TOCALO Co.,Ltd. Environmental Report 2020

Contents
Contents / Editorial Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 1
Message from the President・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 2
TOCALO's surface modiﬁcation technologies・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4

Environmental Management・・・・・・・・・・・・・・・・・・7

Together with Customers and Suppliers・・・・・・29

Targets and Results・・・・・・・・・・・・・・・・・・・・・・・・・15

Together with Our Employees・・・・・・・・・・・・・・・33

Material Balance・・・・・・・・・・・・・・・・・・・・・・・・・・・19

Together with Local Communities・・・・・・・・・・・・38

Measures to Reduce Environmental Load・・・・20

For Shareholders and Investors・・・・・・・・・・・・・40
Business Continuity Activities・・・・・・・・・・・・・・・・42

Countermeasures to Prevent the Spread of COVID-19・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・43
Editorial Policy
TOCALO is a specialized manufacturer of surface treatments focused on thermal spraying. We believethat it is important for us to contribute to society through the various functions of coatings, including
resource savings, energy savings, and reductions in environmental impacts. This report has been
prepared with up-to-date information that presents a non-consolidated corporate proﬁle and the resultsof activities of TOCALO for ﬁscal 2019 (April 2019 to March 2020) in an easy-to-understand manner.

1Message from the President

We will emphasize ESG in our management practices.
We will contribute to society through surface
modification technologies such as thermal spraying.
President and Representative Director Noriyuki Mifune

Contributing to Global Environmental Preservation Based on Our Basic
Environmental Philosophy
To solve environmental issues and provide value to society, we emphasize ESG (environment, society, andgovernance) in management and have built a robust governance system that supports that. In particular, we
recognize that "continuous improvement to the global environment and preservation through pollution
prevention" are the most important challenges, and we clearly state them in our Basic Environmental
Philosophy.
Based on this philosophy, each business site has established an environmental management system andacquired ISO14001 certification. In addition, as a leading company in the surface treatment field, we provide
surface modification technologies that reduce environmental impacts in a wide range of industries, including
energy, steel, petrochemical, and industrial machinery.

Working to reduce environmental load in a wide range of industries
Our surface modification technologies enhance the durability and service-life of components and equipment,
and make production activities more efficient by adding various characteristics to the surfaces of components.
Our technologies can help our customers to decrease their energy consumption, conserve resources, andreduce the environmental impact of their products, services and operations. For example, in the steel industry,
our functional coatings are used to stably produce automotive steel sheet that is the main structural componentof automobile bodies. This steel sheet is being reduced in weight for the purpose of improving fuel efficiency.
Our technologies are also active in the environment and energy fields. Coal-fired power generation is expected
to decline in the future against the backdrop of worldwide needs for CO₂ reduction, however it will be a mainstay
power generation method in Japan for the time being. With our technology, we intend to increase the durabilityof these facilities, maintain efficiency, and contribute to the reduction of environmental loads. We also believethat our technology can contribute to the generation of renewable energy, which is expected to expand in the
future, such as hydroelectric, geothermal, and wind power generation. We are steadily proceeding with researchand development while conducting tests on actual equipment.

2

Pursuit of quality and customer satisfaction
We will continue to develop surface modification technologies that help reduce environmental load and strive toestablish a solid position in all fields of endeavor. To this end, we will strengthen our engineering workforce andresearch activities, promote industry-government-academia collaboration and technical exchanges and allianceswith leading companies, and actively work to create one-of-a-kind technologies.
In addition, since it is integral to our line of business that we carefully examine customer issues, and develop,
test and propose solutions, we aim to improve the quality of our day-to-day operations so that we consistently
satisfy our customers, and continue to demonstrate ourselves to be a company that customers can rely on andconsult with.

Creating an employee-friendly environment
We are also focused on reforming the way our
employees work, such as by reducing working hours andincreasing holidays. On production fronts, we are
aggressively investing in equipment to reduce manpower
demands and improve efficiency as much as possible,
via robotization and automation.
With regard to human resource diversity, we haveestablished a Diversity Promotion Committee toaccelerate initiatives with the aim of enabling women toplay active roles in managerial and executive positions.
We are also striving to create environments and systems
that make it easier for employees to work at various
stages of their lives so that they can continue working
around milestones such as weddings and births.
As for countermeasures against COVID-19, we werequick to implement measures to prevent the spread of
infection in order to keep our business up and runningand fulfill our responsibility to supply our customers, aswell as to protect the lives of our employees andbusiness partners.

