi-Harima Plant), TOCALO Co., Ltd.
Address: 15-1 Higashi-Shinjima, Harima-cho, Kako-gun, Hyogo
Scope of Activities: Manufacture and after-sales service of surface modification products using thermal spraytechnologies⑧ Organization name: Thermal Spraying Technology R&D Laboratories, TOCALO Co., Ltd.
Address: 14-3 Minamifutami, Futami-Cho, Akashi, Hyogo
Range of Activities: Research and development of surface modification products using thermal spray andperipheral technologies

12⑨ Organization name: Mizushima Plant, TOCALO Co., Ltd.
Address: 2-38 Matsue 2-chome, Kurashiki, Okayama
Scope of Activities: Manufacture, sale, and after-sales service of surface modification products using thermal
spray technologies⑩ Organization name: Kitakyushu Plant, TOCALO Co., Ltd.
Location: 1-48 Torigoe-cho, Kanda-cho, Kyoto-gun, Fukuoka Prefecture
Scope of Activities: Manufacture, sale, and after-sales service of surface modification products using thermal
spraytechnologies(4) Scope of impact
Within the site

Scope of Potential Impact①Design and development②Improvement of production processes
Environmental aspects of the interface are as
follows.
①Energy management②Purchasing management③Outsourcing Management④In-house subcontracting management of other plants⑤Waste management⑥Distribution, use, and disposal of products after use⑦Service management

13Compliance with Environment-Related Laws andRegulations
Identifying laws and regulations to be observed and confirming thestatus of compliance
TOCALO compiles a list of environmental laws and regulations to be observed and regularly checks the statusof compliance. Details of compliance include notifications to the government, appointments, and regulatory
values. To date, we have not been subjected to fines or punishment in relation to environmental laws.
Major environmental laws and regulations related to TOCALO's business
Waste Management and Public Cleaning Law

Air Pollution Control Law

Water Pollution Control Law

Sewerage Law

Soil Contamination Countermeasures Act

Septic Tank Law

Noise Regulation Law

Vibration Regulation Law

Offensive Odor Control Law

Factory Location Law

Act on Rational Use and Proper Management of
Fluorocarbons

Act on Confirmation, etc. of Release Amounts ofSpecific Chemical Substances in the Environment
and Promotion of Improvements to the Management
Thereof ("PRTR Law")

Poisonous and Deleterious Substances Control Law

Fire Service Act

Industrial Safety and Health Act

High Pressure Gas Safety Act

Law Concerning the Promotion of the Measures to
Cope with Global Warming

Act on the Rational Use of Energy

14

Environmental Accounting
We focused on investing in environmental facilities, such as wastewater
and waste gas treatment systems, and noise-prevention measures at
new plants.
The graph below shows the cumulative amount of environment-related capital expenditures since 2002, when
we first acquired ISO 14001 certification. Our main environmental facilities include dust collectors that do notemit dust, soundproofing equipment that shields noise from dust collectors, and energy-saving equipment.
In fiscal 2020, we introduced highly efficient air conditioning and compressors, reinforced our dust collectors andnoise-proofing equipment, and switched to energy-saving lighting.
Cumulative Environmental Investments

Breakdown of capital expenditures

15

Environmental Education and Training
We provide general education for all employees.
We systematically conduct education and training on
the operation of the environmental management
system and how to respond to emergencies, as
required by law.
The main themes are "Environmental Policy,""Significance of Operating an Environmental
Management System," and "Waste Handling", which
are taught with initiatives in each workplace.
Through such education and training, we are working toraise awareness and the level of understanding.

In the classroom

16

Targets and Results
We have established two major themes and are working on environmental activities by setting targets at eachsite.
We have set a CO2 reduction target for fiscal 2030 of 46% lower than the level in fiscal 2013 in accordance withgovernment targets. We have been preparing specific measures so that we can start efforts in this regard in
fiscal 2023.
Results in Fiscal 2020 and Targets for Fiscal 2021

Results in Fiscal 2020 and Targets for Fiscal 2021
Of the 33 targets, 26 were achieved.
Across TOCALO, we set independent targets at each of our sites and worked toward achieving them based on
the themes of (1) conserving energy and resources in our business activities and (2) contributing to theenvironment through the promotion of business activities. As a result, 5 targets related to energy conservationand 2 related to business activity promotion were not achieved, while 26 other targets were achieved.

We will focus on energy and resource conservation in our businessactivities, contributing to the environment through the promotion of ourbusiness activities, and preventing climate change.
In fiscal 2021, we will continue to focus on (1) energy and resource conservation in our business activities, and(2) contributing to the environment through the promotion of our business activities, and (3) preventing climatechange. All of our bases will set goals and conduct activities in the same direction.

17

Site

Environmental Target

Target for Fiscal 2020

Fiscal 2020
Results

Energy and resource conservation in business activities

Headquarters

Miyagi

Tokyo

Tokyo No.2

Ending of caseongoing since lastyear in July, endingof one other case inJanuary

Promoting the utilization ofsubsidies for energy
conservation

Distributing guidance on
subsidy information regarding
energy-saving equipment: 1
case/year or more

Promotion of energy- andresource-saving activities[Addition] Recycling operations
regarding used abrasive
1,225 kg/fourmaterials: 1,200 kg/fourmonthsmonths (December to March)or morePromotion of energy- andresource-saving activities

Switching over to energysaving equipment: 3 cases per
year or more

4 cases

Promoting activities to reducethe defect rate

Volume of reworked thermal
spray materials: 3.8% of total
usage volume or less

2.40%

Promoting activities to reducethe defect rate

Rate of occurrence ofnonconformities andcomplaints: 0.08% or less

0.02%

Promotion of energy- andresource-saving activities

Improvement of loss throughintroduction of energy-saving
equipment and facility
maintenance: 3 cases/year ormore

3 cases

Promotion of energy- andresource-saving activities

Reduction in material
consumption by improving
thermal spraying method: 20
kg/month or above

18.3 kg/month

Promotion of energy- andresource-saving activities

Reduction of air consumption
based on air gun
improvements

Promoting activities to reducethe defect rate

Number of nonconformities inquality control: 36 cases/year
or less

14 cases

Reduction in electric power
consumption

Implementation of electric
power-saving measures 1
case/year or more

Two proposals were
examined but could
not be implemented.

Promotion of energy- andresource-saving activities

Measures for reuse of water
resources

Two proposals were
examined but could
not be implemented.

