SUMITOMO RUBBER GROUP

2021
Integrated Report

SUMITOMO RUBBER GROUP

3-6-9, Wakinohama-cho, Chuo-ku, Kobe,
Hyogo 651-0072, Japan
Sustainability Promotion Headquarters
sustainability@srigroup.co.jp

https://www.srigroup.co.jp/english/

Certified by the Ministerof the Environment
Sumitomo Rubber Industries, Ltd.
has been certified as an Eco-First
company by the Minister of theEnvironment of Japan.

The Sumitomo Rubber Group is pulling together to fulfill

Through innovation we will create afuture of joy and well-being for all.

its various social responsibilities while contributing to thecreation of a sustainable society by applying its futureoriented high-tech skills and research and development
capabilities, efforts that will ensure it continues to be truly
valuable for people, communities and society.

Tire Business
The Sumitomo Rubber Group’s Approach to
Value Creation

SportsSustainability Activities Undertaken by the
Sumitomo Rubber Group

Our Philosophy—A Cornerstone for Sumitomo   Rubber Group Operations�����������������������������������������������3

Fiscal 2020 Targets and Results����������������������������������������45

Our Philosophy�������������������������������������������������������������������4

Social: Our Social Initiatives�����������������������������������������������55

Top Commitment ���������������������������������������������������������������5

Governance ���������������������������������������������������������������������59

Progress Report on Our the Midterm Plan���������������������������9

Environmental: Our Environmental Initiatives����������������������47

Honors and Certifications from Outside Organizations�������69

A Message from the Chief Financial Officer........................17
A Message from the Officer in Charge of Human Resources���19
The Sumitomo Rubber Group Value Chain������������������������21

Financial Section���������������������������������������������������������������71

The Growth Track�������������������������������������������������������������23

Independent Verification Report/Third-Party Remarks�������75

Value Creation Model��������������������������������������������������������25

Global Network�����������������������������������������������������������������77

Risks and Opportunities ���������������������������������������������������27

Investor Information����������������������������������������������������������78

Identifying Priority Issues and Promoting Dialogue with Stakeholders���29
Business Overview������������������������������������������������������������31
Key Management Resources��������������������������������������������37

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Corporate Data

Integrated Report 2021

Business

Industrial and Other Products
Business

Editorial Policy
The purpose of this report is to generate new opportunities for dialogue with a wide range of stakeholders bycommunicating the initiatives we are undertaking to accomplish sustainable growth for the Sumitomo RubberGroup. In 2021, we worked to make our disclosure of ESG-related information even more extensive. Informationon the Company’s general efforts and more detailed information on activities not included in this report can beobtained on our website. The content of this publication is based on information disclosed as of February 2021.

Scope of this Report
With coverage focused primarily on Sumitomo Rubber Industries, Ltd. and its six factories in Japan, this report includes information on some bases and group companies in Japan and overseas.

Referenced Guidelines• “Guidance for Collaborative Value Creation” published by the Ministry of Economy, Trade and Industry• The International <IR> Framework created by the International Integrated Reporting Council (IIRC)• “Sustainability Reporting Standards” published by the Global Reporting Initiative (GRI)• “Environmental Reporting Guidelines 2018” published by the Ministry of the Environment (MOE)

Period of the Report Fiscal 2020 (January 1, 2020 to December 31, 2020), with some information 

WebsiteEncompasses detailed information in each category

Corporate
Information    Message from the PresidentOur Philosophy/Management
Policy/History Global Network: World/Japan(including Group companies)
Corporate GovernanceNews Releases• Company Outline*Japanese only

Offering an informative
look into select items• Value Creation Model• Tire Business• Sports Business

Publishing Date June 2021
Third-Party Comments• Industrial and Other Products
Business

Information Disclosure Structure

Quarterly Financial Report
Financial Briefing Materials*
Fact Book
Securities Report*
Shareholder Newsletters*

Integrated
Reportfrom outside of this period

Comments from an expert are included to present an objective perspective on this report. (See page 76.)

Financial
Information

Business
Activities• Sustainability
Management• Materiality• GRI Guideline Index• MOE Guideline Index

Sustainability Activities
and Other Non-Financial
Information

To facilitate stakeholders’ understanding of the Sumitomo Rubber Group, our corporate website features various sections encompassing corporate information, financial information, and descriptions of our business andsustainability activities. The content of this report is selected to cover essential information in each category.

Integrated Report 2021

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The Sumitomo Rubber Group’s Approach to Value Creation

Our Philosophy—A Cornerstone for Sumitomo RubberGroup Operations
For us to achieve further business growth in a time of uncertainty and volatility like the current moment, we mustrefresh our understanding of our reason for being and clearly define it in a way that establishes unwavering guidelines for Group employees and resonates with all of our stakeholders.
Based on this recognition, we have established Our Philosophy, a new corporate philosophy structure.
Our revamped corporate philosophy structure upholds the fundamental ideas of “fulfilling our responsibilities tosociety as a good corporate citizen,” “pursuing greater happiness for all Group employees,” and “living up to the
expectations of our customers.” These ideas are firmly grounded in the Sumitomo Business Spirit, which has long
been passed down by Sumitomo Group entities.

Our Philosophy
Purpose Our Reason for Being

Through innovation we will create a future of joy
and well-being for all.
Story Our Beliefs
A unique belief in the material possibilities of rubber.
A track record of multiple world firsts through industry-leading rubber technology and, beyond that, relentlessdedication to the innovation and development of new technologies.
A singular focus on creating value that exceeds expectations in response to the trust our customers and society

The Origins of the Sumitomo Business Spirit

place in us.

Masatomo Sumitomo, the founder of the Sumitomo Group, left behind writings known as “Monjuin Shiigaki” (“The Founder’s

We are Sumitomo Rubber Industries, and this is what we are for.

Precepts”), which provide a set of principles and guidelines for merchants to abide by.
His teachings have supported the business operations of the Sumitomo Group throughout its 400-year history, passed down fromgeneration to generation in the form of the “Sumitomo Business Spirit,” whose essence was more recently condensed into the modern “Business Principles” of the Sumitomo Group.
Containing such principles as “The business activities of Sumitomo must benefit not only Sumitomo, but must also be of benefit to
the nation and to society as a whole,” the Sumitomo Business Spirit reflects Sumitomo’s strong sense of duty to society. To this day,the Sumitomo Business Spirit still forms the basis for the Sumitomo Rubber Group’s own Corporate Mission.

Supporting individuals, society and the future; creating a future of joy and well-being for all through innovation.

Vision The State to Which We Aspire

Uniting our diverse strengths, growing together, driving and thriving on change.
The SRI Way The Values We Hold
Being reliable and worthy of trust	
Facing forward with honesty and integrity, responding to the trust
our customers, our colleagues and our society place in us.

The Sumitomo
Business Spirit• Integrity and Soundness

Seeking out challenge
Being unafraid; having the courage to persist in the face of failure.
Valuing one another	Understanding and respecting each other’s individuality and perspectives.
SloganRubber and Beyond, Driving Our Future• A Company Is Its People• Esteem for Technology• Mutual Prosperity

Sumitomo Rubber Industries’ reason for being.
What do we exist to do?

A wooden statue of Masatomo Sumitomo(Photo provided by Sumitomo Historical Archives)

Monjuin Shiigaki (Circa 1650)(Photo provided by Sumitomo Historical Archives)

PurposeThe underpinnings of our Purpose.

Story

VisionThe beliefs that shape Sumitomo Rubber Industries.
The state we aspire to in order to bring our Purpose to life.
The values each member of Sumitomo Rubber Industries holds

The SRI Way

in order to realize our Vision and embody our Purpose.

The Sumitomo Business Philosophy provides the basis of

The Sumitomo Business Spirit

Our Philosophy and is the heritage of wisdom accumulated
since its foundation 400 years ago.

Our Philosophy is a layered structure comprising three components—
Purpose, Vision, and The SRI Way—with the Sumitomo Business Sprit, longa guiding principle for all Sumitomo Group members, serving as its bedrock.
Purpose, the uppermost concept in this structure, is coupled with Story,
which represents the beliefs informing this Purpose.

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Integrated Report 2021

Directly below these components is Vision, which represents the state towhich we aspire as a company in order to embody Purpose.
The SRI Way is the third component and represents the values every member of Sumitomo Rubber Industries embraces in order to realize our Visionand embody our Purpose.
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The Sumitomo Rubber Group’s Approach to Value Creation

TOP COMMITMENT
have been able to maintain steady sales of SUV tires in spite of the recent
market downturn. This has given us a renewed appreciation for the market
strength of products backed by advanced technology. Meanwhile, working
to cope with the “New Normal” of life with COVID-19 has brought to light awhole new set of challenges and so we have responded to these newchallenges through Group-wide efforts to fully utilize digital technology inorder to bring about changes in terms of how we interact with customers
and, in tandem with the rise of telework, even in terms of how we work.
Thanks to tireless hard work on the part of employees throughout the
Sumitomo Rubber Group, we not only were able to respond flexibly to thepandemic while minimizing its negative impact on our business performance, but also made sure and steady progress in tackling the challenges embodied in the Three Key Value Drivers set forth in our Midterm
Plan. In light of this, we have decided not to change our performancetargets for 2025. Rather, we will continue working toward the achievement of our Midterm Plan goals while adding to and revising our actionplans as necessary.

Further Enhancing
Our Economic
Value & Our Valueto Society
Satoru Yamamoto
President & Representative Director,
President and CEO
Sumitomo Rubber Industries, Ltd.

Firstly, my heart goes out to all of those who have lost their lives to thenovel coronavirus (COVID-19). I would like to take this opportunity tooffer my deepest condolences to all of the families who are now grieving
as a result of COVID-19 and to pray for the swift recovery of each andevery person currently afflicted with this terrible disease. At the sametime, I would also like to take this opportunity to express my heartfelt
gratitude and admiration to all of those who continue working tirelessly
to provide medical care and prevent the further spread of infections on
the front lines of medicine all over the world, all while facing ongoing
concerns about the possibility of new outbreaks and lingering uncertainty
about what the future holds in store.
In February 2020, the Sumitomo Rubber Group unveiled our new
Midterm Plan, which aims to achieve sales revenues of ¥1 trillion andbusiness profit of ¥100 billion by the year 2025. However, not long after
we made this announcement, COVID-19 began to spread throughout theworld. In light of the pandemic, we made the health and safety of ouremployees and their families our top priority. Once assured that theirhealth and safety were sufficiently secure, we next turned our attention to
the matter of how best to keep our business up and running under thecircumstances, focusing our efforts on various measures intended to keep
the impact of the pandemic on our business performance to a minimum.

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Integrated Report 2021

Project to Reinforce the Foundations of Our Business(Be the Change Project)

In February, we established a Crisis Management HQ in order to share
information throughout our global group in a timely manner while also
sending a strong message to our employees around the world, reassuring
them that we would surely overcome these times of hardship together.
The first half of last year was marked by a drastic deterioration in
overall market conditions, which meant that, in addition to implementing
extensive measures to protect our employees from infection, we wereleft with no choice but to take such emergency operational measures as
halting production at several of our factories. At the same time, however,we were proceeding with steady preparations in anticipation of a strong
market recovery once the situation improved. And so, as market conditions began to improve from the second half of the year (first in China
and North America), our group was able to respond swiftly to the consequent uptick in demand. As a result, we not only succeeded in increasing
our sales, but even achieved an increase in profits for the second half ofthe 2020 compared to second half of 2019.
Even in the midst of the pandemic, we nevertheless continued to pushahead with efforts to tackle the challenges defined in our Midterm Plan
while adding to and revising our action plans as necessary according to
the changing situation. For example, by accelerating various efforts withthe aim of “Developing & Promoting Sales of Advanced Products,” we

In 2020, the COVID-19 Pandemic brought massive changes to the lives
and daily routines of people around the world. Meanwhile, the automotive
industry was and is still in the midst of a “once in a century” transformation, while advances in digital technology have led to significant changes
in consumer behavior across all industries. In other words, even before
the pandemic, the business environment was already changing in various
ways and the pace of this change is only increasing. I believe that, if weare to respond flexibly to these changes and achieve the goals of ourMidterm Plan, it will be essential that we harness the full capabilities ofour entire workforce. Since becoming the president of Sumitomo Rubber
Industries, I have actively taken advantage of numerous opportunities tovisit our group companies throughout the world and to talk with as many
employees as possible about the work being done on the front lines ofour business as well as about what they are thinking. My interactions
with our colleagues in various positions left me with a strong desire toturn the Sumitomo Rubber Group into a corporate group that can bring
together the combined strength of all of our employees while amplifying
and focusing this strength on a common vector in order to propel ourbusiness forward.
This desire would become the impetus behind the formation of our“Be the Change Project” (BTC Project), an initiative that we launched lastyear with the aim of “Reinforcing the Foundations of Our Business.”
Specifically, this project aims to “Reinforce Our Foundation for
Profitability” and “Improve Our Organizational Framework” by overcoming
organizational barriers and promoting the free and open exchange ofideas and opinions in order to strengthen vertical and horizontal connections among our employees so that these connections may serve as thebasis for tackling various challenges together.
I fully believe that these activities will enable us to strengthen our corporate culture and establish a sturdy profit structure, one that is competitive, adaptive to change and resilient in the face of adversity, thereby
endowing us with a strong corporate framework that will remain unshaken
by whatever environmental changes we may face in the future. It is myhope that this project will prove effective not only in terms of changing

how our employees carry out their day-to-day work, but also on the levelof changing the mindset of our employees. Through this process, we will
also be creating a corporate culture in which all members of our diverse
workforce can truly spread their wings and fly. Toward this end, corporate
executives must first change themselves and then lead by example. We
need to think less in terms of optimizing our own departments and morein terms of customer perspectives as well as the big picture of our entire
group (which also means breaking down organizational barriers). We
need to work together as a team with a strong emphasis on cooperation
between departments. We need to share information openly and engage
in active debate while respecting the diversity of ideas and people. We
need to have the courage to take that first step forward when faced witha challenge. We need to boldly tackle the challenges of major and complex issues. These are the kinds of messages that we are now sending toour employees on a daily basis in the interests of spurring change.
As part of these initiatives, we are also actively promoting Work Style
Reform. Based on the belief that stronger vertical and horizontal connections give rise to greater results, we have been forging ahead withreforms on two fronts: promoting Diversity & Inclusion (D&I) and promoting Digital Transformation (DX). With more than 39,000 employees
worldwide, the Sumitomo Rubber Group will be working harder than everto create a corporate culture in which diverse employees can respect one
another, work freely and openly and truly shine while doing worthwhilework. Meanwhile, advances in DX will free up more time for our workers,
giving them the leeway needed to take on the challenges of performing
work that produces even more added value. In this way, I hope to seeeach of our employees find genuine job satisfaction by harnessing his/her own strengths and talents to their fullest. At the same time, communication is absolutely essential to promoting these new kinds of work
styles. I firmly believe that our employees can accomplish great things byforging strong vertical and horizontal connections among themselves.
The activities of the BTC Project form the cornerstone of our full-fledged
efforts to bring about real Work Style Reform.
Since kicking off in earnest in April 2020, the BTC Project has pushedforward with various activities intended not only to change the mindset
and the behavior of each and every employee for the better, but also tocreate new value, reduce costs, generate cash flow and so forth. Already,these activities have produced more than 4,000 new ideas, which arecollectively worth some ¥30 billion in added cash flow and ¥10 billion in
added profit. Through these activities, the capabilities of each and every
employee and by extension the combined capabilities of our entire organization, are already steadily improving, thus leaving our organization
better able to produce results. While this cross-organizational project
started out as a series of top-down directives from the Project
Headquarters, it has now expanded to spawn a growing number of offshoot projects intended to enhance our overall value and these are now
primarily driven by ideas percolating upward from departments throughout our group. This is a sure sign that our employees, not content to sit
around and wait for somebody else to bring about change, are now
beginning to act with the courage to take that first step forward andbring about change on their own.
Moving forward, I would like for us to continue to expand this project
and forge ahead with efforts to reinforce the foundations of our global
business so that we can make the Sumitomo Rubber Group into an evenmore appealing corporate group, all the while maintaining a reasonable

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The Sumitomo Rubber Group’s Approach to Value Creation

TOP COMMITMENT

sense of anxiety about the crises that we currently face as well as hopefor a brighter future, with both in equal measure.

Progress on Our Midterm Plan
The Midterm Plan that we announced in February of last year aims toenhance our group’s economic value as well as our value to society by
maximizing results from the global business framework that we built up
in the years leading up to 2020, by advancing our vision for bringing
new value to tires—as embodied in our “SMART TYRE CONCEPT”—tothe next level and by building a strong corporate structure that canwithstand any and all changes in the business environment throughactivities to “Reinforce the Foundations of Our Business.” All of these
efforts will be driven by Three Key Value Drivers: “Developing &Promoting Sales of Advanced Products,” “Creating New Value” and“Promoting ESG Management.”
Maximizing Results from Our Global Business Framework
Thanks to various investments that we have made to date, the Sumitomo
Rubber Group now possesses a network of production factories and sales
companies situated near major demand centers throughout the world(including, of course, Japan). Among all of the major tire manufacturers
in the world, only a small handful of our competitors have thus far beenable to build a comparable global network for both manufacturing andsales. What this means is that our customers now have all the more reason to have very high expectations of us. While our factories in North
America and South Africa still have some issues to work out, they arenevertheless pushing ahead with sure and steady improvements. We will
be sure to get both of these key production bases on the right track sothat we can finalize a supply network that is not only truly global, but thatis also capable of providing a uniform level of quality and service anywherein the world. In particular, supplying our tires to global automobile manufacturers worldwide will drive us to further enhance our technical capabilities while simultaneously serving to enhance our position as a trusted
manufacturer in the consumer market for replacement tires. Moving forward, we hope to fully harness the potential of our global framework inorder to better respond to the needs of our customers around the world.

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Integrated Report 2021

Advancing SMART TYRE CONCEPT to the Next Level
Our SMART TYRE CONCEPT embodies our vision for bringing new value
to tires and the Sumitomo Rubber Group is now actively engaged inefforts to advance this concept to the next level.
When it comes to “Tires Providing Solutions for Safety & Peace ofMind,” we are actively engaged in the development of new systems thatwill take fuller advantage of our existing “Deflation Warning System” (whichis already available on the market) and SENSING CORE Technology(which transforms tires into sensors to detect road conditions) by sharing
various types of information gleaned from tires through the cloud so that
this information can be put to use for the benefit of all. The Sumitomo
Rubber Group will continue working to advance our SMART TYRE
CONCEPT technology, taking it to the next level so that we can create
the tires and services of the future, by which we mean tires and services
that provide longer lasting safety and even actively avoid hazards.
When it comes to “Tires Incorporating Life Cycle Assessment,” we willcontinue working to develop tires that have less environmental impact
throughout their entire life cycles, from production and sales throughusage and ultimate disposal. Toward this end, we have already developed and released tires that incorporate biomass materials and are now
working to develop tires that feature even higher levels of biomass content as part of our ongoing efforts to contribute to the creation of a sustainable society.
Three Key Value Drivers
Our Midterm Plan defines Three Key Value Drivers for propelling ourongoing efforts to enhance both our group’s economic value and ourvalue to society: “Developing & Promoting Sales of Advanced Products,”“Creating New Value” and “Promoting ESG Management.”
When it comes to “Developing & Promoting Sales of Advanced
Products,” our “ENASAVE NEXT III” has received widespread acclaim not
only for incorporating our proprietary Performance Sustaining Technology,
but also as the world’s first tire to adopt Cellulose Nanofiber, an advanced
biomass material being promoted by the Japanese government as a priority industry. At the same time, thanks to our robust “Trilateral R&D
Network” (with bases in Japan, the United States and Europe), we havebeen working together with automobile manufacturers in each region toadvance the development of tires for electric vehicles (EVs) in order tomeet rising demand for EVs in major markets throughout the world. The
Sumitomo Rubber Group will continue to take full advantage of our proprietary materials and design technologies to develop tires that can bringout the full performance potential of EVs.
When it comes to “Creating New Value,” we will offer a growing lineup
of solutions services to ensure customer safety and peace of mind while
also improving operational efficiency for reduced costs. This includes Tire
Pressure Management Services that take full advantage of our proprietary SENSING CORE Technology, which transforms tires themselves into
sensors, thus allowing for the detection of information on road conditions(such as slipperiness), tire conditions (tire load, etc.) and so forth without
requiring the installation of sensors or other additional hardware. As thistechnology advances further, it will become possible for vehicles todetect and even avoid upcoming hazards related to tire or road conditions
by taking advantage of comprehensive data gleaned from tires and thencompiled and shared at the city or even society level through the cloud.

Through ongoing cooperation with external partners, the Sumitomo
Rubber Group will continue working to provide total solutions to respondto the needs arising from CASE and MaaS, thereby creating new valuethat goes beyond tires.

The Spirit Behind Our New Corporate Philosophy
Framework – Our Philosophy
In order for the Sumitomo Rubber Group to achieve further growth while
adeptly responding to a business environment that is increasingly uncertain and fraught with drastic change, we felt that the time had come for
us to redefine the purpose of our existence in a way that would provide
steadfast guiding principles for all of our employees and fully resonate
with all of our stakeholders.
Thus, in December 2020, we promulgated “Our Philosophy,” a newcorporate philosophy framework that clearly defines the Purpose of theSumitomo Rubber Group not merely in terms of the simple pursuit ofprofit, but with a particular emphasis on carrying out sustainable business activities in harmony with society and with the environment. It is ourhope that Our Philosophy will align all of us on the same vector by serving
as the basis behind our decisions and the impetus behind our actions,
thereby creating a powerful driving force to propel our group ever fastertoward the accomplishment of our strategic goals.
From the beginning, the “Sumitomo Business Spirit” has served as thebasis for decisions within the Sumitomo Group throughout its nearly 400
years of history. The Sumitomo Rubber Group has been no exception,
turning to it regularly as we engaged in various business activities over
the years and even weaving it into our own corporate philosophy, which
was first promulgated in 1963. Since then, although we have revised thecontents of our corporate philosophy in keeping with changing times andchanges to our business, we have nevertheless continuously upheld thebasic ideals enshrined in the Sumitomo Business Spirit, such as “fulfilling
our responsibilities to society as a good corporate citizen,” “pursuing
greater happiness for all of our employees” and “living up to the expectations of our customers.” While still maintaining these basic ideals, wehave now overhauled our corporate philosophy framework in the form of“Our Philosophy.” At the pinnacle of Our Philosophy is our Purpose,
which states the very reason for our existence: “Through innovation wewill create a future of joy and well-being for all.”In addition, we have also devised a new corporate slogan, a simple
statement reflecting the worldview espoused by Our Philosophy: “Rubber
and Beyond, Driving Our Future.” The phrase “Rubber and Beyond” has
two meanings: it refers to both “cutting-edge rubber technology” and“expanding the possibilities of rubber to develop new technologies andprovide new value.” Meanwhile, the phrase “Driving Our Future” reflects
our desire to bring joy to the hearts of all who come into contact with our
products and services, driven by the boundless flexibility and endlesspossibilities of rubber materials. I believe that what the world now needsfrom the Sumitomo Rubber Group is for each and every one of us tocontinue tackling the challenges of creating and providing greater “joyand well-being” to uplift people, society, the environment and the future.
We hope that our newly defined Purpose will serve as the basis for all ofour decisions and as the impetus for all of our actions in both our workand our management so that we may contribute to the development andcontinuing prosperity of a more sustainable society as envisioned by theinternational community.
With the aim of fully living up to the ideals enshrined in Our Philosophy,
the Sumitomo Rubber Group is already actively tackling various challenges
in order to develop products with less environmental impact and to create
the tires and services of the future for greater safety and peace of mind.

Social Contribution Activities Based on the Sumitomo
Business Spirit
In keeping with the Sumitomo Business Spirit, which has been passed
down through generations over nearly 400 years of Sumitomo history, theSumitomo Rubber Group actively promotes and engages in various social
contribution activities, including the provision of free-of-charge tire safety
inspections, collecting employee donations through our “Sumitomo Rubber
CSR Fund” and the “Team ENASAVE Mirai Project,” which is a joint program undertaken in cooperation with the National Federation of UNESCO
Associations in Japan with the aim of promoting activities to preserveboth the environment and traditional culture. One of the highlights of oursocial contribution efforts is our ongoing “GENKI Activities,” employee
volunteer activities that first started out as “activities to invigorate everyone” (“genki” means “lively” in Japanese) and that have now continued
for over thirty years. As part of these activities, employees at eleven of
our facilities throughout Japan have created “GENKI Forests” by collecting acorns, cultivating them into saplings and then planting them tocombat deforestation. GENKI Activities also include activities to protect
endangered species and other biodiversity conservation efforts, as wellas various other volunteer activities that altogether involve some 16,000
employees and their family members each year. Moving forward, theSumitomo Rubber Group will continue to actively promote and engage inactivities that aim to invigorate local communities and the earth.
By working to create new value in terms of both our economic value andour value to society, we at the Sumitomo Rubber Group continually strive
to contribute to the creation of more sustainable societies in which people can live and work safely and with peace of mind. In the future, wewill continue working to produce even greater economic and social
throughout all of our business activities as only the Sumitomo RubberGroup can.

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The Sumitomo Rubber Group’s Approach to Value Creation

Value Drivers
Developing & Promoting
Sales of Advanced Products

Further Enhancing
Our Group’s
Economic &Societal Value

Creating New Value

Progress Report on Our
Midterm Plan

Promoting ESG Management

Efforts to Generate Profits

Shortly after we unveiled our Midterm Plan in February 2020, our business was impacted by the onset of the
COVID-19 Pandemic. Nevertheless, we have continued to run our business surely and steadily in accordancewith the framework set forth in our Midterm Plan while adding to and revising our various action plans asnecessary according to changes in market conditions and work styles.

Challenges of
New Markets

Moving forward, we will continue working to further enhance both our economic value and our value to societyEntering New
Business Fields

with an emphasis on improving the quality of our earnings and ensuring the sustainability of our business, withall of these efforts driven by our Three Key Value Drivers.

Efforts to Reinforce
Our Organizational Framework“Be the Change” Project to Reinforce
the Foundations of Our BusinessInsatiable Drive for Innovation

Maximizing Results from Our Global Framework
SMART TYRE CONCEPTTo the Next Level

2020

Anticipating Recovery in the Tire Industry

Graph 1

Global Tire Gross Demand Forecast*1“Be the Change” — A Group-wide Project to Reinforce the Foundations of Our Businesssales in 2020 (at 88) fared somewhat better than overall global
demand that year (at 86). In 2021, we are planning for our sales torecover to 97, which once again exceeds the anticipated recovery inglobal demand (to 95) and represents an 11% increase over 2020.
We are also planning to improve sales mix in addition to volume.
In particular, we are planning to increase sales of Advanced Tires (amarket segment in which we excel) to 113 in 2021 (a 22% increaseover 2020).

Due to the impact of the COVID-19 Pandemic, global demand fortires plummeted in 2020, with annual gross demand falling toapproximately 1.6 billion tires, which is just 86% of the previous year’s
demand level. Further, global demand is not expected to recover topre-pandemic (i.e. 2019) levels until around 2022 (Graph 1).
Graph 2 illustrates global tire demand in 2020 and 2021 (projected),
as well as our group’s sales plan for that same period, compared to2019 figures, which are used as a baseline (set at 100). Our group’s

Graph 2

Our Group’s Total Tire Sales Volume & Advanced Tire Sales Volume

Compared to 2019 Levels (%)(Millions of tires)

2,000

113 Our Group’s
Advanced Tire
Sales Plan*2

1,900

1,800

UP 22%
vs. 2020

100
93

1,700

97 Our Group’s Sales Plan
95 Gross Tire Demand

UP 11%
vs. 2020

88
1,600
86
1,500

80
2019

2020

*1 In-House Estimates (4W Vehicle Tires)

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Integrated Report 2021

2021

2022

2023

2025

2019

2020

2021

*2 Advanced Tires: Passenger Car Tires with a Size of 18” or Larger (Primarily for SUVs)

In order to ensure the accomplishment of our Midterm Plan, in
2020, we launched the “Be the Change Project” to “Reinforce Our
Foundation for Profitability” and “Improve Our Organizational
Framework.” Since then, we have engaged in various crossorganizational activities that aim to generate cash flow and raise thebar in terms of cost competitiveness while working to bring to lightmajor issues affecting multiple areas of our organization so that we
can then move forward with improvements and so forth.
Involving many employees throughout our group, our efforts toenhance our cash flow generation capabilities have brought together
both top management and frontline workers in actively working todesign and carry out activities to promote and instill proper cashflow management practices.
Meanwhile, project teams formed mainly of members from our
Manufacturing Division and Procurement Division have been leading efforts to enhance our cost improving capabilities by working to
improve the overall efficiency of our procurement of raw materials
and equipment.
To date, these activities have already generated over 4,000 ideas
for improvement measures, which are collectively worth some ¥30billion in added cash flow and ¥10 billion in added profit. Moving
forward, we will steadily put these ideas into action one after anotherso that we can be sure to reap these benefits.
When it comes to “Improving Our Organizational Framework,” wehave been pushing forward with Group-wide activities to shed lighton organizational issues (such as the organizational barriers thathave arisen as a natural consequence of our rapid growth andexpansion) so that we can then move forward with improvements.
In order to transition toward work styles that encourage the proactive tackling of challenges, we have expanded our internal job posting system and established a new system that allows employees toexperience working in different departments for a fixed period oftime. In addition, we have also set about reforming our personnel
system, beginning with a shift to a job-based personnel system for
managers from April 2021 as the first step. At the same time, ourentire group is actively pushing ahead with Work Style Reform as
well as efforts to promote Diversity & Inclusion.
Aims of Activities to Reinforce
the Foundations of Our Business

Reinforcing Our
Foundation for
Profitability

Improving Our
Organizational
Framework

Outcomes of Activities

Enhancing Our Cash Generating
Capabilities
Enhancing Our Cost Improving
Capabilities

Implementing New Systems to
Encourage Challenges
Implementing New Job-Based
Personnel System

Integrated Report 2021

10

The Sumitomo Rubber Group’s Approach to Value Creation

Progress Report on Our Midterm Plan

Manufacturing & Sales Bases Established in Major Markets Worldwide

A Global Framework for Enhancing Our CompetitivenessGlobal Manufacturing& Sales Network

Manufacturing Bases

Sales Bases

Trilateral R&D Network(Japan/USA/EU)

Building Stronger,
Trust-Based Relationships
with Automakers

3 Pillars of Our
Global Framework

Expanding OE Fitment toTake Advantage of a Ripple
Effect for Replacement
Tire Sales

Europe/Africa Region

Japan/Asia Region

Americas Region

Factories:	Augmenting
Production Capacity

Factories:	Updating Equipment
for Advanced Tires

Factories: Augmenting Production Capacity

Sales:	Expanding Sales to
Non-Japanese OE

Sales:	Solid Foundation
Already in PlaceSales:	Sure & Steady Expansion

R&D Network to Respond to the Evolving Needs of Each Market
Global Supply Network

One of the Key Challenges set forth in our Midterm Plan is“Maximizing Results from Our Global Business Framework,” andwe are now tackling this challenge on three fronts: “Global
Manufacturing & Sales Network,” “Trilateral R&D Network (Japan/
USA/Europe) and “Global Supply Network.”
With manufacturing and sales bases in major markets throughout
the world, the Sumitomo Rubber Group has already established thenecessary framework to directly supply products and services thatmeet the diverse needs of our customers throughout the world. At
the same time, we have built a Trilateral R&D Network with bases ineach major region so that we can develop products that better
meet the localized needs of each market.

Meanwhile, on the supply side, in addition to harnessing the fullproduction capacity of our factories around the world in order topromote local production for local consumption, the Sumitomo
Rubber Group has established a flexible supply system that allows
us to supplement local capacity by shipping tires from our flagshipfactory in Thailand (one of the largest tire factories on earth and thecenterpiece of our global supply network) directly to markets allover the world. Through the measures discussed above, we willleverage this enhanced responsiveness in order to reinforce thefoundations of our business by building stronger, trust-based relationships with automobile manufacturers with an eye toward
expanding OE fitment so that we can then take advantage of a ripple effect to increase replacement tire sales.