Toward a Sustainable Future
In order to continue to be a company viewed positively by society, we will continue to reduce environmental
impacts, improve customer satisfaction, and promote work style reforms. At the same time, we will focus on
strengthening our governance system, including at overseas subsidiaries. We believe that the steady promotionof these ESG activities will also lead to the achievement of SDGs (Sustainable Development Goals).
The purpose of our business is, in short, to bring happiness to people. We believe that it is our responsibility as
a company to refine our technologies, engage in environmental conservation, and link the planet’s limited
resources and our accumulated technologies to the children of the future.

3

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 load 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

4

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 gigantic
propellers also in Japan. However, since bearings used in the generator
are built into propellers, there is a concern that sparking phenomena
could occur due to 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
sheet that is thin and has sufficient strength is used to reduce the weightof automobile bodies. TOCALO's surface modification technologies arebeing used to ensure the stable production of high-quality, high-tensile
strength steel sheet. For example, on a production line of high-tensile
steel sheet, foreign matter readily sticks to surfaces of conveying rolls
and pushes against the steel sheet, causing scratches. As a solution to this problem, a thermal spraycoating 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.

5

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 Load

6

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 pollution prevention" isthe one of the most important challenges of our time. Our basic environmental philosophy is to contributeto society by protecting the global environment through various functions of surface modification
technologies such as resource saving, energy saving, and environmental load reduction.

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 impacts 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 addressing
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 impacts 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) Environment contributions by promoting 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: 10/1/2016
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Environmental Management Organization Structure

Promotion of ISO14001
Certified at all sites
Status of ISO 14001 Certification (Certification Number JQA-EM2253) (Registration order)
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. 20188

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 sites of the TOCALO werecertified.
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 sites of the TOCALO
were certified.

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.

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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

10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

11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 consignment management of other plants⑤Waste management⑥Distribution, use, and disposal of products after use⑦Service management

12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.
Major environmental laws and regulations related to TOCALO's business
Waste Management and Cleaning Law

Air Pollution Control Law

Water Quality Pollution Control Law

Sewerage Law

Soil Contamination Countermeasures Law

Septic Tank Law

Noise Control Law

Vibration Regulation Law

Offensive Odor Control Law

Plant Location Law

Law Concerning the Rational Use and Managementof Fluorocarbons

Act on PRTR of Measures to Identify and Improve
the Control of Emissions of Specific Chemical
Substances into the Environment ("PRTR Law")

Poisonous and Deleterious Substances Control Law

Fire Defense Law

Industrial Safety and Health Act

High Pressure Gas Safety Law

Act on Promotion of Global WarmingCountermeasures

Act on the Rationalization of Energy Use, etc.

13

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 2019, we reinforced our dust collectors and noise-proofing equipment, and introduced highly efficientcompressors.
Cumulative Environmental Investments

Breakdown of capital expenditures

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.

Education scene
14

Targets and Results
We have established two major themes and are working on environmental activities by setting targets at eachsite.
Achievements in Fiscal 2019 and Targets for Fiscal 2020

Achievements in Fiscal 2019 and Targets for Fiscal 2020
Of the 34 targets, 26 were achieved.
Across TOCALO, we set our own targets and worked toward achieving them by (1) conserving energy andresources in our business activities and (2) contributing to the environment through the promotion of businessactivities. As a result, 6 targets related to energy conservation and 2 related to business activity promotion were
not achieved, while 26 other targets were achieved.

We will continue to focus on contributing to the environment throughenergy and resource conservation and the promotion of our businessactivities.
In fiscal 2020, 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 business activities. All of our plants will set goals
and conduct activities in the same direction.