Kobe

18

Reduction from 20
m3/h to 12 m3/h

Akashi

Mizushima

Reduction in electricity
consumption

Proposal of improvements or
improvement plans regarding
all defective parts related to air
leaks

Promotion of recycling ofthermal spray materials by
Thermal Spray 1 Department

Recovery rate of A materials:
63% or more at Akashi Plant
Akashi Plant: 66.4%
overall, 15.2% or more at No. 4 No. 4 Plant: 19.4%
Plant

Promotion of recycling ofthermal spray materials by
Thermal Spray 2 Department

Recovery rate of B materials:
20% or more

26.90%

Promotion of recycling ofthermal spray materials by
Thermal Spray 3 Department

Recovery rate of C materials:
4.4% or more

6.30%

Promotion of recycling ofthermal spray materials by
Thermal Spray 4 Department

Recovery rate of D materials:
1.5% or more

1.30%

Reduction in electric power
consumption

consumption rate of 12.29 or
less

Consumption rate of
10.25

Reduction in nonconformities

Preparation of preventive
action manuals: 12 cases/year

16 cases

Reduction in nonconformities

Number of occurrences ofnonconformities regarding
Thermal Spray I Unit: 5cases/month, cumulative rateof occurrences ofnonconformities: 0.35% or less

0.16%

Reduction in nonconformities

Number of occurrences ofnonconformities regarding
Thermal Spray II Unit: 10
cases/month, cumulative rateof occurrences ofnonconformities: 1.50% or less

1.27%

Kitakyushu

19

As planned

Contributing to the environment by promoting business activities

New promotions aimed at
cultivating new projects

Promotions of new projects: atleast 14 cases/month in firsthalf and 12 cases/month insecond half, with target of 156
cases/year

152 cases

Promotion of new proposal
activities

Promotion of new proposal
activities: score of 120
points/year or more

258 points

Establishment of environment
contributing technologies

Establishment of elemental
technologies in development of
32 casesthermal spray parts: 36
cases/year or moreTokyo

Promotions of new TD
proposal activities

Application of new TD
specifications: 12 cases/year
or more12 cases

Tokyo No.2

Promotion of new proposal(sales activities)

Number of orders received for
new items: 480 cases/year or
more

575 cases

NagoyaPromotion of new businessactivities

Receipts of orders for newly
evaluated products: 60
cases/year or more

60 cases

Kobe

Proposals regarding longservice life coatings

Item introductions at sales
meetings from each plant: 36
cases/year or more

38 cases

Akashi

Proposals of long service life
coatings to customers

Number of new visits: 16
cases/month or more, 192
cases/year or more

222 cases

New development

Initiatives for new
development: 60 cases/year or 60 cases
more

New development

Monthly implementation of
coating development based on
new thermal spray processes

Monthly
implementation

Orders for new products

Number of new product orders
received: 96 cases/year or
more

110 cases

Promotion of development of
new projects

New customer registrations: 1
case/month or more, or
receipts of orders for new
projects from existingcustomers: 1 case/month ormore

29 cases

Headquarters

Miyagi

R&D

Mizushima

Kitakyushu

20Others

Kobe

Reduction of waste

Reduction of industrial waste(sludge)

21

Reductionequipment was
introduced but
effects could not beseen.

Material Balance
We strive to reduce environmental impact by ascertaining and analyzing the actual status of how muchresources and energy are used in our production processes and what kind of environmental impacts are
generated.

22

INPUT
Trend regarding volume of energy use
Fiscal 2018
Electricity (MWh)Fiscal 2019

Fiscal 2020

39,81740,15539,825

217

229

209

LPG (kg)

12,807

13,161

10,615

Diesel (kl)

34

31

31

Gasoline (kl)

100

108

101

City gas (m³)

25,01730,611

46,281

Kerosene (kl)Trend regarding volume of use of materials* Not including substrates

Fiscal 2018

Fiscal 2019

Fiscal 2020

Thermal spray materials (t)

291.5

325.2

297.2

Other materials (t)

59.9

72.6

55.7

23

OUTPUT
Trend regarding volume of waste emissions
Fiscal 2018

Fiscal 2019

Fiscal 2020

General business waste (t)

60

70

59

Total industrial waste (t)

1,776

1,841

1,960

Trend regarding volume of emissions to atmosphereFiscal 2018
PRTR Law Class 1 DesignatedChemical Substances (t)Fiscal 2019
3.1

Fiscal 2020
2.5

1.0

Trend regarding volume of water intake
Fiscal 2018

Fiscal 2019

Fiscal 2020

Clean water (m³)

63,525.0

63,610.0

65,850.0

Pure water (m³)

29.8

19.8

18.1

Groundwater (m³)

0.0

0.0

0.0

Trend regarding volume of effluent* The numbers in parentheses are the volume of factory effluent that has undergone wastewater processing

Sewage (m³)

Fiscal 2018

Fiscal 2019

Fiscal 2020

58,896.0（2,330.4）

58,059.0（2,528.0）

60,322.0（1,640.1）

Fiscal 2018

Fiscal 2019

Fiscal 2020

Trend regarding volume of recycling* Not including thermal recycling

Metal scraps (t)

145.8

90.6

108.4

Thermal spray material waste (t)

24.1

28.6

27.4

Blasting material waste (t)

569.1

570.8

471.5

Oil waste/Solvent waste (t)

11.2

9.2

12.0

Paper (t)

29.9

19.2

26.4

24

Measures to Reduce Environmental Impact
We at TOCALO are constantly aware of the environmental impact of our business activities, products, andservices, and strives to prevent environmental pollution and continuously improve our environmental
performance through energy conservation, waste reduction, and appropriate management of hazardous
substances.
Global Warming Prevention

Appropriate Management of Chemical Substances

Air-pollution countermeasures

Soil and Water Pollution Countermeasures

Reduction of Waste
Noise Countermeasures

Global Warming Prevention
In addition to implementing thorough energy-saving measures, we arepromoting the introduction of energy-saving equipment.
Our main sources of energy are kerosene, diesel oil, LPG and city gas, which are primary energy sources
derived from fossil fuels, and electricity, which is a secondary energy source. In terms of CO2 equivalent,electricity and kerosene accounted for 92.55% and 3.22%, respectively, and 95.77% of the total, thus these twoenergy sources accounted for most of our CO2 emissions.
In particular, the highest consumption is electricity. This is calculated by allocating the CO2 emitted by theelectric power supplier to the user's consumption and multiplying the consumption by a factor that converts it toCO2 emissions. This factor is published annually by the electric power supplier. However, CO2 emissions will
increase even with the same amount of electricity used if nuclear power generation decreases and thermal
power generation increases due to the fact that the factor is largely influenced by the power generation methodsof the electric power supplier.
At TOCALO, in addition to implementing detailed power savings as a regular component of efficient business
operations, we are introducing energy-saving equipment and upgrading aging equipment to eco-products.
In fiscal 2020, our electricity usage/sales ratio was lower compared with fiscal 2019, so the electricityconservation effects from initiatives such as the introduction of energy-saving equipment have become
apparent.
Breakdown of Energy Consumption in Fiscal 2020 (CO2 Equivalent)25Changes in CO2 Emissions

Changes in Electricity Usage

CO2 emissions in fiscal 2020 decreased from the previous year.
Despite the fact that electricity consumption, which accounts for the majority of our energy consumption,
remains almost unchanged, our CO2 emission rate has fallen because the CO2 emission factor announced by
the electric power companies has fallen.

26

TOPICS1
We analyze the driving data of each driver, which leads to improved
fuel efficiency.
Vehicle information is collected by utilizing a telematics
service (in-vehicle equipment with communication and
GPS functions) introduced company-wide, and then weanalyze driving data for each driver to improve fuelefficiency. By analyzing driving distance, fuel efficiency,
long-time idling, the number of sudden accelerations,and the ratio of constant-speed driving time of eachdriver, we can provide guidance on fuel-efficient driving
and safe driving to each driver.