In order to more adeptly respond to the distinct needs of each market, we have established a Trilateral R&D Network that includes
development bases in three major regions: Asia (which includes
Japan and China), Europe and North America. This robust framework enables us to better respond to the increasingly stringent performance demands of automobile manufacturers worldwide while
accelerating the development of advanced tires for electric vehicles
in preparation for their rapid proliferation in the near future.
Our Tire Technical Center in Japan serves as our main development headquarters, where we engage in advanced materials
research and advance the development of cutting-edge technologies while developing high-performance tires and other strategic
products for global markets as well as tires designed for local

markets in Asia (including Japan and China). In China, our development and sales teams are working hand-in-hand to expand our supply business with Chinese automobile manufacturers in response torising market share, focusing in particular on efforts to increase OE
fitment on electric vehicles. In 2020, we also established the necessary infrastructure for performing live vehicle testing in China.
In both Europe and North America, our local technical teams areable to respond swiftly to the needs of automobile manufacturers
by developing tires that are well-suited to local conditions in eachmarket. In the future, we are planning to expand the scope of their
responsibilities to cover development for Africa and South andCentral America as well.

Trilateral R&D Network
Europe Technical Center

Tire Technical Center (Japan)

USA Technical Center

Current State of Our Global Manufacturing & Sales Network
The current state of our global manufacturing and sales network by
region is as follows: First, in Japan and the rest of Asia, we havealready established a robust network of cost-efficient manufacturing bases, where we are now in the process of updating equipment
to increase production capacity for SUV tires in order to keep pacewith evolving market needs. Moving forward, we will continue working to maintain steady sales in Japan and China as the main driverof profits in the region.
Next, in Europe and Africa, our factory in Turkey (our main supply
base for markets in Europe) has made steady progress in augmenting production capacity and is now working to maximize the advantages of economies of scale with an eye toward simultaneously
expanding our supply of tires to European automobile manufacturers and increasing replacement tire sales in the region. Meanwhile,

11

Integrated Report 2021

our factory in South Africa is pushing ahead with ongoing efforts toimprove productivity while transitioning to the production of highvalue-added products.
Lastly, in the Americas, in addition to our steadily increasing
overall sales in North America, our factory in the United States has
also made great strides in improving productivity, thereby bringing
our overall North American Business closer and closer to achieving
profitability. Meanwhile, our factory in Brazil has increased production capacity to promote local production for local consumption
while building up a robust local sales network, which has enabled
our South American business to make significant improvements interms of both pricing and sales mix. Thanks to these improvements,
we are now well on our way to establishing a solid foundation forstable profitability in the region.

EuropeanMarketAsian Market(Japan & China)

AmericasMarketAccelerating Our Response to Evolving Automaker Performance Demands for Electric Vehicle Tires, Etc.
Developing Replacement Tires to Respond to Market Needs in Each Region Worldwide

Integrated Report 2021

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The Sumitomo Rubber Group’s Approach to Value Creation

Progress Report on Our Midterm PlanOur Business in North America
Expanding Sales Volume & Market Share in the North American Market
Bolstered by strong sales of our FALKEN brand tires, our overallsales in North America increased in 2020 even as market
demand plummeted as a result of the pandemic. All signs currently indicate that this sales momentum will likely continue
through 2021 and beyond.
Thanks to steadily increasing sales volume and market share

Increasing Replacement Tire Sales Volume*
FALKEN Brand Tires(Millions of Tires)

10

7.5

8.1

8.6

9.1
Further Increase in Sales
Volume Anticipated in 2021

6.5

in the North American market over the past several years, in
2020, FALKEN became the fifth most popular brand of passenger car tires by market share in the region. In keeping with its
expanded market share, FALKEN’s price position has alsosteadily improved, thereby making a solid contribution to thefurther expansion of our overall business in North America.

Expanding Our Supply Capacity for the North American Market
In light of strong sales in the North American market and thereassuring pace of improvement at our factory in the UnitedStates, we recently made the decision to invest in increasing
production capacity at our USA Factory as well as at our major
export bases in Japan and Thailand. With these investments,
we will greatly enhance our ability to respond to market demand(and especially demand for SUV tires) in North America by
expanding our overall supply capacity with a combination of
locally produced and imported tires.
With an investment of ¥10.1 billion, we will introduce the latest labor-saving production equipment at our USA Factory,
thereby increasing the factory’s annual supply capacity by 1.8
million tires (for passenger cars and light trucks).
Meanwhile, having determined that the provisional anti-dumping

tariff rate proposed for tires imported to the United States fromThailand (if ultimately imposed) would have only a minor impact
on our business in the region, we have also decided to invest a
combined total of ¥10.8 billion to increase production capacity
at our factories in Japan and Thailand. Taken together, theseinvestments in our factories in the United States, Japan and
Thailand will increase our group’s supply capacity for the North
American market to the tune of 3.8 million tires per year.
In addition to the abovementioned investment in increasing
supply capacity for passenger car and light truck tires, we arealso planning to invest in increasing production capacity fortruck and bus tires at our factory in the United States, thus
bringing our total planned investment in our USA Factory to¥12.8 billion.

5

0
2016

2017

2018

2019

2020

*In-House Sales Statistics

Expanding Market Share
FALKEN Brand Share of Replacement Passenger Car Tire Market
(%)

5.0

5

3.5

3.5

3.5

3.0

Ranked 5th Among
Tire Brands(2016: 10th)

2.5

Expanding Regional
Wholesale/Retail Sales
Toward Further Increasing
Market Share

0
2016

2017

2018

2019

2020

Source: Modern Tire Dealer

Responding to Increased Sales in the North American Market by Expanding Supply Capacity at
Our Production Bases in the United States, Japan & Thailand by 3.8M Tires (for SUVs, etc.) per Year

Steady Improvement in FALKEN’s Price Position

Strategic Product for the North American Market

Strong Sales of Our Popular
WILDPEAK Series Contributeto Increased Market Share

Thailand Factory

Miyazaki
Factory (Japan)

USA Factory

Shifting to SUV Tire
Production

Shifting to SUV Tire
Production

Investing in
Increased Capacity

4,150 Tires/Day
1.45M Tires/Year

1,600 Tires/Day
560k Tires/Year

5,500 Tires/Day
1.8M Tires/Year

Increased Supply from Investments in Capacity Increase & Equipment Updates Starting in 2022 & 2023

13

Integrated Report 2021

Integrated Report 2021

14

The Sumitomo Rubber Group’s Approach to Value Creation

Progress Report on Our Midterm Plan

Promoting ESG Management

Progress on Value Drivers to Accomplish Our Midterm Plan

Developing & Promoting Sales of Advanced Products
One of our leading Advanced Products, “ENASAVE NEXT III” hasreceived numerous awards, including the prestigious Energy
Conservation Grand Prize “Agency for Natural Resources andEnergy Director-General’s Award.” In addition to enhanced overalltire performance, ENASAVE NEXT III also achieves both longer lasting performance and improved fuel efficiency thanks to the adoption of a revolutionary new “Hydrogenated Polymer” material.
Further, ENASAVE NEXT III is also the world’s first tire to incorporate “Cellulose Nanofiber,” an advanced biomass material promotedby the Japanese government as a priority industry initiative. Thanks
to these advances, ENASAVE NEXT III has received widespreadacclaim as a product that deftly apprehends and responds toevolving market needs.
At the same time, we have also been accelerating the developmentof tires designed for electric vehicles. In 2020, we developed tires
that not only reduce rolling resistance in order to achieve improved
fuel efficiency, but also provide superior grip and wear resistance

performance thanks to our proprietary compounding technology.
These tires were recently adopted by Toyota Motor Corporation as
factory standard tires for their MIRAI line of fuel cell vehicles.
PEcoPro Awards – Eco Material AwardPSuper Monozukuri Parts Awards – Japan
Brand Prize
PEnergy Conservation Grand Prize – Agency
for Natural Resources and Energy DirectorGeneral’s AwardENASAVE NEXT III

The Sumitomo Rubber Group is now engaged in initiatives that aim
to achieve carbon neutrality (i.e. reduce net CO2 emissions by100%) at all of our factories by the year 2050.
Our Scope 1 initiatives have involved proactive energy conservation efforts, including the introduction of cogeneration systems andthe active utilization of IT to reduce various types of energy loss.
Moving forward, we are planning not only to augment these efforts,
but also to transition away from the use of fossil fuels entirely by
replacing the fossil fuels that we currently use with hydrogen, biomass fuel and other renewable energy sources that are being hailed
as the future of energy. For example, we are already in the process
of exploring the possibility of using hydrogen energy to power our
major tire factories in Japan.

Initiatives to Achieve Carbon Neutrality

PGoal for 2050: Reducing Factory CO2 Emissions by 100% (Scope 1 & 2 Initiatives)
PDeveloping Products Incorporating Biomass Materials (Scope 3 Initiatives)
Scope 1
Targeting Direct Emissions of Greenhouse
Gases from Our Business Activities

Creating New Value
Our proprietary SENSING CORE Technology is a software-based
technology that analyzes wheel speed signals (which are transmitted
as a tire rotates) in order to detect various conditions pertaining totire status, such as a decrease in tire pressure. What sets SENSING
CORE apart is the fact that it uses tires themselves as sensors,
meaning that it requires no additional sensors or other hardware andis completely maintenance-free. Our SENSING CORE tire pressure
sensing technology has already been adopted in over forty million
vehicles to date.

DWS*

Tire
Pressure

Wheel
Load

We have also recently made further advancements in our
SENSING CORE Technology, establishing a new technology thatcan detect tire wear status. With this advancement, SENSING
CORE is now able to detect tire wear in addition to tire pressure,tire load and road conditions. With these and other proprietary
technologies, we aim to contribute to the advancement of the
Mobility Society of the Future by responding to the new needs thatwill arise from the rapid rise of CASE and MaaS.

Road
Conditions

15

Integrated Report 2021

P Augmenting Energy Saving Activities
P Expanding Solar Power Facilities at Factories

Targeting Indirect Emissions from Usage ofElectric Power from External Sources

P Actively Purchasing Green Energy(from Natural, Renewable Sources)

Scope 3

P Promoting the Development of Products Incorporating
More Biomass Materials (Tires, Golf/Tennis Balls,
Artificial Turf)Other Indirect Emissions(Not Covered in Scope 1 or 2)

World’s First*1

World’s First*2

100% Fossil Resource-Free
Tires Made from All-Natural
Resources (2013)

Tires Incorporating HighPerformance Biomass Material:
Liquid Farnesene Rubber (2016)

Tires to Incorporate HighPerformance Biomass Material:
Cellulose Nanofiber

Tire
Wear

“Creating Joy & Wellbeing for All”

CASE: An acronym for “Connected, Autonomous, Shared & Services,Electric,” CASE is used as a keyword to reflect the growing
importance of mobility services that involve multiple industry
sectors as a consequence of the rise of electric vehicles and
IoT, etc.

P Introducing Renewable Energy Sources(Hydrogen, Biomass, etc.)

Scope 2ENASAVE 100*DWS: Deflation Warning System

Our Scope 2 initiatives involve the installation of additional solar
panels as well as plans for expanded procurement of Green Energy.
Our main Scope 3 initiatives will involve working to develop products that include more biomass materials throughout all of our linesof business. In 2013, the Sumitomo Rubber Group released ourgroundbreaking “ENASAVE 100,” the world’s first 100% fossil
resource-free tires made from all-natural materials. Taking advantageof the technologies that we refined in the development of “ENASAVE
100, we have since released multiple products that incorporate various advanced biomass materials, such as “Liquid Farnesene
Rubber” and “Cellulose Nanofiber.” Moving forward, we will continue
working toward achieving carbon neutrality for the future throughthe development of products that feature ever greater proportionsof biomass materials.

*1 Since the use of synthetic rubber became standard in tires.
(According to In-House Research)

Further Increasing
Usage of Biomass
Materials

ENASAVE NEXT III*2 According to In-House Research

MaaS: Short for “Mobility as a Service,” MaaS refers to integrated
mobility services that provide greater convenience to users bybringing together all manner of transportation modes (taxies,
buses, trains, airplanes, etc.) on a single, unified platform sothat users can efficiently select, reserve and pay for transportation all in one place.

Integrated Report 2021

16

The Sumitomo Rubber Group’s Approach to Value Creation

A Message from the Chief Financial Officer
Dividends per Share (as of February 9, 2021)

Review of Financial Results
ond quarter—of the fiscal year ended December 31, 2020 (fiscal 2020). Although market conditions began to recover in the second half, albeit in varying degree from region to region, our overall performance remained sluggish throughout the fiscal year.
Consolidated Performance Summary for Fiscal 2020

(Billions of Yen)

2019

893.3
54.4 (6.1%)
33.1 (3.7%)
12.1
2.6%
5.2%
0.7X

2020

Y-o-Y Change

790.8
43.4 (5.5%)
38.7 (4.9%)
22.6
4.9%
4.3%
0.6X

89%
80%
117%
187%

*1 Business Profit = Sales Revenue – (Cost of Sales + Selling, General and Administrative Expenses): In line with changes in our accounting policies, business profit for fiscal 2019 and thefirst quarter of fiscal 2020 has been retrospectively restated.
*2 Gain (Loss) on foreign exchange and derivatives: Jan. to Dec. 2020: Negative ¥7.1 Billion; Jan. to Dec. 2019: Negative ¥2.5 Billion*3 Profit attributable to owners of the parent company as calculated according to IFRS.
*4 ROA: Business Profit / Total Assets*5 D/E Ratio: Figures for 2019 and thereafter reflect the adoption of IFRS 16 (Leases).

Breakdown of Fiscal 2020 Financial Results
Despite various difficulties in the first half of the year, we strove to seize
opportunities arising from recovery in demand in the second half, rallying the combined strength of our entire group to expand sales andincrease profit. Consequently, while sales revenue and business profit
totaled ¥790.8 billion and ¥43.4 billion, down 11% and 20% yearon-year, respectively, operating profit stood at ¥38.7 billion, up 17%.
Moreover, profit attributable to owners of the parent company came to¥22.6 billion, up 87% compared with the previous fiscal year.
Sales revenue declined considerably due to a significant deterioration in the overall sales environment, reflecting the impact of the
COVID-19 pandemic, and business profit similarly decreased. On
the other hand, operating profit and profit attributable to the ownersof the parent company grew year-on-year thanks to such factors as
a substantial decrease in the amount of impairment losses on goodwill and noncurrent assets compared with the previous fiscal year.
Financial results by business segment are as described below.
Tire Business: Sales revenue totaled ¥679.9 billion, down 11%
year-on-year, while business profit amounted to ¥40.9 billion, down
12% year-on-year. Due to the fallout from the COVID-19 pandemic, demand was extremely sluggish in the first half of the year.
However, we strove to seize opportunities arising from the recovery
in market conditions that began from the second half, rallying the
combined strength of our entire group to expand sales. As a result,
we succeeded in improving sales revenue in the second half to alevel equivalent to 97% of our revenue figures from the same periodof the previous fiscal year, largely regaining ground lost since theonset of the pandemic. Moreover, our business profit in the second
half was 123% of our profit figures from the same period of the previous fiscal year, representing a year-on-year increase of ¥7.9 billion.

150

55

50

has been extremely severe, with market conditions deteriorating significantly in the first six months—and particularly in the sec-

Sales Revenue
Business Profit*1 (Rate)
Operating Profit (Rate)*2
Profit Attributable to Owners of the Parent Company*3
ROE
ROA*4
D/E Ratio*5

(%)

70
60

Due to the global fallout from the novel coronavirus (COVID-19) pandemic, the business environment surrounding our group

Nevertheless, the decline in our first-half performance was such thatthese upturns in the second half were insufficient to fully offset ourpoor showing in the first half. Thus, our annual sales revenue andbusiness profit were both down in year-on-year terms.
Sports Business: Sales revenue totaled ¥70.3 billion, down
17% compared with the previous fiscal year, while overall businesslosses totaled ¥0.7 billion. Fallout from the COVID-19 pandemic
caused demand for golf goods and tennis equipment to plummet
in the first half of the year, leading to a significant decrease in salesof these products. As such, annual sales revenue was down significantly in year-on-year terms. As a result, our Sports Businessultimately posted a loss in fiscal 2020. Looking at our second-halfresults, however, we saw a steady recovery in overseas sales, withbusiness profit in the second half growing compared with the same
period of the previous fiscal year.
Industrial and Other Products Business: Sales revenue
amounted to ¥40.7 billion, a figure that is virtually unchanged fromthe previous fiscal year. Business profit was ¥3.2 billion, down 7%
year-on-year. Sales of rubber parts for medical applications andvibration control dampers remained steady. Moreover, due to the
COVID-19 pandemic, we saw growing demand for rubber gloves
and other positive factors that bolstered sales growth. On the other
hand, our business was also negatively affected by a decrease insales of precision rubber parts for office equipment as manufacturers of printers and photocopiers reduced production volume as wellas various other negative factors arising out of the pandemic.
Taking all of the above factors into account, our annual consolidated business profit was ¥43.4 billion, down 20%, or ¥11.0 billion,
year-on-year.

We consider the return of gains to shareholders to be a matter
deserving of the utmost priority. Accordingly, our basic policy
is to ensure a long-term, stable stream of shareholder returns
based on comprehensive consideration of dividend payout ratios,
performance prospects, retained earnings levels and other such
indicators on a consolidated basis. We also fully intend to utilize our
retained earnings as a means of securing funds for capital expenditures, R&D and other forward-looking investments with the aim of
expanding our group’s earnings base well into the future.

17

Integrated Report 2021

120*

55

50

100

35

30

50

20

40

31

10
0

41

45

2020

2021 Forecast

0

2017

2018

2019

2020

2021 Forecast

2017

(FY)

2018

2019

(FY)

Note: The dividend payout ratio for fiscal 2019 would amount to 48% if impairment losses
recorded in said fiscal year were excluded.

Our Financial Strategy for Achieving
Our Midterm Plan Objectives
Hiroki Ishida
Director and Senior
Executive Officer

Q

Please tell us about your policy on capital
expenditures.

Currently, our principal aim with respect to investment is to boost production capacity for Advanced Tires in line with our efforts to expand
sales in markets throughout the world. In fiscal 2020, our capital expenditures totaled ¥41.9 billion, which represents a decrease of ¥16.2 billion
year-on-year and reflects a more restrained investment policy implemented in response to the impact of the COVID-19 pandemic. By contrast, we plan to invest a total of ¥59.0 billion in fiscal 2021. Reversing
our previous policy of reining in investment in our overseas factories, wewill now undertake various capital expenditures with the aim of increasing our group’s overall production capacity. At the same time, we will
also be working to update existing manufacturing lines at our domestic
factories to allow for increased production of Advanced Products.
Meanwhile, the Sumitomo Rubber Group’s factory management techniques are now being embraced by those working at our USA Factory
just as strong sales of our FALKEN brand tires are propelling the growthof our business in North America. Thus, our ongoing efforts to improve
productivity and quality since acquiring this factory are now beginning toyield sure and steady results. Thanks to these factors, we felt confident
enough to greenlight major capital expenditures to increase the factory’s
production capacity in a manner that will put us ahead of the competition when it comes to capitalizing on recovering demand coinciding withthe resumption of economic activities in the United States. This investment is expected to total US $122 million (approximately ¥12.8 billion).

Trends in Capital Expenditures and Depreciation
Capital Expenditures

Overseas

62.5

10.0

Investing CF

140.0

58.1
49.3
51.8

50.2

41.9

70.0

50.9

41.8

46.9

38.0

34.9

-70.0

86.0
-24.6

-42.1

20.6

0

2017

2018

2019

2020

82.8
17.3

91.5

77.9

28.0

-65.5

-63.4

2018

2019

-45.6

-100.7-140.02021 Forecast (FY)

123.5
76.1

0

29.0

2016

Free CF

128.2

59.0

30.0
20.0

We are currently striving to ascertain the specific measures needed
to yield positive cash-generating effects via improvements in working
capital and the efficiency of capital expenditures. Our fiscal 2020 cash
flow figures included a ¥32.0 billion increase in cash flows from operating activities compared with the previous fiscal year, thanks mainly to adecrease in inventory levels. Cash flows from investing activities similarly
improved, with a ¥17.8 billion increase in cash inflows due to such factors as a decrease in overall capital expenditures. As a result, free cash
flow grew from positive ¥28.0 billion in fiscal 2019 to positive ¥77.9
billion in fiscal 2020.
Striving to push ahead with these and other cash-generation activities,
we will work to introduce various new measures to generate cash while
also striving to lock in solid results from our existing cash-generating
measures. We will thus aim to expand our cash flows in order to improve
our overall financial position with the ultimate aim of achieving sustainable growth and the further enhancement of our corporate value.

Operating CF

66.9
50.9

49.6
45.7

Please tell us about the progress being made inyour efforts to improve cash-generating capabilities as part of the “Be the Change” project.

Q(Billions of Yen)

70.0

40.0

Going forward, over the medium term, we will continuously strive to
make improvements in terms of cost factors while also working to dilute
fixed costs attributable to capital expenditures that we have undertakenwith the aim of increasing production capacity.

Cash Flow Trends

Depreciation(Billions of Yen)

50.0

As for the year-end dividend for fiscal 2020, we decided to pay¥35 per share, up ¥10 per share from our initial dividend forecastof ¥25 per share, which we had announced alongside our financial results for the first nine months of the year. Our current planfor fiscal 2021 calls for paying annual dividends of ¥50 per share,comprising an interim dividend of ¥20 per share and a year-end
dividend of ¥30 per share.
Looking ahead, we will strive to ensure stable shareholder returns
throughout our business management and operations.

55

40

60.0

Our Stance on Shareholder Returns

Dividend Payout Ratio (as of February 9, 2021)

(Yen)

2016

2017

2020

(FY)

*Figures for 2019 and thereafter do not reflect the adoption of IFRS 16 (Leases).

Integrated Report 2021

18

The Sumitomo Rubber Group’s Approach to Value Creation

A Message from the Officer in Charge of Human Resources

The Sumitomo Rubber Group is determined to achieve the goals of the Midterm Plan despite the COVID-19 pandemic and,Reinforcing Our Business Foundations

to this end, is engaged in the BTC Project, which aims to reinforce its business foundations.

Masatsugu Nishino
Senior Executive Officer,
General Manager,
the Human Resources &General Affairs Department

Taking on the Challenge of Simultaneously Enhancing Our Organizational Framework andProfit Base to Reinforce Our Business Foundations

Other (to be launchedas necessary)

Integrated Report 2021

Business in China

19

PPromoted interaction with companies in different sectors to jointly effect careerdevelopment training and exchange information
PFacilitated mutual understanding among employees via round-table events
PProvided an even broader scope of employees with training aimed at addressing unconscious bias

Digital strategies

PDistributed “D&I 101” educational materials featuring a mascot character named “Chabo”
PDeveloped a “JOB Return System” and “temporary leave to accompany
spouse overseas system”
PDeveloped various programs allowing employees to flexibly leave the workplace temporarily without the risk of wage deduction, including hour-unit
leave, child-nursing leave, flextime and remote working (currently under trial)

Domestic sales

Main Initiatives to Promote Women’s Success

Production

from 1.3% in 2010 to 3.5% in 2020 and, although this ratio surpasses
the rubber industry’ average, we are engaged in initiatives to double thisratio to 7% by in 2025, knowing that the representation of women in our
workforce must be improved further.
In fiscal 2021, we formulated an advisory team consisting of female
employees from various departments. This team is striving to identify relevant workplace issues and develop new proposals in a way that heeds
the voices of women serving as active components of our workforce. In
addition, preparations are under way to introduce a mentoring systemthat provides female employees with career development assistance via
dialogue with their more experienced peers within the Company.
Thanks to these and other initiatives, in fiscal 2009 we became the firstcompany in the tire industry to be certified for the “Kurumin” mark basedon the Act on Advancement of Measures to Support Raising NextGeneration Children. Since then, in 2019 we were granted “L-boshi (second level)” certification, which is given by the Minister of Health, Labourand Welfare only to businesses that have superior arrangements forencouraging the active participation of women. Moreover, we were granted the upgraded “L-boshi” (third level) certification in November 2020.

Solutions

We have defined our Vision—the state to which we aspire and a component of Our Philosophy—as “Uniting our diverse strengths, growing
together, driving and thriving on change.” To realize this Vision, efforts are
currently under way to promote diversity & inclusion (D&I). Specifically, we
aim to foster a corporate culture that empowers people with diverse backgrounds, such as women, foreign nationals, people with disabilities andmembers of the LGBTQ community, to earn success. To this end, we are
striving to enhance the understanding of diversity among all employees.
Thus far, initiatives in this area include the distribution of messages
from the President addressing D&I topics and Work Style Reform with theintention of conveying a policy of simultaneously promoting the creationof a culture that respects diversity and the digitalization of operations.
We have also hosted mandatory lectures for all managers to help raise
their awareness of unconscious bias, which could constitute a barrier
to D&I. In addition, in an effort to help all employees, regardless of rank,
properly understand these matters, we have provided seminars withsimilar coverage. We are also aware that the removal of barriers inhibiting women’s success is a matter of particular importance among diversity issues. Accordingly, we have raised the ratio of female managers

Logistics

Ensuring That Our Vision Is Embraced by All and Enhancing Employee Understanding of Diversity

Business portfolio strategies /management infrastructure
Purchasing

In addition, e-learning and other skill-enhancement programs are available to individuals who voluntarily apply for supplementary training toaddress skills-related issues identified via the feedback sessions.
Moreover, we maintain boost programs that take a cross-hierarchy
approach. These programs are designed to address essential mattersrequiring unified understanding among all employees throughout theorganization, such as how to put “Our Philosophy”—our new corporate
philosophy structure—into practice, while helping to improve their problemsolving capabilities.

Measures to improve profitability

Capital expenditure

The BTC Project is intended to create a corporate culture that empowers
diverse human resources to earn success via organizational transformation.
As part of efforts to create such a culture, in 2020 Sumitomo Rubber
Industries introduced a system in which all individuals in managerial
or higher positions, including the President, take part in mandatory
360-degree feedback sessions. With the aim of continuously upgrading their approaches, mindsets and skills for better leadership, these
individuals are presented with anonymous feedback from their teammembers, colleagues and leaders that they are asked to study in depth.

M TFs launched in 2020   M TFs to be launched in 2021

Companywide
measures

Working capital

Launching 360-Degree Feedback Sessions for All Individuals in Managerial Positions, Including the President

PLaunched seven task forces (TFs) in 2020 to address issues related to the organizational framework and profit base
PPlans call for launching additional TFs in 2021 to update our business portfolio strategies
PMore than 600 employees are working together to promote the project, taking a cross-regional, cross-departmental
approach

Investment judgment anddecision making

tangible changes in employee behavior, with a great number of individuals becoming adept at utilizing their ties with interdepartmental peers aswell as swifter at executing their duties. In addition, we have seen steadyprogress in the development of measures aimed at generating greater
cash and profit thanks to a total of more than 4,000 employee proposals.
In 2021, our plans call for expanding the scope of the BTC Project toinclude improving and strengthening the business strategy planning process as well as formulating measures to generate growth opportunities
via the use of a selection and concentration approach. By doing so, wewill push ahead further with reinforcing our business foundations.

Objective: Simultaneously improve the Group’s organizational framework and profit base todefinitively achieve the goals of the Midterm Plan.

Organizational framework andhuman resource strategies

Currently underway, the aim of the “Be the Change” (BTC) Project is
to reinforce our business foundations by improving our organizationalframework and enhancing our profit base, and more than 600 employees have come forth to take part in the planning of relevant measures
beyond departmental boundaries. To improve our organizational framework, we have been reviewing our personnel systems while implementing new training programs. To enhance our profit base, we have been
engaging in a variety of initiatives aimed at reducing costs, systematicallygenerating cash and otherwise securing profit in a sustainable manner.
Over the course of a year under the BTC Project, we have witnessed

Be the Change (BTC) ProjectNote: The project name is based on a famous quote from Mahatma Gandhi: “You must be the change you want to see in the world.”

PReinforce our business foundations by simultaneously improving our organizational structure and profit base.
PWe began to see tangible changes in employee behavior while making progress in the formulation of
measures aimed at generating greater cash and profit.

Changes in the behavior of a
growing number of individuals
Employing interdepartmental ties with peers

Improve our organizational framework
Identify issues affecting
specific departments and/or multiple departments
and improve themSpeedier execution of duties

Enhance our
profit base

Having a stronger sense of ownership

Secure the capability
to constantly
generate profit

Helping foster a culture that commends those who succeed
Mutually encouraging the pursuit of challenging goals

Mechanisms for accelerating related initiatives

More than 4,000 measures proposed

PDirect management-employee interactions via online sessions (involving more than 2,000 individuals)
PPeriodic round-table events attended by President and employees
PRevision of personnel and organizational systems and theimplementation of new training regimes
PDevelopment of measures aimed at transforming employee
modes of communication

Launch a variety of measures encompassing areas of production, technology, marketing, and administrative operations to create new value, contain every cost element, andotherwise generate cash
(Expected to yield ¥30.0 billion in cash and ¥10.0 billion in profit)

Integrated Report 2021

20

The Sumitomo Rubber Group’s Approach to Value Creation
Tires,
Sports,Industrial andother products

Sumitomo Rubber Group Value Chain
Product Development

Environment

product development, procurement, production, supply, sales, and after service.
Through these endeavors, the Group is working to achieve sustainable business growth and develop highly competitive new products.