15

Site

Environmental
TargetTarget for Fiscal 2019

Fiscal 2019 Results

Energy and resource conservation in business activities

Headquarters

Promoting theutilization ofsubsidies forenergyconservation

Promoting the introduction ofenergy-saving equipment byshowing customers subsidy
information on energy-saving
equipment

Miyagi

Reduction ofgasoline
consumption

Average fuel consumption ofcompany-owned vehicles: 10% 19.68% improvement
improvement compared to fiscal compared to fiscal 20182018

Promotion ofenergy- andresource-saving
activities

Switch over to energy-saving
equipment: 3 cases per year ormore

4 cases

Promotingactivities to reducethe defect rate

Maintenance and reworkmaterials/Total materials used:
3.0% or less

3.8%

Promotingactivities to reducethe defect rate

Reduction in the shipment rateof non-conforming products:
0.08% or less

0.05%

Promotion ofenergy- andresource-saving
activities

Reduction in material
consumption by improving
thermal spraying method

Results of improvement inthermal spray methodcompleted: Survey for next
fiscal year

Promotingactivities to reducethe defect rate

Number of nonconformities inquality control: 5 cases/year orless

3 cases

Promotion ofenergy- andresource-saving
activities

Improvement of loss throughintroduction of energy-saving
equipment and facility
maintenance: 5 cases/year ormore

5 casesNagoyaPromotingactivities to reducethe defect rate

Publication of non-compliancereports: 50% or more

70%

Kobe

Reduction inelectric power
consumption

Implementation of two power
reduction measures annually

2 cases

Tokyo

Tokyo No.2

16

Attempted to receive advice
from a vendor, but that was
discontinued due to theimpact of COVID-19

Reduction inelectricity
consumption

Akashi

Mizushima

Kitakyushu

Planning for all defects or
improvement plan for air
leaks: 100%100%Promotion ofrecycling of
Recovery rate of Material A:
thermal spray
66.5% or morematerial by thermal
spray 1 division

63.5%

Promotion ofrecycling of
Recovery rate of B materials:
thermal spray
15.2% or morematerial by thermal
spray 2 division

17.0%

Promotion ofrecycling of
Recovery rate of C materials:
thermal spray
19.2% or morematerial by thermal
spray 3 division

25.7%

Promotion ofrecycling of
Recovery rate of D materials:
thermal spray
4.4% or morematerial by thermal
spray 4 division

4.3%

Promotion ofrecycling of
Recovery rate of E materials:
thermal spray
1.5% or morematerial by thermal
spray 5 division

11.8%

Reduction inelectric power
consumption

12.42 or less per unit of target
value

Basic unit 10.85

Reduction innonconformities

Making of preventive action
manuals: 12 cases/year

8 cases

Reduction in the
distance traveledby sales vehicles

Travel distance of sales
vehicles: 1,400 km/month or
less

Average 1,175.8 km/month/unit

17

Contributing to the environment by promoting business activities
168 promotions to new
New promotions
customers or new departments
aimed at cultivatingof existing customers/year or
new projects
more

Implemented 172 cases

Promotion ofdevelopment
projects tocustomers

New development projects:
84/year or more

84 cases

Production ofenvironment
contributing
technologies

Establishment of elemental
technologies in thedevelopment of thermal sprayed 24 cases
parts for semiconductors: 24
cases/year or moreTokyo

Promotions of new
proposal activities
TD

Application of new TD
specifications: 12 cases/year ormore

12 cases

Tokyo No.2

Promotion of new
proposal sales
activities

Number of new visits: 480/year
or more535 cases

NagoyaPromotion of new
business activities

Orders for newly evaluatedproducts: 60 cases/year or
more

61 cases

Kobe

Proposing of
coatings that
Number of orders received: 10
extend the servicecases/year
life of customer
products

4 cases

AkashiIntroduction of longservice-life
Number of new visits: 192/year
coatings tocustomers

216 cases

New development

Initiatives for new development:
70 cases/year or more

87 cases

Development of
coating processes
and provision ofdata

New coating productdevelopment

New coating products 12 cases

Mizushima

Orders for new
products

Number of new product orders:
96/year or more

139 cases

Kitakyushu

Maintaining the arc time ofthermal spray unit by 54% orEfficient production moreof products
Maintaining the arc time of thespraying II unit by 52% or more

Headquarters

Miyagi

R&D

56.5%
45.0%

OthersTokyo No.2

Prevention ofenvironmental
pollution

Improvement of workplace
contamination by preventing
grinding fluid dispersion

Established a cover partition forwestern lathes.

Kobe

Improvement ofwork environment

Reduction in sludge (industrial
waste) generation

5.5% reduction per product18

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

19

Measures to Reduce Environmental Load
TOCALO is constantly aware of the environmental load of its business activities, products, and services, andstrives to prevent environmental pollution and continuously improve its environmental performance throughenergy conservation, waste reduction, and appropriate management of hazardous substances.
Global Warming Prevention
Dust countermeasures

Appropriate Management of Chemical Substances
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 94.65% and 3.48%, respectively, and 98.13% of the total, thus these twoenergy sources accounted for most of 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 2019, energy consumption efficiency declined slightly due to the effects of the hot summer of 2019 andthe tendency for air conditioning to increase with ventilation during the COVID-19.
Breakdown of Energy Consumption in Fiscal 2019 (CO2 Equivalent)20Changes in CO2 Emissions

CO2 emissions in fiscal 2019 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.