Average Fuel Consumption of Sales
Vehicles* Although up to fiscal 2019 the calculation period was
May of the reporting year to April of the following year,
in fiscal 2020, this was changed to April of the reporting
year to March of the following year.

We also found that there was a significant difference infuel efficiency between hybrid and gasoline-powered
vehicles, and, therefore, allocated hybrid vehicles to our
drivers who travel long distances in order to reduce theoverall gasoline consumption of our sites overall. We
believe this approach will enable us to visualize thebenefits of fuel-efficient vehicles, and provide us a goodsource of information for making decisions on
introducing vehicles.
Although our hybrid-vehicle introduction ratio is currently
24.5%, we plan to sequentially make all of our company
vehicles hybrid vehicles going forward. We are aiming totransition to all hybrid vehicles, electric vehicles, and so
on within the next five years.
Hybrid-vehicle introduction ratio
Fiscal 2019

Fiscal 2020
19.7%

21.1%

27

Sales company vehicle (hybrid vehicle)

VOICE Management and operation of commercial
vehicles during COVID-19 crisis
Hiromi Sasaki (Technology Section, Miyagi Technical Service Center)
The Miyagi Technical Service Center is a base that mainly
carries out sales activities and technological development
operations.
Half of the employees are in sales positions, and the sales
representatives manage various commercial vehicles.
Restrictions on outings related to the COVID-19 crisis
became prolonged, so instead of visiting clients, weestablished means of information interchange based on theuse of web conferencing systems and so on. Meanwhile, ourcommercial vehicles were being used substantially less often, so the management and operation of these
became an issue.
Although we have adopted hybrid vehicles for 90% of our commercial vehicles in light of their fuelefficiency and environmental performance, when the frequency of use decreases, the battery performance
declines. As such, there were many instances in which the engine would not turn on when we needed touse a vehicle. In light of this, we used the running monitoring functions of vehicle management systems toidentify vehicles that had not been used for a certain period of time, and then achieved improvements bymaking it a rule to run such vehicles.
Since sales activities based on IT utilization are increasingly becoming commonplace, we have been
considering reducing the number of commercial vehicles that we own with the aim of reducing CO2
emissions.
I would like to thank all of the employees of the Miyagi Technical Service Center who are proactively
cooperating with environmental activities. I intend to consider what I can do as the Environmental
Management Secretariat, and will aim to carry out better and better activities so that we can reduce theenvironmental impact of the base overall.

28

TOPICS2
New Headquarters Building: Initiatives for Energy Conservation andReduction of Environmental Impact
Completed in 2017, the new headquarters has double pane windows on the south side of the building anda mechanism for discharging air between the panes in order to reduce indoor temperature increases. In
addition, multi-stage air conditioners and LED lighting, which offer superior energy-saving performance, arefully used to create an environmental-friendly building.
As a result, energy consumption per floor area of the new headquarters building has been kept to about
50% of that of the old headquarters.
Furthermore, we have adopted an air supply & exhaust system that enables sufficient ventilation for theheadquarters building.
Based on the ideas set forth in the Building Administration Act, the ventilation requirement is 30 m³ perperson per hour, and at the office floors of the headquarters building where people are stationed, thisstandard has been met as can be seen below.
2F office floor: 106 m³ per person per hour (actual value)
3F office floor: 95 m³ per person per hour (actual value)
Building envelope of high thermal insulation
1.7-times higher insulation performance thanordinary office buildings, and an inner sash andair flow system that further enhance insulation
performance
Introduction of various energy-saving equipment
in office rooms with long operating hours
Measurement and calculation of power
consumption by BEMS (Building Energy
Management System) was introduced to support
energy-saving operation of facilities andequipment.
Headquarters

29

Appropriate Management of Chemical Substances
In accordance with the PRTR Law, we report the amounts of chemical
emissions and transfers.
In fiscal 2020, TOCALO reported the amount of designated chemicals released into the environment andtransferred in accordance with the PRTR Law (Pollutant Release and Transfer Register: Chemical SubstanceRelease and Transfer Notification System) for 8 substances. In regard to emissions, the regulatory standards
under the act have been met.
Release and Transfer Volume of PRTR Law, Type 1 Designated Chemicals in fiscal 2020

Released amount (kg)Transferred amount (kg)

Emission
into theatmosphere

ReleaseintopublicwatersDiscarding into
the soil at placeof business

Chrome andtrivalent chrome
compounds

6.0

0

0

Cobalt and its
compounds

3.0

0Transferring
to sewerage

Transferring
off-site(industrial
waste)

0

0

4,730

0

0

0

1,390

0

0

0

0

0

0

Toluene

930

0

0

0

0

530

Nickel

7.3

0

0

0

0

6,480

Nickelcompounds

1.8

0

0

0

0

0

Vanadiumcompound

0

0

0

0

0

2,000

Boron
compounds

0

0

0

0

7.3

4,800

1-2-4
trimethylbenzene*

Landfill
disposal atplace ofbusiness* Although 1-2-4-trimethylbenzene is contained in kerosene at a level of about 1.5%, it is considered to be consumed by
combustion. Emissions into the air are derived from detergents for color checks used in inspections.

Emissions into the atmosphere have resulted in 930 kg of toluene.
This is a substance contained in organic solvents (thinners, etc.), and the value is calculated byestimating the amount of volatile organic compounds (VOCs) evaporated by natural drying from theamount used.
As for nickel compounds, we usually use materials supplied by our customers, and the residual amountafter use and collected powders from the dust collectors are returned to our customers. Therefore, thetransferred amount is zero.
30

Reduction of Waste
We are properly disposing of all types of waste, from general waste tospecially controlled industrial waste.
(1) General waste
Paper constitutes the majority of business-related general waste. With the cooperation of paper
manufacturers, we are committed to the reuse and recycling of paper and are striving to reduce them bychemically dissolving them while maintaining confidentiality.
(2) Industrial waste
Waste oil accounted for the largest portion of our industrial waste emitted at 42%. It is derived from coolingwater that is added to grinding oil for use as a coolant with wet grinders (machines for roll grinding). Morethan 90% of the water is tap water and, after disposal, it is used at cement factories and elsewhere to adjust
combustion temperature.
This was followed by waste plastics (13%), sludge (13%), waste alkali (11%), slag (7%), and glass andceramics (6%).
Sludge contains a large amount of dust generated from thermal spraying. Although thermal spray dust isdry, it is treated as sludge with strict disposal standards.
Waste plastics include material containers and secondary materials, as well as waste paper and wood
scraps that contain oil.
Most of the alkaline waste is washing solution from TD treatment that contains a small amount of sediment.
It is weakly alkaline due to its boron content. Depending on the situation, it may be treated as sludge.
Sludge is a mineral residue, but wet sludge in waste treatment is more strictly controlled. At TOCALO,
residues that may get wet are disposed of as sludge even if they are not currently wet.
Glass and ceramic scraps contain ceramic-based grinding materials that cannot be recycled, in addition torefractory bricks.
(3) Specially controlled industrial waste
Most of the dust generated by thermal spraying using chromium-containing materials (such as stainlesssteel) is collected by dust collectors. In cases when it exceeds the regulatory limit in dissolution tests, it isdisposed of as specially controlled industrial waste.

