About Toyoda Gosei

Value Creation Story

Value Creation Strategy

Foundation of Value Creation

Data

Risk Management
Basic Philosophy
We are working to prevent risks that could have graveconsequences for management and to minimize
damage in adverse events. For these purposes, weidentify risks in each function and make decisions on
how to respond in meetings of the Board of Directors,
Internal Controls Committee, and various general
councils.
An Internal Controls Committee headed by thecompany president identifies key risks, determines
measures to counter them, and checks on theprogress in executing these measures. In this way,
Organization of Internal Controls Committee

these measures are made more effective.
In addition, initiatives to deal with key risks orunexpected risks due to political instability or otherexternal factors are discussed regularly by the Boardof Directors, and continuous improvements are made.
Moreover, Risk Management and Response Guidelines
have been established. These guidelines show theactions taken to prevent potential risks and to respondto problems appropriately and quickly.

Internal Controls Committee

Chairperson: President Saito

Deliberation of policies and measures related to internal controls

Risk Management Subcommittee

Compliance Subcommittee

Identifies major risks, decides measures
to avoid or mitigate them, confirms
implementation status

Reports and deliberates on corporate ethics
and status of compliance with laws, etc.

Internal Audit Subcommittee
Status reports on internal audits

Principal risk management activities
Specify key risks for the next fiscal year
● Confirm plans to counter key risks●Final report on the progress status ofactivities for the current fiscal year
● Improve and review risk management
policies, activities, standards, etc.

PLAN●ACTION

PLANACTION

DODO(Execution of annual plan)● Share information on key risks (includingGroup companies in Japan and abroad)● Apply to company departmental policies● Conduct activities based on plan
Review yearly activities (including Group
companies in Japan and abroad)● Share risk analysis● Evaluate and discuss activities withmembers of the Board of Directors●CHECK

CHECK

External disclosure of activities (securities report, corporate governance report, integrated report, company website, etc.)

Response to Key Risks
Operating foundation risks (primarily handled by CRO)and business strategy risks (primarily handled by CFO)
based on the business environment are assessedfrom the perspective of impact on operations (financialimpact, etc.) and possibility of occurrence (frequency),and key risks are identified.
Key risks are reflected in company policy as important
action items, and initiatives are made to mitigate or
prevent risks.

Examples of Key Risks
Classification

Main Key Risks

Large Large-scale disasters (earthquakes, stormand flood damage, etc.)
 Risks, opportunities, and responses basedon TCFD
 DX support
 Recalls due to serious quality issues

 Cyberattacks/scam emails
 Carbon neutrality measures Raw material procurement, energy price hikes, etc.
 BEV conversion measures
 Injuries and operation shutdowns due to serious work accidents

Medium Leakage of confidential information
 Trade friction

 Traffic accidents (causing serious damage/injury)
 Incidents of harassment

Small Antitrust law violations
 Business operations with partnercompanies

 Interruption of business operations due to fire or explosion
accidents

Size of risk
Impact onoperations(financial impact,etc.)
×Possibility ofoccurrence(frequency)

T OYODA GOSEI REP OR T 20 2383

GovernanceCrisis Management Project in Anticipation of Large-Scale Earthquake Disasters
A crisis management system has been put in place forthe event of a massive disaster, such as the predicted
Nankai Trough earthquake or natural disasters due toclimate change. This system is based on the principles
of human life first, community support, and earlyrecovery. Specifically, in addition to infrastructure andsystem measures based on the Crisis Management
Project, resilience training has been conducted morethan 180 times for directors and members of antidisaster
departments since FY2013. These efforts are basedon the company’s belief that improving the skills of
response personnel is essential. Specific proceduresfor the recovery of affected buildings, facilities,

and processes have also been established, and foralternative production in a production recovery system.
Recovery training for design drawings and other datais also carried out so that product development can becontinued even after disasters. In addition, workshops
to strengthen crisis management not only in Toyoda
Gosei companies but also at Group companies andsuppliers are conducted regularly. Assessments using
anti-earthquake measure implementation statuscheck sheets, clarification of weak points with graphs,
presentation of responses taken at Toyoda Gosei andother companies, and collaborative preparation ofbusiness continuation plans (BCP) are carried out.