Changes in Electricity Usage

21

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 analyze
driving data for each driver to improve fuel efficiency. By
analyzing driving distance, fuel efficiency, long-time
idling, the number of sudden accelerations, and the ratioof constant-speed driving time of each driver, thesystem can provide guidance on fuel-efficient driving
and safe driving to each driver.
We also found that there was a significant difference infuel efficiency between hybrid and gasoline-powered
vehicles, and, therefore, allocated hybrid vehicles todrivers who travel long distances in order to reduce theoverall gasoline consumption of a given site. We believe
this approach will enable us to visualize the benefits offuel-efficient vehicles, and provide us a good source of
information for making decisions on introducing
vehicles.

Average Fuel Consumption of Sales
VehiclesCO2 emissions from sales vehicles

Sales company vehicle (hybrid vehicle)

22

TOPICS2
New Headquarters Building: Initiatives for Energy Conservation andReduction in Environmental Impacts
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.
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.

23

Headquarters

Appropriate Management of Chemical Substances
In accordance with the PRTR Law, we report the amounts of chemical
emissions and transfers.
In fiscal 2019, 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.
Release and Transfer Volume of PRTR Law, Type 1 Designated Chemicals in fiscal 2019

Emission intotheatmosphere

Released amount (kg)Transferred amount (kg)At the place At the place
Release intoof business of businesspublicDiscard into
Landfillwatersthe soil
disposal

Transfer tosewerageTransfer
off-site(Industrial
waste)

Chrome andTrivalent chrome
compounds

8.0

0

0

0

0

6,760

Cobalt and its
compounds

5.6

0

0

0

0

1,200

0

0

0

0

0

0

Toluene

2,460

0

0

0

0

3,260

Nickel

11.2

0

0

0

0

10,000

Nickel compounds

1.9

0

0

0

0

1,400

Vanadiumcompound

0

0

0

0

0

3,200

Boron compounds

0

0

0

0

7.3

8,300

1-2-4
Trimethylbenzene** 1-2-4 Although 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 2,460 kg of toluene.
This is a substance contained in organic solvents (thinners, etc.) and is calculated by estimating theamount of volatile organic compounds (VOCs) evaporated by natural drying from the amount 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. In fiscal 2019,
however, we received orders from another customer that required the application of materials containing
nickel compounds, and we properly disposed of the residual materials used in this process.

24

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 striving to reduce them bychemically dissolving them while maintaining confidentiality.
(2) Industrial waste
Waste oil accounted for the largest portion of our industrial waste at 36%. It is derived from cooling waterthat is added to grinding oil for use as coolant with wet grinders (machines for roll grinding). More than 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 sludge (17%), waste plastics (17%), waste alkali (12%), slag (7%), and glass andceramics (5%).
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 waste alkali 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 it is 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.

25

Changes in Total Waste Emissions

Changes in Total Waste Emissions/Sales

26

Dust 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 fine dust layer collected on thefilter surface becomes thicker, the filter gets clogged,
causing pressure loss to increase and dust collection
efficiency to decrease. Therefore, dust is intermittently
removed with compressed air (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.

27

Cartridge type dust collector

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, which applies 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 and blowers.
However, in addition to this equipment, there are othernoise sources, and we are taking steps to avoid
disturbing the neighborhood by implementing
soundproofing measures such as installing thesefacilities 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

28

Together with Society

Together with Customers and Suppliers
We are aiming to be a company trusted by customers and striving to provide products and services that satisfy
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)

Enhance Customer Satisfaction
We are working daily to deliver inspirations to customers.
We believe that the high value-added one-of-a-kindproducts that TOCALO delivers satisfy and inspire ourcustomers because of our high level of quality control
and good services. We strive to communicate thenecessary information to our customers honestly andsincerely every chance we get from order receipt todelivery.
TOCALO is committed to quality control as well as
research and development. In addition to operating aquality management system that is compliant with both
ISO9001 and JIS Q 9100 for the aerospace industry,
we also hold QA tournaments to present the results ofquality control efforts, and Technology Report
tournaments to present new studies and improvements.
These tournaments are designed to raise the level ofboth technologies and quality management across thecompany. In fiscal 2018, we established the Quality
Headquarters, headed by a director, to strengthen ourmanagement system.
TOCALO actively participates in exhibitions on thethemes of "Medical," "Environment and Energy," and"Transportation" equipment. In fiscal 2019, TOCALO
exhibited at total of 9 exhibitions. As a problem-solving
company, we are proactively working to identify
customer issues and work with customers to realize
better products and services.