31Changes in Total Waste Emissions

Breakdown of specially controlled industrial
waste

Changes in Total Waste Emissions/Sales

32

Use of environmentally-friendly containers for bento boxed meals
The Act on the Promotion of Resource Circulation for Plastics was promulgated on June 11, 2021, and is
set to enter into force within one year from that date. In July 2021, we at TOCALO began holding meetings
with the contracted business operators of our bases with a view to switching the materials of thecontainers, forks, and spoons used for our lunchtime bento boxed meals, from plastics to environmentallyfriendly alternative materials.
In the case of disposable containers, we are now steadily moving forward with transitioning to alternative
materials such as bioplastics, and are aiming to complete the transition by the time that the act enters into
force.
Recycling of miscellaneous recyclable paper at Headquarters (Kobe City)
Kobe City has been implementing an initiative for the recycling of used paper (miscellaneous recyclable
paper) that is emitted by business operators targeting the business operators of Port Island and Rokko
Island, and the TOCALO Headquarters (within Kobe City Port Island) has been participating in this initiative
since March 2020. A large amount of shredder dust is generated at the Headquarters, and this is recovered
and transported to designated locations in Kobe City by contracted transport companies.

33

Air-pollution countermeasures
Dust generated in the thermal spraying process is safely collectedwithout being released into the atmosphere.
TOCALO's main products modify surfaces by way ofthermal spraying. In thermal spraying, powder or wire isused as a material, which is fed into a combustion
flame or plasma jet to melt and spray to form a coating.
During the process, powders that were not melted orwere not deposited even if melted and sprayed becomedust. Dust collectors do not release this dust directly
into the atmosphere but collect it safely.(Photo)Since thermal spraying is a dry method, there is noneed for waste liquid treatment, and the dust collection
method is mainly dry. Airborne dust in a thermal spraybooth is drawn into the dust collector via a duct andfiltered through filters made of woven and nonwoven
fabrics in the device. As a fine dust layer that collects

Cartridge-type dust collector

on the filter surface becomes thicker, the filter getsclogged, causing pressure loss to increase and dust
collection efficiency to decrease. Therefore, dust isintermittently removed with compressed air (a pulse jet)to restore efficiency.
Among the various types of collected dust, that which
can be reused is recycled, whereas that which cannot
be recycled is treated as industrial waste.
The generation of sulfur oxide (SOx) has not been
confirmed.

34

Soil and Water Pollution Countermeasures
We strive to take sufficient measures because the soil and water quality
directly affect surrounding local areas.
Plant Wastewater Treatment Steps(coagulating and sedimentation treatment
facility)At the Kobe Plant, we apply surface modification
technologies other than thermal spraying. Wastewaterthat requires detoxification treatment is discharged into
the sewage system after being detoxified at a
coagulating sedimentation treatment facility. In theevent of an accidental leak of plant wastewater, wehave installed pipes and concrete walls to prevent andquickly and visually detect leaks. In addition, we have
prepared anti-dispersants to prevent leaks fromspreading. The equipment is controlled under arigorous system that complies with applicable laws andregulations, and by conducting periodic monitoring andmeasurements.
The site of the former Kobe Plant, which had beenleased since our foundation in 1951, exceeded somestandards in soil surveys and, though it posed nohealth risks, notification was required upon any
changes to its form or nature. Soil improvement lifted
the requirement on March 20, 2019. The leased land
was returned at the end of March 2019.

Noise Countermeasures
Noise barriers have been installed and noise measurements are also
carried out regularly.
The main types of equipment that generate noise of aconcerning level are air compressors, dust collectors,
and other blowers. However, in addition to thisequipment, there are other noise sources, and we aretaking steps to avoid disturbing the neighborhood byimplementing soundproofing measures such as
installing these facilities inside buildings and installing
special soundproof walls.
In addition, we regularly measure noise levels toensure that our facilities and equipment are within
regulatory limits.
Noise measurement using specialized equipment
35

Together with Society

Together with Customers and Suppliers
We are aiming to be a company trusted by customers and are striving to provide products and services thatsatisfy customer requirements.
We also want our business partners to grow alongside us through activities based on our partnerships.
Enhance Customer Satisfaction

Acquisition of ISO 9001 Certification

Acquired JIS Q 9100, Nadcap Certification (for the aerospace industry)

Enhancing Customer Satisfaction
We are working daily to deliver inspiration to customers.
We believe that the high value-added one-of-a-kindproducts that we at TOCALO deliver satisfy and inspire
our customers because of our high level of quality
control and good services. We strive to communicate
the necessary information to our customers honestly
and sincerely every chance we get, from proposal,
order receipt, and delivery to after-sales service.
We are committed to quality control as well as researchand development. In addition to operating a quality
management system that is compliant with both ISO
9001 and JIS Q 9100 for the aerospace industry, we
also hold QA-presentation competitions to announce
the results of quality control efforts, and technology
report-presentation competitions to announce theresults of new research. These tournaments aredesigned to raise the level of both technologies andquality management across the company. We alsoestablished the Quality Headquarters, headed by adirector, to strengthen our management system.
In 2017, we moved our headquarters to the Kobe
Biomedical Innovation Cluster (KBIC; Chuo-ku, Kobe
City), and have been focusing on market development
in medical fields while collaborating with manufacturers
in the same area. We also actively participate in
exhibitions on the themes of “Medicine,” “Environment
and Energy,” and “Transportation Equipment.” In fiscal
2020, TOCALO exhibited at total of 5 exhibitions. As aproblem-solving company, we are proactively working
to identify customer issues and work with customers torealize better products and services.

Exhibition scene (fiscal 2020 Agro Innovation 2020)36

Exhibitions in Fiscal 2020
Nagoya Automotive Components & Processing Technology Expo in October 2020
Agro Innovation 2020 in November 2020
Highly-Functional Ceramics Expo in December 2020 (plus participation in simultaneously-held online
exhibition)
Manufacturing Fair2020 Online Digest (online exhibition)
Gunma Virtual Expo (online exhibition; free of charge) (https://www.gunma-virtualexpo.jp/)→See here for details* The link destinations are external websites, so the information may be altered.

VOICE Making attractive proposals to customers
even amid restrictions on face-to-face sales
Tomoko Hasegawa (Sales Department, Tokyo Plant Suzumi Workshop; Kanagawa Office)
I am based at the Tokyo Plant, and carry out sales with thesteel industry, including steel plants, as my main customer.
Although sales for the steel industry are based on visiting
worksites and asking about issues while looking at actual
items together with customers, in order to prevent the spreadof COVID-19, I have been avoiding face-to-face sales andhave mainly been carrying out sales online.
Initially, not only I but also my customers were confused by
the substantial environmental changes in which face-to-facesales ended up becoming restricted. This was not only because both sides were not used to web
conferencing, but also because there are cases in which it is impossible for situations to be understood in
detail without directly visiting manufacturing worksites and hearing explanations there.
After repeatedly engaging in trial and error, I am now able to swiftly respond to the requests of customers,
and this includes starting meetings online within 10 minutes whenever customers urgently request ameeting.
I believe that through the use of web conferencing, I will be able to engage in sales with increasingly faraway customers in the future. Going forward, I will carry out sales activities while utilizing the advantagesof both face-to-face sales and web conferencing and continuing to put the customer first.