Procurement

Next-generation product development

E

We have created a value chain that takes into consideration ESG (environment, social, and governance) at all stages, including“VEURO VE304,” which incorporates theworld’s first noise-absorbing sponge “SILENT
CORE,” was named a Grand Prix winner under
the DAILY AUTOMOTIVE NEWS Car Parts
Awards 2020 program
WSDT (VEURO VE304)
PDeveloping environmentally friendly products
p. 53
ENASAVE NEXT III
PAdvancing our SMART TYRE CONCEPT p. 53
PDeveloping natural rubber substitute material based on Russiandandelions
WSSRI (Russian dandelions)P“DUNLOP ENASAVE NEXT III,” our flagship fuel-efficient tire, waschosen to receive a Nippon Brand Award under the 2020 Super
Parts Manufacturer Award program
P“ENASAVE NEXT III” also received an Excellent Award under the
3rd Eco-Pro Award program as well as the Agency for Natural
Resources and Energy Director-General’s Award under the Energy
Conservation Grand Prize program

World’s first noise-absorbing sponge “SILENT CORE”
WSDT (SILENT CORE)

Employing the K computerPReceived an Excellent Achievement Award in recognition of large-scale
molecular dynamics simulations of rubbers used in tires, a research
project utilizing High Performance Computing Infrastructure (HPCI)Intellectual capital WSSRI (intellectual capital) p. 41
PRanked No.1 in rubber product industry in terms of patent assets
Period covered: Apr. 2019–Mar. 2020, Patent Result research
Higher quality rubber
PDeveloped “Reduced Odor Natural Rubber,” which provides a significant reduction in the smell of natural rubber
WSSRI (Reduced Odor Natural Rubber)
PNatural rubber plantation and natural rubber processing
WSSRI (natural rubber processing)

Conducting procurement basedon Procurement Guidelines
PConfirming adherence to CSR Code of
Conduct and safety of procured goods
WSSRI (CSR procurement)

Production / Supply
Reducing the environmental impact offactories p. 49

p. 56

Conducting procurement based on
Procurement Guidelines

S
SocialPConfirming adherence to CSR Code of Conduct
and safety of procured goods
WSSRI (CSR procurement)

Creating a safe, employee-friendly
workplace
PPromoting health & productivity management
WSSRI (health management)
PThe Miyazaki factory achieved a record-high 7.5 million hours without accidents involving lost work days,
receiving a “Type 2 Accident-Free Record Certificate”
from the Ministry of Health, Labor and Welfare

Enhancing corporate governancep. 59

Bribery prohibition policyG

WSSRI (products)

PBusiness partner education programs
including CSR surveys and briefings

Green logistics

Promoting green purchasing

WSSRI (curbing global warming through logistics)
PIncreasing the modal shift rate

PReinforcing our environmental footprint
management system, including reducing
hazardous materials in raw materials
WSSRI (green purchasing)

Conducting environmental risk
audits at business partners
PMaking the response by business partners visible and providing leadership for
improvements
WSSRI (green purchasing)
WSSRI (fair and reasonable procurement)

Formulating a sustainable
natural rubber policy
PFormulating a policy to transform natural
rubber into a sustainable resourceWSSRI (Sustainable Natural Rubber
Policy)PEstablished a new subsidiary in Singapore
to ensure the sustainableprocurement of natural
rubber of good quality
p. 57

PExpanding sales through UK-based Micheldever GroupPStarting up the European base (Moved theheadquarters for the Rubber Parts for Medical
Applications Business to Europe in January 2020)

Maintaining complete zero landfill
waste p. 51
PMaintaining our “Complete Zero” landfill waste policyPEstablishing technology for 100% recycling of wastewaterat factories

Obtaining customer opinions and making use of them toimprove products and services
WSSRI (providing product and service information)PLaunched the verification testing of solution services that remotely manage tire pressure
WSSRI (tire pressure management)

Pursuing same quality throughout theworld

Expanding sales of fuel-efficient tires

PHolding Skill Olympics at 12 factories throughout the world
WSSRI (Monozukuri education)

WSDT (fuel-efficient tires (eco tires))PDUNLOP spring campaigns for safe and secure driving in collaboration with radio stations and traffic safety associations in Aichi, Osaka,
Hiroshima, Kagawa and Fukuoka prefectures
WSSRI (radio)

Improving logistics quality
PReducing the burden on drivers (reducing wait time, etc.)
WSSRI (reducing the burden on drivers)

ENASAVE NEXT III

System for compensating customers for flat tires
WSDT (flat tire compensation plans)

Expanding sales of retread tires andreusing waste tires

Providing customer experience using the “XXIO” brandPXXIO Stations: Enabling golfers to give XXIO clubs a try at 20 golf practice ranges
across the nationPXXIO Day: Holding a variety of campaigns by designating 21st of every month as“XXIO Day”

WSSRI (recycling waste tires)

Achieving a good work-life balance
PThe Miyazaki Factory was granted Hinata no
Kiwami employee-friendly workplace certification 1
PThe Shirakawa Factory was certified by Fukushima
Prefecture as an excellent business operator striving to support the upbringing of future generations
thanks to its efforts to promote a harmonious balance between work and private life
PThe Shirakawa Factory was chosen by Fukushima
Prefecture to receive the Fukushima Work-Life
Balance Grand Award 2
PPromoting use of childcare leave by male employees
PDaycare support system
PShortened working hours for childcare

Initiatives to prevent the spread of COVID-19
infection p. 55

1

PLaunched a risk control headquarters
PPromoted remote working and online marketing activities in response toa government request
PDonated rubber gloves to support healthcare institutions combating the
spread of COVID-19
PExpanded our monthly thin nitrile rubber glove production capacity to
2 million pairs
PDonated 3,200 face shields manufactured by the Thailand Factory’s
sports equipment production staff and otherwise contributed to community efforts to combat the COVID-19 pandemic at home and abroad
PCarried out Nationwide Tire Safety Inspections to support safe andsecure driving in a manner that took great care to guard against the riskof COVID-19 infection

Preservation of historical architectural heritage via
the use of our vibration control damper technology
2

BCP measures WSSRI (risk management) 5
Information security WSSRI (information security)

POur vibration control dampers were chosen to be used for the restoration of Kumamoto Castle

Respect for human rights
Promoting diversity

WSSRI (respect for human rights)

PPromoting women’s career success and stepping up human resource
development to this end
PReceived “L-boshi” (third level) certification as an excellent
corporation promoting women’s career success basedon the Act on the Promotion of Female Participation andCareer Advancement in the Workplace
PContinuing to recruit employees with disabilities
WSSRI (diversity & inclusion)
PReleased “Dun-Slope AiR 2,” a portable ramp for wheelchair use thatabsorbs shocks when crossed by a wheelchair p. 36

3Social contribution activities

PThe Izumiotsu Factory concluded a temporary evacuation center agreement with
Izumiotsu City to provide its premises as shelters in the event of a disaster 3
PImplementing the Team ENASAVE Future Project in cooperation with
the National Federation of UNESCO Associations in Japan (NFUAJ) as
well as the Team ENASAVE Green Project 44PHosting the Dunlop Monozukuri Class and the Dunlop Environmental Class

Promoting dialogue with stakeholders p. 57 6
Protecting whistleblowers WSSRI (compliance)
Risk management WSSRI (risk management)

WSSRI (compliance)WSSRI(Sustainable Natural Rubber Policy)

Ensuring thorough compliance5
A nighttime BCP drill carried out
at the Shirakawa Factory

Integrated Report 2021

Reinforcing our sales expansion
efforts in overseas replacement
tire markets

Promoting efforts to improve
quality of business partners

WSSRI (compliance)WSSRI (compliance)

21

Increasing brand value

Promotion of CSR procurement

WSSRI (preventing wrongful conduct)

Governance

p. 12

p. 12

Fostering human resources andmaking work rewardingPGlobal human resource training

Global sales network

PReducing waste disposal
PReducing water usage
PReducing volume of NOx + SOx + dust

Establishing a trilateral global management system
PStrengthening local development system

Sales / After Service

6
A financial results briefing for investors

WSSRI (search keyword) Sumitomo Rubber Industries website https://www.srigroup.co.jp/english/
WSDT (search word) Dunlop Tires website https://tyre.dunlop.co.jp/ (Japanese only)
WSDSS (search word) Dunlop Sports Style website https://sports.dunlop.co.jp/en/
Integrated Report 2021

22

The Sumitomo Rubber Group’s Approach to Value Creation

Fiscal 2020 Sales Revenue ¥790.8 billion
Business Profit* ¥43.4 billion

The Growth Track* Business profit = Sales revenue - (Cost of sales + Selling, general andadministrative expenses)

Over the more than 110 years since our founding, we haveleveraged our proprietary rubber technology as a tire maker toexpand our field of business into sports and industrial products,
thereby helping to achieve a sustainable society.
Bubbleeconomycollapses(Billions of Yen)

900.0

COVID-19
crisis750.0
Great
East Japan
Earthquake

Asian
currency
crisisBankruptcy
of Lehman
Brothers

Great
Hanshin-Awaji
Earthquake

600.0

Sales Revenue / Net Sales

450.0

JGAAP
IFRS

300.0
Plaza
Accord1978
Net Sales ¥114.0 billion
Operating income ¥7.2 billion

150.0

Established 1909

01978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
JGAAP

IFRS

Major Management Accomplishments
1888

J. B. Dunlop 1 commercialized the world’s first pneumatic tire 2

1909

Commenced operation of the Kobe Factory
U.K.-based Dunlop Rubber Company established and began operating Japan’s first modern rubber factory

1963

1986

Acquired Dunlop Tire Corporation in the U.S.A.

2009

1999

1981

Sumitomo assumed management of the Company. Changed nameto Sumitomo Rubber Industries, Ltd.
Entered into a full business tie-up with The Ohtsu Tire & Rubber Co., Ltd. 3

Formed alliance in the tire business with The Goodyear Tire & Rubber
Company in the U.S.A.

2014

1983

Acquired European tire business from U.K.-based Dunlop Rubber Company

2003

1984

Acquired six plants in the U.K., Germany and France as well as
Dunlop Tyre Technical Division in the U.K. 4

2007

Completed the Tire Technical Center 6

Merged with The Ohtsu Tire & Rubber Co., Ltd. 5
2015

Spun off sports businessCompany’s 100th anniversary

Acquired Cleveland Golf

2017

Acquired fitness company Kitz Wellness Co., Ltd. (current Dunlop
Sports Wellness Co., Ltd.), making it a subsidiary
Acquired Lonstroff AG, which manufactures rubber parts for medical
applications, in Switzerland
Dissolved the Tire Business-related alliance agreement and joint ventures with The Goodyear Tire & Rubber Company in the U.S.A.
Acquired the DUNLOP brand overseas operations
Acquired the U.K.-based tire sales company Micheldever Group
Launched the European and U.S.A. Tire Technical Centers

2018

Consolidated the Sumitomo Rubber Group’s Sports Business-related operations
The 130th anniversary of the commercialization of the pneumatic tire 7

1

2

4

3

5

6

7

2020

Established “Our Philosophy,” a new corporate philosophy structure

2015

Completed the New Materials Development Technology “ADVANCED
4D NANO DESIGN”
Announced the “SMART TYRE CONCEPT” for tire technology development

Major Technological Accomplishments and Products Released
1913

Started tire manufacturing, producing the first Japanese-made tire 8

1966

Started mass-production of Japan’s first radial tire “SP3” ❿01930

Started production of Japan’s first golf and tennis balls 9

2000

Released first-generation “XXIO” golf clubs and golf balls A❿

1954

Developed Japan’s first tubeless tire2012

Released “MIRAIE” Vibration Control Units for Detached Housing B

1964

Started production of golf clubs

2013

Released “ENASAVE 100,” the world’s first* 100% fossil resource-free tire
*Since the use of synthetic rubber became the industry standard (based on
Sumitomo Rubber Industries’ own research)

2014

Released “ENASAVE NEXT” tires boasting 50% less rolling resistanceand the coveted “AAA-a” ranking—the highest possible—underJapan’s tire labeling system

2017
2018
2019

2020

8

23

9

Integrated Report 2021

❿0

A

B

C

D

E

Signed an official sponsorship agreement with the Australian Open,
one of the four major tennis tournaments
Released “ENASAVE NEXT III,” the Company’s flagship fuel-efficienttires made using Performance Sustaining Technology based on
SMART TYRE CONCEPT
Released “VEURO VE304,” premium tires boasting the highest levelsof passenger cabin comfort thanks to superior quietness as well as
long-lasting wet grip performance F

F

Integrated Report 2021

24

The Sumitomo Rubber Group’s Approach to Value Creation

Value Creation Model
A unique belief in the material possibilities of rubber. A track record of multiple world firsts
through industry-leading rubber technology and beyond that, relentless dedication to theinnovation and development of new technologies. A singular focus on creating value thatexceeds expectations in response to the trust our customers and society place in us.
Supporting individuals, society, and the future; creating a future of joy and well-being for
all through innovation. We are Sumitomo Rubber Industries, and this is what we are for.

Our
Beliefs

The Sumitomo Rubber Group is committing a variety ofmanagement resources, both internal and external, togrowing the business. Today, based on its newly formulated
Midterm Plan, it is leading the way to further enhancementsin economic and societal corporate value, with the aim ofcontributing to the sustainable development of society.

Key Management Resources (fiscal 2020)

Business Activities and Growth Strategy

Current Status and Medium-Term Targets

Financial Capital

Current Business Activities

Economic ValueSound financial position and stable earnings structure

Total assets

Total equity¥974.8 billion ¥467.1 billion

8.9%

Diverse production network covering Japan and overseas

6

5.1%

Composition ofSales Revenue
by Business
Segment

Manufactured Capital

Domestic

Industrial andOther Products
Business

Sports Business

Tire Business

86.0%

Foreign16

bases

Overseas Sales Ratio 63.8%

bases

Human Capital

36.2%

Number of
consolidated employees

39,298Others

11.2%

Intellectual Capital

p.31

Compositionof SalesRevenue by
Region19.8%

Europe

14.6%

Asia

18.2%

Target Indices
GrowthPotential

Sales
Revenue¥790.8 billion

Sports BusinessProfitPotential

Business
Profit¥43.4 billion

Invested
Capital Profit
Potential

ROE

4.9

p.33

Manufactures and sells golf
clubs, golf balls, tennis rackets
and tennis balls, and manages
fitness club businesses.

Industrial and Other
Products Business

p.35

Provides items ranging from daily life
supplies, such as rubber gloves andproducts used in care-giving, to industrial materials, including artificial turf,
rubber parts for medical applications,and vibration control dampers.

¥24.2 billion

Steadily building favorable relationships with all stakeholders

The number of tires sold

108.83The number of countries inwhich we engage in tire sales

159

millionAt Least

0.6¥1 Trillion¥100 Billion

At Least

0.5

times

10

Contribute to the next-generation
mobility society via the developmentof new technologies and products%

times or Lower

Societal ValueContribution to the United Nations
Sustainable Development Goals (SDGs)

Help curb environmental burden
through our business operations andparticipation in community activities

Realizing a sustainable society

Value Driver
Developing & Promoting
Sales of Advanced Products

Social Capital

At Least%

Financial
Soundness D/E ratio

Abundant intellectual property to drive the next phase of growth

R&D expenses

Create solutions that offer safety,
comfort, and high performance

Target Vision for 2025
Performance

Fiscal 2020

Provides a variety of tires forpassenger cars, trucks, buses
and motorcycles in Japan andoverseas.

North
AmericaJapan

Diverse human resources in which theSumitomo Business Spirit has taken root

Tire BusinessSocietal value being createdCreating New Value
Promoting ESG Management

Enhance our
economic value

Enhance oursocietal value
ESG(Environmental, social andgovernance issues)

Economic value

Societal value

Promote diversity & inclusion

Sustainable growth andvalue creation

Natural Capital
Efficient use of environmental resources to reduce
environmental impact and realize a recycling-based society

CO2 emissions

1,018

25

kt-CO2eIntegrated Report 2021

Water usage

13,068,000

m³

Our Philosophy

The Sumitomo Business Spirit

Deliver improved value
to stakeholders

Integrated Report 2021

26

The Sumitomo Rubber Group’s Approach to Value Creation

To ensure sustainable growth, we steadily link medium- and long-term business opportunities to growth while working to
identify and mitigate risk factors that could impair such growth. In this section, we provide a brief discussion of risks andopportunities related to changes in the business environment going forward as well as the strengths we will leverage for

Risks and Opportunities

Tire
Businessthe future development of the business.

Management Issues

Business Opportunities

Risks

Strengths

PM aximizing the results that wereap from the global businessframeworkPAccelerated motorization due topopulation upsurges and economic growth in India, Africa,
ASEAN, etc.

PP olitical instability in emerging
countries

PDUNLOP brand, which boasts over 130 yearsof history since the commercialization of theworld’s first pneumatic tire and has won publicrecognition throughout the world

PIncreased demand for tires madeof sustainable raw materials andfuel-efficient tires due to tightened
environmental regulations for automobiles and heightened awareness of the global environmentPE mergence of manufacturers
from emerging countries

PDeveloping products to respondto local market needs and everhigher performance demands
PResponding to the various issues
present on the production floor
by using digital technologies
such as AI and IoT and automation to create smart factoriesP
G rowing demand for nextgeneration tires on the back of
the widespread technologicalshift toward CASE and MaaSPJump in the price of raw materials and crude oil

PNatural disasters, pandemics
PFluctuations in demand for wintertires due to rising global temperatures and diminishing snowfall
volumes

SportsBusinessPDeveloping products to respondto local market needs and everhigher performance demands
PS trengthening efforts towards
enhancement of “DUNLOP”
brand value and expand the effectto the entire Sumitomo RubberGroup to generate synergies

PExpanding business opportunities
following the acquisition of trademark rights to the “DUNLOP”
brand throughout the worldPRaising awareness of health andsports among citizens, against
the backdrop of an aging society
PGrowing demand for digital-driven
services and productsPA cautious consumer sentiment
regarding spending for recreational activities due to a lingering sense of future anxiety amid
economic instability induced by
the COVID-19 pandemicPJump in the price of raw materials
PD eterioration in the outdoor
sporting environment due tohigher temperatures and othernegative consequences resulting
from climate change

PPromoting sales expansion in advanced tires, suchas those aimed at the growing SUV tire market
PC reating new economic and societal value by
giving concrete form to the “SMART TYRE
CONCEPT” for the development of tires andperipheral services

PGlobally optimized production infrastructurePDeveloping tires using biomass raw materials thatfeature reduced environmental impact

PWorld-leading simulation and analysis capabilities utilizing state-of-the-art supercomputersand so on

PProviding tire-related solution businesses designed
to help improve driving safety and reduce environmental burden via the use of AI and IoTPTire pressure sensing technologies installed ina cumulative total of 40 million vehicles

PC ontributing to carbon neutrality through thedevelopment of products incorporating a greater
proportion of biomass materials

PBiomass technologies nurtured in the courseof developing fossil resource-free tires

PPopularization of such tire-related
services as those enabling tirepressure management and abrasion monitoring via the use of AI
and IoTPM aximizing the results that wereap from the global businessframeworkPE xtensive product lineup centered aroundthe “ENASAVE” series that complies with thelabeling regulations for fuel-efficient tires

Growth OpportunitiesPP roviding products and services that arebacked and differentiated by superior technicaldevelopment capabilities, such as the utilization of state-of-the-art supercomputers
PBuilding brands and product appeal that havebeen refined at the most elite professional tour
tournaments
PPracticing marketing that is thoroughly basedon user needs and the global marketing capability to support thatPDeveloping & promoting sales of advanced products
PExpanding our Sports Business globally (Golf andRacket Sports Business)
PIn golf, enhancing our presence in North
America, the largest market
PIn racket sports, leveraging the sales power
we have cultivated in tennis balls, the brandpower of Dunlop and our technical development capabilities, to grow sales
PPursuing the diverse value and potential tobe found in sports, so as to further enrich
the customer’s sporting lifePB roadening the scope of operations toinclude AI- and IoT-based services aimed at
assisting sporting activities
PDeveloping products with even lower environmental
footprints by, for example, reducing the volume ofplastics used in packaging and other materials

Industrial
and Other
Products
BusinessPEnhancing research and development systems for high-valueadded products in terms of quality
and functionality, based on rubber
technologyPA ccelerating business developments into Europe and theUnited States, shifting from conventional businesses centered inJapan and other Asian countries
PConstantly optimizing our business portfolio in line with changes in societyPSustained growth in demand forrubber parts for medical applications on the back of expansion in
the global pharmaceutical market
PG rowing needs for earthquake
countermeasures reflecting everstronger public awareness of natural disaster risksPT he emergence of new needs
due to the growing global trend
toward sustainability along with
the increasing importance of
non-financial aspects of corporate activities
PGrowing public hygiene awareness in the wake of the global
COVID-19 pandemic

27

Integrated Report 2021

PJump in the price of raw materials
PP andemic-induced changes ingovernment policies in addition
to restrained investment policies
adopted by the majority of private corporations

PMaintain a portfolio of varied proprietary technologies backed by our rubber technology nurtured
in the course of operating the Tire BusinessPM aintain a broad range of market contact
points, particularly in business fields like infrastructure, disaster risk countermeasures, andhealthcare that have strong affinity with ourpolicy of contributing to society
PMoved the headquarters for the Rubber Parts
for Medical Applications Business to Europe
in 2020 to build a global business operation in
growth markets

PIn rubber parts for medical applications, aim for further
business expansion in growth markets by boosting our
production capacity via, for example, the launch of a newfactory run by subsidiary Lonstroff AG in Slovenia and theaugmentation of facilities at the Kakogawa Factory
PIn the vibration control business, expand the lineup andincrease sales of the “MIRAIE” Vibration Control Units for
Detached Housing, utilizing the vibration control technology used in bridges and buildings
PIn the rubber glove business, initiate the production ofthin nitrile rubber gloves for medical applications via theestablishment of new manufacturing lines
PExplore new business fields that will better position us to meet future needs ina way that fully takes advantage of the diverse resources afforded us by thewide-ranging operations the Group is handlingPDevelop environmentally friendly products via, for example, the use of alternatives
for organic solvents and the incorporation of biologically derived raw materials

Integrated Report 2021

28

The Sumitomo Rubber Group’s Approach to Value Creation

Identifying Priority Issues andPromoting Dialogue with Stakeholders
Priority Issue Identification Process
Our organized efforts to energize sustainability activities andbecome a corporate group deserving of society’s trust date backmore than a decade. In fiscal 2008, we formulated our Activity
Basic Philosophy along with Activity Guidelines that specified fiveareas, namely, “Green (Green initiative),” “Ecology (Ecological process),” “Next (Next-generation product development),” “Kindness(Kindness to employees)” and “Integrity (Integrity for stakeholders),”
comprising 13 indicators.
In fiscal 2011, we identified the priority issues among these 13
indicators in light of their materiality.
In fiscal 2014, we worked to update these priority issues, taking
into account changes in the business environment and resulting
impacts on stakeholders and society.
In fiscal 2015, we further refined the priority of the issues tobe addressed with reference to the requirements of the “GRI
Guidelines (G4)*” and based on a survey of various stakeholders.
Embarking on fiscal 2021, we merged together “Achieving agood work-life balance” and “Promoting diversity” into “Promoting
diversity & inclusion.” This current total of 18 indicators has again
been updated according to priority.
This report presents the results of efforts aimed at attaining our

Taking into account international guidelines and stakeholders’ views, we determined priority issues to be tackled
through our activities.
Having determined priorities in the indicators of the Activity Guidelines, we will push ahead further with these initiatives.

Stakeholder Dialogue
Survey and Questionnaire for Stakeholders
1 Supplier interview surveys
2 Questionnaire targeting readers of
the Integrated Report (including employees)
3 Environmental brand survey
4 Employee questionnaire
5 Comprehensive consumer survey
6 Questionnaire to individual shareholders

We periodically carry out surveys to learn about the various opinions and expectations of stakeholders, and, while taking their views into
account, we also place importance on daily dialogue with stakeholders in pursuing our business activities.
We are conscious of our responsibilities towards stakeholders, and are working to promote communications through a variety of means.

How We Communicate with Stakeholders
Features

Customers

Automobile manufacturers,
manufacturing companies, sales
companies, sports facilities, etc.

Main responsibilities
PQuality management
PDevelopment of safer products
PSafe driving awareness
PProviding product informationand services

Setting of priority items in terms of “Important Issues
for Stakeholders” and “Important Issues for theCommunications method
PCustomer consultation and service
contact
PCustomer response through service
and sales departments
PProviding information via website
and other media
PExhibitions and events, etc.

Sumitomo Rubber Group” based on the survey results
and in light of the “GENKI 5 Key Areas”
Business partners

Rubber raw materials manufacturers, other materials manufacturers, trading companies,
processing companies, etc.

PFair and reasonable procurement

PDialogue through day-to-day business

PCSR procurement

PConfirmation visits to procurement
partners, and feedback
PQuestionnaires to procurement
partners

Determining materiality and prioritization

PExplanatory meetings, etc.

targets for each indicator.
* Global Reporting Initiative: An international organization that issues CSR reporting guidelines. Currently issues the GRI Standards.

Local community

Important Issues for Stakeholders

18 Indicators Included in “GENKI” Activity Guidelines and Priority Issues
4

Creating a low-carbon society

5

Building a recycling-oriented society

6

Promoting environmental footprint management

8

Developing environmentally friendly products

7

Implementing global environmental management

9

Pursuing “safety and comfort,” “economy” and “quality”

17

Promoting dialogue with stakeholders

12

Promoting diversity & inclusion

15

Enhancing corporate governance16

Ensuring thorough compliance3

Preserving biodiversity

1

Helping to curb global warming through tree planting

102

Fostering better relationships with local
communities through tree planting

Fostering human resource development andmaking work rewarding

11

Creating a safe, employee-friendly workplace

Promoting social contribution activities

13

Respect for human rights

18

Supply chain management

14

Residents, municipalities, local
government, educational institutions, and other organizations
near factories and offices

29

Integrated Report 2021

PParticipation in local eventsPGreen initiatives

PCooperation with NGOs and NPOs
in social contribution activities

PPreserving biodiversity

PParticipation in economic andindustry organizations
PDialogue with local governments,
etc.

Shareholders and investors

Number of shareholders: 41,177(individual and institutional investors, etc.)(as of December 31, 2020)

Employees

PReturn of profits to shareholders PGeneral meeting of shareholders
PTimely disclosure of news releases
PEnhancement of corporate
and publications
value through dialogue withPIssuance of financial information
shareholders and investors
including fact books andshareholder communications
PProviding information via website
and other media
PResults briefings, etc.

Sumitomo Rubber Group:
39,298;

PFostering human resources

Sumitomo Rubber Industries:
7,371

PHealth management(male employees: 6,530,
female employees: 841)

PConsideration of work-life balance(as of December 31, 2020)

Important Issues for the Sumitomo Rubber GroupPSocial contribution activities

POccupational health and safety
PDiversity in employment
PConsideration of human rights
PDialogue with employees

PProviding information through internal newsletters, intranet, etc.
PConsultation with labor-management
councils and employee representatives
PCompliance consultation service
PRound-table discussions withpresident to exchange views withmanagement
PIntegrated Report questionnaire, etc.

Integrated Report 2021

30

The Sumitomo Rubber Group’s Approach to Value Creation

Business Overview

Tire BusinessWith a lineup of products that possesses cutting-edge environmental andsafety technology, DUNLOP conducts business primarily in Japan and Asia.

ENASAVE NEXT III

VEURO VE304

WINTER MAXX 03

A fuel-efficient tire that features 50% lessdecline*1 in wet grip performance over time,
incorporates a hydrogenated polymer, andis also the world’s first*2 tire to use cellulose
nanofiber high-performance biomass material
to help achieve a low-carbon society.
Chosen to receive an Excellent Award
under the 3rd Eco-Pro Award program,a N i p p o n B r a n d Aw a rdunder the 17th Super Parts
Manufacturer Award program,and a Director-General of
Agency for Natural Resources
and Energy Award under the
Energy Conservation Grand
Prize 2020 program.

Achieves the highest levels* of passenger
cabin comfort through superior quietness
and high-level steering stability. Furthermore,
it incorporates Performance Sustaining
Technology to prolong wet grip performanceat the maximum level.
Named a Grand Prix winner under the
DAILY AUTOMOTIVE NEWS Car Parts
Awards 2020 program

A studless tire that provides the best on-ice
performance*4 in Dunlop history thanks to
the use of “nano dimpling rubber,” a newtechnology. WINTER MAXX 03 also incorporates Liquid Farnesene Rubber,*5 which contributes to the durability of tire performance.
The tire thus boasts superiority over conventional products*6 in terms of long-lasting
effectiveness.

*3 Among our products*4 Among our products

3*5 A material developedby Kuraray Co., Ltd. for
WINTER MAXX series*6 WINTER MAXX 02*1 Compared with previous ENASAVENEXT II product*2 In-house research

Results of Operations / Major Indicators
Sales Revenue

Business Profit* (Ratio)(Billions of Yen)

(Billions of Yen)

Business Profit

800.0
600.0

756.6 756.6 767.6
648.4

Business Profit Ratio
(%)

80.0

679.9

20

67.9
60.0

400.0

40.0

200.0

58.3

51.2

10.5
7.7

6.7

20.0

0

46.2
6.0

40.9
6.0

0
2016

2017

2018

2019

2020

(FY)

2017

2018

2019

2020

The Group is stepping up marketing mainly in Europe, the United States and Japan by■■ 当期利益

leveraging its lineup of FALKEN brand tires with superior functionality and product quality.

● 当期利益率2018（年度）
Domestic original800
equipment

2019

2020
（%）

3%

3%

-17%
12.0

6%

7%

9.0
-26%

720

15

Overseas original
600

10

400
Domestic replacement

±0%
362

-7%

6.0
-9%

5.5
5.4
Overseas replacement
200

-2%

226
1%

-9%
3.0

equipment

9.0

5

414

Total
0

0
2016

Year-on-Year Increase/Decrease in Tire Sales Volume(FY)

Total sales
2015volume
2016(millions of tires)

4.1

±0%

121

AZENIS FK510

How do you hope to go about realizing your group’s new Corporate Philosophy
Framework: “Our Philosophy?”
As expressed in our DUNLOP Brand Message: “In the Hope of Making Every Day Accident Free,” our Tire Business aims to provide“joy and well-being for all” by manufacturing and selling tires that contribute to the creation of an automotive society that provides greater all-around safety and peace of mind.
Toward this end, we have been working hard to develop tires that feature superior performance in terms of both safety and environmental friendliness, tires that provide longer lasting safety performance and even tires that can actively avoid hazards—all backed by
the innovative technologies of our SMART TYRE CONCEPT. By providing tires that not only ensure safer, more comfortable mobility for
all drivers, but that are also more environmentally friendly, we hope to contribute to the realization of the Mobility Society of the Future.

earned high evaluations thanks to its robust performance supportinghydroplaning and wet grip performance in wet road conditions.

TopicsLaunch of the verification testing of a tirepressure management solution service

Right now, the COVID-19 Pandemic continues with no end in sight. In light of thesecircumstances, how does the Sumitomo Rubber Group plan to harness your strengths
toward accomplishing the Midterm Plan under the New Normal while looking ahead tothe coming Post-COVID World?
Our group is equipped with agile reflexes to adjust course in response to changes in the business environment without losing momentum, and I believe that this ability to take swift action is one of our greatest strengths. Under the New Normal, business practices areundergoing some major changes, as are the links that connect us with our customers. In response to these changes, our group is now
rapidly pushing ahead with various initiatives to take full advantage of DX (Digital Transformation), not only to optimize costs, but also asa means of promoting greater mutual understanding with our customers and building more solid common ground between us.

association in Europe. Through tests conducted by ADAC, this productstable steering and braking in dry road conditions as well as superior

1%2.6 -12%
1.4
0
(FY)
2017 123.61
2018 20192020108.83
124.36

Messages from Corporate Leadership

Integrated Report 2021

by ADAC, or All German Automobile Club, the largest automobile

470*Business profit = Sales revenue –(Cost of sales + Selling, general and administrative expenses)

31

In first place in the comprehensive tire performance ranking sponsored

Jiro Kawase
Executive Officer,
Head of the Domestic
Replace Tire Sales HQ

We have launched the verification testing of a solution service that
remotely monitors and manages tire pressure and temperature.
The aim of this testing is to verify the feasibility of such service
using 30 leased vehicles and 500 rental cars offered by partnercompanies. Specifically, the Tire Pressure Monitoring System(TPMS) is attached to the tires of these vehicles while they operate
in Fukuoka, Miyazaki and Kagoshima prefectures in order to collectand transfer data on their tire pressure and tire temperature to thecloud database. This service thus enables the remote confirmationof tire conditions and is expected to mitigate the maintenanceworkload in addition to helping operators maintain appropriate tirepressure—a key factor for sustaining fuel efficiency—thereby contributing to safe and secure driving.

The development of a remote tire pressure monitoring system for Level 4 autonomous vehicles;
verification testing conducted in Gifu City using public roads
Targeting Level 4 autonomous vehicles, we have developed a system for collecting tire pressure data and supporting timely response to abnormalities
indicating the need for tire maintenance. In November 2020, this system underwent verification testing using public roads in Gifu City, Gifu Prefecture.
The system was developed via joint research that was launched in 2019 and involves Gunma University’s Center for Research on Adoption of NextGen
Transportation Systems (CRANTS), with the aim of making it possible to remotely monitor the tire pressure of unmanned vehicles operating autonomously. Assuming various types of incidents, including a flat tire while under way, this system is expected to help prevent the occurrence of tire-related issues
via predictive maintenance and otherwise support earlier troubleshooting.

Integrated Report 2021

32

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Business Overview

Sports Business

Golf Equipment
We offer three brands, namely “XXIO,” “SRIXON” and “Cleveland Golf,” ona global scale.
Since their launch in 2000, our mainstay “XXIO” brand golf clubs haveenjoyed favorable user reviews based on their carry, ease of hitting andthe pleasing sound they produce when the ball is hit. The 11th generation
models, “XXIO Eleven” and “XXIO X-eks-,” were launched in December
2019, and their sales are currently growing at home and abroad.
In 2020, we released the “SRIXON ZX series” for serious golfers as well as
the “Cleveland RTX ZIPCORE Wedge” designed specifically for players whoseek to improve their approach shots to a level equivalent to that of professional golfers. We also support the performance of top-notch players withthese and other golfing gear in line with equipment sponsorship agreements.