Exhibition scene

Exhibitions in Fiscal 2019
4th Nagoya Mechanical Component Technology Exhibition Port Messe Nagoya (4/17-19/2019)
2nd Nagoya Vehicle Weight Reduction Technology Exhibition Port Messe Nagoya (9/18-20/2019)
Okayama Technology Exhibition (OTEX) 2020 Convex Okayama (1/23-24/2020) Others29

Acquisition of ISO 9001 Certification
Almost 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

Tokyo Plant

May 1999

JQA-QM 3344

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

Kobe Plant

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

Akashi Plant

Oct. 1999

JQA-QM 3810

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

Mizushima Plant Dec. 2011

JQA-QMA 14492

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

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

Nagoya Plant

JQA-QMA15690

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

Nov. 201730

Quality control system
Plant

Implementation Items

Certified Activities

Considering orders

Hearings
Preliminary
verification test
Review of customer
requirements

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

31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 PRI (Performance Review Institute), 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
Nadcap32

Together with Our Employees
Corporate Ethics Guidelines state the obligations the company has to its employees and its determination tomeet those obligations so that employees can maximize their abilities and achieve self-fulfillment.
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 nursing care leave
Shorter working hours and leave for childcare and nursing care

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
Refreshment leave
Introduction of flextime systems
Implementation of a system of paid leave on an hourly basis

33

Introduction to correspondence education

VOICE Pleasant workplace while raising children
Yuka ODA (Personnel & General Administration Department)
In 2017, I gave birth and took a childcare leave for one and a half years. I returned to the company in April
2019, and currently I am mainly in charge of overall operations related to payroll calculations at thecorporate headquarters.
I was able to return to work with peace of mind because I had been supported by the people around me
from the time I was pregnant and had been contacted frequently even during my childcare leave.
At the beginning when I went back to work, it was very difficult to balance childcare and work, but I could
adjust my work schedule, and now I have been selected as a member of an important project, and I feelvery satisfied with my job.
In addition, when COVID-19 made it impossible to leave my child at nursery school, the company adopted
a telework system and safely spent the lockdown period working from home while caring for my children.
I would like to express my gratitude to everyone in the workplace for creating a comfortable work
environment. It has strongly motivated me to do my work right.

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, physical characteristics,
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.

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 addition to distributing the Compliance Handbook to disseminate correct knowledge, we have established the
Clean Line Committee as a consultation desk for harassment and other matters.

34

Occupational Health and Safety 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 Law and
the Occupational Health and Safety Law. Parallel to this, each business site has established its own measures
to ensure 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.

Safety and Health Policy
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 occupational health and safety activities (inspections, patrols, education) and striving toraise awareness of health and safety.
3. Reducing the risk factors underlying disasters through the use of risk assessments.
4. Showing due consideration to mental health so that employees can work in a healthy state of mind.
5. Promoting the safety activities of on-site partner companies and subcontractors.

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 temperature gets, the greater the risks ofheat stroke becomes. It 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 our
FPD production sites (semi-conductors and FPD make up about 40% of total sales), but we are actively
introducing them in other fields as well.
Measures other than air-conditioning are implemented at sites as required, such to exhaust steam generated inoperations to the outside, reduce outdoor heat input through the use of heat-shielding coating, and installation oflarge-scale air blowers. In addition, for personnel, we are promoting rehydration and salt supplementation withsalt candies, installing spot coolers, and introducing air-conditioning clothing. With these measures in place,
many of the workers on the site 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.