37

Acquisition of ISO 9001 Certification
All plants have acquired certification.
We continually improve our quality management system in order to improve customer satisfaction and earnsocial trust through quality assurance.
Status of ISO 9001 certification
ISO 14001Certified Plant

Registered
Date

Registration
NumberCertified Activities

Kitakyushu Plant Jul. 1998

JQA-2470

Thermal spray processing for industrial machinery parts,
equipment parts for the chemical industry, and parts for
FPD and semiconductor manufacturing equipment

Tokyo Plant

May 1999

JQA-QM 3344

Surface treatment processing for industrial parts (thermal
spray processing and other peripheral technologies)

Akashi Plant

Oct. 1999

JQA-QM 3810

Surface treatment processing for industrial parts (thermal
spray processing and other peripheral technologies)

May 2003

ZAC processing of parts for FPD and semiconductor
manufacturing equipment and general industrial machinery
JQA-QMA 10001
parts TD processing of insert block molds for automobile
forming mold

Kobe Plant

Mizushima Plant Dec. 2011

JQA-QMA 14492

Surface treatment processing for industrial parts (thermal
spray processing and other peripheral technologies)

Nagoya Plant

JQA-QMA15690

Surface treatment of parts for general industrial andaerospace industries (thermal spraying)

Nov. 201738

Quality control system
Plant

Implementation Items

Certified Activities

Considering orders

Interviews
Review of customer
requirements
Preliminary
verification test

Gathering information through interviews to realize
customer requirements
Analysis of the use environment for each customer
Proposal

Processing
directives
Drawing
Purchase
specifications

Input customer requirements into processing
directives (attachment of drawings, purchasespecifications, etc.)

Incoming inspection
Purchasing processcontrol
Manufacturing
process control
Shipment
inspection

Incoming inspection (prevention of non-conforming
parts and materials into the manufacturing process
based on source management)
Purchasing management (purchase of conforming
products from selected suppliers)
Manufacturing process (management of individual
processes based on 5Ms to provide stable productquality)
Shipment inspection (provision of products thatmeet customer requirements)

Traceability
management

Management of process history by productidentification

After-sales followup

Quality surveys of tie-ups in engineering,
manufacturing and sales by visiting customers
Sincere response to customer complaints

Orders(processing instructions)

Manufacturing

Shipment

After-sales service

39Acquired JIS Q 9100, Nadcap Certification (for the aerospaceindustry)
The Nagoya Plant has acquired certification for the aerospace industry.
JIS Q 9100 was established to manage the quality of aerospace defense products, which requires advanced
quality control. To satisfy requirements specific to the aerospace industry, the Nagoya Plant acquired
certification in November 2008. The Akashi Plant was also certified in 2014, but the aircraft-related work was
consolidated at the Nagoya Plant, and the certification was returned at the end of March 2020.
Nadcap is an international certification system under which the Performance Review Institute (PRI), an NPO in
the United States, reviews special process operations in the aerospace and defense industry.
JIS Q 9100 and Nadcap Certification
ISO 14001Certified Plant
JIS Q 9100

Registered
Date

Registration
NumberCertified Activities

Nov. 2008

JQA-AS 0044

Surface treatment of aerospace components(thermal spraying)

Mar. 2014

967616467

Surface treatment of aerospace components(thermal spraying)

Nagoya Plant
Nadcap40

Together with Our Employees
Our company complies regarding the payment of wages above the minimum levels set in each region, and in
our Corporate Ethics Guidelines, we state the obligations we have to employees and our determination to meetthose obligations so that employees can maximize their abilities and achieve self-fulfillment.
Furthermore, we comply regarding maintaining working conditions above the standards set forth in laws andordinances, etc. We hold labor-management gatherings that include company-side management and the
management of labor unions around six times per year, and repeatedly engage in talks with the aim of realizing
higher and higher quality work environments and treatment.
Creating an Environment in Which All Employees Can Thrive
Occupational Health and Safety Initiatives

Respect for Human Rights

Work-Life Balance

Creating an Environment in Which All Employees Can Thrive
Initiatives to Support Balancing Work andChildcareChildcare and caregiver leave
Shorter working hours and leave for childcare and nursingChildren's nursing care and caregiver holiday leave

Initiatives to create a comfortable work
environment
Correspondence education programAwards and incentive programs

Initiatives to create an environment in which
all employees can fully demonstrate theirabilities
Re-employment program for retired employees
Stress checks
Introduction of refreshment leave
Introduction of flextime systems
Implementation of a system of paid leave on an hourly basis
Introduction of telework

41

Introduction to correspondence education

Data regarding human resources
Proportion of all employees who are women (nonconsolidated)
14.2% (125/881 people) as of end of March 2021
Proportion of executives who are women (non-consolidated)
9.1% (2/22 people) as of end of March 2021
Ratio of temporary employees (consolidated)
18.5% (163/881 people) as of end of March 2021
Temporary employees consist of directly-hired employees suchas part-time employees and contract employees, and do notinclude dispatched employees.
Voluntary separation rate (non-consolidated)
1.76% (15/852 people) fiscal 2020
(Excluding mandatory retirements, etc. among full-time
employees such as regular employees and contract employees)

Respect for Human Rights
Eliminating All Discrimination among Employees
The Compliance Handbook expressly stipulates that the company shall respect the fundamental human rights of
employees and shall not discriminate against or harass individuals for reasons unrelated to the performance of
one’s duties. This includes race, nationality, ethnicity, beliefs, religion, age, sex, sexual orientation, physicalcharacteristics, presence or absence of disability, internal position, type of employment, property, place of origin,marital status, or any other reason that may harm the dignity of the individual. Furthermore, instructions havebeen given stating that reasons unrelated to the performance of duties cannot be made selection criteria during
the new hiring of employees.

Prevention of Harassment
To prevent harassment, we held harassment training for all employees in 2020. The first training for managers
was conducted in fiscal 2019.
In order to raise awareness regarding compliance, the Compliance Handbook is distributed to all employees,
and the Clean Line Committee has been established as a contact point for whistleblowing and consulting
regarding harassment and other matters.
Employment rate of persons with disabilities
2.44% (non-consolidated) (end of March 2021)

42

Industrial Safety and Health Initiatives
We are also focusing on ensuring safety in the event of a disaster.
We strive to maintain and improve a comfortable work environment that gives consideration to safety andhealth, as well as enhance various systems related to welfare in compliance with the Labor Standards Act andthe Industrial Safety and Health Act. Parallel to this, each business site has established its own measures toensure safety and minimize damage in the event of a disaster.
In order to prevent occupational accidents from occurring, the entire company is making concerted efforts tovigorously promote safety and health measures.
As one of our initiatives in this regard, we receive tutelage and advice regarding health issues and health &safety from an outside director who is a specially-appointed professor of the Osaka University Campus Life
Health and Counseling Center.