Professional wheelchairtennis player
Yui Kamiji

Professional golfer
Hideki Matsuyama

Tennis Equipment
Having incorporated its cutting-edge proprietary technology into England’s
traditional “DUNLOP” brand, the Company is introducing the brandthroughout the world as one for all athletes, ranging from top professionals

Results of Operations / Major Indicators

to beginners.
Sales Revenue

Business Profit* (Ratio)
Business Profit(Billions of Yen)

100.0
80.0

72.8

81.7

84.5

Business Profit Ratio(Billions of Yen)(%)

ball supplier to the Australian Open in 2019, becoming the first Japanese

6.0

18

company to supply balls to one of the Grand Slam tournaments.

84.7
70.3

Not only does the Company manufacture the long-selling balls used inmany of the major tournaments in Japan, it was chosen to be the official

4.0

60.0
2.0

5.5
4.3

4.4

5.9

5.3

4.3
6.5

12

5.1

6

Wellness Business

40.0
20.0
0
2016

2017

2018

2019

2020 (FY)

0

-1.1

0

-2.0

-7

-6

2016

2017

2018

2020 (FY)2019*Business profit = Sales revenue –(Cost of sales + Selling, general and administrative expenses)

Now in the process of expansion with the aim of becoming a third pillar of business, thewellness business comprises a fitness club business and golf and tennis school businesses.
In addition to the existing school business and comprehensive fitness clubs, the business supports health promotion in a broad range of fields through such operations ascompact gyms open 24 hours a day and the contracted management of local government sports facilities.

Messages from Corporate Leadership

TopicsRight now, the COVID-19 Pandemic continues with no end in sight. In light of thesecircumstances, how does the Sumitomo Rubber Group plan to harness your strengths
toward accomplishing the Midterm Plan under the New Normal while looking ahead tothe coming Post-COVID World?
While the sporting goods industry has been severely impacted by the pandemic, I also feel that it has given many people a renewed
sense of the importance of sports as a pathway to living a fuller and healthier life. As a sport that is played outdoors and has noproblems accommodating social distancing, golf, in particular, is enjoying a resurgence in popularity, which has brought many young
golfers and families to the sport.
Moving forward, while remaining keenly in tune with these and other market changes, we will work to establish a new businessstyle that is well adapted to the New Normal, which will involve enhancing our e-commerce capabilities and so forth. Our major
strengths include our “materials and material simulation technology,” “precision measuring technology” and “solutions development
capabilities,” and we will be working to further augment these strengths in order to enhance our responsiveness to the needs of ourcustomers while continuing to provide second-to-none products with ever greater speed.

How do you hope to go about realizing your group’s new Corporate Philosophy
Framework: “Our Philosophy?”
As a key tenet of “Our Philosophy,” our group has set forth the reason for our existence (i.e., our “Purpose”) thusly: “Through innovation we will create a future of joy and well-being for all.” For our Sports Business, creating “well-being” means providing products andservices that are thoroughly safe in order to engender peace of mind while at the same time earning the trust of our customers, allbacked by the strength of our technical capabilities and our unwavering commitment to quality.
And, when it comes to “joy,” through our products and services, our Sports Business will continue striving to give more and more
people the thrill and satisfaction that come from playing an excellent game, as well as the sense of fulfillment that is an intrinsic benefit of sports in general.

33

Integrated Report 2021

Hideki Matsuyama becomes the first Japanese player to win the Masters Tournament

HideakiKawamatsu
Executive Officer,
Head of the Sports
Business HQ

Hideki Matsuyama, who signed a golf equipment sponsorship agreement with
Sumitomo Rubber Industries, marked a historic victory in April 2021 at the
PGA Tour’s Masters Tournament, becoming the first Japanese and Asian man
to win a major championship.
Matsuyama turned professional in April 2013 and signed an agreementwith Sumitomo Rubber Industries in July 2013. Since then, we have provided
golf clubs, golf balls, gloves and other gear in support of his goal of winning amajor championship.
Going forward, we will continue to strive side by side with Hideki
Matsuyama and other players for their victories.

Hideki Matsuyama

Golfing gear used by
Hideki Matsuyama (the club is a prototype)The 60th anniversary of our long-selling “FORT”
In 2021 we will celebrate the 60th anniversary of the release of “FORT,” a series of long-selling tennis balls that have been used in a number ofmajor domestic tournaments since its release in 1961. With outstanding sphericity and uniform quality, “FORT” has long been a tennis ball brandtrusted by players. It is valued for the consistently mild feel of the hit, an unchanging feature of the series, while boasting superior durability.

Dunlop Sports Club opens a large facility in Kasukabe
The Sumitomo Rubber Group maintains a comprehensive fitness club business and has recently opened Dunlop Sports Club Kasukabe, the21st facility in its nationwide sports club network, in a location slightly north of Tokyo adjacent to AEON Mall Kasukabe. Taking advantage of its
large two-story building, this sports club boasts a swimming pool, machine gym and fitness studio along with a golf practice range and a tennis court. With this new facility, we will strive to serve people of local communities and contribute to their health improvement efforts.

Integrated Report 2021

34

The Sumitomo Rubber Group’s Approach to Value Creation

Business Overview

Industrial andOther Products
Business

Rubber Parts for Medical Applications

Rubber Gloves

Precision Rubber Parts for Office Equipment

Exercising thorough quality control,
Sumitomo Rubber Industries offers safe,
high-quality rubber parts for medical
applications.

We offer an extensive lineup of gloves
encompassing widely diverse applications, which range from household
to institutional use, while focusing on
enhancing their environmental friendliness.

Precision rubber parts for office equipment
require accuracy on a micrometer scale.
With production bases in Japan, China andVietnam, Sumitomo Rubber Industries meetsthe needs of a wide variety of customers

Vibration Control Dampers

Results of Operations / Major Indicators
Sales Revenue

Business Profit* (Ratio)(Billions of Yen)

(Billions of Yen)

Business Profit

50.0
40.0

Business Profit Ratio
(%)

5.0

35.5

39.6

41.8

41.1

40.7

20

4.3

4.0

4.0

16

3.4

30.0

3.0

20.0

2.0

10.0

1.0

0

3.2

2.7
10.9

9.6

7.6

2017

2018

2019

2020 (FY)

8.3

7.8

2019

2020 (FY)

2017

2018

Messages from Corporate Leadership

Right now, the COVID-19 Pandemic continues with no end in sight. In light of thesecircumstances, how does the Sumitomo Rubber Group plan to harness your strengths
toward accomplishing the Midterm Plan under the New Normal while looking ahead tothe coming Post-COVID World?
Offering various types of products under the core concept of “contributing to the creation of safer and more comfortable cities for
greater all-around peace of mind,” our Industrial Products Business provides value to diverse markets around the world in the formof improved infrastructure, reduced disaster risk and so forth. Meanwhile, during the recent pandemic, our business has continually
responded to society’s urgent call for revamped supply chains to support frontline healthcare workers and protect public health. Ourcontribution in these times of need is not only a source of great pride for us but has also given us a renewed appreciation of what
our products mean to society. We will continue working to achieve our Midterm Plan while adapting to the New Normal in a way thatmakes the very diversification of our business into our greatest strength.

How do you hope to go about realizing your group’s new Corporate Philosophy
Framework: “Our Philosophy?”
Our Industrial Products Business connects the Sumitomo Rubber Group to a wide and diverse array of industries and markets, covering everything from industrial infrastructure to medicine and healthcare and even daily necessities. As such, our business division
has a particular duty to pursue “joy and well-being for all” in especially broad terms while continuously working to make these ideals
into something tangible.
Our group is now actively promoting DX (Digital Transformation) and other innovations to provide all of our employees with a workplace environment that is more conducive to their work so that they can realize their full potential. Through these efforts, our Industrial
Products Division will harness the collective strength of our over 3,000 employees in six different countries throughout the world as
we push ahead with purpose-driven business operations that are firmly grounded in “Our Philosophy.”Integrated Report 2021

4
0

2016

*Business profit = Sales revenue –(Cost of sales + Selling, general and administrative expenses)

35

12

MIRAIE

Vibration Control Units for Detached Housing

Vibration control dampers for buildings

Topics80
2016

Our vibration control dampers made using
a special high damping rubber protect such
structures as detached housing, office buildings and housing complexes from swaying
due to high winds and earthquake tremors.
We are accelerating our business expansion
into earthquake-prone Taiwan and South
Korea with these products.

Raising our monthly production capacity for thin nitrile rubber gloves to 2 million pairs in
response to a government request
In response to a government request, we have decided to raise our monthly production capacity for thin nitrile rubber gloves to 2 million pairs and, to thisend, expanded our facilities at the Malaysia Factory. With the expanded facilities brought on line in May 2021, we will supply these gloves to such customers as domestic healthcare institutions and food processing facilities.
The Group’s glove business is serving markets at home and abroad via the Malaysia Factory, which has just undergone facility augmentation, as wellas partner factories in Thailand and elsewhere. Thin nitrile rubber gloves are used for a variety of applications, including healthcare and food processing.
In addition, we have donated 97,500 pairs of such gloves to the Japanese government in April 2020 to support healthcare institutions.
Moreover, we have secured robust funds for the aforementioned facility expansion in the form of subsidies granted by the Japanese government undera scheme to promote the diversification of overseas supply chains.
To accommodate future demand, we will continuously strive to secure an even more stablesupply structure.
Outline of the Malaysia Factory
Location: Sungai Petani, Kedah, Malaysia

Production items: Rubber gloves (household and institutional use) and instant mobility systems

Launch of operations: 1981

Total capital expenditure : ¥150 million

Hirotoshi
Murakami
Executive Officer,
Head of the Hybrid
Rubber Products HQ

Enhancing our lineup of advanced products supporting a comfortable life
With the aim of helping realize a living environment that is friendly to all, we
have released “Dun-Slope AiR 2,” a portable ramp for wheelchair use. This
product offers enhanced user convenience due to its higher durability, superior shock-absorption, and compact size. At the same time, it is lightweightwith a mass on par with that of previous models, making it an industry leader.
We also released “NatuAssist for MEN” compression exercise shorts witha built-in pelvic belt designed to support the wearer’s trunk. Moreover, weenhanced our lineup of “NatuAssist for WOMEN” by introducing LL to 3L size
black, above-knee length versions. As such, we strove to deliver products
capable of meeting an even wider range of customer needs.

Dun-Slope AiR 2NatuAssist

Integrated Report 2021

36

The Sumitomo Rubber Group’s Approach to Value Creation

Key Management Resources

In addition to financial capital, we regard manufactured capital (such as factories and production facilities),
diverse human capital, intellectual capital (including research & development capabilities and intellectual property), social capital (e.g., global brand capability) and natural capital (such as energy resources) as key management resources.
In this section, we provide a brief discussion of our approach to the different types of capital, and their cur-

Manufactured Capital (production infrastructure, capital expenditures)
The Group, which is expanding its business globally, possesses six domestic bases and 16 overseas bases in its production network.
In fiscal 2020, we implemented a total of ¥41.9 billion in capital expenditures.

rent status.

Financial Capital (financial position)

15 16

8
7

For the Group, sound financial capital is a key management resource that supports sustainable growth.

14 13
9

Total Assets / Net Assets, Total Equity
Total assets*¹
Total assets*²

11

2

3

Total assets at the end of fiscal 2020 were ¥974.8 billion and total equity was ¥467.1 billion.
12

Net assets*¹
Total equity*²

10

3
4

1

(Billions of Yen)

1,200.0
JGAAP

973.6
900.0

6

IFRS

1,018.3
936.2

867.5

1,002.4

1,035.5

974.8

Overseas

8,976

Indonesia Factory (tires and sports goods)
Changshu Factory (China)

737.5

Hunan Factory (China) (tires)
Thailand Factory (tires)
Brazil Factory (tires)

671.6
600.0

447.0

453.8

459.5

490.9

472.8

475.5

South Africa Factory (tires)
Turkey Factory (tires)

467.1

USA Factory (tires)
Thailand Factory (sports goods)
Philippines Factory (sports goods)

358.8
300.0

222.2

271.1

6
5

1

Japan

USA Factory (sports goods)
Malaysia Factory (industrial products)

0
2011

5

2012

2013

2014

2015

2016

2017

2018

2019

2020
*1 JGAAP(year)*2 IFRS

Shirakawa Factory (tires)
Nagoya Factory (tires)

Zhongshan Factory (China) (industrial products)
Vietnam Factory (industrial products)
Switzerland Factory (industrial products)

3

Slovenia Factory (industrial products)

Ichijima Factory (sports goods)

Financial Position

Securing Liquidity

Total assets at the end of fiscal 2020 were ¥974.8 billion, aGoing forward, the Group’s policy is to continue its program of

As a rule, the companies of the Group each take into accountdecrease of ¥60.7 billion from the end of the previous fiscal year.

capital expenditures for the purpose of increasing production

medium-term demand forecasts, production plans and the ratio

Current assets fell ¥23.4 billion due to declines in inventories,

capacity in order to support the expansion of sales, primarilyof investment to profit, formulating their capital expenditures

while restraints on investment and a decrease in property, plantoverseas. While increasing sales volumes and improving profit-

accordingly. In the case of important plans, the Company takes

and equipment reflecting foreign exchange effects led to aability so as to expand cash flows from operating activities, wethe central role in coordinating the Group, primarily for the pur-decrease of ¥37.3 billion in non-current assets.

will also utilize funding from financial markets and institutions,pose of optimization.

Capital Expenditures

4

Total liabilities at the end of fiscal 2020 were ¥507.7 billion,etc., as required, seeking a balance between growth on the

In fiscal 2020, the Group restrained capital investment due

a decrease of ¥52.2 billion from the end of the previous fiscal

one hand and securing liquidity and improving our financial

to the novel coronavirus (COVID-19) pandemic. Capital expen-

year. Interest-bearing debt came to ¥276.7 billion, falling ¥48.8

position on the other. Through these endeavors, we will strive

billion from the end of the previous fiscal year.

to achieve a D/E Ratio below 0.5 times in line with our Midterm

Total equity at the end of fiscal 2020 was ¥467.1 billion, of
which total equity attributable to owners of parent was ¥454.7 billion, for a ratio of equity attributable to owners of parent of 46.6%.
Equity attributable to owners of parent per share was ¥1,729.05.

Plan, which was announced on February 13, 2020.

Izumiotsu Factory (tires and industrial products)
Miyazaki Factory (tires and sports goods)
Kakogawa Factory (industrial products)

2

Capital Expenditures
Capital expenditures

70.0

50.0
40.0
30.0

decrease from the previous fiscal year.

20.0

to boost their production output, reversing the restrained policy exercised in fiscal 2020. At the same time, we will invest
in domestic factories to promote a shift to advanced productDepreciation

66.9

10.0

59.0

58.1
49.6

50.2

50.9

49.3
51.8

billion year on year. Depreciation was ¥49.3 billion, a ¥2.5 billion¥59.0 billion. We will expand investment in overseas factories

62.5

60.0

diture thus amounted to ¥41.9 billion, a decrease of ¥16.2

For fiscal 2021, plans call for capital expenditure totaling

Overseas(Billions of Yen)

45.7

41.8

41.9

50.9

46.9
38.0

34.9

29.0
20.6

0

2016

2017

2018

2019

2020

2021 Forecast(FY)

Note: Figures for 2019 and later are not affected by the adoption of IFRS 16 (leases).

manufacturing lines. (For more details, please refer to page 18.)

37

Integrated Report 2021

Integrated Report 2021

38

The Sumitomo Rubber Group’s Approach to Value Creation

Key Management Resources
Production Infrastructure
Tire Business
Establishing a globally optimized production infrastructure
The development of the Tire Business’s global production infrastructure began in 1997 with the Indonesia Factory, and thenumber of production bases continued to expand steadily with the
opening of the Changshu Factory in China in 2004, the Thailand
Factory in 2006 and the Hunan Factory in China in 2012. To further strengthen the supply infrastructure, we are currently moving
forward with plans to extend the Thailand Factory into one of thelargest of its kind in the world. In addition, we are moving steadily
ahead with the expansion and enhancement of other production
facilities and have launched, for example, production at the Brazil
Factory and South Africa Factory in 2013 as well as at the Turkey
Factory in 2015 and have acquired a factory in New York state toserve as the Group’s U.S. base.
Increasing competitiveness via a global production infrastructure
Taking full advantage of the capacities afforded by our factories around the globe, we will push ahead a shift to a structurein which products are manufactured near their target markets.
Simultaneously, we will supplement product supply by charging
our Thailand Factory—the world’s largest facility of its kind and asource of strength for the Group—to ensure that any underserved
demand across the world can be met.

Through these efforts, we will establish relationship of trust with
automakers. This will, in turn, help us raise the number of original
equipment tires we supply and secure robust sales in the replacement market. In these ways, we solidify our business foundation.
Geographically, our production infrastructure already boasts lowcost manufacturing bases in Japan and elsewhere in Asia. And, inline with changing market needs, we have begun replacing facilities
to raise our SUV tire production capacity. Looking ahead, we willcontinuously strive to maintain stable sales in Japan and China andsecure robust sources of profit.
Looking at Europe and Africa, our Turkey Factory, a supply basefor the former, is steadily ramping up production. Via this factory,
we will fully leverage scale merits to stably increase the volume of
products delivered to European automakers while expanding salesof replacement tires. With regard to the South Africa Factory, we
will promote productivity improvement as well as a shift to highvalue-added products.
In the Americas, we have seen stable sales growth in North
America. Recently, we decided to invest in the USA Factory as wellas in the Japan and Thailand factories—our export bases—in aneffort to raise these facilities’ production output. This investment
will boost our regional supply capacity for SUV and other tires, withboth U.S.A-made and imported products supporting our lineup. In
Brazil, we have made progress in securing sufficient local production for local consumption by raising our production capacity in theregion. As such, we are striving to develop a stable profit base.

The basic aim of the Group is to respect the human rights of employees, fostering a workplace environment in which everyone feels safe, respected and free to engage in the open exchange of ideas and is encouraged to take on challenging tasks.
In line with this, we are striving to create a corporate culture that supports employee efforts to achieve personal growth instep with the Group’s business growth.
Employees
2016

2017

2018

2019

2020

33,79236,65037,852

39,23339,298

Japan

11,677

11,606

11,674

11,837

11,856

Overseas

22,11525,044

26,17827,39627,442

Number of employees (Sumitomo Rubber
Industries Ltd. (Non-Consolidated Basis))

6,693

6,666

7,175

7,325

7,371

Average years of service (Sumitomo Rubber
Industries Ltd. (Non-Consolidated Basis))

16.5

16.2

15.9

15.7

15.9

Men (years)

16.7

16.4

16.3

16.1

16.2

Women (years)

13.3

13.0

12.6

12.2

12.5

3.5

3.9

3.8

3.2

3.4

Number of consolidated employees

Employee turnover ratio (Sumitomo Rubber
Industries Ltd. (Non-Consolidated Basis))

Composition by Age (Sumitomo Rubber
Industries Ltd. (Non-Consolidated Basis))

Composition by Region
Asia Pacific45%

Status of Our Global Production and Sales BasesJapan

Making progress in maximizing the effect of our network of manufacturing andsales bases encompassing key markets around the globe

PProduction bases
PSales bases

Human Capital (number of employees, fostering human resources, promoting Work Style Reform)

30%

60 or older

2%

50s

16%

21%

9%

Europe/Africa

30s

26%
40s

29%

16%

Basic Perspective on Human Resource Development

Europe and Africa

Japan and elsewhere in Asia

North America

Factories: Promoting the replacement of facilities withthose for advanced tires
Sales: A stable business foundation
already in place

Factories: Increasing production
capacity
Sales: Stably expanding sales

Sports Business
Proving ourselves worthy of the trust of users through superior production technology and the ingenuity of our employees
The Company began the domestic manufacture of golf balls andtennis balls in 1930. Golf balls, such as SRIXON and XXIO, which
are the mainstay of the Sports Business, are currently manufactured at the Ichijima Factory (Tamba City, Hyogo Prefecture) andthe Indonesia Factory. In addition to the manufacture of golf clubs,
manufacturing subsidiary Dunlop Golf Club Corp. (Miyakonojo City,
Miyazaki Prefecture) is involved in producing custom clubs to meetthe needs of a wide variety of customers.
In tennis, our tennis ball factories in the Philippines and Thailand manufacture balls for the Australian Open and major events on the ATP Tour.

39

Integrated Report 2021

Industrial and Other Products Business
Raising production capacity for the Rubber Parts for Medical
Applications BusinessIn the growing Rubber Parts for Medical Applications Business,since first commencing the production of rubber parts for medical
applications at the Izumiotsu Factory in 2000, we have pursued
global production infrastructure development through the ongoing
expansion of these operations via the launch of the Kakogawa
Factory in 2010, the Swiss Factory in 2015 and the Slovenia
Factory in 2017.

20s

Male

Female

(%)
30

25.2

23.3

24

18.9

18

Americas

Factories: Currently increasing production capacities
Sales: Currently increasing the number oforiginal equipment tires supplied
to non-Japanese automakers

10s

6%

Composition by Sex (Sumitomo Rubber
Industries Ltd. (Non-Consolidated Basis))

The Group fosters human resources through a combination of threecomponents: OffJT such as group training, etc., OJT at each division,and self-study. We believe that to develop robust human resources,
we must start with helping employees be aware of what they need tolearn. In particular, we provide young employees with grade-specificcareer vision training designed to help them envision their desired
future and thereby identify the types of skills they need to acquire.
This training also involves supplementary programs for those who
voluntarily take on further learning. Although the majority of the above
training programs were undertaken in the form of online seminars in
2020, we will continue to enhance our training systems in a way thattakes full advantage of the features of online, in-person and e-learning.
Regarding the systematic execution of human resource development, we are promoting a variety of training programs to enable
employees to improve their skills, with the Human Resources
Development Department and the Manufacturing Education
Department playing a central role.
As for the fostering of global human resources, we are strengthening efforts overseas, aiming to ensure identical product quality
irrespective of the factory in which manufacturing takes place, sothat all employees are able to grow and to feel job satisfaction.

13.6

12
6

2.2
0

0.0

10s

2.0
20s

2.7
30s

5.8

3.9
40s

2.2
50s

0.2

60 years old
and above

Our manufacturing education emphasizes manufacturing technology and craftsmanship in Japan and overseas.
In workplace supervisor training, the focus is on putting what has
been learned to practical use. To raise the level of workplace management, we are conducting various activities aimed at establishinga consistent, Group-wide philosophy embraced by all employees
across the Group.

Respect for Human Rights
Basic Perspective on Consideration for Human Rights
Our Corporate Code of Conduct states that we “maintain a soundworking environment free from discrimination on the basis ofbelief, creed, religion, race, skin color, nationality, language, social
background, gender, sexual orientation, gender identity, age, physical handicap or other reason.” Accordingly, we strive to prevent
infringement of human rights of any employee.
Furthermore, a handbook on human resource and labor management has been distributed to all those in managerial positions. We
also help raise their awareness of relevant topics via training andlecture sessions. In these ways, we are striving to create a working
environment that tolerates no human resource violations or harassment and empowers every employee to work energetically.

Integrated Report 2021

40

The Sumitomo Rubber Group’s Approach to Value Creation

Key Management ResourcesIntellectual Capital (research and development, intellectual property strategies, etc.)

Social Capital

We promote a wide range of research and development in domains or fields related to tires, sports and industrial and other

Building favorable relationships with customers, suppliers, local communities, shareholders, investors, employees and all

products businesses. The intellectual capital accumulated through such activities becomes the driving force that generates

other stakeholders is essential to enhancing our corporate value. Taking heed of their voices, we will strive to live up to what

products with competitive advantages, as well as new growth.

they expect of us and accommodate their needs, thereby fulfilling our social responsibilities.

The State of Our Intellectual Capital

The State of Our Social Capital (efforts to promote dialogue with key stakeholders)

R&D Expenses (millions of yen)
Ratio of R&D Expenses to Sales Revenue (%)
Number of Japanese and Foreign Patents (Number of patents held)

2016

2017

2018

2019

2020

24,2573.2
8,761

25,7203.8
9,183

25,7802.9
9,199

26,1982.9
9,156

24,215
3.1
10,063

R&D Activities
With the Sumitomo Rubber Industries’ R&D organization and facilities at the core of our efforts, we promote R&D activities in a wide
range of fields related to the tire, sports, industrial and other products businesses in close cooperation with subsidiaries and affiliates
around the world.
Guided by the underlying concept of “What tire technology can
do for the global environment,” the Tire Business focuses its R&D
efforts on developing environmentally friendly products by focusing on three areas: “innovative materials,” “fuel efficiency,” and“resource conservation.” The Tire Technical Center, located near
the Kobe Head Office, serves as the core facility for these initiatives,
which it pursues in collaboration with the Europe and USA Tire
Technical Centers.
In line with our particular focus on developing tires boastingsuperior safety performance as well as capabilities that help reduce

environmental burden, we have been engaged in cutting-edge
research initiatives, including an R&D project that has been under
way since 2012 in which we perform large-scale simulations using
the K computer to create innovative rubber materials.
In the Sports Business, having established R&D sections at boththe Sports Business HQ and Roger Cleveland Golf Company, Inc.
in the USA, we are developing, evaluating, and testing new technologies and products by employing computer simulations and othertechnologies.
In the Industrial and Other
Products Business, we are actively
developing new products aimed ataccommodating consumer needs insuch fields as vibration control units
using high-damping rubber parts for
medical applications and precisionrubber parts for office equipment.

Winning an HPCI* Excellent Achievement Award in recognition of large scale molecular dynamics
simulations of rubbers for tires
*High Performance Computing Infrastructure
The Company was chosen to receive an HPCI Excellent Achievement Award in recognition of its research effort employing the K computer to perform large scale
molecular dynamics simulations of rubbers for tires.
Through this research, we have discovered the mechanism by which the form of cohesion between silica and coupling agents, both acting as rubber additives,affects the strength of the resulting rubber material. These findings, in turn, helped us yield positive results in terms of improvement in abrasion resistance. Looking
ahead, we will take advantage of these simulation results in the development of new rubber materials and products.
In addition, as we aim to push ahead with efforts to create tires capable of realizing both a superior safety performance and a lower environmental footprint, we will
also employ Fugaku, a supercomputer designed as the successor to the K computer and made available for shared use since 2021, to advance simulation-based
tire development.

Joint research involving industry-academia collaboration
The Sumitomo Rubber Groups is engaged in the development of new technologies via participation in industry-academia collaboration involving universities boasting
cutting-edge technologies.
Research partners

Key themes of recent research projects

Ibaraki University

Establishment of a method for selectively observing specific materials contained in tire rubber

Gunma University

Development of a system that remotely monitors tire pressure of Level 4 autonomous vehicles

Kansai University

Success in the verification testing of technologies enabling power generation in tires

Tohoku University

Acceleration of X-ray-based CT imaging of tire material (approximately 1,000 times faster than the conventional method) to assess damage status

Intellectual Property Strategies
The Group proactively carries out intellectual property activities that
support its businesses.
Specifically, the Group undertakes intellectual property activities
focusing on three pillars, namely: 1) “securing intellectual property
rights” with regard to such industrial properties as patents, utility models, designs and trademarks; 2) “exercising such rights”
against the infringement of Sumitomo Rubber Industries’ intellectual properties; and 3) “eliminating risk” by developing a structure
to defend against attacks by third parties. In step with the rapid
expansion of its overseas operations, the scope of the Group’s
intellectual property activities is growing worldwide, encompassing not only Japan but also the United States, Europe and such
Asian countries as China, as well as Russia and countries in South

Integrated Report 2021

Fiscal 2020 achievements• Customer consultation and service contact• Customer response through service and sales departments• Providing information via our website and various media channels• Exhibitions and events, etc.

Number of customer consultations (cases)•T ire Business: 4,644 (inquiries: 4,252; complaints: 392)•S
 ports Business: 7,790 (inquiries: 7,292; complaints: 498)
• Industrial and Other Products Business: 3,600(inquiries: 2,466; complaints: 1,134)

Business
partners• Dialogue through day-to-day business• Confirmation visits to procurement partners, and feedback• Questionnaires targeting procurement partners• Explanatory meetings, etc.

Number of CSR procurement briefings (held once every three
years) :0
Note: In fiscal 2020, CSR procurement briefings had not been
held to prevent the risk of COVID-19 infection.

Local
communities• Participation in local events• Cooperation with NGOs and NPOs in social contribution activities• Participation in economic and industry organizations• Dialogue with local governments, etc.

Total amount of CSR Fund subsidy: ¥13.14 million
Number of participants in the Dunlop Monozukuri Class: 231

Shareholders
and investors• General meeting of shareholders• Timely disclosure of news releases and publications• Issuance of financial information, including fact books and shareholder communications• Providing information via website and other media• Results briefings, etc.

Number of shareholders: 41,177 (as of December 31, 2020)
Number of institutional investors we engaged in dialogue: 9

Employees•P roviding information through internal newsletters, intranet, etc.
•C onsultation with labor-management councils and employee representatives•C ompliance consultation service•R ound-table discussions with president to exchange views with management• Integrated Report questionnaire, etc.

Number of employees (as of December 31, 2020)
Sumitomo Rubber Group: 39,298;
Sumitomo Rubber Industries: 7,371(male employees: 6,530, female employees: 841)

Topics

Topics41

Communication methods

Customers

America, the Middle East and Africa.
Efforts are now under way to nurture human resources and reinforce our structure to conduct intellectual property activities that goalong with such globalization. In particular, the Group is providing
training sessions not only for Intellectual Property Department
members but also for employees at every operational base withthe aim of raising awareness of intellectual property and upgrading
the competencies of the entire workforce. Such action is facilitating
the development of a structure that ensures intellectual property
activities are carried out smoothly and seamlessly on a Group-widebasis. In particular, we are focusing on acquiring more effective
rights by assigning IP representatives to Europe.
Focusing on the above-mentioned three pillars, the Group will
promote the more efficient implementation of intellectual property
activities at a global level.

In June 2020, the Izumiotsu Factory concluded a temporary evacuation agreement with Izumiotsu City to provide
its premises as shelters in the event of a disaster. Specifically, the factory will open its gymnasium, parking lot
and bathing and other facilities to evacuees. An agreement of this kind is at the vanguard of community contribution on a nationwide basis. In September 2020, the factory carried out evacuation drills in the presence of Osaka
Prefectural Governor Hirofumi Yoshimura and, in November, executed drills for the installation of a temporary
shelter in tandem with city officials and residents of neighboring communities. Also, during the period from May
2020 to March 2021, the factory donated disinfectants to the city which, in turn, distributed them to local elementary and middle schools.
Going forward, we will work hand in hand with members of neighboring communities to ensure that robust
countermeasures are in place in preparation for disasters.

Enhancing Our Brand Capabilities
Our brand capabilities constitute one of essential elements supporting growth in corporate value. For us to take full advantage of
the Dunlop brand and maximize business outcomes, we need tomake collective efforts that rally all kinds of Group resources. With
Tire Business

A pioneering brand focused on achieving both superior safety andenvironmental friendliness
Since the 1888 commercialization of the world’s first pneumatic tire produced
by J. B. Dunlop, the Dunlop brand has served as an important component of thehistory of automobiles and evolved in step with advances in tire technologies.
As a pioneering brand, Dunlop is always focused on creating products that arefriendly to the global environment and, to this end, employed state-of-the-art
simulation technologies in an effort to realize superior driving safety, environmental friendliness and fuel efficiency.