Disaster Response

Initiatives to Date

Disaster outbreak – First response

Recovery

PermanentWarning & Monitoring Team
Earthquake
occursEmergency
earthquake alertFirst Response
Task Force
Advance Team(investigative team)

Emergency
Task Force

Life Support
Task ForceDistrict
Task Force

Production
Restoration
Task ForceInstructions
Reports

Classification

Measures

Facilityandequipment
measures Earthquake resistance measures for buildings and facilities
 Establishment of a disaster prevention center to serve as
an operations base for the entire company in the event ofa disaster Equipping all locations with a multi-channel access (MCA)
radio system*1 and satellite phones
 Installation of crisis management servers (earthquakeresistant structure) and emergency power generators
 Operation of a DR*2 system and DCs*3Systemmeasures

 Implementation of site and building safety assessments
 Training in operation of earthquake early warning systems
and employee safety information systems
 Preparation of supply chain information
 Preparation of a business continuity plan (BCP)

Skills Ongoing resilience training (disaster simulation exercises)*1 Radio system used in Japan for various purposes, from daily
operations to emergencies and disasters*2 System for restoring and repairing damaged systems (DisasterRecovery)*3 General term for special facilities equipped with and operating
computers, data communications, and other equipment (DataCenter)

Enhancing Our Global Risk Response
In response to global risks that occur not only inJapan but also in other countries (e.g., parts and raw
material shortages, the Ukraine conflict, etc.), we aretaking necessary actions on a global basis to quickly
assess the situation (weekly BCP reports) both in84

Japan and overseas. Standardization is also underway
so that domestic and international locations can takemeasures on their own initiative, and we are enhancing
our ability to respond to key risks seen in the businessenvironment of each company.

About Toyoda Gosei

Value Creation Story

Value Creation Strategy

Foundation of Value Creation

Data

Basic Policy for Cybersecurity MeasuresTo strengthen the control of confidential information,
annual checks of the compliance status of each division
based on company confidentiality management
regulations are conducted together with onsite audits.
Self-inspections are also done at Group companies inJapan and overseas, as well as at major suppliers.
Confidentiality officers are assigned in all departments,
and confidentiality education activities are conductedbased on information system security operating

standards and a confidential information management
manual. At domestic and international Group
companies and major suppliers, specific measures
are stratified and executed based on the size ofthe impact on Toyoda Gosei and inspection results
for cybersecurity risk measures at each company.
Regular reports and discussions are conducted in allcompany-wide councils, and cybersecurity measures
are implemented together globally.

Main Cybersecurity Measures
Classification

Prevent
leakage due tonegligence

Prevent leakage
and damage
due to malicious
intentMeasures (domestic and international Group companies and suppliers respond in accordance with the size of the impact)

Facility andequipment
measures Data encryption on personal computersSystemmeasures Security measures when sending emails out of the company (mandatory cc to superior’s email address,encryption of attached files)

Facility andequipment
measures Installation of computer anti-virus software Constant monitoring of unauthorizedcommunications
 Prevention of unauthorized connections tothe network

 Firewalls to control communication with outside parties Detecting and preventing tampering with systems open to thepublic outside the companySystemmeasures Confidentiality pledge
 Stricter standards for allowing items to betaken from premises

 Restricted access to file servers

Educational activities(morale measures) USB device connection controls

 Security training for employees Training in responding to targeted email attacks
 Company-wide confidentiality controls inspections and on-site audits using check sheets

Compliance
Basic Philosophy
Toyoda Gosei’s management philosophy states, “We
promote business operations with integrity throughthe establishment of a system founded on thoroughcompliance and corporate ethics.” Together withhighly ethical and fair business practices, we strive
for thorough compliance in all areas based on thisphilosophy. The Toyoda Gosei Group Charter for
Business Ethics sets forth shared values and acode of conduct for the entire Toyoda Gosei Group.
Group companies in Japan and other countries thenformulate and implement their own code of conduct
based on the Charter. Toyoda Gosei Co., Ltd. has alsoestablished the Toyoda Gosei Guidelines for Business
Ethics, which it expects every employee to follow, andhas worked to familiarize all employees with theseguidelines.