Safety and Health Policy of 2021
TOCALO's safety and health policy is based on the principle that “safety takes precedence overeverything.” It serves as a guide for “maintaining and improving work environments” and “achieving zeroaccidents and zero injuries,” by showing due consideration to safety and health in ways that safeguard andenhance the health of all employees.
We will strive to create a bright and rewarding workplace by:
1. Complying with laws and regulations related to safety and health related to our business and relevantinternal regulations
2. Continuing industrial health and safety activities (inspections, patrols, and education) and striving toraise awareness of health and safety
3. Aiming to reduce the hazards that cause accidents and disasters by promoting visualization and risk
assessments based on 5S-activity initiatives, and analysis of workplace injuries
4. Showing due consideration to mental health so that employees can work in a healthy state of mind
5. Thoroughly carrying out health & safety education for new employees
6. Promoting the safety activities of on-site partner companies and subcontractors

43

Heat Stroke Countermeasures at Manufacturing Sites
In recent years, summer heat has become increasingly severe, and temperatures at manufacturing sites havebeen higher than before, increasing stress on employees. The higher the temperature gets, the greater the riskof heat stroke becomes, so this could adversely affect the health of our employees.
To prevent such risks, we are firstly improving our air-conditioners. Air-conditioners are adopted at most of ourflat panel display (FPD) and semiconductor processing plants (FPD and semiconductors make up just over 50%
of total sales), and we are actively introducing them at other worksites as well.
Measures other than air-conditioning are implemented at sites as required, such as exhausting steam generated
in operations to the outside, reducing outdoor heat input through the use of heat-shielding coating, and installing
large-scale air blowers. In addition, for personnel, we are promoting rehydration and salt supplementation withsalt candies, installing spot coolers, and introducing air-conditioned clothing. With these measures in place,
many of the workers at sites say that the work has become easier, which has also led to more efficient work.
However, there are some sites where countermeasures are not yet sufficient, and further improvements arenecessary. We will continue to consider the health of our employees and take appropriate measures at eachbusiness site.

Approach to mental health
For employee mental health care, we implement stress checks once per year as is required by law, and give
feedback on the results to individuals. We also perform diagnoses on company structures and identify issues
regarding structures, and this helps us to improve workplaces.
In addition, we have set up a contact point for consultations that is separate from the stress checks. We haveestablished a system that enables our employees to consult with specialists with peace of mind without having
to go through the company, by contracting with SOMPO Health Support Co., Ltd.

Initiatives for raising safety awarenessAt each office, a meeting of the Health and Safety Committee is held each month, risks regarding workplaces
are assessed, and feedback on the results is given to employees. An effort is made to share the informationfrom the committee meetings at company-wide health and safety meetings in which all offices participate every
other month. Furthermore, an effort is made to raise safety awareness by providing education on entering thecompany to new employees that is centered on safety education, and focusing on foreman training that is basedon guidance from external consultants.

44

Work-Life Balance
Promotion of diversity
In July 2020, we established a Diversity Promotion Committee in order to create a work environment for diverse
human resources. Members of the promotion committee are selected from each base who are diverse in termsof age, gender, and job position, and then groups are formed and activities are carried out regarding various
themes. The opinions of employees on issues and improvement measures are gathered through the holding of
regular meetings and questionnaires.
Currently, promoting the active participation of women has been set forth as a priority issue, and we have been
striving to be a company where it is comfortable for women to work. We have thus been endeavoring to improve
our work environments in a forward-looking manner.
→See here for details*The link is for an external website so there may be changes.

In addition to reducing long working hours and promoting use of paid
holidays, we have also enhanced our childcare-leave system and areraising awareness of the options our workforce has.
In order to realize a balance between work and life, not only are we reducing extended working hours andencouraging employees to take annual paid leave through collaborative efforts between labor and management,
but we have also established a childcare-leave system to help employees balance work and child-rearing amid
Japan's rapidly declining birthrate and aging population. In addition, we are improving the work environment inconsideration of health management during and after birth.
We are working to reform work styles and workplace culture in consideration of the employees who need to both
work and care for family members, and are raising awareness of the options our workforce has.
Average paid-holiday utilization rate
* Paid-holiday utilization rate = number of paid holidays utilized/number of paid holidays granted (not including portion carried overfrom previous fiscal year) × 100
Average paid-holiday utilization rate = total of paid-holiday utilization rates of all employees/number of all employees × 100
Fiscal 2020 result-calculation period: April 2020 to March 2021

Fiscal 2019

Fiscal 2020

Approx. 70%

Approx. 66%

Use of Caregiver Leaves* Caregiver leave: for taking care of a family member who needs nursing care for at least two weeks

Fiscal 2019
Number of eligible employees

Fiscal 2020

00

Number of utilizing employees 0045Use of Childcare Leaves* Childcare Leave: for taking care of a child under 1 year old living together

Fiscal 2019
Male
Number of eligible employees

Fiscal 202025

Male 19

Female7

Female 8

Total

32

Total

Male

0

Number of utilizing employees Female
Total

27

Male 07

Female 8

7

Total

8

Use of Nursing Leaves* Nursing leave: for taking care of a family member in need of care

Fiscal 2019

Fiscal 2020

Male

4

4

Female

3

2

Total

7

6

Use of Care Leaves* Care leave: for raising children until they reach the start of elementary school attendance

Fiscal 2019

Fiscal 2020

Male

18

12

Female

7

2

Total

25

14

Initiatives regarding human resource development
Our company has established education & training rules in order to promote self-development and mutual
development, and enable the development of creativity through the performance of professional duties.
We first of all provide education to new employees and mid-career professionals for the acquisition of basic
concepts and knowledge & skills regarding the company and work. Subsequently, education at individual
workplaces, managerial education, supervisor education, specialized education, and so on are provided at theappropriate times as necessary.

46

VOICE An excellent place for actively engaging inwork and hobbies!

Kensuke Nagai (Manager, Environmental Division, Environmental Promotion Department;
Manager, Planning and Administration Department, Thermal Spraying Technology R&D
Laboratories)

In April 2021, I was appointed as the ISO 14001 generalenvironmental management supervisor, and started generalenvironment-related operations.
I ordinarily oversee event operations at the Thermal Spraying
Technology R&D Laboratories, and the largest event of theyear for me is a competition involving presentations oftechnical reports in which announcements are maderegarding new technological development by all offices anddomestic subsidiaries. Overseeing this competition, which
can be considered a report on the outcomes of the past year,
gives me a feeling of tension and preparing for it is difficult.
Nevertheless, it is very rewarding, and the presentations by
employees ranging from younger employees to veterans arevery stimulating for me.
On a personal note, due to the aftereffects of an accident that
I experienced around age 20, I still have a disability related to
my right leg, and am certified as having a grade-four physicaldisability. When I was 45 years old around 15 years ago, I happened to learn about vehicles called go-karts
and became obsessed with them, so I joined the TOCALO go-kart club. Currently, I provide guidance to themembers of the go-kart club as a supervisor, compete in endurance races as part of the TOCALO team.
TOCALO has workplaces where persons with disabilities like me can work without worrying about
handicaps related to disabilities, and there are many club activities through which employees can enjoy
their hobbies. Going forward, I intend to engage in my work and hobbies with seriousness and enjoyment.