A global brand for all those who love driving
Founded in 1983, the Falken brand has been producing replacement tires
via the application of technologies that it has long nurtured in the course of
supporting major motor sports. Guided by an uncompromising commitment toquality, Falken continues to create products designed to deliver a fun of driving.
In line with its brand statement “ON THE PULSE,” Falken is currently serving
an increasingly broad range of market regions, starting from Europe—an area
well known for delivering harsh judgments on quality—and extending to theUnited States, India, China and Australia, thereby securing greater presence asa global brand originated from Japan.

this in mind, in April 2017 we acquired rights to the global use of
trademarks of Dunlop brand sports goods. Furthermore, in January
2018, we executed a business integration with Dunlop Sports Co.
Ltd. Going forward, we will strive to create synergies through relevant operations in both the Tire Business and Sports Business,thereby enhancing the value of the Dunlop brand.
Sports BusinessIn the Sports Business, the “DUNLOP” brand was the first in Japan to produce
golf and tennis balls and has also released innovative products supporting thehistory of golf and tennis. With “DUNLOP” as a starting point, we have developed the “XXIO,” “SRIXON,” “Cleveland Golf” and other unique brands, acting as
a supplier of sporting gear for a number of top-notch players who compete inmajor events around the globe.
Other aspects of the Sports Business include the wellness business, which
includes sports club operations; the sports school business, which oversees
golf and tennis schools; and the management of golf courses and tournaments.
In these ways, we take an aggressive, multifaceted approach to our operations
aimed at supporting sports activities.

Industrial and Other Products Business
Based on our rubber technology, we create a variety of
products for industrial use and other applications. Our
target markets currently range from industrial infrastructure,
medical, and living essential to healthcare fields in line with
our efforts meet the ever more diverse needs of society. The
potential of our offerings backed by cutting-edge technologies is attracting attention from customers worldwide.
Vibration control dampers

Flooring materials

Athletic facilities

Integrated Report 2021

42

The Sumitomo Rubber Group’s Approach to Value Creation

Key Management Resources

Natural Capital (realization of a low-carbon, recycling-oriented society)
Bounties of the Earth, such as natural rubber, which are an element of natural capital, constitute key management resources
for sustainable growth. Based on this awareness, the Group is working to conserve the environment and to use finite energy
resources effectively while contributing to the realization of a low-carbon, recycling-oriented society.
Environmental Indicators
Global Network of Production & Sales Bases

2016

2017

2018

2019

2020

CO2 emissions (business activities) (kt-CO2e)

1,011

1,036

1,073

1,095

1,018

Waste disposal (kt)

17.4

16.6

22.2

32.3

30.7

Water usage (1,000 m3)

13,774

14,523

14,373

14,047

13,068Wastewater (1,000 m3)

11,438

10,824

10,90910,96910,934

Organic solvents used (t)

1,045

1,055

1,573

1,603

1,328

Number of trees planted* (1,000 trees)

71.8

43.5

51.4

38.7

19.2

*Not including the provision of seedlings

Sustainability Activities
Undertaken by the
Sumitomo Rubber Group

Creating a Low-Carbon Society

Greening Initiatives

In response to the problem of climate change, the Group is

We are promoting greening initiatives at our sites and the areas

working to reduce its products’ CO2 emissions over their entire

surrounding them, both in Japan and overseas. On the subject

life cycles, from raw material procurement to final disposal.

of promoting biodiversity, the Company is involved in such pro-P Ecological processgrams as the “Acorn Project,” the goal of which is to conserve

P Next-generation product development

genetic biodiversity, and in the creation of biotopes.

P Kindness to employees

In addition to taking steps to reduce CO2 emissions during
the use of a tire, which accounts for approximately 85% of its
life-cycle CO2 emissions, in 2018 we began working with raw
material suppliers to ascertain and reduce their CO2 emissions.
Also, in terms of reducing CO2 emitted in the course of busi-

Our Activity Guidelines (GENKI)

P Green initiative

P Integrity for stakeholders

Promoting Environmental Footprint Management
Since 1988, the Group has had in place the “GENKI Activities” project

ness activities (Scopes 1 & 2), we are working on initiatives

In order to reduce emissions of chemical substances, we are

involving switching fuel types, installing cogeneration systems,

implementing measures to cut the release and transfer of(meaning activities that give everybody energy), in which employees takepromoting general energy-saving activities, and utilizing renew-

chemicals subject to PRTRs, as well as conducting activities topart in volunteer activities as a way to contribute to society.

able energy from solar power and other green energy sources.

reduce the amount of organic solvent waste produced.

These activities have become extended and firmly entrenched throughout
the Company and the Group. In 2008, GENKI, an acronym for our five cate-

43

Building a Recycling-Oriented Society

Sustainable Natural Rubber Policy

In response to the problem of waste, we are taking steps to

On November 16, 2018, we announced our “Sustainable

control the amount of waste generated, to convert it to some-Natural Rubber Policy” with the aim of making natural rubber athing of value, and to promote recycling. As part of these efforts,

sustainable resource. In line with this policy, we seek to resolve

since 2010 we have been striving to achieve zero emissions at

issues in regions where natural rubber is produced, such as

our major bases both in Japan and overseas by reducing landfill

environmental problems caused by the destruction of forests,

waste to zero and moving to 100% reuse of resources.

and human rights problems in the working environment.

To conserve water resources, we are making efforts to

In September 2020, we participated in the second General

reduce water usage and promoting recycling. In 2019, theAssembly of the GPSNR* as one of 64 member corpora-

Turkey Factory achieved a wastewater recycling rate of 100%.

tions and organizations. Looking ahead, we will update ourOur natural rubber processing factory in Thailand also recycles

Sustainable Natural Rubber Policy to reflect a policy framework

100% of its wastewater. Our plans call for extending wastewa-

approved by this General Assembly.

ter recycling to other factories, including those in China.

*Global Platform for Sustainable Natural Rubber

Integrated Report 2021

gories of activities, was adopted as the guidelines’ keyword.

Integrated Report 2021

44

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Fiscal 2020 Targets and Results
We are striving to be a corporate group that is trusted by society by fulfilling our corporate social responsibility to help create
a better society.
In line with our Activity Guidelines, which categorize our endeavors into “Green,” “Ecology,” “Next,” “Kindness” andItems marked with “ ” have been verified by third parties (excluding environmental impact indicators.) Details of “Fiscal 2020 Activities and Fiscal 2021 Targets” are“Integrity,” we are proactively promoting sustainability under the banner of “GENKI Activities.”
Relevance to SDGs

G

reen

Green initiative3

6 11 13 14 15

cology

3

6

7

304-3

2 Fostering better relationships with local

PContinue our contributions to, and foster better relationships with, local communities through tree planting, forest creation and the provision of seedlings

413-1

3 Preserving biodiversity

PContinue our protection of 21 endangered species, etc.
PSuccessful hatching of Sasakia charonda at the Okayama Tire Proving Ground304-3

6 Promoting environmental footprint management

PReduce global life-cycle CO2 emissions per tire by at least 15.0% compared
to 2005 levels(Six factories in Japan)
PEnvironmental impact indicator of energy usage (crude oil equivalent)* 2:≥1.0% reduction from the previous fiscal year
(Six factories in Japan)
PEnvironmental impact indicator of CO2 emissions*2: ≥ 1.0% reduction fromthe previous fiscal year
(Six factories in Japan)
PEnvironmental impact indicator of waste disposal (excluding valuables)* 2:≥ 0.5% reduction from the previous fiscal year
(Six factories in Japan)
PEnvironmental impact indicator of water usage*3: ≥ 1.0% reduction from theprevious fiscal year
(Six factories in Japan)
PNOx, SOx, and dust: ≥ 80% reduction from fiscal 2005 levels

7 Implementing global environmental management

PMaintain ISO 14001 Global Multi-Site Certification

8

9 11 12 13
5 Building a recycling-oriented society

N

ext

Next-generation product development

3

7

8

9 11 12 13K

indness

3

4

5

302-3

8.3% increase

91%

P2.9% reduction from the previous fiscal year

305-4

18.9% increase80%P0.4% reduction from the previous fiscal year

306-2

17.2% increase

82%

P8.2% reduction from the previous fiscal year

303-1

11.5% increase

87%P4.8% reduction from the previous fiscal year

305-7

86.1% reduction

100%

P≥ 80% reduction from fiscal 2005

103-2

Maintained

100%

PMaintain Global Multi-Site Certification

100%

PDevelop and launch environmentally friendly products

100%

PCommercialize new technologies

100%

PExpand the scope of individuals undergoing 360-degree feedback sessions to include
deputy managers while enhancing the content of leadership seminars via the incorporationof communication skills enhancement programs

100%

PPeriodically host online seminars like those provided in fiscal 2020 while proactively pushing ahead with initiatives to help women and senior employees earn success and to raise
employee awareness of the members of LGBTQ+ community

80%

PContinue to pursue KPIs as part of priority activities in fiscal 2021, making ongoing efforts
to iron out disparities between bases, departments, and workplaces

90%

PHost events aimed at helping employees improve their life style habits, including those
associated with exercise, diets, sleeping and alcohol consumption, along with expanding
the content of health-related education for women and elderly employees to raise the healthawareness of each individual and thereby assist them in their health improvement efforts

100%

PFacilitate employee understanding of and encourage the use of various support systems
via the distribution of guidebooks describing measures in place to help strike a work-lifebalance and the announcement from supervisors

PCommercialize new technologies

416-1

PReleased “WINTER MAXX 03” tires incorporating Liquid Farnesene Rubber, which helps maintain the elasticity of rubber for a long period of time

11 Creating a safe, employee-friendly workplace

S

404-2

404-2
403-2

ntegrity

403-2

PPromote use of childcare leave by male employees
PPromote use of shortened working hours for childcare by employees
PEncourage the use of a daycare support system

401-3

PSupport work styles that leverage the diversity of individuals

405-1

PWorked to foster a corporate culture that empowers individuals with diverse backgrounds,
such as women, foreign nationals, and people with disabilities, through the D&I project

100%

PCarry out various measures aligned with attributes of underrepresented employee groups
to create a desired corporate culture; in particular, push ahead with initiatives to help
women earn success and otherwise assist in their career development efforts via, forexample, the introduction of a mentoring system, in addition to offering programs designed
to help them balance between childrearing and work

PHold training on human rights

412-2

PHeld training on human rights

100%

PHold training on human rights

80%

PPromote joining the CSR Fund
PWork together with NPOs (continue and expand activities)

3

4

5

6

8

9 10

100%

PContinue to implement measures to enhance the effectiveness of the Board of Directors
PContinue to set out and expand the content of BCPs and to implement training
PReanalyze risks to update the profile of major Group-wide risks

56%

Promote the Group’s compliance and risk management
PAudit: Focus particularly on carrying out legal audits at overseas subsidiaries
PTraining: In terms of grade-specific compliance training and specialization-specific training,
conduct training on such subjects as the Corporate Code of Conduct, competition laws,
the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors, the Act
against Unjustifiable Premiums and Misleading Representations, the Foreign Exchange andForeign Trade Act and the prevention of bribery

G

PRate of joining the CSR Fund: approximately 47%
PNumber of CSR Fund beneficiaries: 54, with a total of ¥13.14 million donatedPMonozukuri Class for elementary school students: Held four times in four locations, with thenumber of attendees totaling 231
PEnvironmental Class: Held four times in three locations, with the number of attendees totaling 63
PRevised approval authority rules, implemented measures to enhance the effectiveness of theBoard of Directors, continued to distribute questionnaires aimed at evaluating its effectivenessand reduced strategic shareholdings, etc.
PUpgraded the content of BCPs in light of our response to the COVID-19 pandemic
PContinued to take measures to mitigate major Group-wide risks

14 Promoting social contribution activities

PPromote joining the CSR FundPWork together with NPOs (continue and expand activities)

102-4415 Enhancing corporate governancePFurther increase the effectiveness of corporate governancePContinue to set out and expand the content of BCPs, and to implement training
PImplement measures to counter updated major risks102-1816 Ensuring thorough compliance

PEnhance legal audits for overseas group companies
PIn terms of grade-specific compliance training and specialization-specifictraining, conduct training on such subjects as the Corporate Code of
Conduct, competition laws, the Act against Delay in Payment of Subcontract
Proceeds, Etc. to Subcontractors, the Act against Unjustifiable Premiums
and Misleading Representations, the Foreign Exchange and Foreign Trade
Act and the prevention of bribery, etc.

102-16

PImplemented compliance activities at Group companies, including those operating overseas
PHosted various training sessions at Group companies, including those operating overseas,with particular focus on the prevention of bribery, compliance with competition-related laws,
the prohibition of wrongful conduct and avoidance of legal risks

17 Promoting dialogue with stakeholders

PPromote dialogue with a range of stakeholders

102-44

PConducted stakeholder dialogues at each operation base

100%

PPromote dialogue with a range of stakeholders

102-43

PSent out CSR questionnaires to 245 companies in fiscal 2020 to confirm that our guidelines
are understood by them; refrained from holding CSR briefings

70%

PHold CSR briefings

Integrity for stakeholders

11 12 13 14 15 16

PImplemented 360-degree feedback sessions for all those in managerial or higher positions,
including the President and other officers, in addition to providing online seminars focusedon helping them study in depth the essential qualities of leaders in order to enhance theirleadership skills
PAll members of the workforce, from the President to frontline staff, have undergone online
seminars on unconscious bias as part of collective efforts to foster a corporate culture that
accepts diverse value systems
PIdentified 12 KPIs and continued to implement priority activities in fiscal 2020 under specifictargets; although certain progress has been made in terms of improvement in the area of
weakness, targets have yet to be fully met
PAchieved a 10% reduction in days of mental health and physical sick leave from the fiscal
2019 level; hosted a greater number of walking rally events and otherwise encouraged
employees to step up their daily exercise habits on the back of the COVID-19 pandemic andthe resulting introduction of remote working; selected as a “White 500” organization exercising superior health management for the fifth consecutive year
Became the first in the rubber industry to be granted the “L-boshi” (third level) certification inrecognition of our efforts to help women earn successPRatio of eligible male employees who took childcare leave: 5.4%; ratio of eligible female
employees who took childcare leave: 100%
PNumber of employees who use the daycare support system: 22

PIn addition to reducing days of mental health and physical sick leave, practice initiatives under the Health & Productivity Management Declaration to
improve lifestyle habits, based on the concept of “enjoying exercise to build
a healthy body”

12 Promoting diversity & inclusion

13 Respect for human rights

100%

18 Supply Chain Management

PImplement CSR questionnaires and CSR briefings*1 Self-assessment uses comparison with baseline year (1 – reduction ratio) in the following formula tocalculate the achievement rate:
target value
1×100%
actual value/target value

45

Integrated Report 2021

PContinue our contributions to, and foster better relationships with, local communities
through tree planting, forest creation and the provision of seedlings
PContinue to protect and raise endangered species
PContinue with forest development at the Okayama Tire Proving GroundPGet the raising of the Sasakia charonda at the Okayama Tire Proving Ground on trackP≥16.0% reduction from fiscal 2005

9 Pursuing “safety and comfort,” “economy” and

8 10

50%

98%

302-5

PImplement multifaceted evaluation and leadership training for all thosein managerial or higher positions, including officers; take further steps tocultivate a culture encouraging mutual feedback and create workplaces thatenable open-minded exchanges of opinionPImplement course on unconscious bias for personnel in managerial andhigher positions, including officers, and work to eliminate as far as possible
the unconscious bias and prejudice that causes obstacles to diversity
PIn order to improve workplace safety, continue to conduct evaluations basedon safety indicators (KPI), formulate a plan for each base and carry out
activities to overcome weaknesses in safety activities

60%

Action: Fiscal 2021 Target
PPromote the Million Trees for Local Forests Project
PPromote the creation and maintenance of GENKI Forests in Japan

12.9% reduction

PDevelop and launch environmentally friendly products“quality”

Check: Self-assessment*

302-1, 2, 5

8 Developing environmentally friendly products

rewardingI

Do: Fiscal 2020 Activity Result
PPlanted trees for the Million Trees for Local Forests Project (including mangrove planting)
Fiscal 2020: 19,240 trees planted   Cumulative total: 1,764,091 trees planted
PConducted tree planting/maintenance activities 18 times
PPlanted acorn trees and provided seedlings: Fiscal 2020: 4,070
P3,966 acorn seedlings given away to communities
PConducted activities to protect 21 endangered species at eight sites in Japan
PInitiated forest development at the Okayama Tire Proving GroundPObserved the first successful hatching of Sasakia charonda at the Okayama Tire Proving Ground

PReleased “VEURO VE304” tires incorporating Performance Sustaining Technology that helps
prolong wet grip performance at the maximum level

10 Fostering human resources and making work

Kindness to employees

GRI Guidelines

PPromote the Million Trees for Local Forests Project
PCreation and maintenance of GENKI Forests in Japan

4 Creating a low-carbon society

Ecological process

Plan: Fiscal 2020 Target

 elping to curb global warming through tree
1 H
planting
communities through tree planting

E
E

Activity Guidelines

available on our website (scheduled to be released at the end of July 2021).

*2 The denominator for calculating the environmental impact indicator is the new
rubber consumption amount (consumption of natural rubber + synthetic rubber).

Integrated Report 2021

46

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Environmental: Our Environmental Initiatives

G

Progress in Greening Initiatives (Cumulative Number of Trees Planted)

reenGreen initiative

Management Approach
Forests absorb CO2, which contributes to global warming, and are
an important component of the social infrastructure that preserves
biodiversity. Based on the concept that preserving this infrastructure is one of our corporate social responsibilities, we promote“Green (Green initiative)” through ongoing tree planting activities inand around our operation bases within Japan and overseas.
In fiscal 2009, we began tree-planting activities at our facilities
in Japan and overseas. As of the end of 2020, we had planted acumulative total of 1,760,000 trees. We will continue to plant trees
while participating in forest maintenance.

(thousand of trees)

2,000

Overseas branches
Mangroves (Green Project)
Other tree-planting activities in Japan
Acorn Project in Japan

Collaborative Activities with Local Residents in“Sumitomo Rubber GENKI Forest”

1,600

1,200

800

400

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

Note: In addition to the above, 98,000 seedlings have been provided (2013-2020)

Forestation Activities to Help Curb Global Warming“Sumitomo Rubber GENKI Forest,” a Green
Initiative in Japan
In addition to the grounds of our facilities, we engage in forestation
activities in the surrounding area and at the 11 locations (23 ha) inJapan designated as “Sumitomo Rubber GENKI Forest.”
When planting trees, one has to be aware of the negative effectnon-native species can have on local ecosystem. As such, we plant
only seedlings grown from acorn seeds that employees and their families gather in the target area. Our continued efforts are aimed at increasing the amount of greenery around us while protecting biodiversity.
Although our activities in fiscal 2020 were somewhat restricted
due to the need to prevent the risk of COVID-19 infection, 938 trees
were planted in “Sumitomo Rubber GENKI Forest” in said fiscal year.
Maintenance work after tree planting is also important for forestation.
Accordingly, we constantly carry out such tasks as cutting back weeds,
removing vines, removing unnecessary trees, pruning and thinning.

Volunteers who worked to maintain “GENKI Forest” in the Kanemidake mountain near the
Miyazaki Factory

47

Integrated Report 2021

Connecting with Local Communities
via Forestation Activities

Greening Initiatives Overseas
We are promoting greening initiatives at overseas factories andsales companies. In fiscal 2020, due to the need to prevent COVID19 infection, these Group entities faced restrictions on their activities as did our Japanese bases. However, a total of 902 trees havebeen planted and 2,105 seedlings provided.
In addition, 15,000 trees were planted in Indonesia through the“Team ENASAVE Green Project,” wherein mangrove seedlings areplanted using some of the proceeds from sales of the fuel-efficient“ENASAVE” tire series. Furthermore, 2,400 trees were planted
through the “1 Pair for 1 Love activities,” in which some of the proceeds from the sales of rubber gloves are allocated to the DUNLOPHome Products Forest on the island of Borneo, Malaysia, in orderto protect the orangutan, an endangered species.

The objectives of forestation activities include the prevention of
global warming by absorption of CO2, landslide prevention, andbiodiversity preservation. We also consider communicating withlocal communities through satoyama (working forests that are
maintained and managed by humans) conservation activities,
another important objective.
To align our forestation activities with the circumstances uniqueto each local community, we promote activities in which employees, former employees,
families, friends, local
residents and regionalorganizations participate. In 2020, we provided a total of 5,031
seedlings to green initiative organizations andthe people of neighbor- A Shirakawa Factory employee giving a seedling to acommunity resident
ing communities.

Initiatives to Preserve Biodiversity
The Group is involved in conservation activities in relation to endangered, near threatened, and rare species (five species of animal and16 species of plant) at all eight of its sites in Japan, consisting of six
factories, the Head Office and the Tire Proving Ground.
In terms of contributing to the immediate neighborhood, activities
include transplanting “Fujibakama” (Eupatorium japonicum) cultivated in the grounds of our factory to river beds, as well as providing
this plant to neighboring cities. We also provide kindergarten children with the opportunity to observe Sasakia charonda, which isdesignated as a national butterfly. In 2020, this butterfly successfully
emerged on the premises of the Okayama Tire Proving Ground. Alsoin 2020, we began working on the preservation of Lilium japonicum.

Protecting Culture and Nature—Team ENASAVE
Future Project
In September 2013, the Sumitomo Rubber Group launched theTeam ENASAVE Future Project in cooperation with the National
Federation of UNESCO Associations in Japan (NFUAJ). This project
aims to ensure that Japan’s beautiful cultural and natural heritages
are passed down to future generations for the next 100 years. As
part of this project, we engage in environmental protection activities
in tandem with people from communities across the nation.
Having started with one location in 2013, we have expanded thenumber of locations where these annual activities are held from eightin 2014 to 10 in 2019. The locations are scattered throughout Japanand take place with the help of employees, their families, and local
associations as well as volunteers from the public. In 2020, however,
our activities were canceled due to the COVID-19 pandemic.

On the premises of the Okayama Tire Proving Ground, a Sasakia charonda (Nymphalidae
family) butterfly, which is designated by Okayama Prefecture as a species requiring particular interest, emerges successfully for the first time

Echinops setifer (Asteraceae
family), an endangered species designated by Miyazaki
Prefecture cultivated on thepremises of the Miyazaki
Factory

Chionographis japonica(Melanthiaceae family) cultivated on the premises of
the Nagoya Factory is a rare
species

Lefua echigonia (Cobitidae
family), a class I endangered
species designated by
Hyogo Prefecture, lives on
the premises of the Ichijima
Factory

TopicsParticipating in a biodiversity symposium—helping rediscover
the natural beauty of the Rokko mountain range environment

DUNLOP Home Products Forest

Celebrating the 80th anniversary of the commencement of its construction, in 2021 Kobe
Municipal Arboretum hosted a symposium in tandem with Kobe City, with the aim of communicating the natural beauty of the environment of Mount Rokko. The symposium washeld from January 29 to March 31, 2021, and due to the COVID-19 pandemic, it was madeaccessible to the public only via the internet.
Having participated in the event in the category of biodiversity-related presentations
focused on Mount Rokko, we exhibited materials showcasing green initiatives undertaken by
the Sumitomo Rubber Group. This event provided us with a good opportunity to let a broad
range of the general public know about our locally-rooted green initiatives that exemplify thevariety of activities that can contribute to a sustainable society, energize neighboring communities, and protect the global environment.

Integrated Report 2021

48

Sustainability Activities Undertaken by the Sumitomo Rubber GroupE

Environmental: Our Environmental Initiatives

cologyEcological process

Management Approach
As a global company responsible for the environment, we will fulfill
our social responsibility through all areas of our activities in order toachieve sustainable development of society wherein human prosperity and the environment co-exist harmoniously.
Sumitomo Rubber Industries was certified in March 2009 as an“Eco-First company” under the “Eco-First Program” establishedby the Ministry of the Environment and renewed its “Eco-First
Commitments” in October 2017.

Implementing Global
Environmental Management
Environmental preservation is one of the most important responsibilities that companies must fulfill within a global society.
There are strong demands that global companies implement uniform environmental management throughout the world regardlessof country or region.
As it accelerates its global expansion, the Sumitomo RubberGroup is focusing ever more energy on promoting global environmental management.

Our Basic Policy on Environmental Preservation(fundamental philosophy)
The Sumitomo Rubber Group established its Environmental Policy in
July 2007 and revised said policy in April 2019, putting it into practice
via environmental initiatives.

49

Integrated Report 2021

1 Creating a Low-Carbon Society

Fiscal 2020

O Reduce LCCO2* emissions per tire by
the fiscal year 2022

Reduced by

12.9%

Fiscal 2022:(compared to fiscal
2005 levels; per tire)≥14% reduction over fiscal 2005

*Life-cycle CO2

2 Building a Recycling-Oriented Society

Since fiscal 2010

O Maintain our “Complete Zero landfill
waste” policy at major production
bases in Japan and overseas until 2020

Continued achievement

O Establish a technology for%recycling of wastewater at a model
factory by 2020

Establishing waterrecycling technology
at the Turkey FactoryforFiscal 2019100

3 Promoting Harmonious Coexistence with Nature
O Acorn ProjectConducts activities at least

20 times a year

O Take action to protect biodiversity

11 years

Fiscal 2020
Conducted tree planting activities

18 times

Fiscal 2020
Conserving

21 species

Global Environmental Management System
Environmental Management System

ISO 14001 Global Multi-Site Certification
To implement global management in all of its corporate activities
including the creation of a low-carbon society, in December 2010,
the Group obtained ISO 14001 Global Multi-Site Certification for
its 30 bases in Japan and overseas. This enabled us to carry out
unified environmental management at major production and development bases in Japan and overseas.
At the end of 2020, the number of employees working at ISO
14001 Certified Sites as a percentage of total employees was
79.3%, and the ratio of Certified Sites was 94.7%.
In fiscal 2020, the Slovenia Factory obtained ISO 14001 certification on a stand-alone basis. Looking ahead, we will continue towork on activities aimed at adding the Switzerland Factory, which
has already been certified on a stand-alone basis, and the above
Slovenia Factory, to the Global Multi-Site Certification, and on newcertification for the Philippines Factory.
Coverage Rate of ISO 14001 Certified Sites(Percentage of employees)

39,298

ISO14001
Certified Site Numberof Employees

79.3%(As of December 31, 2020)

CO2 Emissions (Factories in Japan)
Total Emissions*¹(kt-CO2e)600

Environmental impact indicator(t-CO2e/t)

1.481

1.5

1.095
400

0.941
293 302

200

244

270

0.949
248

274

0.951
247

275

1.090
1.0

0.921
242

271

236

265

270

291
0.5

0

0

1990

2016

2017

2018

2019

2020 2021 Target

CO2 Emissions (Overseas Factories)
Total Emissions*

Environmental impact indicator(t-CO2e/t)

1,000Tire BusinessSports Business

2.5

1.958

Industrial and Other Products BusinessGroup Companies

In order to strengthen global environmental management, theGlobal Environmental Management Central Committee, which iscomposed primarily of responsible parties at bases in Japan andoverseas and individuals responsible for issue-specific working
groups, meets twice a year.
In 2020, the committee met in February and July. At thesemeetings, there were reports by representatives from domestic
and overseas manufacturing factories on a wide range of activities,
including actual results and improvements in various indicatorssuch as CO2 emissions, energy savings, waste disposal and water
usage, as well as efforts to improve the environment (odors, etc.)
and contribution to society. Also, the Hybrid Rubber Products
Division reported on its environmental initiatives, while CSR-related
departments reported on their efforts to contribute to the United
Nations Sustainable Development Goals (SDGs) via the promotionof ESG-oriented management. Thus, attendees at both meetings
engaged in active discussion on these matters.
In 2021, the committee was renamed the Sustainability Promotion
Committee to indicate a shift to stronger focus on ESG-oriented management. The committee will engage in the follow-up monitoring of
initiatives aimed at addressing priority
issues associated with contributions to
SDGs. The committee will also facilitate
the in-house sharing of relevant information while submitting reports and recommendations to the Board of Directors.
The Global Environmental Management
Central Committee meeting held in 2020

695

Initiatives to Address Climate Change
We recognize that addressing risks and opportunities arisingfrom climate change is an important management issue. In linewith this recognition, we aim to appropriately implement mitigation and adaptation measures and, to this end, have establishedthe Sustainability Promotion Division in addition to launching the
Sustainability Promotion Committee chaired by the President andtasked with comprehensively overseeing relevant initiatives carriedout by all departments. As part of these efforts, preparations are
now under way to publicly announce our support of the TCFD*1
recommendations and clarify our commitment to STB.*2*1 Task Force on Climate-related Financial Disclosures*2 Science Based Targets

Creating a Low-Carbon Society

1.606

500

739
1.558

779

791

1.645

1.627

814
729
1.672

1.591

In fiscal 2020, we had to temporarily suspend operations at somefactories due to the COVID-19 pandemic. Although we were thus
unable to sufficiently implement energy-saving activities, we strove
to launch new energy-saving measures by putting into practice
insights offered by consultants in fiscal 2019. As a result, CO2 emissions from production activities at the Group’s factories in Japandecreased by 6 kt-CO2 to 265 kt-CO2 from the previous fiscal year.

1.5

0.5

92
0

0

2004

2016

2017

2018

2019

2020 2021 Target(FY)* CO2 emission factors for electricity consumption are based on a WRI/WBCSD GHG
Protocol Initiative Calculation Tool (2004).

CO2 Emissions (Factories Operated by Domestic Group Companies)
Total Emissions*

Environmental impact indicator(t-CO2e)

4,000(t-CO2e/unit)

0.843

0.9

3,919
3,749

3,720

3,500

0.6

3,403
0.527

0.517

0.486

3,000

0.469

0.465

0.462

2,775

3,055

0

CO2 Emissions Reduction Activities in Production Bases

2.0

1.0

3,370

Items marked with “ ” have been verified by third parties. The environmental impact indicator was not verified by third parties. The figures shown in the graphs differ from the verified figures as different
coefficients were used.

(FY)*1 Total emissions are calculated using the cogeneration credits based on the “Guide for
Calculating Greenhouse Gas Emissions,” published by the Japan Rubber Manufacturers
Association (used to calculate the environmental impact indicator). CO2 emission factors
for electricity consumption, published by electricity companies in 2004, are applied.
*2 Total emissions without considering cogeneration credits.

Sustainability Promotion Committee members
Committee chair: Executive Vice President
Committee members:
Officers in charge of relevant departments
Secretariat: Safety, Fire Prevention and Environment
Management Department andHuman Resources & General Affairs Department

Total Emissions*²(kt-CO2e)

President, Sumitomo Rubber Industries, Ltd.
Sustainability Promotion Committee

However, the environmental impact indicator of CO2 emissions
showed an 18.9% increase from the previous fiscal year.
In fiscal 2021, the Company will work on the predictive maintenance of facilities and on reducing CO2 through such initiatives as
deploying AI and IoT platforms to search for, extract, and analyze
factors that affect energy savings.

0.3

0

2004

2016

2017

2018

2019

2020 2021 Target(FY)* Total emissions are calculated using cogeneration credits based on the “Guide for
Calculating Greenhouse Gas Emissions,” published by the Japan Rubber Manufacturers
Association. CO2 emission factors for electricity consumption, published by electricity
companies in 2004, are applied.

Integrated Report 2021

50

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Environmental: Our Environmental Initiatives

Waste Disposal (Excluding Valuables) (Factories in Japan)

CO2 Emissions Reduction in Logistics

Building a Recycling-Oriented Society

In fiscal 2020, we worked to increase the modal shift rate by raising
the precision of demand forecasts and ensuring scheduled shipments for marine and train transportation.
CO2 emissions from transporting tires fell 16.6% compared to theprevious fiscal year, to 24.1 kt-CO2, and the environmental impact
indicator fell 3.3%.
In fiscal 2021, we will work on optimizing the location of our
production sites and reducing the number of products transported
from one warehouse to another.
CO2 Emissions in Logistics (Domestic)
Total Emissions

Environmental impact indicator(kt-CO2e)(t-CO2e/t)

50

0.040

40
30

0.0380
30.7

0.038

29.4

28.3

28.9

28.6

0.036

24.1

20

Items marked with “ ” have been verified by third parties. The environmental
impact indicator was not verified by third parties. The figures shown in the graphs
differ from the verified figures as different coefficients were used.