35

VOICE Fighting the heatSeiichiro Kawachi (Manager of Manufacturing Dept., Kobe Plant)
The Kobe Plant where I am working at has many electric
furnaces (heat sources) that operate at high temperatures.
This makes the plant extremely hot in summer, making it agrueling environment for workers on the site.
We are taking more measures than before, but due to theintense heat wave in recent years, it has become necessary
to take drastic measures. We looked at reducing temperaturein the plant, but since that required major renovations, it was
not practicable or something we could do right away.
So, we prioritized protecting workers from heat with effective countermeasures.
In particular, we made improvements such as to use air-conditioning in work areas outside the electric
furnace area, and install heat shield plates to block radiant heat from the electric furnace to areas where
workers are.
Although we have heard from the site that it has become more comfortable than before, we still cannot saythat the environment has become easier for workers to work in. Today, we are considering ways toeffectively release the heat from our plant. As a manager, I would like to further improve the environment
on a permanent basis.

Approach to mental healthIn addition to the stress checkups mandated by law, we have established a separate consultation desk for
employee mental health care. We have established a system that enables our employees to consult withspecialists without having to go through the company, by contracting with SOMPO Health Support Co., Ltd.

Work-Life Balance
In addition to reducing long working hours and promoting use of paid
leave, we have also established a childcare-friendly employment system
and are raising 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-friendly employment system to help employees balance work andchild-rearing amid Japan’s rapidly declining birthrate and aging population. In addition, we are improving thework environment in consideration 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. Moreover, inJuly 2020, we established a Diversity Promotion Committee in order to create a work environment for diverse
human resources.
36

Fiscal 2019 paid leave used
Average usage rate approx.70%
Use of Nursing Care Leaves in Fiscal 2019
* Nursing care leave: To take care of a family member who needs nursing care for at least two weeks.

Number of eligible employees: 0

Number of approved employees: 0

Use of Child Care Leaves in Fiscal 2019
* Child Care Leave: To take care of children under 1 year old living together.

Number of eligible employees

Number of employees who took childcare leave

Male 25

Male 0Female 7

Female 7

Total 32

Total 7

Nursing care leave taken in fiscal 2019
* Nursing care leave: Take care of a family member in need of care.

Number of employees who took nursing care leave
Male 4
Female 3
Total 7
Fiscal 2019 Nursing Leave Usage Results* Nursing holidays: Raising children until they reach the start of elementary school attendance.

Number of employees who obtained approval
Male 18
Female 4
Total 2237

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

Contributing to the Development of Young People

Community Cleanup Activities
The management union to which the business site belongs received anaward for local cleanup activities.
Local cleanup activities at TOCALO began as a part ofcommunity contribution activities, and are continuing ina manner with unique arrangements at each businesssite. We are working while paying close attention totraffic by wearing orange-colored bibs, our corporate
color.
At the Miyagi Technical Service Center, during thesnow-free period from April to November, we conduct
activities such as picking up garbage in the industrial
park and along general roads in the vicinity, weedingaround the plant, and redesigning signs to encourage
safe driving in the industrial park four times a year.
In addition, the Kawauchi Distribution Industrial Park
Management Association, to which the facility belongs,
was recognized for its regular cleanup activities, and, atthe 2015 Regular General Meeting of the Osatocho
Environmental Health Union recognized its outstandingachievements in promoting public health activities.
At the Thermal Spraying Technology R＆D
Laboratories, we are cleaning the green area of theneighboring Akashi Kaihin Park. When we asked the
Akashi Kaihin Park Office for permission to enter for
cleaning the park, we received generous consent andthe park office posted TOCALO's cleanup activities on
their website.
Each site conducts activities according to their local
needs. The Kobe Plant is struggling with a large
amount of garbage that is thought to be used fireworks
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, we have been encouraged by nearby
companies that have started their own cleanup activity
following our example.
Since fiscal 2016, we have been conducting cleanup
activities on a monthly basis.
The new Headquarters is also conducting cleanup
activities around the site.
38

Cleanup activity at the Kitakyushu Plant

Funabashi High-Tech Park, where Tokyo Plant No.2
(Suzumi Workshop) is located, is an industrial park with lotsof greenery.

Contributing to the Development of Young People
Supporting the Akashi-jyoki Gakudo Soft Baseball Tournament
In fiscal 2019, Akashi TOCALO baseball stadium was the main venue for the 8th Akashi-jyoki Gakudo Soft
Baseball Conference. The tournament started around the time when TOCALO acquired the naming rights forthe stadium, since then we have been sponsoring for the tournament. Every year, a wonderful tournament isheld at Akashi TOCALO Stadium.