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Together with Local Communities
We are aiming to be a company that enjoys the familiarity of local residents based on cleanup activities in thesurrounding areas, local events, participation in youth development programs, and the promotion of sports.
Community Cleanup Activities

Contributing to the Development of Young People

Community Cleanup Activities
Shrinking of activities due to impact of COVID-19
Due to the impact of COVID-19, in fiscal 2020, the local
cleanup activities at TOCALO shrank in size, and weincorporated measures to prevent the spread of thedisease such as wearing masks and avoiding close
contact. We once again worked while paying close
attention to traffic by wearing orange-colored bibs thatare highly visible even from far away.
Prior to the COVID-19 crisis, at the Miyagi Technical
Service Center, during the snow-free period from April
to November, we were conducting activities such as
picking up garbage in the industrial park and along
general roads in the vicinity, weeding around the plant,
and redesigning signs to encourage safe driving in theindustrial park four times a year.
At the Thermal Spraying Technology R&D Laboratories,
we were cleaning the green area of the neighboring
Akashi Kaihin Park. When we asked the Akashi Kaihin
Park Office for permission to enter for cleaning thepark, we received generous consent and the park officeposted TOCALO's cleanup activities on its website.
Furthermore, our sites conduct activities according totheir local needs. The Kobe Plant is struggling with alarge amount of garbage that is thought to be usedfireworks and BBQ waste left in nearby parks, and the
Akashi Plant conducts monthly activities in line with thecleaning activities of the local industrial parks. At the
Kobe Plant, nearby companies told us that they havestarted their own cleanup activities following our
example, and this has been giving us encouragement.

Cleanup activities near Kobe plant

Cleanup activities near thermal spraying technology R&D
laboratories

48

Contributing to Development of Young People
Supporting Akashi-jyoki Gakudo Soft Baseball Tournament
In fiscal 2020, the Akashi-jyoki Gakudo Soft Baseball Conference, of which we have been a special sponsor
since its launch in fiscal 2012, was canceled due to the impact of COVID-19. The tournament started around thetime when TOCALO acquired the naming rights for Akashi TOCALO Baseball Stadium. We hope that theoutstanding performances by the participating boys and the accompanying cheers of support will resume soon.

Akashi-jyoki Gakudo Soft Baseball Tournament to date and Akashi TOCALO Baseball Stadium* TOCALO is a special sponsor.

Accepting interns
Although we had been accepting interns annually since fiscal 2007, we were unable to do so in fiscal 2020 due
to the impact of the COVID-19 crisis.
In usual years, we accept one or two interns from the German University of Helmut Schmidt. They spend morethan a month in summer at the Thermal Spraying Technology R&D Laboratories, and they experience ourresearch and development work on thermal spray technology and our business activities. We also deepen
mutual understanding regarding German and Japanese cultures through exchanges during both work andprivate time with our employees. We are looking forward to the time when we can resume accepting interns.

Activities of overseas interns (fiscal 2019)49

Budget for Community and Social Contribution Activities
We set a budget for community and social contribution activities (annual), and as part of this, we donated toinitiatives such as supporting preventing the spread of the infectious disease COVID-19. Furthermore, inAugust 2020, we began giving foreign students scholarships for the Global Business Course at the
University of Hyogo.

50For Shareholders and Investors
We promote IR activities from the perspective of our shareholders and investors, with a basis of prompt andaccurate information disclosure.
Information Disclosure Policy

Main IR Activities

Dividend Policy

Information Disclosure Policy
We strive to disclose information in an easy-to-understand manner
through shareholder newsletters and our website.
We strive to earn the trust of our shareholders and investors by disclosing corporate information, such as
management policies and financial data promptly, accurately, and fairly from the perspective of theseshareholders and investors.
In disclosing information, we comply with statutory disclosure standards and disclosure rules set forth by thestock exchanges.
IR associated tools
Securities reports and quarterly reports
Financial Results (Quarterly)
Newsletter for Shareholders
The latest Newsletter for Shareholders can be viewed
on this page.

Fact Book
Company briefing materials for investors
IR information on our website
Investor relations information can be found in detail on
this page.

51

Main IR Activities
We are also focusing on briefings for individual investors.
We hold corporate briefings for investors and meetings withanalysts and domestic/overseas institutional investors to provide
opportunities for direct dialogues between shareholders &investors and top management as a part of our proactive
communications.
We also participate in asset management expos on an ongoingbasis to improve our name recognition, broaden our corporate
recognition, and expand our investor and fan base.
We also actively provide IR information on our website. In
addition to enabling the viewing of various disclosure materials,
we are posting our video commercials with the aim of providing
communication that gives people a sense of familiarity with thecontent of our business.

President Mifune giving a presentation at
Nikkei IR & Individual Investor Fair Online
2020

Investor Expo
exhibition brochure

Dividend Policy
Our dividend was JPY 35 per share in fiscal 2020.
We consider the return of profits to shareholders to be an important management policy, and strive tocontinuously pay stable dividends that are based on the outcomes of our business performance. At the sametime, we actively strive to enhance shareholder returns.
In fiscal 2020, we paid a dividend of 35 yen per share (including an interim dividend of 12.5 yen). As a result, thedividend payout ratio (consolidated) was 38.9%. Retained earnings will be allocated to R&D and capital
investment, which are indispensable for business growth and strengthening corporate structure, in order toenhance our medium-to long-term share value through business development and expansion.

52

Business Continuity Activities
Risk Management

Risk Management
Implementing thorough measures regarding disasters, etc.
Our risk management system is based on our CSR Committee's cross-sectional oversight of the status of risk
management and examination of company-wide measures. A Business Continuity Plan was issued on April 1,2010 and is updated annually.
With regard to risks related to compliance, responses to antisocial forces, the environment, disasters, quality,
information security, credit management, investment & financing, and export management, we acquaint andprovide each department in charge with rules, guidelines, and manuals. In the event of an unexpected situation,an Emergency Management Headquarters will be established immediately to implement countermeasures inaccordance with our Emergency Management Protocol.
In addition to the above, the Board of Directors promptly appoints directors to be responsible for responding torisks that have newly arisen, and establishes systems for responding appropriately.
We also conduct annual disaster prevention drills in preparation for emergencies. Our main sites conduct fire
drills and large-scale disaster response drills envisioning situations such as an earthquake or tsunami. At thesame time, we also stockpile emergency meals and other supplies at all of our sites in order to be prepared fordisasters.

53

Countermeasures to Prevent the Spread of COVID-19

Countermeasures to Prevent the Spread of COVID-19—Safety for Employees and Customers—
COVID-19, which is prevalent worldwide, has affected Japan as well and transformed our lives.
Under these circumstances, TOCALO is implementing measures to prevent infections with an emphasis on thefollowing concepts.

Prioritizing the safety of employees and their families, customers,
and business partners.
Ensuring thorough risk management for business continuity.
In February 2020, in accordance with the basic policies announced by the government, our company began
measures to prevent infections, such as avoiding the three Cs (closed spaces, crowded places, and closecontact settings) and wearing masks, while maintaining the operations of our plants. On March 1, weestablished the COVID-19 Countermeasure Headquarters headed by our President, and then implemented
measures related to commuting to work, sales activities, and internal operations based on “not getting COVID19,” “not passing on COVID-19,” and “not bringing in COVID-19.” In order to continue our business and protect
the health of employees, we have been revising these measures according to the situation, and we are still
implementing them as of August 2021.
During the COVID-19 crisis, we have been doing our utmost to work closely with our customers and fulfill theirrequests while paying sufficient attention to safety. Going forward, we will continue to work hard to contribute tosociety with surface modification technologies.