100.03390.03320.03210.0329

0

0.032
0

2016

2017

2018

2019

2020

2021 Target(FY)

The Sumitomo Rubber Group is promoting the 3Rs (reduce, reuse,
and recycle) of waste management in order to build a recyclingoriented society.
In fiscal 2020, we achieved complete zero landfill waste for the
11th consecutive year at our major production bases both in Japanand overseas.
Complete zero landfill waste is defined as the complete diversionof landfill waste, meaning a 100% recycling rate and no waste sent
directly to landfills.
In fiscal 2021, the aim of our efforts is to proceed with our mission to achieve zero emissions.
Amount of Waste Generated and Recycling Rate (Factories in Japan)
Amount of Waste Generated

Recycling Rate

(kt)

(%)

38

100

100

100
35.8

100

100

35.6

100

0.034
0.025

0.024

1.76

1.86

6.57

6.37

2016

2017

0.031

0.029

0.029

2.01

1.86

1.50

1.50

0.02

7.44

7.64

7.35

7.69

0.01

2018

2019

2020

2021 Target

5

0

35.6

35.0

0

Total Emissions

26.08

25

24.00

32

25

Wastewater recycling facilities (Brazil Factory)

0.06

The Group has been making voluntary efforts to reduce emissionsof VOCs (volatile organic compounds). In fiscal 2020, there was adecrease in the total amount of VOCs emitted due to a significant
cut in production volume. On the other hand, the environmental
impact indicator deteriorated substantially.
In fiscal 2021, we will strive to achieve further reduction in thequantities of VOCs used while implementing measures to curb theevaporation of these substances.

0

2016

2017

2018

2019

2020

2021 Target

12

1,917

1,500

9

8.20

2000

Material Recycling Rate (Factories in Japan)

5

0.023

80

81

82

74

68

73

100% recycling of factory wastewater
0.04

9.44
0.02

0.020
2017

2018

2019

2020

2021 Target(FY)

Factories in Japan
Overseas factories(t/unit)

1,500

0.12

0.119
0.098

0.097
0.083

0.087

635

635

2021 Target

350

342

349

348

325

362

1.35
2016

1.31
2017

1.34
2018

1.33
2019

1.51

1.46

2020 2021 Target

3

0
(FY)

(FY)

Reducing Waste Disposal*
In fiscal 2020, the Group made efforts to curb waste disposal, forexample by reducing metal scrap. However, the environmental
impact indicator deteriorated, reflecting the cut in production volume.
*W aste disposal refers to the amount of waste diverted for the thermal/material cycle.

14,305

708
579

5,000
0.04

13,79013,61813,283

7,707

7,468

7,105

12,427

7,676

8,567

16

15

15

13

12

16

5,814

5,724

5,896

5,802

5,310

5,821

2016

2017

2018

2019

2020

2021 Target

0.08

0

2020

13,507

7,954

0

0

2019

15,00010,000

0.107

0

2017

2018

2019

2020

2021 Target

(FY)

(FY)

Water Usage Reduction

2018

Factories operated by domestic group companies(km³)

Environmental impact indicator

(t)

745

Water Usage (Factories in Japan , Factories Operated by
Domestic Group Companies, Overseas Factories)

80

20

2017

Turkey Factory* World Resources Institute

Waste Disposal (Excluding Valuables)(Factories Operated by Domestic Group Companies)

2016

2016

Thailand Factory Natural Rubber Processing

0

500

100

0.051

0

850

(%)

0.050

0.030

Material Recycling Rate

6

Integrated Report 2021

10.01

1,000

(kg/t)

(t)

0

10

0.049

40

Environmental impact indicator

500

14.08

(FY)

60

Total Amount of VOCs Emitted (Factories in Japan)

15

Total Emissions

0

(t/t)

0.08

21.79

20

2016
50

(FY)

Environmental impact indicator

(kt)

75

34

0.03

recycling of wastewater has also been implemented at the Thailand
Factory and the Kakogawa Factory, while the Brazil Factory and theSouth Africa Factory initiated the recycling of factory wastewater.
Furthermore, the Indonesia Factory is moving ahead with the use of
rainwater to reduce external water usage.
In 2020, total water usage at all of the Sumitomo Rubber Group’s
factories was reduced by about 8.5% year on year. We will push forward with water usage optimization in production processes at eachbase and measures that utilize the results of assessments based on
the WRI* Aqueduct Water Risk Atlas on an ongoing basis.

Waste Disposal (Excluding Valuables) (Overseas Factories)

100

30.9

Efforts to Reduce Organic Solvents Use

51

0.04

Continue to Achieve Complete Zero Landfill Waste

34.9

Promoting Environmental
Footprint Management

1,000

(t/t)

15

10

36

2,000

(kt)

0.034

0.0342

Total

From factories
From tires entrusted for disposal from outside the Company
Environmental impact indicator (From factories)

With the aim of dealing with the global shortage of water resources, as a measure to reduce water usage, the Group aims toachieve a wastewater recycling rate of 100% at all 26 factories
around the world by fiscal 2050. The Turkey Factory is one ofthose within the Group with a higher level of water stress, andhas been working on trial operations to establish water-recycling
technology since 2018. In the summer of 2019, it achieved 100%
recycling for factory wastewater by using concentrated water fromthe recycling facilities to water trees on the site of the factory andto flush toilets. In accordance with the Midterm Plan, the Groupis aiming to establish water-recycling technology for 100% of thewastewater from a second factory in 2021, namely the Changshu
Factory in China, which also has a high level of water stress. Partial

Wastewater (Factories in Japan , Factories Operated by
Domestic Group Companies, Overseas Factories)
Factories in Japan
Overseas factories*

Factories operated by domestic group companies(km³)

12,000

8,000

4,000

11,17011,746
10,652

10,153

10,144

10,261
6,684

6,238

5,750

5,055

5,223

5,644

13

12

12

10

10

12

4,919

4,890

5,087

4,911

4,607

5,050

2016

2017

2018

2019

2020

2021 Target

0(FY)* Figures include estimates based on water usage at some factories

Integrated Report 2021

52

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Environmental: Our Environmental Initiatives

N

Environmentally Friendly Product Development Themesext

Fossil resource-freematerials

Fuel efficiency(lower rolling resistance)

MakingUsing

Rawmaterials

Next-generation product development
Reduce(weight-savings andwear resistance)

Management Approach
Underpinning the activities of the Sumitomo Rubber Group is the question “How can tires contribute to the global environment?” To this end,
the Group is developing environmentally friendly products with a focus
on three areas—fuel efficiency, raw materials and resource saving.
While the environment surrounding the automobile industry faces
drastic changes, the Group is pushing forward with the developmentof environmentally friendly products based on its “ENASAVE technology,” which delivers “even higher environmental performance.”

Fuel
efficiency

Resource
savingSafety and comfort(grip, braking andquietness)

Disposing
Recycle & reuse (ease of retreading)

How Can Tires Contribute to the Global Environment?

Developing Environmentally Friendly Products
Based on the SMART TYRE CONCEPT, our Performance
Sustaining Technology has been incorporated into the “VEURO
VE304” premium comfort tire. This concept also led to the releaseof the flagship “ENASAVE NEXT III” fuel-efficient tire. The releaseof these tires helped us step up our sales expansion efforts.
Both of these tires also incorporate a hydrogenated polymer
that helps prevent a decline in wet grip performance while contributing to superior wear resistance.
The release of the “VEURO VE304” was achieved via theestablishment of a technology that makes it possible to incorporate this polymer into products designed for large volume
sales. We therefore consider the “VEURO VE304” a testament
to our remarkable technological advancements.
The “ENASAVE NEXT III,” on the other hand, incorporates

cellulose nanofiber, thereby achieving driving comfort and steering stability. This product is the first in the world to incorporate
cellulose nanofiber, a biomass material boasting environmental
friendliness. From the viewpoint of sustainability, we believe that
our success in utilizing biomass as a tire material is a matter ofgreat significance.
We have received robust customer reviews for these products.
In addition, the “VEURO VE304” was named a Grand Prix
winner under the DAILY AUTOMOTIVE NEWS Car Parts
Awards 2020 program, while the “ENASAVE NEXT III” waschosen to receive multiple awards under the Eco-Pro Award
program, the Super Parts Manufacturer Award program, andthe Energy Conservation Grand Prize program. As such, ourproducts are similarly lauded by external organizations.

Incorporating ahydrogenated polymer

The first in the world toincorporate cellulose
nanofiber (“ENASAVE NEXT III”)

M Prevent a decline in wet grip
performance over timeM Simultaneously realize driving
comfort and steering stability

M Boast superior wear resistancePursuing “Safety and Comfort,” “Economy” and “Quality”
SENSING CORE
SMART TYRE CONCEPT
Reflecting the ongoing advance of the Mobility as a Service (MaaS)
industrial trend, tire manufacturers are confronting changes in tire
performance requirements as the shift from car ownership to car
sharing and pooling progresses. In response, Sumitomo Rubber

Industries is striving to advance its SMART TYRE CONCEPT, which
guides its efforts to create tires with ever better safety performanceand environmental friendliness, as well as to develop peripheralservices with an eye to meeting the needs of future generations.

SMART TYRE CONCEPT

Tire
PressureRoad
Conditions

Wheel
Load

Tire
Wear

This technology is distinctively unique as it allows the tireitself to serve as a sensor and thereby eliminates the need forthe additional installation of other sensing devices as well as
eliminating a great deal of maintenance.
As a testament to our SENSING CORE-based offerings, thistire pressure sensing technology has been installed in a cumulative total of 40 million vehicles, garnering a solid reputation.
Recently, we advanced SENSING CORE by establishing atechnology for detecting the extent of tire abrasion. In addition
to existing technologies for detecting tire pressure, tire load
and road conditions, we will leverage this new technology for
detecting tire abrasion, with the aim of making further contribution to CASE, MaaS and other technological trends supporting
the future advancement of a mobility society.

One of our proprietary technologies, SENSING CORE is used
for detecting tire pressure, tire load, and road conditions via
the use of sensors installed in tires. While this technology helps
drivers assess tire conditions on a real-time basis, it can also be
used to improve vehicle control and other aspects of automobile operations.
Safety technology
Airless Tires
SENSING CORE
Performance Sustaining
Technology
Active Tread

ENASAVE technology
Core technologies
Tyre Lifetime Simulation
ADVANCED 4D NANO DESIGN
Tyre Leap AI Analysis

Fuel efficiency
LCA
Durability
Lightweight
Recycling

NoiselessValue Offered

Environmental
preservation

Collaboration withexternal partners

M Reduce CO2 emissions byimproving driving and routeselection methods, etc.

Deliver value that transcends the scope of tire
manufacturing

Business streamlining
M Reduce downtime
M Improve the efficiency ofvehicle operations andrepair, etc.

Start from Japan
Expand the scope ofcustomers and services

Cost reductions
M Reduce tire and maintenanceexpensesM Accurately assess the optimal

Tire development = Manufacturing tangible goods

Solution services = Otherwise supporting safe & comfortable driving

timing of maintenance, etc.

Safe and secure
vehicle operations
M Detection and prevention ofvehicle failures
M Improve maintenance efficiency, etc.

Conventional tire sales
and maintenance(Launched the verificationof tire pressure
management services)

-2020

53

Integrated Report 2021

STEP 1
Tire pressure
management

2021

Develop proposal-based
services that take advantage of even more accurate tire-related data via
abrasion management

STEP 2Tire pressure andabrasion management
Tire
PressureRoad
Conditions

Wheel
Load

Tire
Wear

2023

STEP 3
Total solutions
For example, the detection of road conditions /vehicle control
Collaboration with
automakers and otherexternal companies
employing
SENSING CORE

2025Integrated Report 2021

54

Sustainability Activities Undertaken by the Sumitomo Rubber GroupK

Social: Our Social Initiatives

indness

Work Style-Related Certifications andAwards Granted under Municipal Programs
Sumitomo Rubber Group’s Basic Hiring Policy
A diverse employment
environment and humanresource development

Kindness to employees

Management Approach
Employees achieve satisfaction by working for the Sumitomo RubberGroup, which grows as a result of its employees’ success. To continue building such a sound relationship, we believe that we have a
responsibility to provide all employees with a fair and equal chance
to grow through a range of benefit packages and training programs.
With the President himself leading the way, the Company isworking on Work Style Reform and on activities to maintain or
improve the health of employees, which it is putting into practice asa strategic priority.

Initiatives to Prevent the
Spread of COVID-19
In the wake of the COVID-19 outbreak, which impacted regions
around the world, we put the utmost priority on ensuring the safetyof Group employees and their families. In addition to ensuring thispriority, we focused on maintaining operations and, to this end,
took every possible measure to minimize the pandemic’s effect on
our operating results.
In February 2020, we established a risk control headquarters andpromoted the above endeavors while facilitating information sharing
on a global basis.
In the course of our business operations, we have not only striven to ensure employee safety but also done our utmost to secure
customer safety. Along with promoting remote working, we havethus shifted to online and other alternative sales activities to prevent
COVID-19 infection. Also, in April 2020 we donated 97,500 pairsof nitrile rubber gloves, one of our products, to the Japanese government to support healthcare institutions. Moreover, in July 2020,
in response to a government request we have decided to raise ourannual production capacity for nitrile rubber gloves to 2 million pairs
and, to this end, expanded our facilities at the Malaysia Factory. In

55

February2020

We launched our risk control headquarters, which is spearheading discussion on our response to the pandemic whilegathering information on a global basis. From mid-February
onward, we cancelled various events set to be held thereafter.

March
2020

We began recommending employees at domestic businesssites to work at home to mitigate the risk of COVID-19 infection. For those working at overseas business sites, we issued
similar recommendations in response to requests from local
governments.

April
2020

Due to the enforcement of a state of emergency declarationin Japan, as general rule, all domestic employees were asked
to work at home. We also donated nitrile rubber gloves to theJapanese government to support healthcare institutions. As
part of health-oriented management, we launched web-based
healthcare sessions in which industrial physicians, health nurses and counselors could engage with employees.

May
2020

Even after the lifting of a state of emergency declaration, we
kept our focus on ensuring employee health and maintaining
an employee-friendly working environment and, to this end
continued to encourage remote working to curb the numberof employees commuting to our offices. We have similarly
encouraged those operating in overseas business sites to workat home in a manner consistent with region-specific conditions.

Integrated Report 2021

A workplaceenvironment conducive
to job satisfaction

Fair evaluation andequal benefits

Health & Productivity
Management Declaration
In order to pursue greater happiness for all of the employees—the bedrock of our
growing business—as well as their families, Sumitomo Rubber Industries and our
Health Insurance Association are working together to raise awareness of one’s personal responsibility to maintain one’s own health while at the same time promoting
disease prevention and healthier living.

May 2021, we brought the expanded facilities on line.
In Japan, we have maintained a policy of encouraging remote
working, keeping it up even after the lifting of a state of emergency
declaration and thereby curbing the number of employees at workin our offices. Through these and other measures, we are continuously implementing countermeasures against COVID-19 infection inlight of country-specific circumstances.
Currently, our mode of operations is changing significantly in stepwith the aforementioned shift to remote working. Leveraging thisshift as an opportunity, we will verify the effectiveness of remote
working as part of our pursuit of optimal work styles that enable us
to improve productivity in a way that ensures employee health andis employee friendly.

Promoting Health &Productivity Management
In line with the “Health & Productivity Management Declaration”
established in February 2018, the Company has worked in cooperation with the Health Insurance Association to promote healthand productivity management measures that are centered on
the Health Management Office but that include the participationof all employees. As a result of establishing Health Management
Regulations codifying the rules for various health checks and levelsof risk and its efforts to steadily cycle through the PDCA system,in March 2020 for the first time the Company was one of 40 companies selected for inclusion in the “2020 Health & Productivity
Stock Selection” organized by the Ministry of Economy, Trade andIndustry in conjunction with the Tokyo Stock Exchange, which recognizes companies that take a strategic management approach tothe health management of their employees. In 2021 the Company
has also been certified under the “2021 Certified Health andProductivity Management Organization Recognition Program—
White 500” for the fifth consecutive year.
* We were certified as one of the 40 companies in the “2020 Health &Productivity Stock Selection Program,” in which companies that makestrategic efforts to consider employee management from a managerial perspective are jointly selected
and announced (in principle, one company is selected from each industry) by
the Ministry of Economy,
Trade and Industry and theTokyo Stock Exchange.

Two of our factories were chosen by prefectural governments under
their programs and named, respectively, as an employee-friendly
workplace and an excellent organization in terms of helping employees achieve an optimal work-life balance.
Miyazaki
Factory

Hinata no Kiwami employee-friendly workplace certification
granted by Miyazaki Prefecture

Shirakawa
Factory

Fukushima Work-Life Balance Grand Award granted by
Fukushima Prefecture

Fostering Human Resources andMaking Work Rewarding
Strengthening the Organizational Framework
At the end of 2019, we conducted a Group-wide organizationalframework survey by submitting questionnaires to every Group
employee. Based on survey results, in 2020 we conducted activities to enhance our organizational framework. Specifically, we
implemented the following four policies: “An environment thatencourages employees to take on challenges,” “An open-minded
workplace without boundaries between departments or ranks,” “Anenvironment that empowers everyone to exercise leadership,” and“Highly productive operations connected to Companywide strategies.” While confirming the outcomes of these activities via simple
questionnaires on a quarterly basis, we are continuously engagedin efforts to achieve organizational transformation.

Human Resources Development
In order for the Company to become a truly global player, thehuman resources who support this effort must also be able to act
as truly global players. To this end, human resource development
initiatives being undertaken since 2020 to strengthen employee
leadership include executive coaching programs for the President
and other members of top management and 360-degree feedback
sessions for those in managerial or higher positions. Furthermore,to support those who spearhead transformation, we have launchedboost programs that take a cross-hierarchy approach and encompass a range of employees from managers to frontline workers,
with the aim of establishing a unified understanding of how to process tasks and other operational issues.

Expanding the Work System That Supports
Diverse, Flexible Workstyles
In addition to promoting reductions in the amount of after-hours
work performed by employees and greater use of paid leave, we
are moving forward with the introduction of diverse workstyles thattake into consideration childcare and nursing care in order to add
variety to work and support efforts to balance work and family.
The result of these and other efforts has been that 100% of
female employees who have given birth have taken childcare leave.
In addition, 14 male employees took childcare leave in 2020, an
increase of five people year on year.
In fiscal 2009 we became the first company in the tire industry to be certified for the “Kurumin” mark based on the Act on
Advancement of Measures to Support Raising Next-Generation
Children and have since continued to support childcare. In 2019,
the Minister of Health, Labour and Welfare awarded the Company“L-boshi (second level)” certification, which is given only to businesses that have superior arrangements for encouraging the active
participation of women. Moreover, we were granted “L-boshi” (thirdlevel) certification in November 2020. We have also expanded
support for nursing care through efforts ranging from launching an
external nursing care consultation desk to periodically hosting nursing care seminars addressing a variety of timely topics.

Promoting Diversity
Promoting Work Style Reform and Diversity
We communicate our approach to promoting work style reform anddiversity to people within and outside the Group via messages fromtop management. As part of our pursuit of diversity & inclusion, we
will strive to foster a corporate culture in which diverse individuals are
empowered to work energetically in an atmosphere of mutual respect.
Through digital transformation, we also help employees discover
the spare time they need to take on tasks aimed at delivering higher
added value. With these two key initiatives, we will pursue happinessfor all Group employees while improving our corporate value.
Also, since 2019 we made helping raise employee awareness of
unconscious bias, which could constitute a barrier against diversity& inclusion, a priority. In line with this, in 2020 we held mandatory
corporate ethics lectures for all managers that encouraged themto reflect on their own unconscious biases, join grade-specific discussion sessions to share their takeaways with peers, and acquire
deeper insights into this subject. Furthermore, we have distributed atranscript of a dialogue between President Yamamoto and a lecturer specializing in unconscious bias. By letting employees know thatthe man at the top is also committed to addressing his own biases,
we have drawn their attention to the importance of this issue.
In addition, we have been holding grade-specific seminars on thissubject and, for 2021, we will continuously strive to help all employees, regardless of their ranks, properly understand the matter.

Respecting Diversity
In order to promote Work Style Reform and diversity, in February
2019, we launched a new project within the Human Resources &General Affairs Department and Human Resources Development
Department. By nurturing a corporate culture in which people fromdiverse backgrounds can thrive, we will generate innovations thatsave time through advances in operational efficiency, linking this tothe satisfaction of all employees and enhanced corporate value.
For example, we eased dress restrictions in offices as part of ourongoing initiatives since 2019 to create a workplace culture thatencourages free expression and independent thinking as well as
the individuality of employees. We also incorporated a location-freeworkplace platform to vitalize employee communication.

Support for Female Employees Striving to Playan Active Role in Their Duties
In the course of promoting more active roles for women, the Company
has set a target of raising the ratio of women in management positions to 7% by the end of 2025, redefining its conventional diversity
target in 2021. In order to achieve the goal of respecting diversity, we
are moving forward with efforts to expand the work-life balance systems so that employees who have experienced various life events canplay active roles and to raise the percentage of people who take paid
leave to promote reforms for a well-balanced work style.
The number of users of the “daycare support system” underwhich a daycare subsidy is granted to employees who leave a childunder two years of age at a daycare facility, has been increasing
since its introduction in 2015 as a measure to support an earlier
return to work from maternity leave and/or childcare leave. The system is contributing to female employees’ career development.
Usage of the “temporary leave to accompany spouse overseas system,” whereby employees can take temporary leave to accompany theirspouses when they are relocated overseas, is also progressing, and weare seeing a rising number of registrations in our “JOB Return System,”
which applies in cases where marriage or a change in the spouse’s
work location makes the resignation of an employee unavoidable.
For fiscal 2021, our plans call for establishing a working group thattakes a cross-departmental approach to determining how to promotewomen’s career success and incorporating the insights the groupoffers to improve various human resource management measures.
Integrated Report 2021

56

Sustainability Activities Undertaken by the Sumitomo Rubber GroupI

Social: Our Social Initiatives

ntegrity

Sumitomo Rubber Group Stakeholders
Customers

Integrity for stakeholders

Sound Labor-Management Relations

Management Approach
Aware of the social responsibilities incumbent on the Sumitomo
Rubber Group, we always work to assess what is expected of us
and reflect such expectations in our business activities. To this end,
regular communication with our stakeholders is indispensable. As
we globalize our business, we welcome a diverse range of new
stakeholders around the world. We strive to demonstrate integrityin all our business activities so that we can earn the trust of all

Local community

Business partners

Sumitomo
Rubber Group

Shareholders andinvestors

Employees

our stakeholders.

Supply Chain Management
Promoting Initiatives That Comply with the“Sustainable Natural Rubber Policy”
The Group has established its own “Sustainable Natural Rubber
Policy” with the aim of making natural rubber a sustainable
resource for the future that it announced in November 2018. In linewith this policy, we are committed to promoting more proactive,
collaborative efforts that involve both supply chains and various
other stakeholders, with the objective of achieving a society inwhich natural rubber is a sustainable resource.

Sustainable Natural Rubber Policy
2018 November

providing information and participating in an exchange of opinionswith a broader scope.
The Company will continue making full use of input from ourshareholders and investors in enhancing its management and corporate value.

Engaging in CSR Procurement along with Suppliers
In light of the growing importance of CSR procurement, every three
years we distribute CSR questionnaires that target suppliers and anever expanding range of business partners.
In addition, we hold lectures for employees that focus on ESG
issues and United Nations Sustainable Development Goals (SDGs),
with the aim of helping raise employee awareness regarding compliance, human rights, labor, environmental and other issues.

Ensuring Thorough ComplianceWe drive home to our employees the importance of avoiding all
wrongful conduct through our “Corporate Code of Conduct,” which
includes rules that prohibit them from engaging in monopolistic practices; unfair competition or business dealings; or bribery. Employees
are also required to sever any relations with anti-social forces.
Going forward, we will continue efforts aimed at improving compliance awareness on a Group-wide basis.

The Company and the Sumitomo Rubber Labor Union (which
had 5,532 general members as of December 31, 2020, excluding officers or managers) maintain good relations based on the
sharing of information by management and an approach of priorconsultation. We believe that the growth of the Company and the
pursuit of employee happiness are objectives shared by labor andmanagement, and we have a history of productive discussions
at the various labor-management committees. For example, we
engage in activities in which labor and management are united
in the pursuit of their objectives, such as when we organized aLabor-Management Wages Study Group comprising personnel
from the union leadership and the Company’s Human Resources
Department, with the aim of reviewing the human resources system
and working conditions and have maintained it ever since.
In fiscal 2020, this study group was responsible for such initiatives as the upward revision of the overtime premium rate applied
to those who work during consecutive holidays that have otherwise
been designated as non-business days for the general workforce inaddition to the relaxation of conditions regarding applications for apaid-leave rights preservation system designed to support employee livelihood.
In fiscal 2021, we
will continue our efforts
to promote workstylereforms, and moveahead with various activities, with labor and management continuing towork in cooperation with A central labor-management meeting held in
December 2020
each other.

Building Relationships with Customers
With the aim of raising driver awareness regarding the need ofperiodic tire checkups, for 13 years since 2018 we have sponsored
DUNLOP Nationwide Tire Safety Inspections. The latest round of
this campaign was conducted in October 2020 at the Company’s

Establishing a Natural Rubber Procurement
Subsidiary in Singapore
Aiming to ensure the sustainable procurement of high-quality natural
rubber, we established SUMITOMO RUBBER SINGAPORE PTE.
LTD. in Singapore, which boasts the world’s largest market for
natural rubber, and initiated its operations in April 2020. Today, businesses engaged in the procurement of natural rubber are increasingly being called upon to give due consideration to human rights
and environmental concerns. In response to this call, Sumitomo
Rubber Industries is also serving as a proactive participant in
GPSNR,* an international platform founded in October 2018.
* Global Platform for Sustainable Natural Rubber consisting mainly of tiremakers, natural rubber suppliers, automakers and NGOs.

57

Integrated Report 2021

Promoting Dialogue with Stakeholders

directly managed stores (Tire Select and Tire Land stores) in

Communication with Shareholders and Investors

inspections was found to have issues attributable to insufficient tireregions across Japan.
As a result, one out of every four vehicles that had undergone

The Company discloses various types of data, including businessperformance records, in the Investor Relations section of our corporate website and holds briefings for analysts and institutional investors at such times as the disclosure of earnings reports, as part ofour communications (IR activities) with shareholders and investors.
The Company engages in constant communication (shareholder
relations (SR) activities) with institutional investors for deeper mutual
understanding and trust. In 2020, we held a total of nine SR sessions, a number of which were held remotely. Through such direct
dialogue, the Company aims to enhance its corporate value by

maintenance, such as shallower tire grooves, a typical cause of slipping on a wet road. These inspections are thus helping to prevent
accidents induced by badtires. As we strive to meetcustomer expectations, wewill continue to call publicattention to the importanceof tire inspections, thereby
contributing to the creationof a safer mobility society.

Becoming the First in the Rubber Product Industry
to Sign a Positive Impact Finance Loan Agreement
Thanks to Our Efforts to Contribute to SDGs
In May 2020, we signed a Positive Impact Finance Loan Agreementwith Sumitomo Mitsui Trust Bank, Limited, becoming the first business in the rubber product industry to be entitled to financing of
this kind. This is testament to the solid reputation we have earned
regarding our efforts to contribute to the realization of SDGs.
The Positive Impact Finance scheme involves the comprehensive
analysis and assessment of environmental, social, and economic
impacts, both positive and negative, attributable to business activities undertaken by applicants. Loans are thus furnished to provide
ongoing assistance, without specifying usage of funds, to those
whose activities are positively evaluated.
With the signing of this agreement as a springboard, theSumitomo Rubber Group will place even stronger emphasis on
efforts aimed at contributing to SDGs in line with its ongoing policyof achieving medium- to long-term improvement in corporate value.

Contributing to Regional Communities
In 2020, the latest rounds of the Dunlop Monozukuri Class andthe Dunlop Environmental Class were held in Hyogo Prefecture.
We have regularly held both events since launching the former in2009 in conjunction with the centennial of the Company’s founding,and the latter in the subsequent year. Acting in collaboration withan NPO, we are thus offering programs designed to help children
experience the fun of manufacturing and familiarize them with environmental problems.
Striving to fulfill our corporate social responsibilities, we willcontribute to the communities in which we operate as well associety as a whole. In theseways, we create new valuethat fosters the sustainable
development of society,thereby becoming a company deserving the solid trustof community members andworthy of their support.
Children attending a Dunlop Environmental Class

Promoting Social Contribution Activities: CSR FundIn fiscal 2009, the Company established the “Sumitomo Rubber
Industries CSR Fund” to provide financial support for various activities aimed at solving global environmental and social problems,
activities primarily being carried out by NPOs in regions where wehave bases. This is supported by a matching gift program in which
we appeal for donations from among likeminded employees anddonate an amount equivalent to that collected.
In fiscal 2020, the Fund donated a total of ¥13.14 million to 54
organizations consisting of 18 environmental advocates, threedisaster aid groups, and 33 community builders. Recently, thenumber of employees coming forth to support this initiative has
been increasing as their social contribution awareness grows stronger. Reflecting this, this Fund achieved record highs for the third
consecutive year since 2018 in terms of the number of recipientsand total donation amount.
In fiscal 2021, a total of ¥14.10 million will be donated to 57
organizations.