Compliance Implementation System

Toyoda Gosei Compliance Implementation System

Toyoda Gosei has established the Internal Controls
Committee with the Company’s president serving aschairman and all company officers as members, whose
activities include reporting on and discussing thestatus of compliance with business ethics, laws, andregulations. The items reported and discussed in theCommittee are shared with the compliance advocates
selected by each department in the Company-wide
Compliance Implementation Council so that they will
be incorporated into the activities of each workplace.
The Committee works for thorough compliance witha unified approach between management and theworkplace.

Corporate activities

Domestic
affiliates

Support for thecompliance system

Management
Philosophy

Support for thecompliance system

Toyoda Gosei
Group Charterfor Business EthicsOverseasaffiliates

Toyoda Gosei Guidelines
for Business Ethics
All company executives

Compliance advocates from each divisionInternal Controls
Committee

Company-wide Compliance
Implementation Council

Ensuring compliance
Legal affairs/compliance training

Compliance consultation office(internal/external)
Labor consultation office(internal)

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GovernanceSpecific Compliance Initiatives
Training and Educational Activities
Toyoda Gosei conducts various training and education
activities with the aim of raising and solidifying
compliance awareness in every employee. Trainings
are conducted by level in the company and by risks
corresponding to the work. The level-specific trainings
target new officers, new managers, mid-level employees,
new employees and others as an opportunity to spreadand deepen awareness of compliance at various career
stages. Risk-specific training is conducted for specificrisks. These trainings include training for transferees

prior to overseas assignments, antitrust law training forpeople in sales and other business departments, training
for sports clubs, and more. The training programs
are proactive in incorporating online training so that alarge number of eligible participants can participate.
Educational tools are also prepared, including aCompliance Academy that is regularly published in thecompany newsletter, and Compliance KY Case Studies
using various case study materials.

List of Workshops/Education at Toyoda Gosei
Category

Workshop name/education

For eachrisk

Education

Main content

Frequency

Company officers

Company law, fiduciary duty, etc.

Asneeded

New manager training

New managers

Compliance, mindset as a manager, antitrust laws, bribery, etc.

1 time/year

General employees (mid-level)

Compliance, contracts, internal company regulations, laws (antitrust laws, bribery, etc.)

1 time/year

Fifth-year employee training

General employees (skilledworkers)

Compliance in manufacturing settings

1 time/year

New employee training

New employees

Compliance, laws

Whenjoining thecompany

Pre-overseas assignment
training

Management/Generalemployees

Key points on compliance in other countries (antitrust laws,bribery, etc.)As
neededAntitrust law training

Management/Generalemployees (sales)

Laws, internal company regulations

1 time/year

Product liability law training

Management/Generalemployees (technical)

Laws, internal company regulations

1 time/year

Training for sports clubs

Management/Generalemployees (athletes, staff)