54

Specific Countermeasures
TOCALO Initiatives (January 2020 to end of August 2021)(Scope of Report: TOCALO Domestic Facilities)

1/2020 to 3/2020
Confirmation of COVID-19 infection and prompt launch of
measures to prevent spread of infections in Japan
1/16 First confirmation of infection in Japan
February
Donation of masks to
subsidiaries in China
Checking of employees'
temperatures before work
every day

Promotion of staggered work
hours
Voluntarily refraining fromgoing on business trips

Promotion of web
conferencing
Guidance on wearing masks

March
3/9 Expert Meeting calls for “avoiding 3Cs”
Establishment of COVID-19
Response Headquarters

Refraining from visits asmuch as possible

Promoting avoidance of 3Cs
at dining halls

Allowing driving to work to
avoid public transportation

55

Formulation of Work
Attendance Standards as
COVID-19 countermeasure4/2020 to 5/2020
Issuance of state of emergency declaration, enhancementof measures
April
4/7 Issuance of state of emergency declaration in seven prefectures
4/16 Expansion of state of emergency declaration to all of Japan, with 13
prefectures as Prefectures under Specific Cautions
Telework Promotion

Distribution of 50 masks per
employee, request forthorough wearing of masks

Training of new employees
shifted to online trainingMay
5/27 Lifting of state of emergency declaration
Resumption of customer
visits (with prior approval
from customers required)6/2020
Responding to “new normal” and flexible shifting of
measuresJune
6/19 Government announcement of phased easing

In response to the easing of measures by the government, our measures were reviewed (wearingof masks, telework, staggered work hours, business trips, commuting by car, etc.).
Donations were made toseven domestic medical
institutions.

56

7/2020 to 12/2020 Start and end of Go To TravelJuly
7/22 Start of Go To Travel campaign (excluding Tokyo)

Strengthening of measures accompanying spread of infections (regarding wearing of masks,
business trips, etc.)

September
Having company partly cover expenses for PCR tests and antibody tests following business trips
and construction if requested (including family members)

December
12/15 Decision for nationwide suspension of Go To Travel

Recommending commuting by car in order to avoid public transportation
Discouraging company visits by guests
Online implementation of ISO 14001 internal audit regarding some offices

1/2021 to 3/2021
Second state of emergency declaration and start ofvaccinations
January
1/8 Issuance of state of emergency declaration in four prefectures
February
2/17 Start of COVID-19 vaccinations in JapanMarch
3/21 Lifting of state of emergency declaration
Allowing of business trips,
including outside ofprefecture, as necessary

Allowing of visits by guests

57

4/2021 to 6/2021
Third state of emergency declaration, strengthening of
measuresApril
4/5 Application of semi-state of emergency measures in three prefectures
4/25 Issuance of state of emergency declaration in four prefectures
Strengthening measures(wearing of masks, etc.)

Voluntarily refraining fromgoing on business trips

Installing disinfection devices
and CO2 measurement
devices in closed spaces
whenever possible
Discouraging company visits
by guests

Recommending telework,
staggered work hours,
commuting by car, etc.

May
Permission for taking of compensated half holiday or compensated holiday on day of vaccination(and the next day onward in the case of fever)June
6/20 Lifting of state of emergency declaration in all prefectures except Okinawa

Establishment of period of isolation measures following returns to Japan from overseas businesstrips

7/2021 onward
Fourth state of emergency declaration and holding ofTokyo Olympics & Paralympics
July
7/12 Issuance of state of emergency declaration in Tokyo
7/21 Start of Tokyo Olympics
August8/2 Issuance of state of emergency declaration in four prefectures, application ofsemi-state of emergency measures in five prefectures
8/24 Start of Tokyo Paralympics
Measures still ongoing58

Work Style
Staggered work hours

Web conferencing

We implemented this to avoid the 3Cs duringcommuting. It also helped to reduce the density oflocker rooms and dining halls.

We actively implemented web conferences in order toavoid the 3Cs. With this, we can also interact withpeople far away immediately and see their faces.
This led to more efficient business operations.

Telework

Driving to work

We introduced telework actively todivisions/departments capable of such a workstyle.
We were able to participate in web conferences fromhome as well and were able to use time effectively.

Although driving to work was not permitted except forsome business locations, it was temporarily allowed
as a countermeasure for COVID-19.

Daily operations
Temperature
measurement anddisinfection

Wearing masks
We have distributed masks to all
employees, and have decided thatmasks should be worn during work Tokyo Plant
at all times except in the following
Suzumisituations: (i) when walking alone
Workshopduring commuting, (ii) when alone
in an isolated room, and (iii) wheneating, smoking, and taking breaks.
We have implemented measures toensure that a distance of at least
two meters is maintained from thenearest person, and this has
included making marks on the
ground for standing positions at
locations where masks are
removed.

Kitakyushu
Alcohol disinfectant bottles were set
Plant
out in various locations for thepracticing of frequent disinfection.
The temperatures of both
employees and visitors were
measured, and safety measures
were taken.

Cafeteria
We removed seats from one side oftables and prevented face-to-faceseating during meals. At some
Headquarters
sites, we divided employees into
two groups and staggered lunch
times.

59

Business Sites
Use of conference rooms

Desk layout

In order to avoid the 3Cs, we held
meetings with large numbers ofpeople online, and we set certain
Kobe Plant
amounts of space between seats inconference rooms. In addition, we
moved the desks of our offices tomake use of vacant conference
rooms.

We rearranged desks to avoid faceto-face seating and create space inbetween them. Between the desks, Headquarters
shields were installed to prevent
spread of droplets.
* The shield is marked with a dotted linein the photo.

3C countermeasuresamong workers
Manufacturing sites have relatively
Tokyo Plant
more distance between workers,
Gyoda
but there are also cases in whichpeople work at a close distance. In Workshop
such case, 3C avoidance measures
were taken with vinyl sheets, etc.,
and careful consideration was given
to the safety of workers andproducts.

* The photograph has been partially edited out of consideration for confidentiality.

60

TOCALO Co., Ltd. Environmental Report 2021
Launch of Environmental Promotion Department
Kosaku Hiyama
General Manager Environmental Promotion Dept.
Thank you for reading our Environmental Report. We recently launched the newEnvironmental Promotion Department. What must truly be valued? We believe
the old way of doing things is insufficient to address the problems of society as
a whole on a global scale while meeting the needs of our customers. Whileleveraging our experience up to now, a new approach is also necessary. Goingforward, in addition to changing the surface through our business and surface
modification technologies, including thermal spraying, we hope to change theform of things, including improving our environmental approach andorganizational structure.
We are committed to contributing to society through our surface modification technologies while taking measureof our proprietary technologies from the customerʼs perspective and judging our company from a global
perspective. Thank you in advance for your continued support.

Editorʻs Postscript
Thank you for reading TOCALOʼs 2021 Environmental Report.
TOCALO has set out on a mission to contribute to a bright future for people and nature. We hope to also enhance
the Environmental Report toward that end.
We will move forward so that we can continue to meet your expectations. Your frank opinions and feedback areappreciated. Thank you for your continued support of TOCALO.

61