Integrated Report 2021

58

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Governance

Basic Perspective

Directors, Audit & Supervisory Board Members andExecutive Officers (as of March 26, 2021)

Hiroaki Tanaka
Standing Audit &Supervisory Board
MemberDirectors and Audit & Supervisory Board Members

Ikuji Ikeda
Chairman of the Board

The Sumitomo Rubber Group’s basic management policy is toenhance not only its economic value but also its societal value andto contribute to the development of a sustainable society by ensuring that “Our Philosophy” is the foundation for all decision-making and the starting point for all actions. Under this policy, theCompany considers the enhancement of corporate governance to
be one of its major management objectives.
We are thus engaged in initiatives aimed at realizing this objective
and, to this end, endeavoring to secure overall management efficiency, strengthen the relationship of trust between us and society
and improve the Company’s operations in terms of fairness andtransparency. Based on the above convictions, we have established the following five basic approaches in terms of the further
enhancement of corporate governance.
1Develop an environment that protects rights of shareholders andhelps them exercise such rights

2Strive to improve corporate value via sound collaboration with abroad range of stakeholders
3Disclose the Company’s financial and non-financial information inan accurate and timely manner
4Work to enhance the content of discussions undertaken by
the Board of Directors regarding management policies, medium- to long-term business planning and other matters related
to the general direction of the Company by establishing theManagement Meeting, which is tasked with deliberating a large
proportion of business execution matters. In addition, strive tosecure fairness in the Board of Directors’ operations via rigorous
audits by standing and outside Audit & Supervisory Board members as well as the objective supervision offered by independent
outside directors
5Endeavor to achieve the sustainable improvement of corporate
value via engagement in shareholder dialogue

Takashi Kono

Naofumi HaradaStanding Audit &Supervisory Board
MemberDirector (Senior
Executive Officer)

Corporate Governance System Overview (as of March 26, 2021)
Form of organization Company with an Audit & Supervisory Board (established Nomination and Remuneration Committee, voluntary body)

Satoru Yamamoto
Representative Director,
President andCEO (President)

Morihiro Murata

Hidekazu Nishiguchi

Outside Audit &Supervisory Board
Member*Director (Senior
Executive Officer)

Directors

Audit & Supervisory Board Members

Nomination and Remuneration Committee Members

4 Outside

3 Outside

3 Outside Audit &Supervisory Board
Members

5 Audit &Supervisory
Board Members

12 Directors(of which 1 isa woman)Membercomposition: 9(of which 2
are women)(of which 1 isa woman)

8 InternalKazuo Kinameri
Representative Director(Vice President)

Asli M. Colpan

Keizo Kosaka

Outside Audit &Supervisory Board
Member*Outside Director*•Number of members stipulated
in the Articles of Incorporation
15•Term of office
1 year•Chairperson of the Board of Directors
Chairman of the Board

2 Internal
Directors

2 Internal•Number of members stipulated
in the Articles of Incorporation •Term of office 

4 Outside
Directors•Nomination and Remuneration
Committee chairOutside Director•Term of office 
1 year5
4 years

Skill Matrix of Directors and Audit & Supervisory Board Members
Yasutaka Ii
Director (Managing
Executive Officer)

Hirofumi Yasuhara

Kenji Murakami

Outside Audit &Supervisory Board
Member*Outside Director*

Executive Officers

Hiroki Ishida
Director (Senior
Executive Officer)

Senior Executive Officers

Nobuyuki Kobayashi
Outside Director*

Takanori Aoi
Kiyoshige Muraoka
Tomohiko Masuta

Masatsugu Nishino
Naoki Okawa

Executive Officers

Yutaka Kuroda
Director (Senior
Executive Officer)

Mari Sonoda
Outside Director*

Note: The position in parentheses is the position held as an Executive Officer of the Company.
* Registered as independent officers in accordance with regulations stipulated by the Tokyo Stock Exchange

59

Integrated Report 2021

Toshihiko Komatsu
Eiichi Masuda
Kenji Saito
Hirotoshi Murakami
Richard Smallwood
Hideaki Kawamatsu
Akio Onishi
Naofumi Yanetani

Atsuhiko Tanaka
Fumikazu Yamashita
Yasuo Watanabe
Takuzo Iwata
Hiroshi Matsui
Yasuaki Kuniyasu
Jiro Kawase
Hiroshi Hamada

Primary business experience, specialty, etc.
Name

Current position at the Company*

Manufacturing
and Technology
Q

Sales andmarketing

Finance andaccounting

Legal affairs

International
business

IT and digital

Corporate
management

Ikuji Ikeda

Chairman of the Board

Q

Q

Satoru Yamamoto

Representative Director, President and CEO (President)

Q

Q

Q

Kazuo Kinameri

Representative Director (Vice President)

Q

Q

Q

Yasutaka Ii

Director (Managing Executive Officer)

Q

Q

Q

Q

Q
Q

Hiroki Ishida

Director (Senior Executive Officer)

Yutaka Kuroda

Director (Senior Executive Officer)

Q

Q

Naofumi Harada

Director (Senior Executive Officer)

Q

Q

Hidekazu Nishiguchi

Director (Senior Executive Officer)

Keizo Kosaka

Outside Director

Kenji Murakami

Outside Director

Nobuyuki Kobayashi

Outside Director

Mari Sonoda

Outside Director

Hiroaki Tanaka

Standing Audit & Supervisory Board Member

Q

Q

Q

Q
Q

Q

Q
Q
Q

Q
Q

Q

Q

Expertise in otherbusiness sectors

Q

Q

Q

Q

Q

Q

Q

Q

Q

Takashi Kono

Standing Audit & Supervisory Board Member

Q

Morihiro Murata

Outside Audit & Supervisory Board Member

Q

Q

Q

Asli M. Colpan

Outside Audit & Supervisory Board Member

Q

Q

Q

Q

Hirofumi Yasuhara

Outside Audit & Supervisory Board Member

Q

Q

Q

Q

Q
Q

Q

Q

Note: U p to four skill categories are presented per individual in line with the Company’s expectations regarding their contributions in their respective areas of specialty. The above matrix does
not fully describe the business experience and expertise possessed by each individual. The position in parentheses is the position held as an Executive Officer of the Company.

Integrated Report 2021

60

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Governance3. Corporate Ethics Committee

Reasons for Adopting the Current Corporate Governance Structure
The Sumitomo Rubber Group is endeavoring to secure overall management efficiency while strengthening the relationship of trust between theGroup and society and improving its operations in terms of fairness andtransparency. To this end, we consider the audit functions the Audit &Supervisory Board and its members currently provide to be a matter ofcritical importance. Accordingly, the Group adopted a Company with an
Audit & Supervisory Board system.
As part of its efforts to enhance corporate governance, since 2016
the Group has voluntarily maintained the Nomination and Remuneration
Committee, an advisory body to the Board of Directors. The majority ofcommittee membership is accounted for by independent officers, withan Independent Outside Director acting as the committee chair. This
committee is tasked with improving the objectivity and transparency
of officer candidate selection and other key procedures. Moreover,
the Company has appointed four Independent Outside Directors andissues questionnaires targeting Directors and Audit & Supervisory Board
Members. In these and other ways, we implement necessary measures
to develop an even more robust discussion platform for the Board of
Directors and enhance the effectiveness of its operations.

Corporate Governance Structure(As of March 26, 2021)

General Meeting of Shareholders
ReportAppointment/Dismissal

Appointment/
Dismissal

Audit

Scope of Internal
Control Auditing

1. Board of Directors
Chair: Chairman of the Board(Business Execution
Supervision)

Consult

2. Nomination andRemuneration Committee

AdviseCommittee Chair: Outside Director(Independent Officer)

4. Audit &Supervisory Board(Legal Audit)(Validity Audit)

Cooperation

Accounting Auditor

Audit

Business
Execution

ReportCooperation

Appointment/ Supervision

Audit Department

ReportPresident
5. Management
Meeting(Business Execution)(Establishment of Business Plans)

Accounting Audit
Cooperation(Business Audit)(Internal Control Audit)

ReportInternal Control Auditor
Audit

Internal Audit

Executive Officers
Each Business Operation Division and Group Company

ReportInstruction/ Human Resources & General Affairs Dept., Accounting & Finance Dept., International Business
Development & Administration Dept., Legal Dept. and Sustainability Promotion HQ
Guidance

14 meetings in fiscal 2020

The Board of Directors is composed of a total of 17 members, including
12 Directors and five Audit & Supervisory Board Members, and deliberates and determines matters of managerial importance while supervising Directors’ execution of operations. Generally, the Board of Directors
meets once a month, but it also holds extraordinary meetings whennecessary, such as at the end of the fiscal year and when the books
are closed at the end of the first half. In fiscal 2020, the board met 14
times, and attendance of Outside Directors was 100%. In addition, we
have established the Management Meeting and delegated to it authority regarding deliberation on a large proportion of business execution
matters. By doing so, we work to enhance the content of discussion by
the Board of Directors with regard to management policies, medium- tolong-term business planning and other matters related to the general
direction of the Company.
Director candidates are nominated taking into consideration whether
they can contribute to the sustainable enhancement of the corporate

61

Integrated Report 2021

27 meetings in fiscal 2020

The Meeting makes prompt management decisions through discussions
or the reporting of matters considered to be important to management.
The meeting consists of internal Directors, Standing Audit &Supervisory Board Members and Executive Officers appointed by the
President, and the officer in charge of corporate planning serves as thechair of the meeting. The Management Meeting was convened 27 times
in fiscal 2020.

6. Risk Management Committee

2 meetings in fiscal 2020

The committee oversees the Group’s risk management activities andappropriately examines and confirms whether business risks and otherrisks have been recognized and discussed and whether the risk management system is functioning effectively.
The committee consists of the officers responsible for administration;
research, design, and development; production; and sales and each business department, with the President serving as the committee chair. The
two Standing Audit & Supervisory Board Members attend as observers.
The Risk Management Committee was convened twice in fiscal 2020.

7. Sustainability Promotion Committee
The Sustainability Promotion HQ, which was established in January
2021 to push ahead with the Company’s sustainability activities, istasked with the planning and implementation of relevant measuresfrom a long-term perspective. With staff at this division acting as key
members, the Sustainability Promotion Committee is engaged in deliberations aimed at facilitating Companywide initiatives to address ESG
issues and contribute to realization of the United Nations Sustainable
Development Goals (SDGs).

Keizo Kosaka

Mr. Keizo Kosaka provides valuable comments and opinions from an objective perspective, leveraging his abundant knowledge
as an attorney who excels at corporate legal affairs and experience in corporate management as a Chairman of Irokawa Legal
Professional Corporation and outside auditor of Toyo Aluminium K.K., Sekisui Plastics Co., Ltd., Techno Associe Co., Ltd. and
SEIREN CO., LTD. The Company requests his appointment based on its judgment that he would contribute to the improvement of
the Company’s corporate governance.

14 of 14 times—

Kenji Murakami

Mr. Kenji Murakami provides valuable comments and opinions regarding general management matters, leveraging his substantial
experience in corporate management as Representative Director, President and COO of Daiwa House Industry Co., Ltd. The Company
requests his appointment based on its judgment that he would contribute to the improvement of the Company’s corporate governance.

14 of 14 times—

Nobuyuki
Kobayashi

Mr. Nobuyuki Kobayashi has been engaged mainly in duties associated with accounting and finance at Sumitomo ElectricIndustries, Ltd. and gained extensive experience and broad insights as a manager through his experience as Managing Director of
the said company. As he provides valuable comments and opinions regarding general management matters based on his experience described above, the Company requests his appointment based on its judgment that he would contribute to the improvementof the Company’s corporate governance.

11 of 11 times—

Mari Sonoda

Ms. Mari Sonoda has fulfilled a number of important positions in the Ministry of Finance and other government agencies and been involvedin the development of systems for protecting information privacy, such as “My Number,” thereby gaining specialist knowledge with regard
to monetary and financial matters as well as abundant experience and extensive expertise in this field. Accordingly, the Company requests
her appointment based on its judgment that she would contribute to the improvement of the Company’s corporate governance.

Cooperation

Cooperation

value of the Company, including such factors as their contribution toachieving effective corporate governance and ensuring the diversity ofboard members in terms of knowledge, experience, etc.

2. Nomination and Remuneration Committee

Appointed in March 2021

Reasons for the Selection of Independent Outside Audit & Supervisory Board Members
Fiscal 2020 Status of Attendance
Board of Directors Audit & Supervisory
meetings
Board meetings

Name

Reason for selection

Morihiro Murata

Mr. Morihiro Murata expresses opinions on the execution of business by Directors from an objective viewpoint as an Outside Audit& Supervisory Board Member, based on his considerable knowledge in finance and accounting as a certified public accountant andtax accountant and corporate management experience while serving as outside director, Audit & Supervisory Committee member ofKagome Co., Ltd., as well as outside Audit & Supervisory Board member of Kokuyo Co., Ltd. The Company requests his appointment
based on its judgment that he would contribute to the reinforcement of its audit system.

14 of 14 times

12 of 12 times

Asli M. Colpan

Ms. Asli M. Colpan has extensive knowledge in corporate management based on her advanced academic knowledge as a professor
specializing in management strategy and corporate governance, as well as experience of involvement in corporate management as an
Outside Director of Gourmet Kineya Co., Ltd. and NISSHA Co., Ltd. As she expresses her opinions as an Outside Audit & Supervisory
Board Member on the execution of business by Directors from an objective viewpoint reflecting her experience as described above,
the Company requests her appointment based on its judgment that she would contribute to the reinforcement of its audit system.

14 of 14 times

12 of 12 times

Hirofumi
Yasuhara

Mr. Yasuhara has ample knowledge of corporate management, with experience in corporate management as Representative
Director, President of PanaHome Corporation (currently Panasonic Homes Co., Ltd.), as well as Senior Audit & Supervisory Board
Member of Panasonic Corporation and Outside Auditor of Santen Pharmaceutical Co., Ltd and Hitachi Zosen Corporation. As he
expresses his opinions as an Outside Audit & Supervisory Board Member on the execution of business by Directors from an objective viewpoint reflecting his experience as described above, the Company requests his appointment based on its judgment that hewould contribute to the reinforcement of its audit system.

11 of 11 times

10 of 10 times

3 meetings in fiscal 2020

In an effort to further increase corporate value, the committee was established in 2016 as a voluntary advisory body to the Board of Directors
to ensure objectivity and transparency in the nomination of officers anddecisions regarding remuneration. In fiscal 2020, the committee met
three times and discussed various issues regarding nominations (training
successors, nomination of officers, etc.) and remuneration (introduction of
performance-based remuneration and stock-based remuneration linked
to medium- and long-term business results, director bonuses, etc.).
Currently, the committee consists of a total of nine members, sevenof whom are independent outside officers, and an Independent Outside
Director serves as the committee chair. There was 100% attendance
among members in fiscal 2020.

Fiscal 2020 Status of Attendance
Board of Directors Audit & Supervisory
meetings
Board meetings

Reason for selection

Our Philosophy / Corporate Code of Conduct

1. Board of Directors

5. Management Meeting

Name

Legal Counsel

Cooperation

Compliance Consultation Office (Corporate Ethics Help Line)

In accordance with audit plans and policies set out by the Audit &Supervisory Board, each Audit & Supervisory Board Member attends
important meetings, including Board of Directors’ meetings; hears
reports on the status of job execution from Directors and the internal
audit office; reviews important approval documents; and implements
on-site audits at the Head Office, major business sites and subsidiaries
while working closely with the Accounting Auditor to ensure that audits
are conducted in an appropriate manner.
The Audit & Supervisory Board consists of five members, of which
two are selected as Standing Audit & Supervisory Board Members. In
addition to attending important in-house meetings, the board confirms
important documents for approval. From the aspect of reinforcing themanagement auditing function, three of the five Audit & Supervisory
Board Members are Outside Audit & Supervisory Board Members,
securing a structure to conduct fair and objective audits. The Audit &Supervisory Board meets once a month in general. In fiscal 2020, theAdviceCooperation

3. Corporate Ethics Committee (Legal Compliance),
6. the Risk Management Committee and 7. Sustainability Promotion Committee

12 meetings in fiscal 2020

board met 12 times, and Outside Audit & Supervisory Board Members
attended 100% of the Audit & Supervisory Board meetings.

Reasons for the Selection of Independent Outside Directors

Guidance
Report

The committee identifies, analyzes and evaluates compliance risks
throughout the Sumitomo Rubber Group, plans and conducts training,
ascertains the cause of violations, proposes preventive measures andthoroughly disseminates information on that throughout the Group.
The committee is composed of the officer in charge of corporate
ethics (officer in charge of human resources and general affairs), officer
in charge of audits, officer in charge of legal affairs, Audit Department
Manager, Human Resources & General Affairs Department Manager
and Legal Department Manager, with the President serving as thecommittee chair. In addition, two Standing Audit & Supervisory Board
Members participate as observers. In fiscal 2020, the committee not
only met four times but also held a corporate ethics lecture meeting toraise awareness of corporate ethics throughout the Group.

4. Audit & Supervisory BoardReportAppointment/Dismissal

4 meetings in fiscal 2020

Notes:
1. Mr. Nobuyuki Kobayashi was appointed as a Director at the 128th Ordinary General Meeting of Shareholders held on March 26, 2020. Following that date, the Board of Directors met 11 times in fiscal 2020.
2. Mr. Hirofumi Yasuhara was appointed as a Director at the 128th Ordinary General Meeting of Shareholders held on March 26, 2020. Following that date, the Board of Directors and the Audit & Supervisory
Board met 11 and 10 times, respectively, in fiscal 2020.

Integrated Report 2021

62

Sustainability Activities Undertaken by the Sumitomo Rubber Group

GovernanceInitiatives to Enhance the Effectiveness of the Board of Directors’ Operations
The Board of Directors’ Operations
To ensure that agenda items submitted to the Board of Directors
are fully examined and discussed, we provide Outside Directors
and Outside Audit & Supervisory Board Members with materials
describing these items and presentations prior to each meeting.
With regard to decision making on management matters of particular importance, Executive Officers in charge of such matters occa-

newly appointed as Outside Directors with briefings that cover such
topics as the Sumitomo Rubber Group’s latest business outline, its
most recent operating results, challenges it is currently facing andother essential matters they need to know in light of their directorial
duty to present advice on enhancing the Company’s standing.

Conducting Questionnaires to Evaluate theBoard’s Effectivenesssionally provide prior briefings to these individuals.

Since 2016, Sumitomo Rubber Industries has conducted regular

Main topics of discussion at Board of Directors meetingsin 2020 (agenda items)

survey questionnaires for all Directors and Audit & Supervisory

P Progress report and issues related to the Midterm Plan foreach business
P Response going forward in relation to the results of the questionnaire survey on the effectiveness of the Board of Directors
P Status of the Risk Management Committee and Corporate
Ethics Committee
P Disposal of a portion of cross-shareholdings

Board Members regarding various aspects of the Board of
Directors, including its composition and operation. Based on the
results of the survey, the Board of Directors then conducts deliberations aimed at increasing its effectiveness.
In fiscal 2020, the survey was conducted between September
and October, and discussions were held in January 2021. The
results confirmed the overall effectiveness of various aspects of theBoard of Directors, including the number of Directors and member composition, operation of the board (frequency of meetings,

Training for Directors and Audit &Supervisory Board Members

discussion time, etc.), manner of deliberation, and monitoring of

The Company helps internal Directors and Executive Officers partic-

viding fuller information to Outside Directors and Outside Audit &ipate in external executive training at its own expense. By doing so,

Supervisory Board Members helped invigorate discussion at Board

we ensure that these individuals are fully equipped with the knowl-of Directors’ meetings.

business execution, etc.
In addition, it was confirmed that our initiatives aimed at pro-edge necessary to serve as members of a key decision-making body

We will work on maintaining the Board of Directors’ environmentof a listed company. Furthermore, we provide individuals who are

and, as necessary, execute measures to enhance its effectiveness.

Board of Directors’ Measures to enhance effectivenessFiscal year ofquestionnaire survey

IssuesMeasures taken (implemented in the fiscal year following that in which the questionnaire survey was conducted)

Before 2016

P Extend time allotted for
discussion addressing
strategic issues
P M ore complete information to be provided
to officers in advance

Raising the monetary criteria for tabling an item at a Board of Directors meeting
P Monetary limit for tabling an item at a Board of Directors meeting was raised in order to discontinue the tablingof insignificant items, thereby freeing that time to be used to discuss more strategic and important issues.
Earlier provision of materials
P Revised certain operating rules so as to enable materials provided in advance to be sent out earlier.
More complete information to be provided to outside officers in advanceP Hitherto, regular “Management Meeting Reports” and “Executive Officer Reports” had been presented to
the Audit & Supervisory Board Members, in a different setting to that of the Board of Directors, and Outside
Directors were added to this arrangement.
P Regular new reports to the Board of Directors also began in relation to the status of the Corporate Ethics
Committee and the Risk Management Committee.

2018

2019

P Revitalization of
discussions

2020

63

Integrated Report 2021

Further steps to provide more complete information to outside officers in advanceP Hitherto, explanations of the content of discussions at the Management Meeting related to agenda items at
the Board of Directors had been sent in advance to outside officers, but we worked further to ensure that sufficient time is allowed and that more specific details are shared.
Improvements to the manner of reporting on business of which Executive Officers are in charge
P Hitherto, Executive Officers had presented regular reports on the business that they are in charge of at Boardof Directors meetings, but we have revised the way reporting takes place, basing it on specific reporting
themes in order to provide solid opportunities to exchange opinions.
Prior acceptance of questions with regard to agenda items and provision of answers
P The secretariat reaches out to individuals intending to attend an upcoming Board of Directors meeting andasks them whether they have questions and/or issues that need to be confirmed beforehand, with Executive
Officers in charge of relevant operations providing them with necessary explanations at such opportunities as
the Board of Directors meeting or prior briefings on agenda items.

Remuneration of Directors and Audit & Supervisory Board Members
1. Matters Related to Remuneration and the Company’s Policies for Determining Its Calculation Method
Remuneration and the Company’s Policies for Determining Its
Calculation Method
With regard to the remuneration of Directors and Audit & Supervisory
Board Members, the Company’s basic policy is to adopt a remuneration
system that is linked to the interests of shareholders, so that it effectivelyfunctions as an incentive package rewarding members for their efforts
to sustainably enhance corporate value. The Company also ensuresthat the remuneration of individual recipients is set at an appropriate
level in light of their respective responsibilities.
Details of the methods for determining remuneration are as described
below.
1E xcept for Outside Directors, remuneration for Directors andExecutive Officers consists of a basic salary constituting a fixed portion and bonuses constituting a performance-based portion.
2Basic salary is a fixed amount paid monthly and is determined basedon each recipient’s position, responsibilities and years in office andin accordance with basic salary tables determined after comprehensively taking into consideration the level of remuneration at peer
companies, the business performance of the Company, salary levels
for employees and other factors.
3To enhance recipients’ awareness of their duty to improve businessperformance each business year, performance-based remuneration ispaid in cash in a way that reflects performance indicators. An amountcorresponding to the degree to which performance indicators havebeen met is paid at a predetermined time each year.
4R emuneration for Directors and Executive Officers is discussed
based on objective and fair perspectives by the Nomination andRemuneration Committee, which is attended by independent officers,
who make up the majority of committee membership, and chaired by
an Independent Outside Director. Remuneration is thus determined ina way that takes into consideration recommendations from and conclusions reached by the committee.
In addition, the level of remuneration is objectively adjusted by applying findings from third-party surveys on remuneration paid at othercompanies.
Indicators Used for Determining Performance-BasedRemuneration, Reasons for Adopting Such Indicators andMethods of Calculating Said Remuneration
When determining the amount of performance-based remuneration, theCompany selects business profit, profit attributable to owners of the parent company and other performance indicators considered particularly
important in light of its corporate strategy. The target values for these
indicators are determined when midterm plans are formulated in a waythat is consistent with said plans and revised as necessary in accordancewith changes in the environment, taking into consideration any recommendations from the Nomination and Remuneration Committee.
When determining the allocation of remuneration to each individual,
the individual’s position, operational duties, level of responsibility, level ofachievement of key targets within departments under his or her supervision, level of contribution to business performance and other factors aretaken into account from a medium- to long-term perspective.
Proportional Composition of Remuneration for Directors (Except
Outside Directors) by TypeThe composition of each type of remuneration is engineered to ensurethat the weighting of performance-based remuneration is higher forindividuals in higher positions than it is for those in lower positions. This
determination is benchmarked against the remuneration levels of companies of a similar business scale to the Company or in a related industry or with a similar business format. This composition is also discussed
by the Nomination and Remuneration Committee.
The Representative Director and President, to whom the Boardof Directors has delegated authority over the matter, determines thedetails of remuneration for individual recipients in a manner that honors
recommendations from the Nomination and Remuneration Committee
and within the scope of the proportional composition set forth in such
recommendations for each type of remuneration.
Furthermore, as a general rule regarding the proportional compositionof each type of remuneration, the ratio of fixed remuneration (basic salary) to performance-based remuneration (bonuses) is 7:3 for Directors,
excluding Outside Directors, and 8:2 for Executive Officers, provided
that the level of achievement of performance indicators is 100%.
Position

Fixed remuneration(basic salary)

Performance-based
remuneration (bonus)

Directors (excluding
outside directors)

70%

30%

Executive Officers

80%

20%

Although the Company has not yet introduced stock-based remuneration designed to offer medium- to long-term incentives, the Company
encourages officers to acquire shares of its stock through the officers’
stockholding association while giving due consideration to the status ofachievements under its medium- to long-term management plans in thecourse of determining performance-based remuneration. As such, theCompany strives to incentivize recipients to pursue sustainable growth
for the Sumitomo Rubber Group.
With regard to stock-based remuneration, the Company will continue
to engage in in-house discussion to assess the optimal timing for the
introduction and determine the form and amount of such remuneration.

2. Total Amount of Remuneration by Officer Category, Total Amount of Remuneration by Remuneration Type and the Number of Recipients
Total amount of
remuneration(millions of yen)

Number ofrecipients

Directors(excluding Outside Directors)

438

9

Audit & Supervisory Board Members(excluding Outside Members)

50

2Outside Members

53

8

Officer category

1The resolution passed at the General Meeting of Shareholders regarding remuneration The limits on the total amount of remuneration for Directors and Audit& Supervisory Board Members have been set based on a resolution
by the 123rd Ordinary General Meeting of Shareholders held on March
26, 2015, as detailed below: Directors: up to ¥800 million per year (ofthis amount, remuneration for Outside Directors: up to ¥70 million peryear); Audit & Supervisory Board Members: up to ¥100 million per year.
2A ctivities undertaken by the Nomination and Remuneration
Committee and the Board of Directors in the process of determining
remuneration to be paid for the most recent fiscal year
 The Nomination and Remuneration Committee met on July 30, 2020,
November 27, 2020 and January 29, 2021, to discuss the Company’s
remuneration system, the level of remuneration paid under said system,and the amount of basic salaries and bonuses, with the aim of assessing
the appropriateness of these matters and policies for determining them.
Based on recommendations formulated by the committee, the Boardof Directors convened an extraordinary meeting on February 9, 2021 to
discuss policies for determining remuneration. Furthermore, the Board of
Directors met on March 1, 2021 to discuss the amounts to be awarded
as bonuses, thereby determining the full details of remuneration.

Integrated Report 2021

64

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Governance

Measures to Promote Constructive Dialogue with Shareholders

departments, shall be specifically determined in accordance withsubsidiary on an as necessary basis regarding risk management,

the Regulations Concerning the Allocation of Responsibility andcompliance, and other specific matters that need to be reported

Duties. Each subsidiary shall develop a similar organizational

to and discussed at the Company’s Management Meeting andstructure and reporting lines. Furthermore, an Executive Officer

its Board of Directors so that directors at such subsidiaries may

3 In addition to maintaining sufficient information disclosure at the

System shall remain in place to ensure flexible business exe-

directly deliberate these matters with directors at the Company.

1 The Company strives to realize dialogue in line with the interests

General Meeting of Shareholders and through the convocation

cution in response to the changing environment and customerof various stakeholders by appointing the officer in charge ofnotice and newsletters, the Company provides various types ofneeds. With respect to the performance and efficiency of each6A system to ensure adequate financial reporting

finance for investor relations (IR) and the officer in charge of gen-timely information by issuing integrated reports describing thedivision and subsidiary, a midterm management plan shall be The Company shall strive to maintain the Internal Control

eral affairs for shareholder relations (SR).

status of its business operations and ESG-based management

drawn up, targets shall be set at budget meetings (and reviewed

System in accordance with the Financial Instruments and2 In preparing materials and gathering information for the IR

and sustainability activities. In addition, the Company holds

as necessary), and the status of achievements of those targets

Exchange Law and assessment/audit standards and implemen-

and SR activities mentioned above, the Company’s Corporate

results briefings and endeavors to promote communication withshall be reported, reviewed and analyzed on a monthly basis attation standards prescribed by the Financial Services Agency,

shareholders and investors.

The Company will conduct dialogue with shareholders with the aimof enhancing its corporate value based on the following policies:

improve its corporate value.

the Group’s performance meetings. For all business operations

and to enhance systems to ensure adequate financial reporting

departments engage in organic, cross-sectional coordination in

4 The Company considers the opinions gleaned through dialogue

undertaken by the Sumitomo Rubber Group, we shall actively

by the Sumitomo Rubber Group.

order to support constructive dialogue with stakeholders, includ-with shareholders and investors as valuable in terms of further

utilize IT and digital technology to enhance efficiency in the exe-ing shareholders and institutional investors.

enhancing its corporate value. While sharing such information

cution of business.

Planning, General Affairs, Finance, Legal Affairs and other related   As part of IR activities, the IR section of the Company’s corpo-

with the senior management, the Company discusses therate website features various data, including the latest businessnecessity of and studies methods for materializing such opinions

performance trends. The Company also hosts IR briefings foras needed.

7E stablishment of a position to assist the duties of Audit &Supervisory Board Members at the request of such members

4A
 system to ensure the execution of business by directors An employee shall be selected to work as an Audit &and employees is in compliance with law/regulations andSupervisory Board Members’ dedicated assistant to support

the Articles of Incorporation

them in the execution of their duties. This individual shall oper-

analysts and institutional investors in conjunction with, for exam-

5 When engaging in dialogue with shareholders and investors, theple, business results announcements. In terms of SR activities,

Company checks the explanation and disclosure materials to be The Company ensures that the corporate philosophy of theate solely based on instructions by Audit & Supervisory Board

the Company offers a broad range of information and facilitatesused in such dialogue in tandem with external consultants andSumitomo Rubber Group, “Our Philosophy,” is the foundation

Members. The opinion of the Audit & Supervisory Board shall be

the robust exchange of opinions via direct engagement withother professionals beforehand, with the objective of preventing

for all decision-making and the starting point for all actions.

sought in advance prior to carrying out personnel changes andinstitutional investors. In these ways, the Company strives tothe risk of insider trading.

Our corporate Code of Conduct, as well as various complianceevaluating the performance of this individual.

manuals, shall be widely distributed, with top management clar-

Basic Policy on the Internal Control System

ifying its principles. Moreover, it shall be made thoroughly clear

8S ystems to allow directors and employees to report toto all Sumitomo Rubber Group members that compliance with

Audit & Supervisory Board Members and to allow otherlaws and corporate ethics constitutes the basic foundation ofreports to be made to such members

The Company established the Internal Control System, a systemrisks and the planning of countermeasures in accordance withmanagement. The Corporate Ethics Committee, chaired by the Standing Audit & Supervisory Board Members shall partic-

that performs the necessary function of ensuring the propriety of

the Regulations Concerning Risk Control, which define risk man-President, shall identify, analyze, and evaluate those complianceipate in Management Meetings and other important meet-business undertaken by the Sumitomo Rubber Group (Sumitomo

agement methods for the entire Sumitomo Rubber Group. Theserisks affecting the Group as a whole in addition to planning andings to accurately assess the status of the Sumitomo Rubber

Rubber Industries and its subsidiaries as defined by the Article

risks shall be then referred to the Management Meeting and otherconducting necessary training. The Committee shall also work

Group. Important matters involving risk management shall be

2, Paragraph 3 of the Companies Act). As it aims to continue tobodies for discussion. If necessary, advice and guidance may be

to ascertain the cause of any violation, propose measures toreported directly by directors or heads of divisions to Audit &enhance its Internal Control System, the Company has made it asought from professionals including legal counsel, in analyzing

prevent their recurrence, and ensure thorough familiarization

Supervisory Board Members as necessary. Matters reported

rule to submit any proposal for the revision of the following mattersand planning countermeasures for such risks. Any risk affectingof these matters throughout the Group. A Corporate Ethics

to the Corporate Ethics Help Line (excluding minor problems)to the Board of Directors.

the Group as a whole shall be addressed by individual depart-

Help Line shall be established to allow employees, et al., toshall be reported to the Audit & Supervisory Board. In accor-

ments under the administrative divisions overseeing their busi-

directly report and consult on any actions that are question-

dance with “Regulations on Corporate Ethics Activities,” which

ness operations in coordination with other relevant departments

able in light of corporate ethics. Information received by theapply to all Group companies, the Company shall establish aand subsidiaries. The Risk Management Committee shall oversee

Corporate Ethics Help Line shall be reported to the Corporate

structure that prohibits anyone from disadvantageously treating Information concerning the execution of business by direc-

Group-wide risk management activities and, on an as necessary

Ethics Committee, which, in turn, shall assess the situation andpersons who report to the Corporate Ethics Help Line or Audit

tors, such as documents on proposals or decisions, shall bebasis, investigate and confirm whether the risk management

adopt the necessary measures. The Sumitomo Rubber Group’s& Supervisory Board Members on the grounds of such reporting

recorded and managed appropriately in accordance with thesystem is functioning effectively. If any material risk affecting the

Corporate Code of Conduct shall stipulate that any ties withand protects the confidentiality of their identities.

Regulations Concerning Preservation of Documents. The direc-

Sumitomo Rubber Group as a whole emerges or is expected toantisocial forces must be severed, with the aim of securing ators and Audit & Supervisory Board Members shall be permitted

emerge, the President shall establish a risk control headquarters

structure that refuses any requests from such forces.

to view these records at all times.

pursuant to the Regulations Concerning Risk Control.