Akashi-jyoki Gakudo Soft Baseball Tournament

Akashi TOCALO Baseball Stadium* TOCALO is a proud sponsor.

We are accepting interns.
In fiscal 2019, we accepted two interns from the German University of Helmut Schmidt. They spent more than amonth in summer at the Thermal Spraying Technology R＆D Laboratories, and they have experienced our
research and development work on thermal spray technology and our business activities. We also deepened
mutual understanding between German and Japanese culture through exchanges of both work and private timewith our employees.

Activities by overseas interns

Budget for Community and Social Contribution Activities
A "Budget for Community and Social Contribution Activities (Annual)" was established to help fund CSR
activities. From it, donations were made to support the damage caused by Typhoon No. 19 in October 2019
and to support the prevention of the spread of COVID-19 in June 2020.

39

For Shareholders and Investors
We promote IR activities from the perspective of our shareholders and investors, therefore prompt and accurate
information disclosure is the underlying tone.
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 shareholders
and investors.
In disclosing information, we comply with legal disclosure standards and disclosure rules set forth by the stock
exchanges.
IR associated tools

Quarterly and annual securities reports
Financial Results (Quarterly)
Newsletter to Shareholders
Fact Book
IR information from company briefing materials forinvestors on the website
Investor relations information can be found in detail on
this page.

40

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 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 viewing various disclosure materials, we are
improving 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
the Investor Expo

Investor Expo
exhibition brochure

Dividend Policy
Dividend was JPY 25 per share in fiscal 2019.
We consider the return of profits to shareholders to be an important management policy, and strive to pay stabledividends of the profits made by business performance. At the same time, we actively strive to enhanceshareholder returns.
In fiscal 2019, we paid a dividend of 25 yen per share (including an interim dividend of 12.5 yen). As a result, thedividend payout ratio (consolidated) was 34.5%. Retained earnings will be allocated to R&D and capital
investment, which are indispensable for business growth and strengthening the corporate structure, in order toenhance our medium-to long-term share value through business development and expansion.

41

Business Continuity Activities
Risk Management

Risk Management
Implementing thorough measures in the event of a disasterOur risk management system is based on the CSR Committee's cross-sectional oversight of the status of risk
management and 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 and financing, and export management, we acquaint andprovide each department in charge with rules, guidelines, and manuals. In the event of an unexpected situation,
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 occurred, and establishes a system for responding appropriately.
We also conduct annual disaster prevention drills in preparation for an emergency. Our main sites conduct fire
drills and large-scale disaster response drills for hypothetical cases such as an earthquake or tsunami. At thesame time, we also stockpile emergency meals and other supplies at each site in order to be prepared fordisasters.

42

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 anemphasis on the following concepts.

Prioritize the safety of employees and their families,
customers, and business partners.
Ensure thorough risk management for business continuity.
We launched measures to prevent infections in February, and, on March 1, we established a COVID19 Response Headquarters headed by President. At the time of the announcement of the Emergency
Declaration on April 7, we also decided on measures that same day to prevent the spread of
infections, such as avoiding the 3Cs while keeping our plants operating. We implemented measures
under the slogans of "Don't catch it!" "Don't transmit it!" and "Don't bring it in!" during commutes, sales
activities, and internal operations. These measures are still being implemented with reviews as of
October, months after the Emergency Declaration was lifted in May. To ensure business continuity,
some activities are being gradually returned to their previous status, while necessary measures arebeing strengthened.
In spite of the COVID-19 situation, we do our utmost to meet our customers and respond to theirrequests. We will continue our efforts to contribute to society through surface modification
technologies.

43

Specific Countermeasures
TOCALO Initiatives (January 2020 - End of June 2020)(Scope of Report: TOCALO Domestic Facilities)

01 - 03/2020
Confirmation of COVID-19 infections and prompt
launch of measures to prevent the spread of
infections in Japan.
1/16 First confirmation of infections in the country
February
Donated masks to
subsidiaries in China.
Checked employees’
temperatures before work
every day.