Compliance overall

1 time/year

Compliance Academy(company newsletter)All employees

Presentation of compliance cases

4 times/year

For each Legal affairs/compliancetraininglevel

Workshops

Recipients

Workshops/study sessions
for officers

Compliance KY Case Studies All employees

Theme-based case studies and interpretations (100)−Compliance Awareness Surveys and Self-Inspections
To ascertain the degree to which complianceawareness has been incorporated into the companyand whether there are any signs of problems, we
conduct an annual compliance implementationquestionnaire survey of all employees. The resultsof the survey are reported to the Internal Controls
Committee, and measures are implemented
throughout the company, and each workplace also
conducts improvement activities led by complianceadvocates by referring to the departmental feedback
reports of the questionnaires. Domestic and overseas
Group companies conduct annual self-inspectionsof the status of their compliance implementation
systems, status of compliance with antitrust andcompetition laws, bribery regulations, and otherimportant laws and regulations, as well as risks in key
functions including internal controls, human resources,accounting, procurement, and quality. The results ofthese inspections are reviewed by each functional

86

department of the Company, and feedback reports
are provided to support each company in making
improvements and taking action so that the entire
Toyoda Gosei Group is working to ensure thoroughcompliance by implementing the PDCA cycle.
From the FY2022 Compliance Implementation Questionnaire

Aware

Implementing

93.9%

95.1%

I am aware of most of theinformation in the Toyoda Gosei
Guidelines for Business Ethics

We are implementing complianceand conducting awarenesscampaigns in the workplace

About Toyoda Gosei

Value Creation Story

Value Creation Strategy

Foundation of Value Creation

Data

Initiatives for the Prevention of Antitrust and Competition Law Violations
The Group Charter for Business Ethics states that theToyoda Gosei Group will conduct business activities
with a spirit of “fair and free competition” (compliancewith antitrust and competition laws). We haveformulated the Codes of Conduct for Antitrust Law
Compliance as guidelines to be followed by ouremployees, and are working to ensure thoroughcompliance by employees through training andeducational activities. Antitrust law compliancemanuals based on the laws of each country areprepared for the regions where Group companies arelocated, and initiatives are made to prevent
anticompetitive acts globally.

Anti-Bribery Initiatives
The Group Charter for Business Ethics clearly statesthat in Toyoda Gosei Group’s relationships withgovernment agencies and political parties, we shallstrictly refrain from any actions that could be mistaken
for “back-scratching” or cronyism in the eyes ofsociety in general, and shall strive to maintain highly
transparent and sound relationships. We have also

formulated Global Anti-Bribery Guidelines as acommon guide for global activities, and are making
Group-wide efforts to prevent bribery, accounting
fraud, and other forms of corruption. Education isprovided to employees through level-specific training
and training for Group companies doing business inregions where there is high risk to prevent corruption.

Initiatives to Ensure thorough Export Controls
Toyoda Gosei has established an import/export controls
system to ensure that goods, technical materials,
software, and other items subject to import/export
restrictions, as well as items that violate laws andregulations (such as counterfeit products), are not takenout of the country or brought into the country without
proper authorization.

In addition to ensuring compliance with laws andregulations through the Security Export Control Systemand company regulations, the Company ensures thatdomestic and overseas Group companies conduct
installation and check for defects through self-inspection,and provide appropriate support in cooperation with thehead office and overseas control companies.

Early Detection and Correction of Problems through an Internal Reporting System
We have established compliance consultation offices
both inside and outside the company for the purposeof early detection and correction of complianceissues and violations of internal rules and laws andregulations in the course of business operations.
Outside lawyers are in charge of the external offices
to deal with problems from an objective standpoint.
This system allows all employees of the company
and family members living with them to receive
consultations, and the company takes thoroughmeasures to protect their privacy and ensure thatthey will not be treated unfairly because of theirreport. In addition to the internal consultation officeof each Group company in Japan, they also have acommon external compliance consultation office withthe Company. Overseas Group companies also haveexternal or internal consultation services. In FY2022, asa result of making the consultation offices known to all
and building trust, 66 reports and consultations werereceived from within the company and its domestic
affiliates, mainly concerning labor management,workplace problems, and harassment. These cases
were promptly investigated and appropriate corrective
measures were taken to resolve the issues.
No. of Compliance Consultations/Reports (Japan)
FY20192020

2021

2022

No. of cases

48694266

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