1 A system to preserve and manage information concerning
the execution of business by the directors& Supervisory Board Members
5A
 system regarding reporting on the execution of busi-

2R ules concerning the risk management of loss and othersystems65

3 A system to ensure the efficient execution of business bydirectors

9O ther systems to ensure effective audit coverage by Audit

ness by directors at subsidiaries to the Company Audit & Supervisory Board Members shall be given opportunities
to receive explanations from the Sumitomo Rubber Group’s Each business division shall periodically receive reports fromdirectors and division heads as necessary. The Company shall Management risks involving product quality, law, the environment, In order to ensure that the directors and managerial person-

directors of each subsidiary under its supervision with regard

reimburse expenses, including incidental expenses, incurred bycredit, accidents, disasters, etc., that may materially and adverse-

nel may execute their business properly and efficiently, their

to its performance targets and the achievement of such tar-

Audit & Supervisory Board Members in the course of the execu-

ly affect our business activities, shall be addressed by the relevant

duties, authority and relevant departments to be placed undergets. Pursuant to the Regulations Concerning Management oftion of their duties to a reasonable extent.

division and/or subsidiary in advance, via the analysis of thosetheir supervision, along with operations conducted by these

Subsidiaries, such division shall also receive reports from eachIntegrated Report 2021

Integrated Report 2021

66

Sustainability Activities Undertaken by the Sumitomo Rubber Group

GovernanceRisk Management

ComplianceManagement risks involving product quality, law, the environment,

countermeasures for such risks. Any risk affecting the Group as

In the Sumitomo Rubber Group, we believe that “legal compli-

structure by formulating the “Regulations on Corporate Ethics

credit, accidents, disasters, etc., that may materially and adversely

a whole shall be addressed by individual departments under theance and the upholding of corporate ethics form the cornerstone

Activities” and the “Sumitomo Rubber Group Corporate Code ofaffect our business activities, shall be addressed by the relevant

administrative divisions overseeing their business operations in coor-of a company’s survival and are crucial to long-term corporate

Conduct” in February 2003 in addition to establishing a Compliancedivision and/or subsidiary in advance, via the analysis of thosedination with other relevant departments and subsidiaries. The Risk

vitality and competitiveness,” and we developed our compliance

Consultation office, a system that has continued to this day.

risks and the planning of countermeasures in accordance with theManagement Committee shall oversee Group-wide risk manage-

Regulations Concerning Risk Control, which define risk manage-

ment activities and, on an as necessary basis, investigate and con-ment methods for the entire Sumitomo Rubber Group. These risks

firm whether the risk management system is functioning effectively.

shall be then referred to the Management Meeting and other bodies
for discussion.

If any material risk affecting the Sumitomo Rubber Group asa whole emerges or is expected to emerge, the President shallIf necessary, advice and guidance may be sought from professionals, including legal counsel, in analyzing and planning

Structure of Compliance Initiatives

Board of Directors

establish a risk control headquarters pursuant to the Regulations

Audit & Supervisory Board

Notification as necessary

Concerning Risk Control.
Corporate Ethics Committee

Notification asnecessaryGroup-wide Risk Management System

Board of Directors
Corporate Ethics Help Line (consultation desk)Managing risks related to business strategy

Risk Management Committee

Compliance Consultation office

Notification as necessary

Direct consultation

Chair: President
Members: Officers in charge of three regional block headquarters, human resources & general affairs, legal
affairs, finance, corporate planning, international business, digital planning, logistics, production
planning, production, R&D, material development, tyre technologies, original equipment tyre sales,
replacement tyre sales, hybrid rubber products business, and sports business

Legal Counsel• Receives reports on the effectiveness of risk management, confirms/considers improvements• Receives reports on incidents and measures to prevent recurrence, etc., submits
countermeasures or proposals for countermeasures to the Committee agenda• Matters related to control of Group risk management activities• Feedback on consultation items• No disadvantageous treatment resulted from consultation• Confidentiality of person seeking consultation maintained

Direct consultation

Employees

Risk Management Committee Secretariat

Departments
Subsidiaries underjurisdiction

Audit, Human Resources & General Affairs, Legal, Accounting & Finance,
Purchasing, Corporate Management Planning & Administration, International
Business Development & Administration, Digital & Information Technology, andProduction Planning departments

Main Initiatives in Fiscal 2020

• Investigations/checks on the state of risk management in departments and Group companies• Reports to Committee on problems related to deficiencies and effectiveness of risk management system• Storage/management of Risk Management Committee records• Formulation and promotion of BCP, support for departments formulating BCP

Articles of Incorporation.

In addition to meetings of the Board of Directors, which exercises supervision over compliance matters, the Audit & Supervisory Board
met 12 times and confirmed that the execution of business by directors was in conformity with laws, regulations and the Company’s
Also, the Corporate Ethics Committee, tasked with deliberating compliance issues for the Sumitomo Rubber Group, met four times
to implement countermeasures against compliance and risk management issues affecting the Group as a whole. The committee also
strove to ensure that each case reported via the Corporate Ethics Help Line was properly handled.
In addition, each business division endeavored to raise corporate ethics awareness among its employees by, for example, striving toMain Initiatives in Fiscal 2020

help improve their understanding of the Group’s Corporate Code of Conduct and the Sumitomo Business Spirit while hosting various
corporate ethics lecture sessions.

Based on the Company’s Regulations Concerning Risk Control, the Risk Management Committee met twice to supervise risk management activities vis-à-vis risks affecting the Sumitomo Rubber Group as a whole. The committee also confirmed that the risk management system for the entire Group is functioning effectively.
In response to the global COVID-19 pandemic, the Company established a risk control headquarters led by the President, thereby implementing measures to minimize the pandemic’s overall impact on the Group’s facility operations and its business results.
Specifically, the Company placed the utmost priority on ensuring the safety of employees and their families while introducing countermeasures to prevent COVID-19 infection and updating procedures for response to the emergence of infection cases. Moreover, theCompany strove to collect information from supply chains to assess their status and helped them introduce robust measures to prevent
infection. These endeavors were carried out under the leadership of the risk control headquarters via collaboration involving each business division and administrative departments with specific functions.

67

Integrated Report 2021

Integrated Report 2021

68

Sustainability Activities Undertaken by the Sumitomo Rubber Group

Honors and Certifications from Outside Organizations

June

The Izumiotsu Factory signed an agreement with Izumiotsu City, with the aim of making its premises available to citizens as
a temporary shelter at times of emergency.

July

DUNLOP VEURO VE304 was named a Grand Prix winner under the DAILYAUTOMOTIVE NEWS Car Parts Awards 2020 program.

September

ENASAVE NEXT III, a flagship product in our fuel-efficient tires, was chosen
to receive an Excellent Award under the 3rd Eco-Pro Award program.

Some honors and certifications related to sustainability that the Sumitomo Rubber Group has received from outsideorganizations are listed below.

The First Nikkei BP ESG Brand Survey

The 15th (2021) CSR Ranking

The Company was ranked 10th in the ESG Brand Survey(social category) sponsored by Nikkei- BP for the question “wehave a system that can balance work with child rearing, nursing
care and fighting diseases.”

The Toyo Keizai CSR Company Ranking, which identifies companies recognized by a wide range of stakeholders as reliable, evaluates the utilization of human resources, environment, governanceand social activities, profitability, safety and scale and provides
rankings for both corporate social responsibility (CSR) and finance.
The ranking program’s scoring is comprehensive and ourscores surpass the average score for all companies and thosein our industry (rubber products). We also boast a balanced
score across all items.

Source: Nikkei ESG December 2020 edition

Corporate Message Survey 2020
Our brand message, “create a future that is free of automobile
accidents,” used in Dunlop’s TV commercials, was ranked firstin the Corporate Message Survey 2020 undertaken by Nikkei
BP Consulting, Inc., the highest rating it has earned—number
one in consumer favorability.

Use of humanresources

100

Sustainability Award 2021

80

We were chosen by CSR Communication Association (CCA)
to receive a Silver Award under the Sustainability Website
Award 2021 program in which the CCA rates the content ofsustainability-related information disclosed via corporate websites.

60
Scale

40

September Following its employment of the K computer to perform large scale molecular dynamics simulations of rubbers used in tires,the Company was recognized for its research efforts utilizing High Performance Computing Infrastructure (HPCI), receiving
an Excellent Achievement Award.
November

The Miyazaki Factory was chosen by Miyazaki Prefecture to receive a Governor’s Award under the 2020 Miyazaki Green
Initiative Contributor Award program.

November

The Company received “L-boshi” (third level) certification as an excellent corporation promoting women’s
career success based on the Act on the Promotion of Female Participation and Career Advancement in the
Workplace.

December

The Miyazaki factory achieved a record high 7.5 million hours without accidents involving lost work days, receiving a “Type 2
Accident-Free Record Certificate” from the Ministry of Health, Labor and Welfare.

December

We were ranked first for the third consecutive year in the “2020 Ranking ofConstruction Material and Equipment
Manufacturers to Work With,” parts andmaterials for detached housing vibration
control category, sponsored by Nikkei
Architecture. In the same category, we wereranked second by Nikkei Home Builder.

Sumitomo Rubber Industries, Ltd.
Industry (rubber products)
All companies (average)

Environment

20

SNAM Sustainability Index
Since 2012, the Company has been continuously included in
the SNAM Sustainability Index, an asset management product index compiled by Sompo Japan
Nipponkoa Asset Management Co.,
Ltd. (SNAM) for pension fund managers and institutional investors.

Governanceand sociality

SafetyProfitability

Parts and materials for detachedhousing vibration
control category

Vibration Control Units for
Detached Housing “MIRAIE”

Parts and materials for detachedhousing vibration
control category

1st

2nd

Questionnaire that asks
readers which construction material and equipment manufacturer’s
products they prefer

Questionnaire that asks
readers which construction material and equipment manufacturer’s
products they prefer

December

The DUNLOP ENASAVE NEXT III fuel-efficient tire was chosen to receive a
Nippon Brand Award under the 2020 Super Parts Manufacturer Award program.

December

A letter of gratitude was issued by the Minister of Economy, Trade and Industry after we donated rubber gloves to support
healthcare institutions combating the COVID-19 pandemic.

Source: TOYO KEIZAI INC.
15th (2021) CSR
Ranking Report

2020
February

Our corporate advertising was chosen to receive a Silver Award under the Nikkei BP MarketingAwards 2020 program.

2021

March

March

Sumitomo Rubber Industries was selected as one of 40 companies included in the“2020 Health & Productivity Stock Selection,” which recognizes companies thattake a strategic approach to managing the health of their employees. Moreover,
the Company has been selected as a “White 500” organization exercising superior health management, under the “Certified Health & Productivity Management
Outstanding Organizations Recognition Program,” for the fourth consecutive year.
The Miyazaki Factory was granted Hinata no Kiwami employee-friendly workplace certification thanks to its efforts to create a working environment that promotes a harmonious balance between work and private life.

January

The Shirakawa Factory was chosen by Fukushima Prefecture to receive the Fukushima Work-Life
Balance Grand Award in recognition of its proactive efforts to allow employees to choose fromdiverse work styles in light of their private circumstances related to childrearing and nursing care.

February

DUNLOP ENASAVE NEXT III was chosen to receive the Agency for Natural Resources and Energy
Director-General’s Award under the Energy Conservation Grand Prize program.

Certifications Acquired
PISO9001: 2015 Quality Management System
PISO14001: 2015 Environmental Management Systems
PO HSAS18001: 2007 Occupational Health and Safety

May

69

Thanks to its efforts to help realize the United Nations Sustainable Development Goals (SDGs), the Company became the firstin the rubber product industry to sign a Positive Impact Finance Loan Agreement with Sumitomo Mitsui Trust Bank, Limited.

Integrated Report 2021

Management Systems*

PISO45001: 2018 Occupational Health and Safety Management
System
PIATF16949: 2016 Automotive Quality Management System
Standard*In the process of becoming ISO standard ISO45001: 2018

Integrated Report 2021

70

Corporate Data

Financial Section

Consolidated Financial/Non-financial Data

Main Financial Indicators (Fiscal 2020)
Millions of yen

IFRS

Years ended December 31

2015

2016

2017

2018

2019

2020

Overseas sales ratio (%)
Cost of sales

798,483

756,696

877,866

894,243

893,310

790,817

59

59

63

63

63

64

528,393499,650

611,185

632,756

637,658

Business Profit (Ratio)*

Tire BusinessSports BusinessIndustrial and Other Products Business

Earnings for the year:
Sales revenue

Sales Revenue

558,638

Tire BusinessSports BusinessIndustrial and Other Products Business(Billions of yen)

798.5

877.9 894.2 893.3
756.7

Selling, general and administrative expenses

191,237

182,130

199,706

200,806

201,261

188,791

Business profit*1

78,85374,916

66,97560,681

54,391

43,388

400

9.9

9.9

7.6

6.8

6.1

5.5

200

89,17373,28467,44957,15533,06538,701

11.2

9.7

7.7

6.4

3.7

4.9

71,97641,364

46,97936,246

12,072

22,596

9.0

5.5

5.4

4.1

1.4

2.9

Total assets

932,432

897,634

1,018,266

1,002,383

1,035,484

974,805

Total Assets / Ratio of Equity
Attributable to Owners of Parent

Total equity

451,837

459,541

490,886

472,807475,537

467,097

Total assets
Ratio of equity attributable to owners of parent

Total equity attributable to owners of parent

422,287

429,316

459,907457,927

460,800

454,743

Interest-Bearing Debt

261,867

204,218

273,452

283,482

325,490276,739

Operating profit
Operating profit ratio (%)
Profit attributable to owners of the parent*2
Profit attributable to owners of the parent to sales (%)
Financial position at year-end:

2017

2018

2019

2020

91,458

123,504800

Cash flows from investing activities(30,672)(42,144)(100,724)(65,494)(63,417)(45,594)600

56,192

86,046(24,615)

17,32628,041

77,910400(52,707)(71,055)

21,706(2,122)(40,979)(61,881)200

Related information:

932.4 897.6
45.3

47.8

1,018.3 1,002.4 1,035.5 974.8
45.2

45.7

44.5

66,857

58,12941,923

Depreciation and amortization

51,41951,24856,01057,36567,941

67,665R&D expenses

23,372

24,25725,72025,78026,19824,215

109.62112.64123.47

123.61124.36108.83

ROE (%)

17.5

9.7

10.6

7.9

2.6

4.9

ROA (%) (business profit base)

8.4

8.2

7.0

6.0

5.2

4.3

D/E ratio (times)

0.6

0.5

0.6

0.6

0.7

0.6

Ratio of equity attributable to owners of parent (%)

45.3

47.8

45.2

45.7

44.5

46.6

Sustainability-related indicators:
Number of trees planted (thousands of trees)

77

Total CO2 Emissions (global environmental data of domestic andoverseas factories) (kt-CO2e)
Employees at ISO 14001 certified sites as a percentage of
all employees (%)

72

44

51

79

1,011
89

1,036
84

1,073
84

1,095
86

1,018
79

7,849

8,745

9,183

9,199

9,156

10,063Tire production capacity (tons/month)

60,60061,50063,20065,00066,85068,500

Number of employees in Japan and overseas

33,19733,79236,65037,852

39,23339,298

Number of employees using childcare leave system(Sumitomo Rubber Industries, Ltd. (non-consolidated basis))

16

23

20

29

33

30

Ratio of new female employees to the total number of new employees(Sumitomo Rubber Industries, Ltd. (non-consolidated basis)) (%)

29

30

28

27

26

26

Ratio of female employees to the total number of employees(Sumitomo Rubber Industries, Ltd. (non-consolidated basis)) (%)

7

8

8

9

11

11

2.2

2.1

2.6

2.7

3.1

3.3

Men (years)

16.8

16.7

16.4

16.3

16.1

16.2

Women (years)

13.3

13.3

13.0

12.6

12.2

12.5

Average years of service (Sumitomo Rubber
Industries, Ltd. (non-consolidated basis))

Number of complaints and whistleblowing incidents filed by employeeswith the Corporate Ethics Helpline (Compliance Consultation office)(Sumitomo Rubber Industries, Ltd. (non-consolidated basis)) (cases)
Total amount of CSR Fund subsidy (thousand yen)

(%)

(%)

80.0

20.0

14

13

13

23

25

29

6,960

7,850

8,930

11,09013,140*1 Defined by Sumitomo Rubber Industries, Ltd. as its primary management indicator, business profit is calculated using the following formula: Sales revenue –(Cost of sales + Selling, general and administrative expenses)*2 Profit attributable to owners of the parent as calculated under IFRS

Integrated Report 2021

(%)

12.0

72.0

60

9.0

9.0

40

5.0

41.4

47.0

5.5

20

22.6

5.4
4.1

0

2016

2017

2018

2019

2020

2015

(FY)

2016

6.0

36.2

2017

2018

12.1
1.4
2019

3.0

2.9
0

2020

(FY)

15.0

40.0

10.0

0

2016

2017

2018

2019

2020

Interest-Bearing Debt / D/E Ratio

ROA

Interest-bearing debt

D/E ratio(Billions of yen)

60.0

2.0

325.5
300

9.7

10.6

8.4

8.2

5.2
7.0

6.0

0

2015

2016

2017

2018

2.6
2019

100

4.3
2020

276.7

204.2
0.6

4.9

273.5 283.5

261.9

200

7.9

5.0

(Times)

400

17.5

(FY)

1.5
1.0

0.6

0.5

0.6

0.7

0.6
0.5

0

0

2015

(FY)

2016

2017

2018

2019

2020

(FY)

Sustainability-Related Indicators (Fiscal 2020)
Global Environmental Data
(total CO2 emissions)

Number of Japanese and Foreign Patents(1,000 trees)(kt-CO2e)(Cases)

2,000

1,200

Trees Planted(fiscal year cumulative basis)

1,745 1,764
1,655 1,706
1,539 1,611

800

Japan

10,000

786

8,000

600

1,000
500

4,000

200

2,000

0

2015

2016

2017

2018

2019

2020

8,761 9,183 9,199 9,156

10,063

0

2015

(FY)

7,849

6,000

400

0

Overseas

12,0001,073 1,095
1,018
1,011 1,036

1,000

2016

2017

2018

2019

2020

2015

(FY)

2016

2017

2018

2019

2020

(FY)

Note: Figure for fiscal 2016 increased substantially due to theinclusion of six overseas bases (Brazil, South Africa,
United States, Turkey, Switzerland, and Germany).

Number of Employees Using Childcare
Leave System

Number of Employees in Japan andOverseas
Japan

Women

Overseas(People)Men(People)40,00033,197 33,792

36,650 37,852

39,233 39,29830

33

30,00030

10,000

23

20
16

18

2016

2017

2018

2019

2020

(FY)

14

13

13

2015

2016

2017

10

0

2015

25

20

10

0

29

30

24
20

Number of Complaints and Whistleblowing
Incidents Filed by Employees with the Corporate
Ethics Helpline (Compliance Consultation office)(Cases)40

20,000

6,940

43.4

80

*1 ROE = (Net income / Average of total equity at the
beginning and end of the fiscal year) x 100*2 ROA = (Business profit / Average of total assets at the
beginning and end of the fiscal year) x 100

1,500

786

6.1

10.0

ROE*1 and ROA*2 (business profit base)

20.0

2015

19

Number of Japanese and foreign patents (number of patents held)

Ratio of female managers to the total number of managers

71

39

6.8

54.4

0

2015

(FY)

Management-related and financial data:
Tire sales volume (millions of tires)

60.7

5.5

46.6

0

62,494

7.6

ROE

1,200

82,82049,606

9.9

15.0

20

2016

(Billions of yen)

76,10958,911

9.9

67.0(Billions of yen)*Business profit = Sales revenue – (Cost of sales +Selling, general and administrative expenses)

128,190

Capital expenditures

74.9

0

2015

86,864

Free cash flows

78.9

20

0

Cash flows from operating activities

Cash flows from financing activities

20.0

40

1,000

Cash flows for the year:

80
60

600

Business profit ratio (%)

(%)

100

790.8

Profit attributable to owners of the parent
As a percentage of sales

Business profit ratio(Billions of yen)

1,000
800

Profit Attributable to Owners of the
Parent (Ratio)

0

2015

2016

2017

2018

2019

2020

(FY)

2018

2019

2020

(FY)

Integrated Report 2021

72

Corporate Data

Financial Section

Consolidated Statement of Financial Position

Consolidated Statement of Income
Millions of yen

Fiscal 2020

Fiscal 2019

Fiscal 2020

Fiscal 2019

Fiscal 2020

(As of December 31, 2019)(As of December 31, 2020)(As of December 31, 2019)(As of December 31, 2020)(Jan. 1 to Dec. 31, 2019)(Jan. 1 to Dec. 31, 2020)

AssetsCurrent assets Cash and cash
equivalents Trade and otherreceivables
Other financial assets
Inventories
Other current assets
Total current assets

60,631

74,203

190,261

179,635

1,314

1,399

182,769

151,253

25,07930,162460,054436,652

420,924

389,184

Goodwill

26,547

23,378Intangible assets

43,44541,402 Investments accounted
for using equity method

4,258

4,323

Other financial assets

33,44033,15929,35232,451 
Net defined benefit
asset

Liabilities and equity

Sales revenue

893,310

790,817

Liabilities

Cost of sales(637,658)(558,638)

Gross profit

255,652

232,179

Selling, general and administrative expenses(201,261)(188,791)

Business profit

54,391

43,388Other income

2,427

3,818

Other expenses(23,753)(8,505) Current liabilities

Non-current assets Property, plant andequipment Bonds and loans
payable106,644

62,256 Trade and other payables

127,040

123,261O  ther financial liabilities

12,446

12,816

Operating profit

33,06538,701 Income tax payable

4,851

7,790

Financial income

2,173

1,735

835

1,170

Financial expenses(7,988)(10,733) Other current liabilities

37,031

38,835Equity in earnings of affiliates

45

68

Total current liabilities

288,847

246,128

Profit before tax

27,29529,771

Income tax expenses(14,124)(6,761)

Profit for the year

13,171

23,010Owners of parent

12,072

22,596 Provisions Non-current liabilities Bonds and loans
payable157,589

155,177

Other financial liabilities 

49,71648,164

21,833

22,202

Non-controlling interests

1,099

414

 Provisions

1,565

2,189

Profit for the year

13,171

23,010 Deferred tax liabilities

17,57011,282
45.90

85.92

Earnings per share

Deferred tax assets

14,79813,449 
Other non-current
assets

2,666

807

 
Total non-current
liabilities

271,100

261,580

Total non-current
assets575,430

538,153

Total liabilities

559,947

507,708

42,65842,65822,82722,566Equity Capital stock73

Integrated Report 2021

974,805

Basic earnings per share (yen)Consolidated Statement of Cash Flows
Millions of yen

Fiscal 2019

Fiscal 2020

(Jan. 1 to Dec. 31, 2019)(Jan. 1 to Dec. 31, 2020) Capital surplus

39,48639,486 Retained earnings

444,783

461,720

Cash flows from operating activities

91,458

123,504

(75)

(77)

Cash flows from investing activities(63,417)(45,594) Other components ofequityCash flows from financing activities(40,979)(61,881)(66,052)(89,044)(957)(2,457)

Total equity attributable 
to owners of parent

Net increase (decrease) in cash and cash equivalents(13,895)

13,572

460,800

454,743

Cash and cash equivalents at the beginning of current period

74,526

60,631

Non-controlling interests 

14,737

12,354

Cash and cash equivalents at the end of current period

60,631

74,203 Total equity

475,537

467,097

1,035,484

974,805 Treasury stock

1,035,484

Profit attributable to: Net defined benefit
liability Other non-current
liabilities

Total assets

Millions of yen

Fiscal 2019

Total liabilities andequityEffect of exchange rate change on cash and cash equivalents

Integrated Report 2021

74

Corporate Data

Independent Verification Report

Third-Party Remarks

In order to enhance the reliability of this report and the environmental data disclosed on our website, we underwent verification by a

Global Trend toward ESG Management

third party.

Over the last few years, we have seen a growing global trend toward ESG management.
Previously, there had been quite a few companies publicizing ambitious statements regarding
sustainability, but they have often failed to live up to these lofty goals in reality. However, today’s
businesses are becoming ever more serious about practicing ESG management and taking concrete action. Although Sumitomo Rubber Industries has been exemplary in terms of sustainability,
I believe that the time has come for the Company to review its management approach to ESG
issues on an across-the-board basis.

Data marked with “ ” (pages 45, 46, 50, and 52) has been verified.
The target data for verification and the verification criteria employed are as follows.
1. Total Global CO2 Emissions
Criteria: ISO 14064-1

2. Total Global Energy and Water Usage, Wastewater and Waste Disposal (Excluding Valuables) by Factories in Japan
Criteria: LRQA’s Report Verification (Pursuant to ISAE3000, AA1000AS and GRI)My Impression of the “Our Philosophy” Corporate Philosophy Framework

Katsuhiko Kokubu
Professor at the Graduate School ofBusiness Administration, Kobe University

Completed a doctoral program inbusiness administration at Osaka City
University Graduate School. After serving as an assistant professor at Osaka
City University and Kobe University, heassumed his current position in 2001.
Head of the Graduate School of Business
Administration at Kobe University from2014 to 2016. Has served concurrently as Vice President of Kobe University(from 2019 to 2021) and as Headof Kobe University V. School (since2020). His recent publications include“From Accountability to Management
Ethics” (Yuhikaku Publishing Co.,
Ltd.), “Emergent-Type Responsibility
Management” (Nikkei Publishing Inc.)and “The 1st Step to Management
Accounting” (Sekigakusha Inc.).

Viewed in this light, the establishment of “Our Philosophy” in fiscal 2020 is of great significance.
With the Group’s Purpose serving as its pinnacle concept and defined as “Through innovation wewill create a future of joy and well-being for all,” this Philosophy consists of a Story, a Vision and
the SRI Way. Moreover, the “Governance” section of this report clarifies that “Our Philosophy” isintended to serve as the basis for all decision-making and as the impetus for all actions throughout the Group. Thus, the Group’s commitment to living up to this Philosophy is sure to be clearly
understood by readers. Going forward, I would very much like to see the Group provide follow-up
reports regarding changes in employee behavior driven by “Our Philosophy” from the next editionof its Integrated Report onward.

Improving Organizational Framework and Enhancing Human Capital
For a business that is actively pursuing sustainability, among its various responsibilities to stakeholders, its responsibilities with respect to its employees are of particular importance. Amid the
COVID-19 pandemic, corporations’ treatment of their employees is becoming a subject of generalpublic concern. In this report, Sumitomo Rubber Industries presents a policy of promoting Work
Style Reform as part of efforts aiming to improve its overall organizational framework. Looking
ahead, I expect the Group to report further on the details of these endeavors in the section dedicated to human capital. When it comes to developing human capital, ensuring robust investment
and resource allocation with respect to employees is a matter of the utmost importance. Today, agrowing number of businesses worldwide share a common understanding that employees deservea robust allocation of resources, such as investment in their education, because helping employees
to enhance their skills and living standards is considered a part of a company’s corporate social
responsibilities. In line with the Sumitomo Rubber Group’s corporate philosophy, I hope that a concept of this kind will serve as the cornerstone of the Group’s ESG management. This will, I believe,
encourage all employees to substantially raise their awareness of ESG management and ultimately
lead to the strengthening of the Group’s overall organizational capabilities.

Initiatives toward Carbon Neutrality
Sumitomo Rubber Industries has declared that it will strive to achieve carbon neutrality and is thus
aiming to reduce net CO2 emissions from its factories to zero by 2050. Although its GHG reduction
efforts with an eye toward 2050 are worthy of praise, I am somewhat concerned about the levelof detail when it comes to breaking this target down into specific steps and milestones, as 2050
is still a long way off. I believe that the Company should pay particular attention to the perceptionof this issue among younger employees. As these individuals are highly likely to still be Sumitomo
Rubber Group employees in 2050, their perceptions will be a key factor affecting the success of
the aforementioned declaration.
Response to Third-Party Comments
I would once again like to thank Professor Kokubu for providing us with his pertinent advice and generous assessments.
In line with the Midterm Plan that we announced in February 2020, our group has defined three key Value Drivers
to propel our ongoing efforts to enhance both our economic value and our value to society, namely: “Developing &Promoting Sales of Advanced Products,” “Creating New Value,” and “Promoting ESG Management.” In the interestsof further promoting ESG Management, we newly established a Sustainability Promotion HQ in January 2021.
With a new corporate philosophy structure, “Our Philosophy,” now serving as the basis for all of our decisions andas the impetus behind all of our actions, we are committed to fostering organic changes in employee behavior (which
is something that Professor Kokubu mentioned) and promoting Work Style Reform while simultaneously implementing
various measures to achieve carbon neutrality and otherwise ensure that our business operations are as environmentallyfriendly as possible. Toward this end, all Group employees will come together in a united effort to push ahead with theseongoing endeavors. In this way, the Sumitomo Rubber Group will rally our combined strength in working to contributeto the creation of a safe and sustainable society in which everyone can work and live with consistent peace of mind.

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Fumikazu Yamashita
Executive Officer, General Manager,
Sustainability Promotion HQ

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76

Corporate Data

Global Network (As of March 2021)

Investor Information (As of December 31, 2020)

OVERSEAS

Paid-in Capital

1 2

Number of Shares ofCommon Stock

15
3
6
9
10
11

14

5

¥42,658 million

Number of
Shareholders

8 7Authorized: 800,000,000
Issued:263,043,057

41,177

13

Stock Exchange ListingTokyo

Ticker Symbol

5110

Transfer Agent andSpecial AccountManagement Institution

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

Independent Auditors

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

Sumitomo Electric Industries, Ltd................................................................................................................. 28.85%
The Master Trust Bank of Japan, Ltd. (Trust account)..................................................................................... 5.65%
Custody Bank of Japan, Ltd. (Trust account).................................................................................................. 3.22%

12

4

Asia/Pacific

Americas

Manufacturing Companies: 9
Sales Companies: 22
Other Group Companies: 2

Manufacturing Companies: 3
Sales Companies: 4
Other Group Companies: 2

National Mutual Insurance Federation of Agricultural Cooperatives................................................................. 2.79%
16

Major Shareholders

Sumitomo Mitsui Banking Corporation............................................................................................................ 1.98%
Sumitomo Corporation................................................................................................................................... 1.83%
STATE STREET BANK AND TRUST COMPANY 505103................................................................................ 1.69%
SMBC Nikko Securities Inc............................................................................................................................. 1.55%

Europe/Africa/Middle East

JPMBL RE BARCLAYS CAPITAL SECURITIES LIMITED COLL EQUITY.......................................................... 1.28%

Manufacturing Companies: 4
Sales Companies: 11
Other Group Companies: 12

 unan Factory
H(China) (tires) hangshu FactoryC(China) (tires)Z hongshan Factory (China)(industrial products)

JP MORGAN CHASE BANK 385635.............................................................................................................. 1.12%

 SA FactoryU(sports goods)

Note: The percentage of shares in the above list was calculated using the total number of shares of common stock, excluding 41,905 shares of treasury stock.

Stock Price witzerland FactoryS(industrial products)

 lovenia FactoryS(industrial products)

 ietnam FactoryV(industrial products)

 hailand FactoryT(sports goods) hailand FactoryT(tires)(yen)

USA Factory (tires)

2,500

2,000
Turkey Factory(tires) outh Africa
S
Factory (tires) alaysia FactoryM(industrial products)

Indonesia Factory(tires and sports goods) hilippines FactoryP(sports goods)

Brazil Factory (tires)

1,500

JAPAN

1
2

JAPAN

1,000

Production Subsidiaries: 3
Sales Subsidiaries: 15
Other Group Companies: 12
 ayoro Tire Proving
N
Ground500

 sahikawa Tire
A
Proving GroundIzumiotsu Factory (tires
and industrial products)

Ichijima Factory(sports goods)

Golf Science Center

High
High
Opening
Closing
Closing
Opening
Low
Low

77

Integrated Report 2021

2018

2019

2020

2021

3

 agoya FactoryN(tires)9

Offices
R&D bases
Production bases

Opening > Closing

Light Blue: Closing > Opening0
2017

 hirakawa FactoryS(tires)

Blue:

8

6
7
5

 ire TechnicalT
Center4

 akogawa FactoryK(industrial products)

Tokyo Head OfficeDisclaimer
10

Head Office kayama TireO
Proving Ground iyazaki Factory (tires
Mand sports goods)

In addition to facts on the past and present of the Sumitomo Rubber Group, this report contains projections based on forecasts and future management plans.
Said projections reflect assumptions and judgments based on information available at the time this report was made. Actual future results may differ from these projections.

Integrated Report 2021

78