Staggered work hours
Self-restraint on businesstrips

Promotion of web
conferences
Guidance on wearing
masks

March
3/9 Advocating the Expert Meeting "avoiding 3Cs"
Established COVID-19
Response Headquarters

Refrain from visiting as
much as possible

Promoting 3Cs avoidance
measures at Dining Halls

Allowing driving to work to
avoid public
transportations

44

Formulation of
Attendance Standards for
COVID-19
countermeasures

04 - 05/2020
Emergency Declaration, Enhancing Measures
April
4/7 Declaration of state of emergency issued to seven prefectures
Telework Promotion

Distribution of 50 masks
per employee, requested
wearing of masks to all

Training of new
employees shifted to webbased trainingMay
5/27 Emergency declaration lifted:
Resumption of customer
visits (prior approvals
from customers required)

06/2020 Responding to new lifestyles and flexibly shifted
measuresJune
6/19 Government announced phased easing

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

45

Work Style
Staggered work hours

Web conferencing

Implemented to avoid the 3Cs duringcommuting. It also helped to reduce the densityof locker rooms and dining halls.

We actively implemented web conferences inorder to avoid the 3Cs. We can also interact withpeople far away immediately and see theirfaces. This led to more efficient business
operations.

Telework

Driving to work

Introduced telework actively todivisions/departments capable of such work
style. We were able to participate in web
conferences from home as well and were able touse time effectively.

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

Daily operations
Temperature
measurement
anddisinfection
Alcohol disinfectant
bottles were set out invarious locations topractice frequentdisinfection.
Temperature wasmeasured for both
employees andvisitors, and safetymeasures weretaken.

Wearing masks
We distributed masks
to all employees, andduring their duties,
they wore masks
except for wheneating and drinking.
In late June, in light of
the transition to Step
2 of government
announcements andthe need to prevent
heat strokes, wemade some minorchanges to theregulations.

Kitakyushu Plant

Cafeteria
We removed seatsfrom one side andprevented face-toface seating during
meals. At some sites,
we divided
employees into twogroups and staggeredlunch time.

Headquarters

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Tokyo Plant Suzumi
WorkshopBusiness Sites
Use ofconferencerooms
In order to avoid the3Cs, we held
meetings with a large
number of people
online, and we set
certain space
between seats inconference rooms. In
addition, we moved
the desks of ouroffices to make use of
vacant conference
rooms.

Desk layout
We rearranged desks
to avoid face-to-faceseating and create
space in-between.
Between desks,
shields were installed
to prevent spread ofdroplets.

Kobe Plant* The shields are marked
with dotted lines in thephoto.

3Cs
Countermeasuresamong workers
Manufacturing sites
have relatively moredistance between
workers, but there arealso cases where
people work at close
distance. In suchcase, the 3Cs
avoidance measures
were taken with vinyl
sheets, etc., withcareful considerations
to safety of workers
and products.

Tokyo Plant Gyoda
Workshop* The photograph has been partially edited.

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Headquarters

VOICE Implementation of Telework
Environment Division General Manager Takeuchi Junichi
We decided to recommend teleworking to continue
our business amid travel restrictions due to COVID19. I have been able to smoothly shift toteleworking, partly because I have been using web
conferencing through meetings with overseas
customers and subsidiaries on a regular basis.
Other office staff seem to have been able to makethe transition without confusion, partly because anenvironment equipped with company-provided PCs
was in place.
Monthly meetings, which had conventionally been
During a remote interview
held at the corporate headquarters with around 20
people from across the company, have also been
held online under the current situation. From Tohoku to Kyushu, it was a good change as
everyone recognized that remote meetings could be easily conducted without having to movepeople from distant locations.
As a manager, I have also seen some issues. Although I had devised ways to communicate withmy subordinates such as by chatting, I cannot say that I was able to communicate satisfactorily. I
also find it difficult to evaluate their work since it is hard to see the progress they make.
In the post-Covid world, we will continue teleworking because we can reduce traveling and it isenvironmental-friendly. We intend to continue to work on the issues that we have seen this time,solve them and then take advantage of them.

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TOCALO Co.,Ltd. Environmental Report 2020
Editor's Postscript
Environmental Division
TOMOKA YAMAWAKI
Thank you for reading the 2020 edition of our Environmental Report. I am
Tomoka Yamawaki, and I was in charge of preparing the first environmental
report.
In preparing the environmental report, we felt that it was difficult to collectinformation. This time, I focused on the article on COVID-19
countermeasures, but I struggled to find where to start and how to put
together the collected information. Though the article was completed, the measures against COVID-19
will continue in the future. We hope that our measures to prevent the spread of infection will ensure
the safety of employees to the end of COVID-19 crisis.
We will continue to work diligently to meet the expectations of our stakeholders, and we appreciate
your continued efforts.

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